and prevention of deception in the marketing of watches, watch cases or watch movements, whether of domestic or foreign manufacture, and maintenance of fair competition among persons, firms, and corporations engaged in the sale, offering for sale, or distribution of these articles. Provisions of the rules respecting the use of such terms are applicable to all types of advertising, whether in newspapers, periodicals, sales catalogs, sales promotional literature, on the radio, or otherwise; and also to the use of the terms as a mark, or part of the marking, on any watch, watch case, or movement, or on any label, tag, container, or literature used in connection with the sale, offering for sale, or distribution of such articles. The rules prescribe definite and specific requirements as to conditions to use of the terms and are designed to adequately protect the buying public. The definition of such terms as applied to watches, watch cases, and watch movements has been an urgent need of the industry.

Rules for the saw and blade service industry.-Members of this industry engage in the business of supplying and servicing, under lease or rental contract, saws, saw frames, knives, chopper machines, knife or slicer machines (and plates or blades for such machines), and similar articles for use in meat markets, packing houses, restaurants, and other food processing or food dispensing establishments. The promulgated draft for this industry consists of 18 Group I rules prohibiting a variety of unfair competitive practices, together with 5 Group II rules constituting voluntary expressions recommending against the use of practices which the industry considers harmful or unethical, or recommending use of ethical practices which the industry considers beneficial to itself or the public, such provisions having been considered by the Commission as in harmony with the law and the public interest.

Rules for doll and stuffed toy industry.-Another industry for which rules were promulgated during the fiscal year is the doll and stuffed toy industry. The rules are designed to eliminate and prevent unfair trade practices in the manufacture and marketing of all kinds of dolls and stuffed toys and they prohibit a variety of forms of misrepresentation of products. Use of unsanitary material is specifically proscribed and disclosure of used or second-hand material is required. Lottery schemes used in the marketing of industry products, tie-in sales, and price discrimination violative of the provisions of the Robinson-Patman Antidiscrimination Act also are prohibited. (Explanatory statements respecting the rules promulgated during the fiscal year for the construction equipment, piston ring and wholesale confectionery industries were included in the Annual Report for the fiscal year ended June 30, 1946.)

PENDING TRADE PRACTICE PROCEEDINGS

Trade practice proceedings were undertaken for other industries and were pending in various stages of progress at the close of the fiscal year. In some instances proposed rules had been released by the Commission and public hearings held. In other cases, where the proceedings were less advanced, the necessary preliminary study and consideration had been undertaken preparatory to further action. Among the new conference proceedings instituted during the fiscal period was that for the cosmetic and toilet preparations industry.

ADMINISTRATION OF RULES

71

After an industry-wide survey of practices in this industry a general industry conference was called by the Commission to consider proposed rules for the elimination of unfair practices and abuses in the industry. At the close of the fiscal year the results of this conference were being studied prior to release of proposed rules for hearing.

ADMINISTRATION OF RULES

Rules for over 150 industries, comprising more than 2,000 separate provisions, have been promulgated and are now under administration. During the fiscal year rule administration activities were undertaken to the extent possible with the personnel available for this work. Existing rules for several industries received special attention over and above the general rule administration activities.

Artificial limb industry.-The rules for this industry have as their principal objective the aiding of some 600,000 physically handicapped persons in the United States who use artificial limbs or devices by protecting them from the harmful effects of deceptive trade methods and monopolistic practices in the sale of prosthetic devices. Various practices which are deceptive and otherwise unfair or harmful are defined in the rules and provision made therein for their elimination and prevention. The administration of these rules was conducted with due regard to the substantial public interest involved and to the requirements of the probationary order of a Federal Court to which certain members of the industry were subject.

Masonry waterproofing products industry.-The rules for the masonry waterproofing products industry likewise received special attention. The advertising of industry members was examined and informal conferences and correspondence conducted with the members for the purpose of assisting them in bringing their advertising into conformity with the approved rules. Through these administrative efforts, unwarranted and deceptive claims as to the efficacy of industry products and other unfair competitive practices have been reduced substantially.

Radio receiving set manufacturing industry.-Another rule administration problem receiving special consideration concerned the rules for the radio receiving set manufacturing industry. Having found that a considerable number of advertisers of radio sets were including rectifiers in the tube count of sets advertised, the Commission issued an interpretation of applicable trade practice rule provisions in the light of a recent court decision on the subject. All industry members were afforded opportunity to bring their advertising into conformity with such provisions as interpreted. Thereafter, a survey was made of radio set advertising with the view to taking appropriate corrective action against industry members who fail to comply with legal requirements.

