instances where policies are so drawn, of provisions under which policy holders may be subject to assessments in excess of stated premiums.

Seam Binding Industry.-An intensive survey of the principal members of the seam binding industry was conducted in connection with the alleged widespread practice of delivering short yardage in violation of the industry rules. The purpose of the survey was to induce more strict adherence to the rule requirements and to effect the discontinuance of the practice in question. As a result of such field work, closer liaison with members of the industry was established and substantial progress made in attaining full compliance with the rule provisions.

Masonry Waterproofing Industry.-Elimination of misrepresentation in advertising, labeling, and promotional literature of the degree of water impermeability imparted by industry products has been effected by constant administrative contact through the media of field interviews, office conferences, and correspondence with those industry members who had heretofore failed to comply with the rules. Also, misrepresentations of this nature have been averted by giving prompt attention to newcomers in the "waterproofing" field and acquainting them with the provisions of the industry rules prior to their preparation and dissemination of labeling and advertising copy. Information concerning industry conditions obtained through field contact was particularly helpful in achieving cessation of unfair trade practices.

Bedding Manufacturing and Wholesale Distributing Industry.— Progress has been made in the administration of the trade practice rules for this industry by securing through cooperative means the discontinuance of such unfair practices as fictitious pricing and misrepresentation of the therapeutic value of bedding products. Emphasis has been placed upon the elimination of the use in advertising and labeling of such terms as "orthopedic," "health," "custom built," "posturized," et cetera, as descriptive of ordinary stock mattresses and springs.

Canvas Cover Industry.--Complaints received, and examination of labels, advertisements, and other promotional material, having indicated that misuse of the terms "Fireproof," "Waterproof," "Sunproof," and "Mildewproof," and failure to disclose the finished size of industry products and the kind and weight of materials of which they were made, were the principal violations of the canvas cover rules, administrative action was directed, with considerable success, to their elimination. A field survey during which industry members in sections of New York, New Jersey, and Pennsylvania were visited showed that such infractions at the manufacturing level in those areas had been almost entirely eliminated..

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Baby Chick Industry.-Rule enforcement through administrative action in this industry has modified and materially reduced unfair trade practices, such as deceptive claims as to quality, character, productivity, etc. of baby chicks. Through close cooperation with officials of the National Poultry Improvement Plan of the United States Department of Agriculture, its various executive committees, and participating State agencies, instances of misuse of plan terminology have been corrected. In addition, progress was made in the matter of bringing about full disclosure of the sex and breed of baby chicks. SETTLEMENT OF CASES BY STIPULATION

Summary of Case Work

The stipulation or informal settlement method is utilized extensively by the Commission as a means of settling cases by voluntary action of the parties, without resort to formal complaint and trial. Under this procedure businessmen are afforded an opportunity in appropriate cases to enter into a voluntary agreement to discontinue practices considered to be unlawful.

In the fiscal period the Commission disposed of 182 cases under the stipulation procedure, as follows:

Accepted executed stipulations, including 7 amendment or substitute

The Division of Stipulations in the Bureau of Industry Cooperation is charged with the duty of negotiating settlements under the stipulation procedure. The Division does not investigate or prosecute any matter. Its procedure is to notify the businessman concerned that certain of his business practices have been challenged as illegal. The notice includes a statement of the specific practices which preliminary investigation indicates should be discontinued. The businessman may reply by letter and submit for consideration any pertinent information or explanation he may care to present, or he may request an informal conference with a representative of the Division of Stipulations. Opportunity for such informal conference is always afforded, 133 having been held during the fiscal

year. At these conferences the facts and issues are discussed informally and every effort made to reach an amicable settlement.

The procedure encourages frank, informal, and thorough discussion of the questions involved, either by correspondence or in conference. The businessman is thereafter given an opportunity to enter into an agreement to discontinue such of the challenged practices as are considered to be unlawful on the basis of the facts presented. This proposed agreement is then presented to the Commission for its consideration in disposing of the case.

