United States Gold Leaf Manufacturers' Association

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FEDERAL TRADE COMMISSION v. UNITED STATES GOLD LEAF MANUFACTURERS' ASSO- CIATION ET AL.

COMPLAINT IN THE MATTER OF THE ALLEGED VIOLATION OF SECTION fi OF THE ACT 01'' CONGRESS APPROVED SEPTEMBER 26 1 1914, Docket No. 95.-June 28, 1918.

SYLLABUS.

Where about 40 pet· cent of the concerns In the United States engaged ln the manufacture of gold leaf, manufacturing and seung about 50 per cent of the total output of the country, formed nn unlncorpomted association, and by conc<'t·ted action through such association and by agreement, t a) fixed the price of such product and attempt<'d to bring about a general uniformity thereof; and (b) enhanced such price and attempted to maintain the same: He"ld, That such combination of compf>tltors and such tl:x:ing and enhancement of prices constituted an unfair mf'thod of competition ln violation of section 5 of the act of S<'ptember 26, 1914. COMPLAINT.

The Federal Trade Commission having reason to believe from a preliminary investigation made hy·it that the United States Gold Leaf Manufacturers' Association, an unincorporated association without a constitution or by-laws, whose officers are Robert E. Hastings, of the city of Philadelphia, State of Pennsylvania, president; F. W. Rauskolb, of the city of Boston, State of Massachusetts, vice president; and Frank H. Scardefield, of the city of Brooklyn, State of New York, secretary, with its principal office and place of doing business located in the city of Brooklyn, of said State of New York, and the individuals whose names, location of their principal offices, and places of doing business are as fellows, to wit: · Name. Office. State. Chas. E. Auer ........................ Brooklyn .................. . New York. H1~rry Ayres ......................... Phllndolphla ............... . Pennsylvania. W. D. Ashmore ...................... Bed Bank .................. . New Jorsey. ~.ii! iley: :::::::::::::::::::::: . :;~~:'~':.:::::: :::::::::::: Newco.York.John Clarke .......................... Phllartelphla .............. .. Pennsylvania. F. A. Chadwick ...................... Red Hank .................. . New Jersey. Robt. Clayton ........................ West Hoboken ............. . Do. 174 FEDERAL TRADE COMMISSION DECISIONS. Name. Office. State. neo. Dickson ......................... Brooklyn .................. . New York. Alex. l<'ras~r ......................... New York ................. . Do. D. Froeschauer ....................... Brooklyn ................. .. Do. W. nrecht ........................... Orange, ll. D.l. .......... .. California. S. A. Hickson ........................ New York ................ .. Now York. Robt. Hrnke .............................. do ...................... . Do. Oeo. Harris ............................... do ...................... . Do. A. A. Lauriat ........................ Medford .................... . Massachusetts. Frank Ludwick ...................... Brooklyn .................. . New York. Char. R. Mcl.ood ..................... New York ................. . Do. John McEnte~ ............................ do ...................... . Do. Tohn D. McCable ..................... Brooklyn .................. . Do. Geo. Mussier .............................. do ...................... . Do. John A. Morneburg .................. HlckR\ille ................. .. Long Island, N.Y. John Menz ........................... Brooklyn .................. . New York. Eugene J. Norton ................................................ .. Frederick Pye........................ Philadelphia ............... . Pennsylvania. Leonard Hiker....................... D~lnwnnna ................. . New .Ters~y. Edw. Radford ....................... Jersey City ................. . llo. A. H. Williams ...................... C'hirn.~o ................... .. Illinois. C'has. E. Williams .................... Wt,st Hoboken ............. . Now Jersey. Fred Woidorer ....................... Brooklyn ................. .. New York. Jos. Wingerter ............................ do ...................... . Do. nnd that the corporations whose names, location of their principal offices, and places of doing business. and the States un<ler whose laws they are organized, existing, and doing busin<'ss, are as follows, to wit:

