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About The Sunday Oregonian. (Portland, Ore.) 1881-current | View Entire Issue (Nov. 13, 1921)
THE SUNDAY OR EGO XT AX, PORTLAND, NOVEMBER .13. 1921 7 STEPS TAKEN TOWARD MAKING ALL BUSINESS HONEST Huston Thompson, Chairman of the Federal Trade Commission, Talks About Laws That Prevent Unfair Competition and Practices to Purge Merchandising of Deception Bribery BT WILLIAM ATHERTON DU PU1 IT WASN'T a pound of butter she got," said Huston Thompson, chairman of the federal trade commission, somewhat warmly. "This housewife had come down to thu mar ket, had asked for a pound of butter and had been handed this package. It was all refrigerated and wrapped up In transparent paper with lots of reading matter on It. Up In one cor ner was a blurred line which stated that there was fifteen ounces In this package. The housewife never read It. She had asked for a pound, thought she had paid for a pound and bad received a package an ounce less than a pound. All the housewives be tween Maine and Mexico were being deceived. Nearly all the butter peo ple were practicing this deception. "Now all these butter people did not want to put up a short-weight package. Some few of them did it, however, and the others were driven to It that the competition might be met. Finally the practice came to be nearly universal. Complaints rained In on us. Keeping track of the fluc tuating package of the competitor was the trial of their lives. "So we called the people together who were producing the butter of the nation. We asked them If they didn't think this an unfair method of com petition They said It was and asked us to help them. We emphasized that It would be better in .the long run for the industry to purge Itself. They took the suggestion. They got together and signed an agree . ment as to what the Industry itself believes unfair and agreed further more to discontinue such practices. It was a great relief to them to do this. It obviated the necessity of elaborate plans of deception which gave them no advantage, because all practiced them. Of course, It gave the treacherous producer a chance to cut under the rest and reap a harvest. But the trade would be vigilant and the danger was great. It was a step toward making business honest." This big, blue-eyed chairman, this mountain climber, this son of a preacher who was the eon of a preacher, this football player who had worked his way through college by stoking the furnaces In the homes of the professors, this lawyer from Colorado who had come down to Washington half a dozen years ago to take up this new task for the gov ernment, was full of hi subject. He believed that tha federal Trade com mission was to give business Its chance to be honest, was to force It to become honest where It had no de lire. Here was a law prohibiting un fair competition, the first such law In the world. Gradually the commis sion was building up the structure for its enforcement. "Deceiving the buyer." continued Chairman Thompson, "as to the weight of the package which he ac quires is obviously a method of un fair competition. The same is true If a bottle or a can Is supposed to hold a pint or a quart and contains less. The same is true of any carton which has a capacity which Is less than It Is believed to have, or which Is not well filled. The purchaser is not likely to miss a small shortage In his small package, but saving this email shortage would enable the manufacturer to cut below the whole sale price of his competitor and have a material advantage over him. Steady progress Is being made toward eliminating this method of unfair competition. "A much more brazen method of unfair competition is that of com mercial bribery. It appears in many lines of business, but may be well Illustrated in the operations of the ship-chandlers. A boat, for instance, comes Into the harbor of Baltimore after a long cruise. In a few days It is to put out again on another equally extended voyage. It must stock up at Norfolk. Baltimore, New Orleans or elsewhere with a supply of provi sions of all classes that are to meet tts requirements on this voyage. The ship-chandler is the merchant who deals In the supplies that are needed on their Journeys by those who put to sea. There are a number of ship chandlers In these cities, and from one of these the captain of this ship will buy his stock. "Now It has become the practice In virtually all ports of the nation that tie ship-chandler shall allow a per sonal rebate to the captain of the which was threshed out by the com- hava upheld the commlasion in this In- easy wealth Just around the corner vessel who buys his supplies from mission was that of the use of cellu- stance." as a result of their investments, that ship-chandler. This rebate la loid In the manufacture of trankets "Is this attempt by a government to "After the war we assumed the po- usually In cash and may amount to and Its advertisement as othei and introduce honesty into its commercial