Unfair Practices Covered by Stipulation

Cases disposed of by stipulation agreements during the fiscal year covered a wide range of unfair or deceptive practices, particularly in the field of false and misleading advertising. The following are some of the practices involved in cases disposed of in this manner:

Thirty-eight advertisers of shoes agreed to discontinue representations that their products were "orthopedic", "corrective" or "health" shoes or that they would prevent or correct abnormalities, deformities and disorders of the feet, weak ankles, fallen arches, poor posture or other similar conditions. Eight manufacturers of hearing aids agreed to discontinue advertising claims that devices which are not completely concealed are invisible, that hearing aids duplicate the functions of the human ear or that persons who are hopelessly deaf will be enabled to hear again. Nine sellers of woolen garments stipulated that they would label their garments truthfully as to the percentages of wool and other fibers contained therein.

A mail order insurance company agreed to stop making deceptive representations concerning requirements as to medical examinations and the payment of benefits under its family group life and accident policies. A manufacturer of crib mattresses stipulated to discontinue claims that his mattresses develop, strengthen and shape a baby's back, materially affect posture or insure development of a stronger back or better posture. Another stipulation brought about the discontinuance of claims that a device to be inserted in shoes will stop pains, aches, swellings, cramps in feet, legs, knees, thighs, neck or shoulders. A vitamin preparation will no longer be advertised as containing all of the vitamins required in human nutrition. A corporation engaged in selling correspondence courses in theology agreed to stop calling itself a "college." A seller of mechanical pencils containing imported mechanisms agreed to disclose the foreign origin of such imported parts. Another company agreed to disclose that failure to follow. directions for using its electric water heater might result in a dangerous electric shock.

Other stipulations provide for the discontinuance of claims that: a disinfectant advertised for use in sickrooms is effective against most

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disease-producing bacteria; a dental plate reliner will accomplish permanent results in the refitting or tightening of dental plates or assure permanent comfort; a nerve tonic will beneficially affect the nerves except where a deficiency of vitamin B, exists; a mineral supplement supplies the mineral needs of livestock or protects livestock against all mineral deficiencies; a vitamin and mineral preparation will have any beneficial effect in preventing or relieving colds or respiratory infections; a garlic tablet has any therapeutic value in the treatment of high blood pressure or its symptoms; a plastic starch will double the life of garments; a water filter softens water and is effective for an unlimited time in removing chlorine taste and odor; a preparation for cleaning floors and rugs kills all germs, bacteria, moths and moth larvae; a fuel oil additive will reduce consumption of fuel oil; a detergent and water softener will reduce the use of soap by one-half. Stipulation Compliance Activities

After stipulations are accepted by the Commission, the Division of Stipulations obtains reports showing the manner in which signatories are complying with their agreements. These reports must be in writing and signed by the interested parties. In cases involving false and misleading advertising, such reports must be accompanied by representative specimens of all advertising in current use. During the fiscal year 125 reports of compliance were obtained and submitted to the Commission.

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Case Work Progress

Under New Procedures

CHANGES in the organization and procedures of the Federal Trade Commission have speeded up and increased efficiency (1) in its handling of trade practice cases harmful to business and the consuming public and (2) in bringing its legal case work to a more current status.

LEGAL CASE WORK

Considerable progress was made during the year in the continuing program to bring the Commission's legal case work to a more current status. In fiscal 1952, the Commission disposed of 153 cases in which complaints had been issued. While 260 cases were pending at the close of the fiscal year 1951, this number was reduced to 212 by the end of fiscal 1952.

Of the cases disposed of during 1952, 132 resulted in cease and desist orders, as compared to 121 cease and desist orders issued in 1951. In addition, during 1952, 4 cases in which formal complaints had been issued were settled by acceptance of stipulations to cease and desist instead of by formal orders. Nine cases had been thus settled during 1951.

Cease and desist orders in antimonopoly cases totaled 24 as compared to 23 in 1951. In antideceptive practices cases 108 orders to cease and desist were entered as compared to 98 in 1951. When cases settled by stipulation are included, the respective antideceptive case totals are 112 and 107.

In informal cases-that is, where formal complaints were not issued-131 initial and substitute stipulations were accepted during 1952. Informal cases disposed of by administrative treatment-that is, by letters or affidavits of discontinuance-aggregated 269 during the fiscal year 1952. Under the Wool Products Labeling Act, labeling deficiencies in which compliance was effected administratively totaled 14,696 during the fiscal year. A total of 949 cases involving alleged violations of trade practice rules for industries were disposed of by administrative treatment.