mission, and the number pending at the end of each fiscal year, the figures for 1943 being based upon the experience of the several preceding years:

Disposition of cases.-During the fiscal year 1941, 2,256 cases were disposed of by the Commission, the largest number ever disposed of in any fiscal year. During the fiscal year 1942, only 1,833 cases were disposed of. This reduction was due in part to a diversion of a substantial portion of the Legal Investigation Division and of the Radio and Periodical Division to war-related activities undertaken at the request of other governmental agencies, and in part to the depletion in the staffs of all divisions occasioned by the entry of many employees into the armed forces and to the transfer of others to war agencies. Despite the depletion in the staff and assignment of large portions of the staff personnel to war-related activities, the Commission anticipates that, by increased effort, it will be able to continue its war-related investigational work and to dispose of 80 percent as many cases as were disposed of in the 1942 fiscal year. Even with very limited additions to the staff, the Commission will find it extremely difficult to reduce substantially the present large backlog of cases or to dispose of current cases more rapidly.

Pendency of cases.-Because of the inability of the present small staff, to handle a large number of important and complex cases with dispatch, delays have been inevitable. At the present time, each investigating attorney, including nine detailed from the chief counsel's staff, has an average of 12.67 cases. Each trial attorney has an average of 10 cases. At the end of the 1942 fiscal year, there were 145 cases pending in the trial examiner's division with an average of approximately 10 cases per trial examiner. Promptness and dispatch in disposition of cases is extremely important. Cases which are dragged out over 2 years do not give applicants a sufficiently quick remedy against unfair practices, do not give respondents a quick decision as to whether they have been violating the law, and do not serve effectively to discourage violations by competitors of those respondents.

The following table indicates that more than 47 percent of the pending complaints and more than 54 percent of the pending applications for complaint have been under consideration for a year or more:

Cases pending July 1, 1942, classified as to duration of pendency

Increased statutory duties under the Wool Products Labeling Act.-While the administration of the regulatory duties imposed upon the Commission by this act are incorporated in the project entitled "Trade Practice Agreements and Wool Products Labeling Act," it is anticipated that during the current fiscal year. 100 or more applications for the issuance of formal complaint will be insituted charging violations of either the Wool Act or the rules and regulations issued and promulgated by the Commission thereunder. These alleged violations will be investigated by the Legal Investigation Division and undoubtedly formal complaints will be issued in many cases. These must be prosecuted by the Chief Counsel's staff. In addition to the regular Commission proceedings with respect to misbranding and misrepresentation of wool products, the statute also provides for the institution of injunction suits and condemnation

proceedings in the various United States district courts in the event of certain violations of the act. The requisitioning of practically the entire output of domestic wool presents a serious problem to the American people and every possible safeguard should be thrown around the consumer in order that he be adequately informed as to the character of the fiber composition of merchandise containing wool, reprocessed or reused wool. Heretofore the funds made available to the Commission have not been sufficient to permit a vigorous enforcement of the Wool Products Labeling Act.

Broadened duties under the Wheeler-Lea Act.-The Wheeler-Lea Act of March 21, 1938, broadened the Commission statutory duties in three directions: (1) prevention of unfair or deceptive acts or practices other than those held to be unfair methods of competition; (2) prevention, by injunction proceedings in United States district courts, of the dissemination of false advertisements of food, drugs, devices, and cosmetics pending the final disposition of the case before the Commission and the courts where such dissemination would be contrary to the public interest; (3) certification of facts to the Attorney General (a) for institution of civil penalty suits by reason of violation of orders issued under the Federal Trade Commission Act which have become final and (b) for institution of criminal penalty suits under section 14 of such act.