sltion that "wild cat' stocks competed 6 per cent or 10 per cent of the pur- more expensive materials. This eel- life a new thing?" I wanted to know. In the financial market with such se- chases. It Is en actual bribe to him.. luloid appeared in hairbrushes, for "The United States." Chairman eurities as liberty bonds, and If. there- If one of the ship-chandlers is al- instance, and was called 'Parisian Thompson explained, "is the first gov- fore, the securities back of them were lowing the captains of vessels this Ivory." It was. of course, not Ivory, ernment In the world to put such a misrepresented, we had authority to rebate of 8 per cent or 10 per cent and Investigation showed that It was law Into effect. So novel was the Idea declare them In unfair competition, on purchases and the other ship- not of Parisian origin. It was. there- that the commission has found it We prepared a searching question- fore, obviously misbranded. It was necessary to overcome a great inertia nalre and sent It out to more than a found, also, that ornaments were with regard to such matters and to thousand individuals of whom corn made of this celluloid and used In awaken the public.to the possibilities plaint had been made. The Issuance Jewelry and for dress trimmings and that lie within them. The commission of this questionnaire to those who had advertised as Jet. It was. of course, holds, for Instance, that an individual made alleged inventions which nrom- cannot survive. They are driven to not Jet. Celluloid appeared In other crime committed against the law. as. lged to produce fortunes had de rebatlng. " forms and masqueraded as amber, for example, a burglary, should, of veloped methods of catching fish, "Now the ship chandlers all over All of the masquerades were classed course, be punished, but that its pun- schemes for raising lost property from the sea, for hog farming, for coloniza tion of soldiers, and countless others, caused them to stop and think, often to desist and sometimes to return money which they had collected. "Many of the states have excellent 'blue-sky' laws, and what we are anxious to bring about is control of such operations by the national gov ernment. We believe that It should be possible for an investor to ask h's government what is back of a stock that is offered for sale and get an answer. We believe that whoever Is allowed to sell atock should be re quired to file such Information with the proper federal authority. "But, in the meantime, we say to the prospective purchaser: 'Beware of . the glib salesman! Never hurry In making an Investment. Consult your lawyer or your banker before you close the transaction and, finally, fcrce your stock salesman to do this definite thing make him give you a statement in writing which telle the rate of commission he la receiving; i which tells how much of your money goes into the company treasury; how .much of It Is used In developing tha property or business, and make him state that he acknowledge that you. In buying; are relying on what he say a If he hesitates to sign a state ment of this kind conclude that his. - proposition Is crooked and put no money Into It.' "In these ways has the federal trade commission found It possible to exert an evesMncreaslng Influence upon the business of the nation, tend- ng always to drive It more nearly to a basis of honest and open competi tion. To Its authority to thus influ ence business and to tend constantly toward getting It upon a basis of honest competition, congress saw fit. of the association are not In ac cordance with the Intent of the law. So do the principles of honest bus' ness, which the commission is at tempting to establish, follow the dustriale of the nation as they reach out here, there and yonder into all the markets of the world, and ao is the principle of prevent'ng unfair competition going beyond the borders of the United States. So. likewise, is it finding Itself In a position where if may do much to remove from the good name of the nation those blots which have been placed upon It In the past by those exporters who have thought more of an Immediate profit than of the establishment of a good commercial name for the nation which would aerve It well la build ing up better foreign trade. "About a thousand manufacturing plants In all parts of the United States are operating under this law. During the last year the total value of exports of the Webb-Pomerene law export associations approximat ed (300,000.004. Some of the feature of this law are Joint advertising, a saving of overhead expense. Joint ex port trade marts, central foreign agencies. "The law which created the federal trade commission seven years aga gave it two prlnclplal functions. The first of these was to gather, compile and publish Information regarding the. organization, business conduct, practice and management of corpora tions and associations (except banks and common carriers) engaged in In terstate or foreign commerce. The second was to prevent unfair