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ders to keep inventions and patents secret up to the time of the armistice, after which a vacating order was issued.

The most important work done in this field was that done under (a) above. The commission issued licenses permitting the manufacture and sale of many articles, particularly dyes and drugs. Some of these were not only necessary for the use of the public but were also of great commercial value. The commission was given wide powers in deciding what persons should receive licenses and in fixing the rate of the royalty to be paid to the Alien Property Custodian. This money is a trust fund for the enemy owner and the licensee, subject to the disposition of the court in case the enemy owner during the year following peace avails himself of the privilege accorded him by the act of filing suit to recover his rights. under the patent. The royalties have amounted to $833,223.30 up to June 30, 1920. After the armistice the prospect of peace decreased the number of applications for licenses. At the present time this activity of the commission is practically ended, although the law is still in effect pending the proclamation of peace.

The Export Trade Act. Among the powers of the Federal Trade Commission was one permitting it to investigate "trade conditions in and with foreign countries where associations, combinations, or practices of manufacturers, merchants or traders, or other conditions, may affect the foreign trade of the United States." As the result of such an investigation the commission found that American exporters were at a disadvantage compared with their rivals in the chief foreign exporting countries, where combinations for the export trade were effectively developed. As it was the fear of violating the anti-trust laws that prevented American exporters from developing equally effective organizations for overseas business, the commission recommended legislation to make it clear that such organizations would be permitted. The recommendation of the commission and the great interest in foreign

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trade created by the war led to the Webb-Pomerene Act which became a law on April 10, 1918.6

This act declares that the Sherman Anti-Trust Act of 1890 shall not be construed as declaring illegal associations engaged solely in export trade. It also exempts such associations and members of them from that section of the Clayton Act which forbids holding companies. At the same time it specifically states that the prohibition against unfair methods of competition applies to the export trade, and it requires all export trade associations to report to the Federal Trade Commission, their officers, stockholders and any other information about membership, conduct or management that the commission may require. The Federal Trade Commission is charged with the duty of receiving such report and

Whenever the Federal Trade Commission shall have reason to believe that an association or any agreement made or act done by such association is in restraint of trade within the United States or in restraint of the export trade of any domestic competitor of such association, or that an association either in the United States or elsewhere has entered into any agreement, understanding, or conspiracy, or done any act which artificially or intentionally enhances or depresses prices within the United States of commodities of the class exported by such association, or which substantially lessens competition within the United States or otherwise restrains trade therein, it shall summon such association, its officers, and agents to appear before it, and thereafter conduct an investigation into the alleged violations of law. Upon investigation, if it shall conclude that the law has been violated, it may make to such association recommendations for the readjustment of its business, in order that it may thereafter maintain its organization and management and conduct its business in accordance with law. If such association fails to comply with the recommendations of the Federal Trade Commission, said commission shall refer its findings and recommendations to the Attorney General of the United States for such action thereon as he may deem proper.

640 Stat. L., 516.

For the purpose of enforcing these provisions the Federal Trade Commission shall have all the powers, so far as applicable, given it in "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

CHAPTER II

ACTIVITIES

As indicated in the preceding chapter, the Federal Trade Commission has two major duties: the prevention of unfair methods of competition in interstate commerce, the collection of information regarding corporations engaged in interstate commerce and regarding export trade associations. In this chapter each will be treated in turn, and the attempt will be made to trace in detail the method in which each is performed. In both the aim is regulation, to be obtained in the first case by quasi-judicial action, and in the other by means of publicity or by other governmental agencies acting on the information supplied by the Federal Trade Commission.

Quasi-judicial Activities. The law declares that unfair methods of competition in interstate commerce are illegal and charges the Federal Trade Commission with the duty of preventing them. The method used in discharging this duty is partly outlined by the law and partly developed by the commission.

Prevention of Unfair Methods of Competition. With few exceptions the proceedings are started by business men who write to the commission complaining of the methods of some competitor. As the proceedings are primarily for the purpose of protecting the public interest, the names of the parties complaining are not disclosed by the commission except as they may be called upon to furnish evidence. There are obvious reasons for this policy. Moreover, the commission can and sometimes does institute proceedings on its own initiative. No matter how the attention of the commission is called to the practices in question, a formal complaint

cannot be issued and proceedings started unless the commission has "reason to believe" that a person, partnership or corporation is using methods forbidden either by the specific provisions of the Clayton Act or by the general provision of the Federal Trade Commission Act. The commission must also, if the complaint is to be issued under the general prohibition, be of the opinion that a proceeding would be in the interests of the public.

These important points are determined by a preliminary investigation and consideration of the facts disclosed thereby. All complaints that show on their face that the practice complained of is not unlawful or is something outside the jurisdiction of the commission, are immediately dropped and the person complaining informed to that effect. The rest are docketed as "applications for the issuance of a complaint" and are assigned to investigators for attention. These preliminary investigations vary with each case, but are nearly sure to involve lawyers, economists, and accountants. When completed the investigator reports the findings and recommends either dismissal or the issuance of a formal complaint. The case then goes to a board of review composed of two lawyers and an economist. This board reviews the entire investigation and makes its report to the commission, which finally decides whether it has reason to believe the law has been violated and that a proceeding would be in the interest of the public. Experience has shown that about two out of three of the complaints are not such as to warrant any formal proceedings, and these are dismissed without publicity.

During the first two years the commission attempted to establish the practice of disposing of a good many cases without formal proceedings even though there appeared to have been a violation of the law. It would do this in cases where the party complained of would agree to cease from the practices in question without waiting for a formal proceeding. The commission would publish a "conference ruling" on the

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