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B. Cost of distribution inquiries Continued.

Sugar manufacturers.
Vegetable and fruit canners.
Whe] sale and retail grocers.
Women's and misses' outerwear industry.

Women's hosiery manufacturers.
Some of these reports were furnished to the War Production Board and all
of them to the Office of Price Administration.

Source of funds.-With the approval of the Bureau of the Budget, the appropriations of the Commission to the extent available have been used for these special studies and costs in excess thereof have been met by allocation of funds from the emergency agencies for which the work was performed. In view of the Commission's long and successful experience in this type of work and the undesirability, if not impossibility, of building up in the war agencies similar staffs of experienced men, it appears to be in the interest of economy and efficient administration, especially in the supervision of the staff and in the convenient use of data, that this accounting, statistical, and economic investigational work continue to be performed under the supervision of the Federal Trade Commission.

Modest annual appropriations have been allowed to keep this staff intact. For 1943 the amount of $141,000 was granted. This amount was supplemented by funds included in the appropriation for the Office of Price Administration.

It, therefore, appearing that the larger part of this staff of the Commission
during the entire year 1944 would be engaged upon work for other agencies to
be paid for by those agencies, the Bureau of the Budget decided that the better
arrangement would probably be to provide for the cost of this work by alloca-
tion of funds from other agencies rather than by direct appropriation to the
Federal Trade Commission, and, therefore, the estimates for the fiscal year
1944 were reduced in the sum of $91,000 under the amount provided for the
fiscal year 1943.

Corporation reports.--Corporation reports, covering over 70 industries for
the years 1939 and 1940, were prepared as follows:

Paint, varnish, and lacquer,
Steel castings.

Flour milling. Rayon and allied products.

Internal-combustion engine. Bolt, nut, washer, and rivet.

Refrigeration and air-conditioning Machine-tool accessory and machin equipment. ists' precision tool.

Agricultural machinery and tractor. Wool carpet and rug.

Cranes : Dredging, excavating, and roadFruit and vegetable canning.

building machinery. Screw-machine products and wood Pumps, pumping equipment, and air

compressors. Shipbuilding

Corn products. Fertilizer manufacturing.

Soap, cottonseed products, and cooking Beet-sugar refining.

fats. Cotton textiles.

Cereal preparations. Elevator, escalator, and conveyor.

Lumber and timber products. Machine tool.

Office and store machines. Hardware.

Glass and glassware. Steam engine and turbine.

Rubber products. Cane-sugar refining.

Petroleum refining and marketing.
Gypsum products.

Oilfield machinery and tools.
Men's, youths', and boys' clothing. Tin can and tinware.
Lead and zinc producing and manu- Heating and cooking apparatus (except

electric). Plumbers' supplies.

Footwear (except rubber). Biscuit and cracker.

Mechanical stoker. Copper (primary) smelting and refin- Mining machinery and equipment. ing.

Plastics. Gray iron and malleable iron castings. Distilled liquors. Wallboard and wall plaster (except gyp- Paving and roofing materials. sum), building insulation, and floor Wire and cable (electrical). composition.

Mechanical measuring instruments,


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Drugs and medicines. Linoleum and other hard-surface floor Smelting and refining equipment. covering.

Paper and pulp. Sewing machine.

Commercial laundry, dry cleaning, and Textile dyeing and finishing.

pressing machines. Special industry machinery.

Railroad equipment.
Power boilers and associated products. Bread and bakery products.
Clay products (other than pottery). Merchant pig iron.
Textile machinery.

Chemicals (industrial).
Automobile parts and accessories. Woolen and worsted.
Tanned, curried, and finished leather. Milk and milk products.

The Commission's corporation reports have been made use of by many Government departments and agencies, including the Navy Department, the Medical, Signal Corps, and other branches of the War Department, War Production Board, Commerce Department, Office of Price Administration, Bureau of Labor Statistics, Federal Reserve Board, and others.

These reports contain detailed information covering costs of production, selling, and overhead costs, including materials cost, labor cost, depreciation and obsolescence, repairs, and maintenance; also selling, general and administrative, and other costs and expenses. Profits are shown both on investment and also the net profit from manufacturing and trading. These data have enabled the Bureau of Labor Statistics, the War Labor Board, and various branches of the Navy and War Departments to compare the data they have on individual companies with the industry results. This enables them to quickly ascertain any individual costa which are out of line.