meth ods of competition. The act states that 'unfair methods of competition j re hereby declared unlawful." This is the declaration upon which our chief activities are based. "When complaints are made to the commission of methods constitutlong unfair competition, they ar.e first placed In the hands of an examiner, who makes a thorough Investigation and report with recommendation. His recommendations go to a board of review, and if the methods appear to be unfair and if the public Inter est is affected the board of review recommends that a compialnt be Is sued. The respondent, Is summoned to appear and defend his practice. He Is given a complete hearing before the commission. If It concludes that his practices are unfair, then It is sues an order upon him to cease and desist. This order 'a published and it Is Its publication which is most dreaded by any business, agency, since being declared unfair by the federal government is certain to be very Injurious to any business. NATIONAL MEMORIAL CHURCH AT WASHINGTON IS WANTED -. Effort Will Be Made to Erect Edifice That Will Be Fitting Tribute to Those Who Died in Americaa War. WHEN Major Pierre Charles l'En fant, a skillful engineer who oeme from France with Lafay ette in 1777 and entered the employ of George Washington as an architec tural engineer, drafted plans for the city of Washington, D. C, he pro vided, among other things, for a na tional church somewhere In the neigh borhood of where now stands the old Pension building. A copy of the orig inal map of the District of Columbia, drawn by Major l'Entant. and now carefully preserved In a glass case In the library of congress, clearly Indi cates the spot where the proposed edifice was to be erected. Examination of these old drawings If J I lb' Lis- chandlers are not. the man who al- ' Iff i!nm lows the rebate, human nature being Ur r what it Is. will get the mass of busi- yit -T nees. The ship-chandlers who da S I I not resort to this commercial bribery ! . VLk k Y A- jT 'U-'. 'A'-.-I Tk. IV fVSW I I d& , .: . 1 V v.:: --3;- v 7 rv o fry. . :A)- &A" V...-:-.- V 1 m 3K3 N&d , &aem( UA- AA VAL Og fa naise Weight the country have complained to us of this situation, have signified their desire to get away from this method, have asked us to take' steps to pre vent this commercial bribery. We have called on the ship-chandlers and have talked the situation over with them. We have brought them Into an agreement that the praclce shall be discontinued. We have set them to police each.pther, to see. that there is no violatoln of this agreement. We have laid the basis for clearing up this sort of commercial bribery. "Commercial bribery appears in many lines of business. One of the first cases which the federal trade commission handled, for example, had to do with the methods used In sell ing ink. The ink business Is a very extensive one and a very old one and a given manufacturer's contract with a given printing establishment is an Item which bulks quite large. The Ink salesman actually transacts hit business with the manager of the printing establishment but one of his subordinates is pretty likely to has taken hold with the backing of many prominent figures. Including Tresldent Harding, who said: "I .am very much Interested In the great work you are doing. It appeals to me very strongly." The movement i establish the church ha come about largely through the efforts of the Rev. Ed ward Lawrence Hunt, who now Is In Washington as pastor of Americas Memorial church. He was formerly a Presbyterian preacher at Fort Hills, Long Island. He resigned as a mem ber of the Presbytery of the Brooklyn-Nassau district to give hi entire time to the work. Spirit to Be Commemorated. Back of the story of this movement is a bit of touching sentiment. The Rev. Mr. Hunt took as his second wife a widow. Mrs. Fanny Rice, the mother of a young Princeton student, who, despite his tender years, volun teered for service and entered the navy at the commncement of hostili ties. The boy gave his life for his country. He was killed October. 1918, near the Azores while serving on a submarine chaser. There was an ex plosion aboardshlp and a number of officers and crew were fatally In jured. An officer of the Tralrle. mother Loaded1' Sponoes O Huston Thompson, raatraaa the federal trade commlloB. Fake Stocks ishment is ifnlmpoitant to the public ae compared with a violation of the as false branding and were prohib ited. "Another early deception which was brought to the attention of the fed eral trade commission was that of be able to control the ink order. So loading sponges. Sponges, in the the Ink salesman finds it necessary market, sell by weight. This cus to cultivate that subordinate and If torn being established, certain pro he can arrange a collusion with him ducers of sponges, chiefly of foreign he is likely to get and hold this Ink extraction, devised a method of add contract. ing weight to them. This was done "This salesman may make a cold- by Introducing