Investigation and trial of food, drugs, devices, and cosmetic cases.—The enactment of the Wheeler-Lea Act has resulted in very substantial changes in the investigation and trial procedure, particularly in those cases involving food, drugs, cosmetics, and devices. Preliminary investigation in these cases cannot be completed by merely determining that the Commission has reason to believe that false advertisements are being disseminated. A determination must also be made as to whether the circumstances require the institution of an injuction proceeding to halt the dissemination of such advertisements pending final decision of the case by the Commission and the courts. If so, samples must be procured and analyzed and the services of witnesses and medical and other technical experts obtained. Thereafter, the Commission's attorneys present the matter to an appropriate United States district court and prosecute the matter to a conclusion. Determination must also be made as to whether injury to the public health or an intent to defraud the public is involved and, if so, a prompt assembly of the facts and certification thereof made to the Attorney General for criminal prosecution. The food and drug cases are of primary importance at this time because it is evident that many of our people will be compelled to rely more and more on self-medication, primarily because the armed services of the United States will require a vast number of medical officers who will thus be removed from civilian life. Conservation and protection of the public health, particularly during this war period, is of paramount importance to the Nation and if the public is compelled to rely more and more on recommendations made by purveyors of medicinal products and devices, then the Commission must exert every effort to see to it that the products so advertised and represented are not injurious to the health of the user and that the therapeutic representations which are made are honest and truthful. These cases are of an emergency character and to secure expeditious results for the protection of the public health, such cases must be given individual attention.

The Medical Advisory Division is operating with an extremely limited staff, and it is impossible for it to continue to keep abreast with the development of medicine and pharmacy unless additional personnel of high caliber can be obtained. This Division works closely with various other divisions handling cases arising through dissemination of false advertisements of food, drugs, cosmetics, and devices, and also gives material assistance in the preparation for trial of litigated medical cases. In cases which are contested throughout, the members of this staff render invaluable service to the Chief Counsel's Division, but cannot continue to perform these functions adequately with the present small staff. During the 1940 fiscal year there were 1,013 applications for complaint and complaints in food and rug cases pending for disposition; 493 were disposed of during that year. During the fiscal year 1941 there were 1,105 applications for complaint and complaints in food and drug cases pending for disposition; 605 were disposed of during that year. During the fiscal year 1942 there were 819 applications for complaint and complaints in food and drug cases pending for disposition; 470 were disposed of during that year. In addition to the 349 docketed applications for complaint and formal complaints pending in food and drug cases at the end of 1942, there are more than 200 additional matters involving the dissemination of alleged false advertise

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ments of food, drug, and cosmetic preparations pending in the Medical Advisory Division for report. Until such time as the Medical Advisory Division is in a position to submit its reports in these cases, no determination can be made as to whether the docketing of the matter as an application for the issuance of a complaint is warranted. It is safe to assume, however, that at least 150 to 175 of these more than 200 cases will be docketed as applications for complaint. Robinson-Patman Act cases.-At the beginning of the 1942 fiscal year there were 164 cases under investigation involving alleged violations of the Robinson-Patman Act. During the year, 32 additional cases were docketed for investigation, making a total of 196 such cases for disposition during the year. Of these, 79 were completed, leaving on hand 117 such cases on June 30, 1942. Fifteen formal complaints charging specific respondents with violation of the act were issued as a result of these investigations. In addition, there were a number of formal complaints charging violation of those sections of the Clayton Act which had not been modified by the Robinson-Patman Act.

Among the complaints and orders to cease and desist issued during the year involving price discrimination in violation of section 2 (a) were cases against some of the leading manufacturers of glucose or corn sirup. Among other forms of discrimination the orders forbade discrimination in delivered prices which made more than due allowance for differences in cost of delivery, a form of discrimination arising from calculating delivery charges from a point other than the point of shipment.

Many of these cases require production-cost and distribution-cost accounting studies to determine whether the price differences involved were justified by cost differences as well as broad factual investigations. These factors, together with the several legal defenses available under the statute, contribute toward making the cases arising under this act extremely complex, thus necessitating extended pretrial preparation and more protracted trials. In the investigation and prosecution of complaints under this statute the Commission in many instances requires the assistance of its economic, accounting, and statistical staffs. The experience of the investigation division has shown that it requires three times as much work to thoroughly investigate cases of this type as it does to investigate a case of alleged false and misleading advertising. Similarly, attorneys on the trial staff and those presiding as trial examiners cannot dispose of cases of this type as speedily by reason of the complex and involved issues litigated.

Restraint-of-trade cases.-It is to be especially noted that the prosecution of restraint-of-trade cases such as price fixing, boycotts, and other illegal combinations and conspiracies is of paramount importance and that such matters are engaging the attention of the Commission and its staff.