Project No. 3Trade Practice Agreements and Wool Products Labeling Act


Base increase of $71,790.

Statement of estimate.-The estimates for 1944 provide for this project the sum of $172,410, of which $50,000 is for "Trade practice agreements” and $122,410 for the administration of the “Wool Products Labeling Act." The increase of $71,790 may in reality be regarded as offset to the extent of $50,000 by the fact that regularly for many years $100,000 had been appropriated for trade-practice agreements whereas in the estimate only $50,000 is allotted for such activity. Description of work.

Project No. 3 covers (1) the work relating to the formulation and promulgation of trade-practice rules for the elimination and prevention of unfair methods and the maintenance of the standards of fair competitive practices in industry; the administration of established rules, and their application to competitive problems arising in the respective industries; and (2) the general administration of the Wool Products Labeling Act and the rules and regulations thereunder, including amendment of such regulations as needed from time to time. The several functions under the project are interrelated.

Establishment and administration of trade-practice rules.-In the formulation and promulgation of trade-practice rules, provision is made for the holding of industry-wide conferences under the auspices of the Commission at which industry members may consider unfair and unethical practices and trade abuses and provide methods for their correction and abandonment. The procedure involves the utilization of self-discipline and voluntary cooperation on the part of industry members under Commission supervision to eliminate and prevent unfair methods of competition and other practices contrary to the laws administered by the Commission. By such voluntary and cooperative action the same results are achieved as by the institution of separate proceedings against individual industry members but with a substantial saving in time and expense to both Government and industry.

The work necessitates basic research and study of competitive conditions and problems in the particular industries concerned. In addition to general trade practice conferences of entire industries, informal conferences are held from time to time with industry representatives and other interested parties for the discussion of industry problems and practices. Before rules are promulgated for an industry, the tests of law and the public interest are applied thereto and public hearings are held for the purpose of affording all interested or affected

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parties opportunity to present their views, including suggestions or objections, 2026, and to be heard. After due proceeding and hearing the rules in proper form are

approved and promulgated by the Commission as guiding rules of fair competiIrg de tive practices in the particular industry concerned.

Administration of established rules and their application to competitive prac

tices in the industry relate not only to the trade-practice rules currently promulpoderi

gated from time to time but also to rules which were promulgated in previous years and remain in effect. This activity includes the handling of a substantial volume of correspondence in supplying information and interpretations as to the rules and, in general, assisting industry members in the application and observ. ance of the provisions thereof. This phase of the trade-practice conference work also embraces extensive activity in obtaining compliance with the provisions of promulgated rules and the detection of violations of such provisions. Through this compliance activity, voluntary correction of unfair trade practices is obtained in hundreds of cases with little expense and without the necessity of resorting to compulsory litigation by the issuance of formal complaints.

To the extent the curtailed funds available therefor permit, the trade-practice

work during the present emergency is converted to direct support of the war e effort, special attention being given to rules and practices fitting into the needs

and objectives of the war program.

Trade-practice rules or agreements are codified in the Code of Federal Regulations of the United States of America. It is fortunate under the present conditions of stress that the established body of rules are available under which cooperative effort on the part of businessmen is mobilized and utilized to hold commercial evils in check. Through the voluntary cooperation in industry under such fair trade rules of the Commission, the elimination of unethical, wasteful, and burdensome competitive methods against which the law is directed is accom

plished in large volume with saving to industry and the Governmont in money, i time, and effort. The rules function in the wartime economy to prevent waste

of manpower, harmful and concealed depreciation of quality in essential commodities, hidden price increases with their inflationary tendencies, and various other evils which exploit the consumer and hamper industry. Such tradepractice work is availed of extensively by the war agencies and is recognized by authoritative persons generally. The curtailed sum included in the estimates for this function will permit of carrying on only the most urgent part.

Wool act regulations and administration.The general administration of the Wool Products Labeling Act is directed toward carrying out the statutory provisions and the rules and regulations thereunder. As stated in its title, it is an act “to protect producers, manufacturers, distributors, and consumers from the unrevealed presence of substitutes and mixtures of spun, woven, knitted, felted, or otherwise manufactured wool products, and for other purposes."