Name. Office. State. Arnorican Roll Gold LonfCo ......... Pro,·idence ................. . Rho<le Island. W. II. C<>e Mnnufucturing Co .............. tlo ..... ·................ .. Do. W. H. Cox Co ........................ Chi<-a_go ................... .. Illin,is. F. W. Hanskolh Co .................. lloslt•n ..................... . Mli"Silr.husetts. Wehrung & Billmolor Co ............. Chicago .................... . Illinois. and the copartners whose individual and firm names and style under which they are doing business, the location of their principal offices and places of doing business, are as follows, to wit:

Individuals. Firm names. Office. <'hn•.Henry n.B. HkhyC'ahot} .................. .. Cabot & Bigby .............. Boston, Mass. Frank ll. Catlin}F. Hnnry Cnltin · .. " ............. .. Frank B. Caffin & Son...... Do. Robor!. E. Hastings} V. Unslings .................... .. Hnstings & Co Philadolphia, Pa.J. R. E. ll~<stings} V. Hrstin~s · · ................. .. Komp & Co ................. New York, N.Y.J. Fro•l"rirkJohn W. Schultz~eltultz}.................. .. Michael Rchultz's Sons...... Do. Jo:mll Mlltls~n ..... ·} Jncob Hauptmann · · ·" .. " ...... "· Madsen & Hauptmann...... Brooklyn, N. Y. FEDERAL TRADE COMMISSION DECISIONS. 17 5 and Charles Taylor, 18 Congress Street, Jersey City, State of New Jersey, doing business under the firm name and <>style of Chas. Taylor & Sons, and the following firms whose identities as to being individuals, copartnerships, or corpor~tions are unknown to this Commission: F. Bittner & Son. 147 Dresden Street, Brooklyn, State of New York; George L. Bladon & Co., 101 Trumbull Street, Hartford, State of Connecticut; William Gregory & Son, 518 Curtin Avenue, Richmond Hill, State of New York; Julius Hess & Co .. 1417 Altgeld Street, Chicago, State of Illinois; Longmore Bros., 1229 .Myrtle Avenue, Brooklyn, State of New York; Standard Gold Leaf Co., 873 Fifth Avenue, Brooklyn, State of New York; M. Swift & Sons, 100 Love Lane, Hartford, State of Connecticut; all of which persons, firms, copartnerships, and corporations, hereinafter referred to as respondents, have been and are using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and it appearing that a proceeding by it in respect thereof would be to the interest of the public, issues this complaint, stating its charges in that respect as follows:

PARAGRAPH 1. That the responoent, United States Gold Leaf Manufacturers' Association, is an association composed o£ the other respondents herein mentioned, who are all and singular engaged in the business of manufacturing and selling generally in commerce gold lea£ throughout the States and Territories of the United States and the District of Columbia in direct competition with other persons, firms, t)()partnerships, and corporations similarly engaged, and in direct competition among each other except where selfrestrained by agreement, understanding, or concerted action, as hereinafter set out, or otherwise: and are, each and all of them, members of said association except the respondent, F. Bittner & Son, which firm resigned from said association on tlw 1st day of January, A. D. 1918. PAR. 2. That the respondents manufacture and sell the greater portion of the output of gold leaf made and sold 176 FEDERAL TRADE COMMISSION DECISIONS, in commerce within the United States, and the membership of the respondent, United States Gold Leaf Manufacturers' Association, represents a majority of the persons, firms, copartnerships, and corporations engaged in such industry and commerce in the United States.

PAR. 3. That the respondents, either as individuals or as members of said association, have for more than one year last past, both individually and as members of said association, been and now are engaged in a concerted movement to unduly enhance the prices of gold leaf, and to maintain such enhanced price. and to bring about a general uniformity of such prices, and as a result of such activities prices of gold leaf ha \'e been enhancer! and such enhanced prices at·e being m!tintained. Such enhancement and general uniformity has been effpcted by agreements, understandings, and concert of action. through meetings, correspondence, nnd other means of intercommunication between respondents, members and ex-members of said association, among themselves and between such respondents and the said association and its secretary, Frank H. Scardefield. PAn. 4. That said respondents by agreement, understanding, or concerted action, pool their surplus products and export same in foreign commet·ce, and sell such surplus products abroad at a less price than such products are being sold a-t the same time in the United States, and respondents have an agreement or understanding tlutt assets:;;;ment shall be made among them to cover losses on such foreign sales when made below cost; that the effect of such pmctices is to cm·tail the supply for the domestic market and restrain the competition which would naturally result within the United Stutes from the competitive sale of such surplus products, to the resultant injury and detriment in competition and to the public, and in aid of the control and enhancement of prices by these respondents exercised as hereinbefore stated.