Other industry rules receiving special attention.-Other rules receiving special attention during the fiscal period include those for the following industries: household fabric dye, watch (respecting use of designations "waterproof", "shockproof", "nonmagnetic", etc.), linen, rayon, and fur.

Cooperative liaison work.-During the year contacts were renewed with several industries having trade practice rules for the purpose of creating cooperative liaison by means of which the rules might

be more effectively administered and enforced in the best interest of both the industries and the public. The cooperative liaison established with these industries proved helpful in determining whether present rules are adequate in fulfilling industry needs; whether new practices have developed which indicate a need for rule revision; and whether the rules have accomplished the results toward which they are directed.

TYPES OF PRACTICES COVERED IN PROMULGATED RULES

The following are illustrative of the variety of subjects covered by trade practice rules now in effect:

Misrepresentation in various forms, including false or misleading advertising; misbranding; defamation of competitors or disparagement of their products; commercial bribery in purchasing or selling supplies; inducing breach of competitor's contract; false invoicing; imitation of competitor's trade-marks, trade names, etc.; substituting inferior products for those ordered; lottery schemes; use of consignment distribution to close competitor's trade outlets; enticing away employees of a competitor; giving "push money", gratuities, etc., under circumstances involving commercial bribery, deception or restraint of trade; full-line forcing as a monopolistic weapon; combination or conspiracy to fix prices, suppress competition or restrain trade; unfair bidding methods; discriminations in price, service or facilities, such as discrimination effected through rebates, refunds, discounts, credits, returns, or other means; prohibited brokerage or commissions; the making of advertising or promotional allowances or the furnishing of services or facilities on terms not accorded to all customers on proportionally equal terms; and aiding or abetting another in the use of unfair trade practices.

Other subjects covered in the rules are: Use of slack-filled or shortweight containers, or those of odd size simulating standard and generally recognized types; use of deceptive depictions (photographs, engravings, cuts, etc.) in describing industry products; use of false or misleading guarantees, warranties, price quotations, price lists, or terms of sale; misrepresentation as to possible earnings or opportunities afforded on completion of correspondence school courses, or as to Government connection with, or indorsement of, any school, or respecting any training or services offered by such school; falsely representing offers as "special" or "limited"; misrepresenting regular lines of merchandise as "close-outs" to induce belief that bargains are available; representing products as conforming to recognized industry standards when such is not the fact; misrepresenting kind, quality, thickness or backing of mirrors; use of fictitious animal designations in descriptions of furs; misrepresenting character, extent or type of business engaged in; representing retail prices as wholesale, or deception through failure to differentiate between wholesale and retail transactions; use of false or misleading testimonials; use of "blind" advertisements in such manner as to mislead or deceive; representing domestic products as imported or imported products as domestic; use of misleading or deceptive representations in procuring sales representatives; use of deceptive titles or names in selling books under the subscription plan; and false representations respecting tube capacity of radio sets and their range or receptivity.

TYPES OF PRACTICES COVERED IN PROMULGATED RULES 73

The rules also cover the following: Misuse of terms "perfect", "perfect cut", "commercially perfect", "real", "genuine", "natural", etc., in describing precious stones or their imitations; deceptive use of word "Crookes" as applied to sun glasses; improper use of terms "pullorum tested", "blood tested", etc., as applied to baby chicks; misuse of words "all fabric", "all purpose", "fast", "fadeless", "fadeproof" "unfadable", "sunfast", or "wash-fast" as descriptive of products of the household fabric dye industry; deceptive use of such terms as "all-wave", "world-wave", "world-wide wave", etc., with reference to radio receiving sets; improper use of words "bristle", "pure bristle", etc., in the sale of toilet brushes; misuse of terms "extra fancy", "extra select", "extra quality", "de luxe", "choice", etc., to describe tuna fish products; improper use of words "lisle cotton", "cotton lisle", etc., as applied to hosiery products; deceptive use of terms "hand woven", "hand loomed", "hand printed", and "hand embroidered" in describing linen products; misuse of term "waterproof" as applied to watches, watch cases or watch movements, or to luggage or related products, or to masonry waterproofing products, or of the expression "water resistant" to describe watches, watch cases or watch movements or masonry waterproofing products, or of the words "water repellent" as descriptive of such watches, watch cases or watch movements, or of luggage or related products; improper use of terms "water tight", "moistureproof", or "water sealed" as applied to watches, watch cases or watch movements, or to masonry waterproofing products; misuse of terms "vaporproof", "dampproof", "dampproofing", "damp-resistant", "weatherproof", "weatherproofing", "perpetual", "everlasting", "eternal", "permanent", or "permanently" to describe products of the masonry waterproofing industry; deceptive use of words "water protected", "shockproof", "shock protected", "shock absorbing", "shock resistant", "unconditionally shock resistant", "jarproof", "nonmagnetic", or "antimagnetic" in referring to watches, watch cases or watch movements; and misuse of words "dustproof" or "warp-proof" as applied to luggage and related products.

