who are haled into court and who admit that they have pursued a course of conduct that is not in accordance with the highest ethics of the trade, to say the least, do not feel kindly toward that agency, public or otherwise, that stopped it. That is human nature.

Mr. WINSLOW. As a matter of real practice, has the operation of the Federal Trade Commission resulted in the discontinuance of the practices of which complaint has been made?

Mr. DAVIES. Oh, yes; because when the order is entered, if the order is violated they may become subject to an order of the circuit court of appeals or other Federal court, and upon the violation of that order they are subject to contempt proceedings.

In connection with the attitude of respondents to the commission, I should like to say that in my opinion the situation which I have described is rather an unusual one. I believe from my experience on the commission that quite the contrary was the general rule. For instance, when the commission was first organized this situation obtained in the silk trade. Mr. Horace Cheney, a very fine splendid citizen, whom you probably know, engaged in the manufacture of silks, found himself confronted with a condition where other manufacturers of silk fabrics were labeling their goods as "Silkateen" or some such word that conveyed to the public the idea that the predominating factor in the constituent elements of the fabric was silk, whereas as a matter of fact it was not. It was cotton or some other substitute. He did not think, and a great many other gentlemen in the silk trade did not believe, that that was good merchandising or good business. They did not want to do it but they had to do it in order to meet the competition of everybody else that was doing it, and no single individual could stop it because if he did he would lose his trade. It could only be stopped by joint action, and there was not enough public interest in the whole trade to get an agreement to stop it, and perhaps under the law they could not do it because it might perhaps affect competition under the Sherman law. So the complaint being filed with the Federal Trade Commission, I took it up, having the matter in charge, with practically all of the leading silk manufacturers of the country and held a conference with them up in New York at their silk association rooms, and they practically all agreed that there was no way in which they could morally justify palming off those fabrics as silk which were not in fact silk, hat these names were misleading and they should not be employed. The net result of it all was that we stipulated as to certain facts and we entered what we called a conference ruling, and I think perhaps it might be interesting to you if I were just to read a typical ruling. It will give you a picture of what happened there:

[From the records of the Corporation Trust Co.]

FEDERAL TRADE COMMISSION, WASHINGTON, D. C.

CONFERENCE RULINGS NOS. 49 AND 50, MARCH 17, 1917.

MAR. 21, 1917.)

(RELEASED FOR PUBLICATION

49. Misbranding-Misleading labeling and advertising-Competitive method discontinued. On application for the issuance of a complaint, it is alleged that a manufacturer labeled certain fabrics as "Oxford and Cambridge silks," which in fact were not genuine silk, and that such manufacturer advertised and sold said fabrics under such labeling in interstate commerce.

Upon investigation, and after informal conference with the respondents, it appeared that the goods labeled as "Oxford and Cambridge silks" in fact contained only 15 per cent genuine or cocoon silk and 85 per cent of other material, and that such manufacturer advertised and sold said fabrics generally, in interstate commerce, under such label; and

It appeared further that such practices in this industry have grown up gradually and partly through the necessity of meeting competitively like practices by others; and

It appeared further that respondents are ready and willing to cooperate with the commission to end all such unfair methods in said industry and trade; and

It appeared further that respondents have now changed their brand of such goods from Oxford and Cambridge silks" to "Oxford and Cambridge drapery fabrics,” and that respondents have also taken steps permanently to discontinue all other methods of labeling and advertising used by them which may be unfair to competitors or may deceive the consuming public.

Held, That such practice of labeling, advertising, and selling in interstate commerce, fabrics as "Oxford and Cambridge silks" without qualifying terms which clearly designate that class of fabrics composed partly of silk, when in fact the fabrics complained of are composed only in part of genuine or cocoon silk, is an unfair method of competition within the meaning of section 5 of the Federal Trade Commission act, in that such practice is calculated to deceive the consuming public, and thereby injure others who are engaged in selling a similar class of fabrics under labels and advertisements which correctly designate their product, and also to injure those engaged in selling genuine silk fabrics.

Held further, That, respondents having taken steps permanently to avoid all unfair competition in the matters complained of, and to avoid all probable deception and injury to the consuming public, it does not appear to the commission that a proceeding by it in respect thereof would be in the interest of the public.

50. Misbranding Misleading labeling and advertising Competive method discontinued. On application for the issuance of a complaint it is alleged that a manufacturer labeled certain fabrics as "St. Regis silk," which in fact was not genuine silk, and that such manufacturer advertised and sold fabrics under such labeling in interstate commerce.

Upon investigation, and after informal conference with the respondents, it appeared that the goods labeled as "St. Regis silk" in fact contained no genuine or cocoon silk, and that such manufacturer advertised and sold said fabrics generally, in interstate commerce, under such label; and

It appeared further that respondents are ready and willing to cooperate with the commission to end all such unfair methods in said industry and trade: and

It appeared further that respondents have now discontinued the manufacture of the goods formerly labeled "St. Regis silk," and that respondents have also taken steps permanently to discontinue all other methods of labeling and advertising used by them which may be unfair to competitors or may deceive the consuming public. Held, That such practice of labeling, advertising, and selling in interstate commerce, fabrics advertised and labeled as "St. Regis silk," when in fact the fabrics complained of contain no genuine or cocoon silk, is an unfair method of competition within the meaning of section 5 of the Federal Trade Commission act, in that such practice is calculated to deceive the consuming public, and thereby to injure others who are engaged in selling a similar class of fabrics under labels and advertisements which correctly designate their product, and also to injure those engaged in selling genuine silk fabrics.

Held further, That, respondents having taken steps permanently to avoid all unfair competition in the matters complained of, and to avoid all probable deception and injury to the consuming public, it does not appear to the commission that a proceeding by it in respect thereof would be in the interest of the public.

CONFERENCE RULING NO. 56, APRIL 26, 1917.1

56. Misbranding-Misleading labeling and advertising Competitive method discontinued.--On application for the issuance of a complaint, it is alleged that a manufacturer labeled certain threads, no one of which contained any silk, respectively, as follows: Sansilk, "Silkateen," Silkateen darning floss, Silkine crochet, and Silkine art thread, and that such manufacturer advertised and sold such threads under such labeling in interstate commerce.

1 Released for publication Apr. 28, 1917.

Upon investigation, it appeared that no one of the threads labeled as: Sansilk, "Silkateen," Silkateen darning floss, Silkine crochet, and Silkine art thread, in fact, contained any genuine or cocoon silk; and that such manufacturer advertised and sold said threads generally in interstate commerce under such labels; and

It appeared further that such practice of using fanciful words, of which the letters s-i-l-k constituted a part, may have grown up (as alleged by respondent) as a result of the necessity of meeting competitively like practices by others; and

It appeared further that whatever possible confusion and deception resulted were without any specific intent on the part of the respondent; and

It appeared further that respondent voluntarily took steps promptly to correct every possible confusion and deception that might result from such practice; and It appears further that respondent has now permanently changed each of the labels complained of by placing the fanciful words within quotations and by adding thereto certain words in conspicuous lettering as follows: From Sansilk to "Sansilk" mercerized crochet cotton; from "Silkateen" to "Silkateen" mercerized crochet cotton; from Silkateen darning floss to "Silkateen" mercerized cotton darning floss: from Silkine crochet to "Silkine" crochet cotton; from Silkine art thread to "Silkine" art thread mercerized cotton.

Held: That such practice of labeling, advertising, and selling in interstate commerce threads labeled as "Sansilk," "Silkateen," Silkateen darning floss, Silkine crochet, and Silkine art thread, without the use of qualifying terms which clearly indicated that such threads were not composed of silk, when in fact they contained no silk, is, even in the absence of specific intent, an unfair method of competition within the meaning of section 5 of the Federal Trade Commission act.

Held further: That respondent having promptly and voluntarily agreed and taken steps permanently to avoid all unfair competition in the matters complained of, and to avoid all further possible deception and injury to the trade and the consuming public, it does not appear to the commission that a proceeding by it in respect thereof would be in the interest of the public.

CONFERENCE RULING NO. 57, MARCH 21, 1917.2

57. Use of similar corporate name— -Competitive method discontinued—Public interest. Upon application for the issuance of a complaint it appeared that a corporation engaged in interstate commerce adopted in 1901 the corporate name "National Oil & Supply Co.," and that another corporation engaged in interstate commerce adopted in 1916 the identical name. It further appeared that, while located in different cities, these corporations were selling the same class of goods in the same markets, and the use of the identical corporate name was resulting in confusion and deception of the public. The commission took up the subject matter of the application with the corporation last adopting the name National Oil & Supply Co.," which voluntarily agreed to discontinue the use of the name and to adopt in lieu thereof the name "United States Oil & Supply Co."

Held (1) The use by a corporation of a corporate name, consisting of a combination of several generic and descriptive words, in the identical form or combination previously adopted by a corporation engaged in the manufacture and sale of the same class of goods in the same market, is an unfair method of competition in that it is calculated to deceive the public and thereby result in injury to the competitor previously adopting the name. (2) The use of the name "United States Oil & Supply Co." does not constitute an unfair method of competition as against the National Oil & Supply Co. (3) The practice complained of having been permanently discontinued, it does not appear to the commission that a proceeding by it in respect thereof would be to the interest of the public.

That had to do with threads.

The CHAIRMAN. That was a conference agreement?

Mr. DAVIES. That was a conference ruling. That was the situation where the commission did a piece of constructive work with the consent of the manufacturers and with their express approval and desire that the work should be done. It was done without a formal complaint. It was done practically by agreement. The results were speedily achieved and accomplished to the benefit of the public and to the benefit of the competitors in the silk business who could not do it themselves because they could not agree among themselves to do it.

2 Released for publication May 5, 1917.

The CHAIRMAN. So the ruling had really the effect of an order? Mr. DAVIES. The ruling has had the effect of an order. Now, the other case, the wool case, was a situation where a complaint was issued. After the complaint was issued the answer was filed. Issue was thus joined and thereafter an agreed statement of facts was stipulated and upon that agreed statement of facts an order was entered.

Mr. DEWALT. Conceding it as a fact that there are many fabrics now being manufactured in which the term virgin wool is used, which really contain shoddy, do you think that the Federal Trade Commission under section 5 could take hold of a case of that kind where the fabric itself does contain shoddy?

Mr. WINSLOW. Bro. Dewalt, for the purpose of clarifying the suggestion, possibly you have made a statement that you did not intend to make. As far as I know, there is no evidence here to show that anything is marked virgin wool.

Mr. DEWALT. No: it is advertised as such.

Mr. WINSLOW. As containing shoddy?

Mr. DEWALT. No; advertised as virgin wool which usually does contain shoddy, as I understand it.

Mr. WINSLOW. It may be, but I have not had the experience.
Mr. DEWALT. Conceding the case to be this-

Mr. CLARK (interposing). All wool.

Mr. DEWALT (continuing). That an article is either marked or advertised to be all wool and the popular conception is that that means virgin wool, but the fact is that it contains shoddy, would section 5 take care of a case of that kind?

Mr. DAVIES. Of course, a curbstone opinion is not of much value; but my advice in that situation would be to file an informal complaint alleging the facts as you state them. Then, if, as a matter of fact, there was deception, which of course the evidence would have to determine, then it seems to me that the Federal Trade Commission, to be consistent with its views, with its previous conduct, would have to issue a formal complaint and try the situation out, and in my opinion it would. What the result of the proceeding would be I do not know. It would depend upon the evidence, whether there was actual deceit or deception.

Mr. DEWALT. Now, in the case you gave us, Mr. Davies, of silkateen, it seems to be affirmatively shown, or at least the Federal Trade Commission accepted it as affirmative, that there was no intent to deceive. I so understood you.

Mr. DAVIES. There was no willful intent to deceive, but constructively there was an intent to deceive. In other words, there was a deception.

Mr. DEWALT. Now, take the article that is being advertised as all wool. As I understand the situation, the popular belief is that that means that there is no shoddy, no reworked wool. Now, if the fabric. is thus advertised and either the ultimate consumer or the middle man was to make complaint that this led to deception, poplar belief being that all wool meant virgin wool and not a composition of virgin wool and shoddy, then the question is, Would that be inet by the provision of section 5 in your opinion as a former member of the Federal Trade Commission?

Mr. DAVIES. In my opinion, yes, sir.

Mr. WINSLOW. Suppose that for a number of years a certain wool cloth had been recognized and known to the trade under the name of all wool, and that later on somebody conceived the phrase virgin wool. To which side of the controversy would it be possible to attribute the injustice of the treatment?

Mr. DAVIES. I would hesitate to reply to that question.

Mr. WINSLOW. Would it not be seen that the man who had described for 25 years a cloth as all wool, never having heard of the term virgin wool, had established a right to that description of the cloth?

Mr. DAVIES. I must confess it means more to me to say "all wool" than "virgin wool." I never heard of "virgin wool" until this morning.

Mr. WINSLOW. Now, within 25 years, if somebody, for good business reasons, is clever enough to invent a term that is catching and calls it virgin wool, is there any injustice done to him if the other man continues to do what he has done for 25 or 30 years, or to the public? Mr. DAVIES. The fabric being all wool?

Mr. WINSLOW. The fabric being just as represented in both cases. Mr. DAVIES. I should think not, personally.

Mr. JONES. Mr. Davies, if there is an imposition on the public and evils exist which are covered by the provisions of the act creating the Federal Trade Commission, is it your opinion that evils of that kind should be remedied by amendment to the Federal Trade Commission act if the Federal Trade Commission does not now take care of them, or would you advocate the enactment of a multitude of laws for every particular subject matter?

Mr. DAVIES. Congressman Jones, I was addressing these facts to that very proposition. I wanted to show that which is apparently not known to your committee, and in doing that I am appearing purely in a personal capacity, not as a former member of the commission and not representing any one, but having a very deep interest in the Federal Trade Commission and knowing a very large amount of good that it has done which is not heralded abroad, which is not generally appreciated-such, for instance, as this procedure with reference to Silkateen and with reference to silks, work that is quietly done that is not appreciated. Now, here is a committee of the greatest legislative body in the world in conference on this matter of misbranding, and apparently the Federal Trade Commission has not advised you of what it has done upon this subject nor are you aware of what has been done apparently, and I took it upon myself to ascertain what the facts were without their solicitation, and in fact without their knowledge except through the secretary, to run this down, because this was my hobby when I was on the Federal Trade Commission, and to state to you what had been done to prevent misbranding and to do it by constructive processes, to do it speedily, to do it without process of long litigation, if it was possible, and to do it with the accommodation of the business interests themselves. This was one of the things for which the Federal Trade Commission was designed and which in many instances it has done but which function has been lost sight of because of the other more well known functions it has had to perform under the direction of Congress.