REPORT, FI~DINGS AS TO THE FACTS, AND ORDER.

The Fefleral Trade Commission, having issued and served its complaint herein, wherein it is alleged that it had reason to believe that the respondents. United States Gold Lea.£ FEDERAL TRADE COMMISSION DECISIONS, 177 Manufacturers' Association, Robert E. Hastings, F. W. Rauskolb, Frank H. Scardefield, Charles E. Auer, Harry Ayres, W. D. Ashmore, H. Baner, Eugene Bailey, John Clarke, F. A. Chadwick, Robert Clayton, George Dickson, Alexanrler Fraser, D. Freschauer, ,V. Grecht, S. A. Hickson, Robert Henke, George Harris~ A. A. Lauriat, Frank Lurlwick~ Charles R. McLeod, John l\feEntee, ,John D. McCable, George Mussier, .John A. Mornelmrg, John Menz, Eugene J. Norton, Frederick Pye, Leonard Riker, Edw. Hadford, M. Swift & Sons, Charles Taylor, A. H. Williams, Charles E. Williams, F. W. Rauskolb Co., Fred Weiderer, Joseph Wingerter, American Holl Gold Lraf Co., W. H. Coe Manufacturing Co., W. H. Cox Co .. Wdmmg & Billmeier Co., Henry B. Cabot, Charles H. Higby, Frank H. Caffin, F. Henry Caffin, John V. Hastings, R. E. Hastings, J. V. Hastings, Emil Madsen, Jacob Hauptmann, Frederick Schultz, John W. Schultz, F. Bittner & Son, George L. Bladon & Co., William Gregory & Son, Julius Hess & Co., Standard Gold Leaf Co., have been and are now using unfair methods of competition in interstate commerce, in violation of the provisions of section 5 of the act of Congres.<; approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and that a proceeding in that respect would be to the interest of the public, and fully stating its charges in this respect, and the respon<lents, desiring to make it unnecessary to take testimony and to be relieved of the expense of a trial of the issues necessary by reason of the answers and denials of the various respondents, hadng signed an agreement and stipulation as to the facts, and agreeing and consenting that the Commission forthwith proceed to make its findings and order, and for that purpose said stipulation to have the effect and be considered as the appearance and answer of said respondents, the Commission makes this report and findings as to the facts and conclusions. FINDINGS AS TO THE FACTS.

I. That the respondent, the United States Gold Leaf Manufacturers' Association, is an unincorporated associa- 1474300--20----12 178 FEDERAL TRADE COMMISSION DECISIONS. tion, with its principal office and place of doing business located in the city of Brooklyn, in the State of New York, composed of the other respondents herein, except the respondent F. Bittner & Son, which firm resigned from said a::;sociation on the 1st day of January, A. D. 1918. That all are engaged in the business of manufacturing and selling gold leaf generally in commerce throughout the States and Territories of the United States and the District of Colmnbia, in direct competition with other persons, firms, copartnerships, and corporations similarly engaged, and in direct competition with each other, except where self-restrained by understanding or concerted action, as heremafter set forth, or otherwise.

II. That the respondents manufacture and ::;ell about 50 per cent of the output of gold leaf made and sold in commerce within the United States, and the membership of said as.<;ociation represents about 40 per cent of the persons, firms, copartnerships, and corporations engaged in such industry and commerce in the United States.