During the fiscal year ending June 30, 1942, the Commission had under investigation 148 matters involving alleged restraints of trade. Of that number, 61 had been instituted during the fiscal year and 87 were on hand at the beginning of the fiscal year. During the year, 67 of these inquiries were completed, leaving on hand 81 at the end of the year. In addition, 29 supplementary investigations were made in connection with the trial of formal complaints, 21 of which were completed during the year, leaving 8 unfinished at the beginning of the present year. The 25 formal complaints issued during the 1943 fiscal year, which charged alleged combinations in restraint of trade involved the following commodities: Women's suits and coats, women's millinery, women's dresses, garment boxes, Harris tweed fabrics, uniforms, button molds, linen supplies, charcoal, printed stationery, milk and ice-cream cans, milk-bottle closures, liquid-tight paper containers, bakery products, bottle and can crowns and caps, electrical alloy wire, crepe paper, traffic signals, asbestos pipe coverings, art pictures, commercial screen advertising, hardware, and groceries.

Among the orders to cease and desist entered during the year against combinations in restraint of trade were orders against manufacturers and distributors of tracing cloths, blueprint papers, and other supplies and equipment; a group of 21 hardwood manufacturers and their trade association; a group of manufacturers of power and gang mowers; a group of 18 producers of candy products and their trade association; a group of 20 producers of salt and their trade association; an organization of manufacturers of pins, metal paper clips, and fasteners; a group of beauty-parlor and barber-supplies jobbers and distributors; a group of produce jobbers and shippers of spinach; a group of paper manufacturers and distributors: a group of dealers and publishers of medical books; a group of 115 wholesalers of dry goods, notions, etc.; a group of glassware manu

facturers and an association of wholesale dealers in glassware; a group of kosher meat manufacturers and dealers therein; a group of retail and wholesale coal dealers; a group of 185 candy and tobacco jobbers; a group of automatic cigarettevending machine manufacturers; and a group of over 100 dealers in and manufacturers of food-service equipment.

war.

The Commission believes that important as the investigation and prosecution of such cases have always been they are of even greater importance during the The preservation of price competition and the prevention of practices which destroy it are obviously valuable aids in the difficult task of forestalling and avoiding price inflation. If prices can by force of competition be kept below the ceiling, a powerful corrective is thereby provided for relieving pressure against the ceiling. Moreover, it is common knowledge and common experience that the cost of war materials and supplies to the Government may be substantially enhanced through price-fixing combinations. A very substantial proportion of the Commission's cases of this type originate in applications filed by various Federal, State, and municipal agencies which think that they are the victims of such combinations. The Commission is cooperating with the War and Navy Departments to insure that prosecution of such cases does not interfere with the war effort.

Injunction suits.-Since the enactment of the Wheeler-Lea Act, the Commission, acting in the public interest and with a view to promoting public health, has instituted and successfully maintained 37 injunction suits in the various district courts. All of these suits except 2 involved dissemination of advertisements for drugs which were considered to be dangerous to health. With 1 exception, the courts have uniformly upheld the Commission's contentions and issued injunctions which prohibited the disseminations of advertisements of the dangerous drug preparations involved, which injunctions remain in effect until the final determination of the formal complaint proceeding by the Commission. Unless the dissemination of false advertisements of food, drugs, cosmetics, and devices which are injurious to health is promptly detected, expeditiously and thoroughly investigated, and speedily prohibited, there will be a substantial failure of the objectives of the Wheeler-Lea Act. In 4 years of experience in the enforcement of this statute the Commission reports that the objectives of this act have to a large degree been attained. However, with the increase in statutory duties already entailed there is reason to fear that delays in the prosecution of such cases will arise unless adequate funds are provided as requested.

Civil penalty and criminal suits.-An entirely new type of work necessitated by the Wheeler-Lea Act is the certification of cases to the Attorney General for the institution of civil-penalty suits in cases of violation of final orders issued under the Federal Trade Commission Act. In addition, under section 14 of the act cases are certified to the Attorney General for the institution of criminal proceedings when the use of the commodity advertised is injurious to health or where dissemination of the advertisement involved is with intent to defraud or mislead. This work requires considerable field investigation and travel for the purpose of assembling all of the documentary evidence and available witnesses necessary to the successful maintenance of such penalty suits in the United States district courts and the preparation of all pleadings and trial briefs for use in such trials. At the beginning of the fiscal year 1942, there were 16 civil-penalty suits pending. Eleven cases were certified to the Attorney General during the fiscal year and 5 were disposed of by the Attorney General during that period, resulting in the imposition of penalties in the total sum of $8,500. At the end of the 1942 fiscal year there were pending 22 civil-penalty suits.