glucose and sand blooded deal allowing a commission which stuck to the sponges and was on the Ink. He may hold the em- retailed by weight at regular sponge ploye's favor by entertainment of pr'ces. The firms resorting to this gifts which he may shower upon him. method could, of course, undersell on We have developed the fact that these the weight basis those who marketed Ink salesmen sometimes use odd and clean sponges. The men of higher ingenious methods of bribery which Ideals In the trade, who I am glad to technically may not appear to be say were in the majority, brought bribery. The salesman, for Instance, the situation to our attention. The may masquerade as a betting man. practice constituted unTalr competl- He may, for example, congratulate tion and we have very seriously at- the foreman upon the fact of his pos- tempted to do away with it. t -a-utnw . a--' i r a .htlHr.n TKjk fnrman at may deny that he has a family of that "Virtually all case which w inves- Provision against unfair competition, size-, may assert that there are but tigate come to us at the instigation The removal of such a practice, for three children in his family. Where- of some business house or organize- example, as selling short-weight but upon the ink salesman will lay a tion and are not inaugurated by the ter directly affects millions of house wager of J600 that the foreman ha commission. It happened, for In- n0,js in the United States every day twelve children In hi family. The stance, that numbers of merchant jn the year. The removal of the de foreman will establish the proof that all over the country wrote to us pro- .' ,.,. . . , , he as but three children and will testing that a certain great mail- Pon lth relation to .0 of the collect the wager. Thu. is he ub- order house was making claim, to the tndard article, which are used by a sldized for a given period, at the end public which pained for them an ad- family directly affects every family of which the ink salesman will appear vantage in selling certain products. In SO different ways In everyday life. and bet him he has six toes on hi. This mall-order house, for. Instance, For these reasons we are apt to be- foot or a nose twelve inches long. made the claim that its pos tion and come very earnest over the enforce- "Where one Ink maker resorted to the vast quantities of certain mate- ment of these laws and are likely to such practices as these, others were rials that it handled gave It a ma- tend a good deal toward evangelistic forced to do likewise to meet his com- terial advantage over other dealers advocacy of them. petition. It came to pass that prac- and enabled It to procure materials "The example that has been eet by tically all of them resorted to some all over the world, and of superior the United States In the establishment uch device of commercial bribery, quality. It claimed, for Instance, 6- jnt federal trade commission Is to- In the end none of them -derived any that it sent Its agents abroad to day being followed by a number of at the close of the recent war, to advantage from It, but were forced purchase tea directly from the gar- other nations. Canada, for example, make a great addition. It passed what to maintain th'a most unpleasant dens where It was produced, that its has made a similar provision tending i- called the export trade act, in practice. Many ink manufacturers tea was specially treated, was hurried toward enforced honesty in business, tended to be of assistance to the complained to the federal trade com- over seas and reached the consumer modeling her law upon ours. Other United States In developing foreign mission and It finally Issued an order while Its quality was superior to that nations England, South Africa, Den- trade during this era of reconsruc against this sort of commercial brlb- which he could secure through other mark. Sweden and Norway and lndl- tion. This export trade act author ery. and, while Individuals break over channels. Similar claims were made vldual states In the United States have es any group of Individuals to corn here and there, much progress has with relation to coffee and to sugar; followed suit. It looks" as though a bine for the establishment and main been made toward eliminating it. most alluring and romantic storlew general awakening as to the deslrabil- tejiance of agencies abroad. All the were broadcasted as to the methods ty of more ethical methods In sortie people who manufacture soap, for "The commission has attacked first use(j by this large establishment in lines of business might sweep the instance, might establish an agency one phase after another of commer- procuring these supplies. Obviously world. lr. China which would take order for cial misrepresentation. It found, for the corner grocery could not resort "The old adage, "Let the buyer be- soap in that part of the world and example, that many materials were to such methods. 