III. That the respondents, now and for more than one year lust past, have been engaged, among other things, in a concerted movement to fix and enhance the price of gold leaf and to maintain and bring about a general uniformity of such enhanced prices; that as a result of such activities the prices of gold leaf have been enhanced and such enhanced prices are being maintained, but absolute uniformity has not resulted therefrom; that such enhancement and general uniformity have been effected by understandings and concert of action through meetings, correspondence, and other .means of intercommunication between respondents, members and ex-members of said association, among themselves and between the members and the said association and its secretary, Frank H. Scardeficld; that on the 25th day of October, 1917, the price of gold leaf :3~ by 3i (the standard size) was increased from $8.75 to $D.75 per pack of 20 books, less 2 per cent, said price having been fixed by said association at a meeting at which there was present a. majority of its membership, it bpi.ng understood at the meeting that said price should be maintained by all the members FEDERAL Tl\ADE COMMISSION DECISIONS, 179 present; that other increases in price have been fixed in the same manner, at meetings of said association, as follows: An understanding was effeeted at a meeting held in March or April, 1916, raising the price from $U. 75 to $7.50, and at a meeting held in November, 191G, raising the price from $7.50 to $8.75, said meeting~ having been called to discuss and grant advance wage scale. That there is, and has been for more than one year last pa::;t, an under::;tanding among members of :said association to maintain, ut all time~, prices on gold leaf agreed upon at said association meetings, but that the result of such understanding has not led to an absolute uniformity of price.

IV. That the respondent members of said association set forth in the complaint herein, entered into an understanding December 5, 1!H7, to endeavor to secure foreign orders, for the purpose of kc>eping laborers employed, and to sell such products for which there is no demand in the United States at the best price obtainable; that an assessment was to be made to cover any possible losses on such foreign sales, when said sales were made below cost to meet competition, but as no foreign orders were received and the agent selected had resigned, the resolution was rescinded. CONCLUSIONS.

That the methods of competition set forth in the foregoing findings as to the facts and each and all of them are, under the circumstances therein set forth, unfair methods of competition in interstate commerce in violation of the provisions of section 5 of the act of Congress approved September 26, 1914, entitled "An act to create a Fe<leral Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DESIST, The Federal Trade Commission, having issued and served its complaint herein, and the respondents having signed an agreement and stipulation as to the facts, and agreeing and consenting that the Commission forthwith proceed to make its findings and order, and fo" that purpose said stipulation shall have the effect and be considered as the appearance and answer of said respondents, and the Commission 180 FEDERAL TRADE COMMISSION DECISIONS. having made and filed its report containing its findings as to facts and its conclusions, that the respondents have violated section 5 of the act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," which said report is hereby referred to and made a part hereof. Now therefore It is ordered, that the respondents, United States Gold Leaf Mnnnfacturers Association, Robert E. Hastings, F. W. RuuskolL, Frank H. Scardefield, Charles E. Auer, Harry Ayres, ,Y, D. Ashmore, H. Bauer, Eugene Bailey, John Clarke, F. A. Chadwick, Robert Clayton, George Dickson, Alex. Fraser, D. Freschauer, W. Grecht, S. A. Hickson, Robert Henke, George Harris, A. A. Lauriat, Frank· Ludwick, Charles R. McLeod, John McEntee, John D. McCaLle, George Mussier, John A. Morneburg, John Mcnz, Engene J. Norton, Frederick Pye, Leonard Riker, Edw. Radford, M. Swift & Sons, Charles Taylor, A. H. Williams, Charles E. Williams, F. W. Rauskolb Co., Fred Weidcrer, .Joseph Wingerter, American Roll Gold Leaf Co., W. H. Coe Manufacturing Co., W. H. Cox Co., Wehrung & Billmeier Co., Henry B. Cabot, Charles H. Higby, Frank H. Caffin, F. Henry Caffin, John V. Hastings, R. E. Hastings, J. V. Hastings, Emil Madsen, Jacob Hauptmann, Frederick Schultz, John W. Schultz, F. Bittner & Son, George L. Bladon & Co., 'Villiam Gregory & Son, Julius Hess & Co., Standard Gold Leaf Co., forever cease and desist from- Engaging in any concerted movement, either as members or officials of the United States Gold Leaf Manufacturers Association, or as individuals, (a) to fix or enhance the prices of gold leaf, or (b) to maintain such enhanced prices, or (a) to bring about a general uniformity of such prices, and (d) from effecting or maintaining such enhanced prices or general uniformity of prices through understandings and concerted action through meetings, correspondence, or other means of intercommunication between respondents, members, and ex-members of such association, among themselves and between said members and the said association and its secretary, or in any other manner whatsoever.

FEDERAL TRADE COMMISSION DECISIONS. 181