Pending court cases.-The Commission has the greatest number of cases pending in the appellate courts that it has ever had. At the present time the Commission has 47 cases pending in the circuit courts of appeals and in the Supreme Court of the United States. During the fiscal year 1942, various circuit courts of appeals rendered decisions in 16 cases involving orders issued by the Commission, 15 of which were favorable to the Commission; dismissing 11 petitions for review without consideration on the merits, answers having been withdrawn by respondents who accepted orders of the Commission and signified an intention to comply therewith. During the last fiscal year, the Supreme Court affirmed one order issued by the Commission which had been set aside by the Circuit Court of Appeals for the Sixth Circuit.

Prior to the enactment of the Wheeler-Lea Act, Commission orders did not become final and whenever a violation of such order was indicated, it was necessary for the Commission to institute enforcement proceedings for the affirmance of such order by the appropriate circuit court of appeals. There were no penalties attached to such proceeding. Only when further violation occurred after

the court's affirmance of the Commission's order could a proceeding be instituted, charging contempt of the court order. The Wheeler-Lea Act provides that orders issued by the Commission under the Federal Trade Commission Act shall become final at the expiration of 60 days after service thereof, unless the respondents therein seek a review thereof in the circuit courts of appeals, and also provides a civil penalty not to exceed $5,000 for each violation of a Commission order after it has become final. In an attempt to avoid the liabilities arising from an outstanding final order, violation of which carries heavy civil penalties, and, sometimes, in an attempt to delay the date upon which such orders become final, respondents appeal many more cases to the circuit courts of appeals for review than formerly. The Commission has been uniformly successful in the appellate courts in securing complete affirmance of orders issued by it under the RobinsonPatman Act.

History of court cases. Since January 1, 1933, to date, a period of nearly 10 years, 177 Commission cases have been disposed of by the Federal courts. In 167 of these cases, results favorable to the Commission were obtained. Of the remaining 10 cases, only 7 were out-and-out reversals, the other 3 being contempt proceedings in cases in which the Commission's orders had been previously affirmed. Of the reversals, 3 were upon the question of jurisdiction rather than the merits; a fourth was decided on the issue of res judicata.

The Commission has been reversed by the Supreme Court of the United States but twice in more than 10 years, in both cases by a divided Court (5-4 and 5-3). During this period, the Supreme Court has decided 8 cases in favor of the Commission. Petitions by the Commission for certiorari were granted in 7 cases and denied in 1; similar petitions by respondents were granted in 3 cases and denied in 28.

Export Trade Act.-Under the Export Trade Act (Webb-Pomerene law) the Commission supervises the registrations and the operations of associations of American exporters engaged solely in export trade, who for this purpose are exempt from the provisions of the antitrust acts provided domestic trade is not restrained nor American interests jeopardized. There are 50 associations, representing approximately 500 member companies, presently registered with the Commission under provisions of this statute.

Project No. 5-Administrative expenses

An increase of $6,210 over the fiscal year 1943 is requested to provide rental of quarters for our branch offices in San Francisco and New Orleans. The Navy Department took over our quarters in the Federal Building, San Francisco, on January 7, 1942, and in the Federal Building in New Orleans, March 1, 1942. By agreement, the Navy Department reimburses the Commission for the rental costs through the period ending June 30, 1943.

This project covers the salaries of the following administrative divisions: Budget and Finance, Personnel Supervision and Management, Records, Publications and Procurement, and Research and Library. This project also includes the various miscellaneous expenses covering purchases of supplies and materials, communication service, transportation of things, repairs and alterations, equipment, etc.

Printing and binding, decrease of $7,250.-For printing and binding for the fiscal year 1944, the sum of $43,000 is carried in the estimate. This sum represents a decrease of $7,250 under the appropriation provided for this project for the fiscal year 1943. The following is a break-down of the estimate for the fiscal year 1944, estimated expenditures for 1943, and the actual expenditures for the fiscal year 1942: