legislative intent and plan to upbuild a code of commercial ethics that will inculcate a spirit of fair dealing and which in its turn will render trust-methods repugnant to our business men; and a reasonable period must be allotted for the accomplishment of this primary object.

Suffice it to say there is a potent force inherent in the original plan which thus far has triumphed over structural defects in these statutes; and gives promise of ultimately overcoming every obstacle to the useful employment of its powers. As we have endeavored to point out, the Sherman Law removed the obstacles that beset the highway of national trade; to the Clayton Law and the Federal Trade Commission Act belong the duty of policing that highway and of rendering its traffic fair and free for all --not excluding the humblest citizen.

ANFORD LIBRAR

CHAPTER VI.

Aspects of Federal Trade Commission Rulings.

Preventive Influence is Paramount Element.

It is quite evident that while the cases adjudicated under the common law and later under the Sherman Law and anti-trust statutes were calculated to create a sphere of jurisprudence that would operate as a guide and deterrent, still there existed a borderland-a veritable no-man's country-where monopolies and trade-restraints might incubate and grow up to formidable size and be fully flowered before the Department of Justice could proceed and institute an anti-trust prosecution. It is exactly at this earlier stage that the Federal Trade Commission comes into play; and the exercise of its functions and powers has unquestionably brought forth great changes and reforms in the business life of the country. As the report of the Commission for the fiscal year ending June 30, 1919, states at page 45: "Previous to the creation of the Commission (September 26, 1914), the courts had ruled upon various forms of unfair practices * * *. But upon the creation of the Commission it was empowered to leave the shores defined, *** and, taking the knowledge of those decisions with it, to embark upon an uncharted sea, using common sense plus the common law for its compass."

A New Departure in Trade Regulation.

In brief, under the creating act (see page 409), the Commission was given jurisdiction over a new province, viz., over "unfair methods of competition in commerce;" and it became at once the power and the duty of that semi-judicial body to initiate appropriate proceedings whenever it had reason to believe that

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proceedings against those practicing such unfair methods were in the public interest. The procedure in these prosecutions has been dealt with elsewhere (Chapter V, page 97), and in the course of a proceeding instituted by the Commission, the Federal courts have held the Act constitutional; and its orders to cease and desist were considered and judicially determined to be binding within the boundaries of the jurisdiction conferred upon the Commission. In the leading case (Sears, Roebuck & Co. v. The Federal Trade Commission, decided by the Seventh Circuit of the United States Circuit Court of Appeals, April 29, 1919), the opinion in the case, per Mr. Justice Baker, clearly sets forth the judicial interpretation, stating the right of the commissioners, when dealing with charges brought before them "to exercise their common sense, as informed by their knowledge of the general idea of unfair trade at common law; and stop all those practices that have a capacity or a tendency to injure competitors directly or through deception of purchasers quite irrespective of whether the specific practices in question have yet been denounced in common law cases." It is obvious that the Court employs the words "common law” as including those statutes usually styled the anti-trust acts; doubtless the Court regards those measures as declaratory of principles long since established under the early English cases; although of recent years, within the United Kingdom, their authority is much impaired, and the English Courts, under a modernistic policy, deem them "more honored in the breach than the observance."

Benefits Conferred.

Thus it is seen the Federal Trade Commission Law and its companion statute, the Clayton Act, offer relief to the injured competitor and the public long before the trouble complained of has reached an acute stage. As the report states (page 45): "The offending party has his warning and opportunity to cease in abundant time to avoid the indictment-day under the Sherman Anti-trust Act that awaits him, if his restraint of trade or tendency shall, finally, culminate in a monopoly." In the Sears,

Roebuck Co. case, however, we find much more than an adjudication that the Commission is empowered to go beyond the limits of the common law when defining "unfair competition;" more than the ruling that mere discontinuance of the offending conduct prior to the issuance of a complaint does not divest the commission of power to proceed to a binding determination; we find in this controversy a decision squarely establishing the constitutionality of the Act. Since the defeated party made no application to the Supreme Court for a review, it may be assumed that the opinion of the Circuit Court of Appeals was convincing as to power of Congress to create the Commission and to invest it with the various powers in the act contained.1

Few Appeals from Commission's Rulings.

Unlike the anti-trust prosecutions, the proceedings before the Federal Trade Commission do not appear destined to build up a system of court decisions, for only five appeals resulted from the issuance of 603 formal complaints in the period beginning with the inception of the Commission, September 26, 1914, and extending to June 10, 1920.

This showing is so remarkable that we feel an official statement and explanation of the experience of the Commission should be presented, in order to amplify the mere announcement of the results obtained. Fortunately, Hon. William B. Colver, a member of the commission, has prepared such a statement: Summary of Proceedings and Rulings.

"Experience has shown that about two out of three of the complaints which are brought to the Commission's attention are not such as to warrant any formal proceedings and those matters are dismissed without annoyance to the respondent, without publicity and without public knowledge.

“In the five years of the existence of the Commission, there have been 1,978 of such applications for complaint made. These cases have passed through or are passing through the procedure which I have outlined, and with the following result:

1See also decision in U. S. Circuit Court of Appeals, 6th Circuit, National Harness Mfg. Assn. v. Federal Trade Commission, Dec. 7, 1920.

"On preliminary examination and without publicity or embarrassment, 954 of these cases have been dismissed; 570 are still in the process of such preliminary investigation, and in the remaining 454 cases the Commission has instituted formal proceedings, resulting in the issuance of 603 formal complaints-the excess being due to the fact that in some applications there were a number of respondents who were proceeded against individually. Of these 603 adversary proceedings, 294 have been disposed of while 309 are still pending. Of the 294 disposed of, 56 were dismissed, the Government, on full hearing, having failed of preponderating proof or the respondent having made a sufficient showing of defense. Of the remaining 238 cases, the orders of the Commission to cease and desist were issued, and here comes what I believe to be one of the greatest examples of the inherent fairness of the American business man, for out of the 238 cases where the business concern after trial and hearing and after having had brought home to it the consequences, often unsuspected, of its conduct upon competitors, 194 of the respondents have voluntarily agreed to accept the order to cease and desist and to stop the bad practice.

"In the remaining 44 cases, the concerns complained against by other business concerns, resisted to the end and the order to cease and desist was nevertheless issued.

"Thus we find that the Federal Trade Commission, seeking to administer a fair and just law and dealing with fair and just people in a spirit of fairness and equity, finds a minimum of controversy and a maximum of accommodation."

(Extract from address before Wholesale Grocers' Association, delivered June 10, 1920.)

Novel Feature Introduced by Trade Commission.

Perhaps one explanation of the ready acquiescence of business interests, where Federal Trade Commission rulings are concerned, will be found in a novel and highly equitable practice which, in effect, secures submission of the general complaint to a jury of business associates, prior to filing a complaint against an individual infractor.