Subjects embraced in other rules include: Exclusive or pre-emptive deals to eliminate or suppress competition; improper use of demonstrators and payment of "spiffs," "push money," etc., in the sale of industry products; deceptive concealment of name of sponsor and other pertinent information respecting product offered for sale; persuading distributors to refrain from submitting independent bids and price quotations to buyers; coercing adherence to published rental rates or trade-in values; furnishing property on condition of exclusive right to service the same; deception of customers of competitors as to identity; and prejudicing competitors' relationships with their agents.

In addition, there are rules providing for disclosure of fiber content of textile merchandise made of rayon, or of two or more fibers containing either rayon, silk or linen; disclosure as to remaining shrinkage in so-called preshrunk merchandise; disclosure of fact that apparently new products are not new, but are secondhand, used, rebuilt, or renovated; disclosure that products are artificial or imitations and not real or genuine; disclosure of country of origin of imported products; prevention of marketing of substandard or imitation products as and for standard or genuine, and the specification of

minimum requirements for standard or genuine products; proper nomenclature for industry products; disclosure as to true composition of paint and varnish brushes, as to imperfect or defective merchandise, as to use of adulterant or substitute for linseed oil in respect to putty products, as to presence of metallic weighting in silk or silk products, as to minimum yardage of ribbons, as to true functions of radio parts and accessories, as to quality, quantity, and size of ripe olives packed in cans and other opaque containers, as to latent defects in artificial limbs or devices, as to price charged for so-called premiums in sale of piston rings, and as to use and application of masonry waterproofing products.

INFORMATIVE LABELING

Informative labeling enters extensively into the work of the Commission under the trade practice conference rules. Fiber identification, or what is generally referred to as "Truth in Fabrics", forms a large part of such informative labeling work. While consumer goods containing or purporting to contain wool are subject to Wool Act labeling, similar fiber identification of other textiles under certain circumstances, and informative labeling of various lines of merchandise outside the field of textiles, are covered by trade practice rules.

The object of informative labeling is twofold: (1) To aid intelligent purchasing and to prevent deception by informing consumers what they are to receive for their money, thus enabling them to be in a better position to judge quality and to buy according to their needs or preferences; and (2) to protect business from the unfair commercial practices attendant upon the sale of competing articles under conditions of misleading representations or deceptive concealment of the facts.

The value of such labeling is widely recognized as a necessary and effective preventive of confusion or deception of the public and of unfair competitive conditions.

Products containing rayon in whole or in part are covered by the rules for the rayon industry, promulgated October 26, 1937. Those containing silk in whole or in part are covered by the rules for the silk industry, issued November 4, 1938. Corresponding rules for linen and part-linen merchandise were promulgated February 1, 1941. Informative labeling for all types of hosiery is the subject of trade practice rules for the hosiery industry, issued May 15, 1941. Similar rules covering fur garments and fur products generally were promulgated June 17, 1938. Informative labeling provisions on the subject of shrinkage of woven cotton merchandise were put into effect on June 30, 1938. Other textile provisions are found in the rules promulgated for infants' and children's knitted outerwear industry, June 28, 1939; uniform industry, May 18, 1940; and ribbon industry, June 30, 1942.

Provisions on the subject of informative labeling are also contained in the different sets of rules promulgated for the following industries on the dates mentioned: Rubber tire, October 17, 1936; toilet brush manufacturing, December 31, 1937; wholesale jewelry, March 18, 1938; paint and varnish brush manufacturing, January 14, 1939; putty manufacturing, June 30, 1939; mirror manufacturing, July 19, 1939;