The legislation is commonly referred to as the “truth in fabrics” law. It provides for the labeling of products which contain, purport to contain, or are represented as containing, wool, reprocessed wool, or reused wool. Among other things, the label is to inform the purchaser of the true fiber content, that the boying public and fair competition may be protected against deceptive concealment and attendant evils. The Commission is the agency designated by law to administer the act.

There are approximately 70 industries producing products which are subject to the act and which must be dealt with under the regulations. In addition to these manufacturing industries, there are the thousands of affected marketers and distributors operating in the different channels of trade.

The products subject to the act are of wide variety and of a character essential to the entire population. All types of woolen and part woolen clothing for men, women, and children, also blankets and other imrortant products, are covered. Compliance work involves the necessity of seeing to it that the "wool products" subject to the act bear the required fiber identification when placed in "commerce," and that such identification is not only truthful but remains or is displayed upon the product throughout its journey from producer to consumer. The inspections and policing directed and required in such compliance work is the most pressing and increasing phase of this work.

The administrative duties also involve consideration and dispositinn of questions concerning the application of the act and regulations to specific problems of interpretation and construction arising in the administration of the provisions: the handling of cases instituted upon sworn application for manufacturer's registered identification numbers; the examination and recording of continuing

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guaranties under the act; the consideration and disposition, in cooperation with officials of the Customs Bureau, of questions arising in the clearance of importations of wool products through customs for sale within this country; the handling of apklications or requests for rulings in cases of wool products having or claimed to have an inconsequential or insignificant textile content under section 4 (d) of the act and rule 35 of the rules and regulations; and the necessary administrative action in the application of the provision of the statute respecting the keeping of proper records of fiber content in the manufacture of wool products.

Conditions growing out of the war and the consequent wider use of substitutes and mixtures in woolen products have increased the volume of work under the act. Certain phases are becoming more imperative, such as the work of policing false or otherwise improper labeling practices under the act, and the duties in relation to the segregation and proper classification of fiber as between wool, reprocessed wool, and reused wool, thus requiring more attention. Practical operation of this new law in progressive application and the impact of the war have not only enlarged but also accentuated the administrative demands for which the above fuds provide the barest minimum.

Such "truth in fabrics” legislation embodied in the Wool Act is of tremendous importance to the country. The need therefor is greater than ever in the present emergency, rising cost of living, and the widespread use of substitutes and mixtures seriously affecting quality and value of essential commodities. The act provides a material check against insationary forces which arise from concealed lowering of quality of goods or what is known as hidden-price increases. It provides for the protection of scrupulous business and the consuming public from exploitation ard deception of the worst kind.

Wcol is a critical war material, and the act is essential to the practical operation of the program of the wartime controls of wool for meeting the needs of the armed forces and to insure an equitable distribution of essential civilian supply.

Project No. 4-Unlawful practices work.
A net increase of $13,000 has been allocated to this project.

Nature of the work.--This is the law-enforcement work of the Commission. It includes the preventioa of unfair methods of competition in commerce, such as price fixing by combination and conspiracy, illegal restraints of trade, false advertising and numerous other unfair competitive trade practices, prohibited by the Federal Trade Commission Act, and of unfair or deceptive acts or practices in commerce prohibited by the Wheeler-Lea amendment to such act; the prevention of unlawful price discriminations under the Clayton Act, as amended by the Robinson-Patman Act, and the prevention of unlawful tying contracts, unlawful capital-stock acquisitions and unlawful interlocking directions under the Clayton Act; supervision over associations organized solely for export trade under the Export Trade Act; and the prosecution of cases arising under the Wool Products Labeling Act of 1939, effective July 14, 1941. The staffs of the chief counsel, chief examiner, chief trial examiner, Director of Radio and Periodical Division, Medical Advisory Division, and a part of the staff of the Division of Accounts, Statistics and Economic Investigations are engaged upon this work.

Statement of increase.—The estimates for 1944 provide an increase of $15,000 for personal services and traveling expenses over the amount provided for 1943, of which $11,552 provides for the salaries of two additional attorneys and one additional meilical officer, and $3,448 increase for traveling expenses.