60 was the impres- ware,' which has controlled in bust- allocate the orders taken among the belrvs; currently sold which were -ion created that the mall-order house ness for centuries, seems on the way firms maintaining the agency. It branded 'all wool' and which might delivered superior materials -4o the toward being substituted by a new might happen that a group pf 10 contain as low as 10 per cent wool, consumer. one which may read, 'Let the seller manufacturers could afford to com When it first attacked this mishrand- "The federal trade commission lnstl- beware.' It may come to pass within bine and maintain ucfi an agency, lng and sought to have It officially tuted a thorough Investigation of the next decade that the buyer may while no one of them could afford to ruled as unfair competition, that pro- these claims. It found that, as a accept materials offered for sale at do eo individually. Without thi. posal In certain quarters was vigor- matter of fact, the mail-order house their face value, and that if they common agency If might happen that ,'Ufly fought.. It was maintained that bought its supplies of coffee, tea and prove not to be as represented the so American soap would be sold In this was not unfair competition be- sugar from the wholesalers In the seller will be the individual who will China. With It great quantities of cause It was a gefferal trade practice United States and that they were ex- suffer. soap might be sold and all the manu al d nobody bad an advantage over actly the same coffees, teas and "In all the commercial world there facturers might benefit, anybody else. The commission held, sugars ss those used by other dealers, probably has been no more glaring however, that misbranding was. under The fantastic claims made by this abuse of common honesty than in the "Congress gave the federal trade the law, unfair competition, and has concern were merely romances. The selling of stocks in enterprises which commission the authority for admln ordered its discontinuance in one case commission decided that the broad- range from oil wells to finance cor- istering this law. Such trade asso after another. The Industry gener- casting of these untrue claims consti- porations. Enterprising salesmen have ciations must file their papers with ally Is now strongly with the com- tuted unfair competition and was un- gone about the world and have sold the federal trade commission and tha: mission. lawful. It issued orders forbidding 'blue sky' to the unsuspecting, for commission has authority to revoke "One pf the early case oX this sort their continuation. The highest court whom they have built the picture pf those paper in case the pperaUoaj by the French architect shows an an notation on the original draft in ex planation of the suggested national church. This is legibly written where all who scan It close may read: "The church Is intended for na tional purposes, such as public prayer, thanksgiving, funeral ora tions, etc., and assigned to the spe cial use of no particular sect or de nomination, .but equally open to all. It will be likewise a prbper shelter for such monuments as were voted by the late continental congress for those heroes who fell in the cause of liberty and for such others as here after may be decreed by the voice of a grateful nation." Wa-hlna-toa Father of Plan. President Washington is accredited the sponsor of the plan. He employed Major TEnfant t draft a plan for the creation of a magnificent capital the only city In the world built ex clusively to serve as a capital And at last the Idea of a national church for Washington has been re vived and brought forward by enthu siastic supporters. A movement launched shortly after the termina tion of the war It was the world war with the consequent trend toward war memorials U-at Inspired the plan ship of the submarine chasers.- to which the wounded were transferred after the accident, related the circum stances of the lad s death. For five hours the youth lived. Returning to consciousness for a few mlnues, and while In tortures of pain, he asked. "Is Captain Curtis all right?" The captain was a Harvard man. When told that he was only slightly hurt, young Rice said calmly: "He has a wife end two babies to care for, and If he Is safe I am willing to die." "That Is the kind of spirit which this national temple will commem orate," said Mr. Hunt as he finished telling the story. "Our purpone Is to build A great national temple In the nation's capital as a merflorlal to all who served America In the world war, as well as to those who made the su preme sacrifice. "As a national Institution Its mem bership and Its support must com from the nation at large. We will not compete with but will supplement the work of local churches. We will co-operate with churches In all part of the nation." Hear la Jury of Women. Houston (Texas) Post. "Judge," cried the prisoner In the dock, "have I got to be tried by a woman Jury?" "Be quiet!" whispered his counsel. "I won't be quiet! Judge, I can't even fool my own wife, let alone 12 strange women. I'm fiuilty."