Statement of decrease.—The appropriation for 1943 provides an item of $5,000 for transfer to the Food and Drug Administration, Federal Security Agency, as reimbursement for chemical analyses performed by that agency for the account of the Commission. The estimates for 1944 provide a total of $3.000 for this type of service, a reduction in the sum of $2.000. The total net increase for the unfair practices project for 1944, therefore, amounts to $13,000.

General statement as to justification for appropriation.In this period of grave national emergency there is every reason to anticipate a great number of violations of the statutes over which the Commission exercises jurisdiction, particularly in the field of consumer frauds where the strongest efforts to protect both the health and pocketbook of the ultimate consumer must be exerted, and in the field of oppressive trade practices, which, if allowed to run unchecked, will destroy the small businessman. Unless the Commission is enabled to act quickly and forcibly during this war period in curbing such practices in their inception, the intended force of the statutes will become ineffective both now and for years after the termination of the war. If the Com



mission is to (1) continue the field investigational work undertaken at the request of war agencies; and (2) continue to afford the public and business generally the degree of protection which the statutes administered by the Com mission contemplate, it essential that a slight increase in the staff personnel be obtained. This can be accomplished only by means of the increased appropriation herein urgently requested.

During the fiscal year ending June 30, 1942, the Legal Investigation division, at the request of the Office of Production Management and its successor, the War Production Board, completed seven Nation-wide surveys covering the investigation of more than 1,500 companies engaged in the manufacture of essential war materials. At the request of the Office of Production Management, the Commission conducted Nation-wide surveys of the entire steel industry and the copper-fabricating industry for the purpose of determining the extent and degree to which the companies in these industries were complying with orders issued by the office of Production Management relative to the allocation of supply and priority of delivery of such materials The War Production Board requested the Commission to undertake surveys and investigations of copper-ingot manufacturers, processors, and users of chromium and nickel, users of jewel bearings, and silverware manufacturers. These investigations were also for the purpose of securing information as to the extent and manner in which the members of these industries were complying with priority orders and regulations promulgated for the control of their activities. At the request of the War Production Board, the Commission also conducted an investigation of 406 manufacturers of metal-working machines. The War Production Board has indicated that the Legal Investigation Division, in conducting investigations relating to war activities, is rendering a distinct beneficial service to the War Production Board in its effort to achieve maximum production of war materials. It is the expressed intention of the War Production Board to utilize this organization continuously in these activities and there is an informal agreement that this Commission will maintain an investigational staff of approximately 100 attorney-examiners who will be available to the War Production Board for investigational work requested by it.

In its regular survey of radio and periodical national advertising since the outbreak of the war, the Radio and Periodical Division has undertaken warrelated work for other agencies of the Government, and it is anticipated that this work will continue for the duration of the war on the same, or a larger, scale. For example, this Division in the course of its regular duties has made available to other agencies, 3,340 pages of radio continuities and 873 publishel advertisements were selected from a large group which had been classified and analyzed and were referred to the Office of Facts and Figures; 53 pages of radio continuities and 272 published advertisements were referred to the War Production Board, in addition to semimonthly tabulations with analyses of current advertising of rubber products and a special survey of the radio and periodical advertising of 48 cities in 25 States relating to critical materials, cosmetics, soap, drug-store rubber goods and rubbing alcohol; and it is now making similar surveys and semimonthly report to the Board of the advertising published in 15 principal cities in the 12 Federal Reserve districts relating to foreed sales and other liquidations of stocks of general merchandise. For the Office of Price Administration, the Division surveys and reports periodically on types of advertising concerning advice to "buy now,” scarcity of materials, equivalent or substitute materials of better quality, statements concerning rationing, efforts to sell products subject to "freeze" orders, and any institutional or general character reference to rationing, price control, or quality showing trends and attitudes toward the price and rationing programs.

Status of unlawful practices work. The primary function of the Commission is to prevent unlawful restraints of trade, unlawful price discriminations, dissemination of false advertisements of food, drugs, cosmetics, and devices which may be injurious to health, false and deceptive labeling of wool products, and the myriad other unfair methods of competition and unfair and deceptive acts and practices in commerce utilized by unscrupulous traders. For the purpose of comparison, the following table for the fiscal years 1938, 1939, 1940, 1941, 1942, and 1943 indicates the number of alleged and determined unlawful statute violations for disposition by the Commission at the beginning of each fiscal year indicated, the number of cases disposed of by the Com

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