National Silver Co

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IN THE MA TI'ER OF NATIONAL SILVER COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO Tile ALLEGED VIOLATIO:'If. OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 11!14 Docket U11. Complaint, Sept. 21J, 1983 '-Decision, Feb. 11, 1937 Where a corporation engaged in sale and distribution of knives and othercutlery and tableware to jobbers, wholesale nud retail dealers in cutlery, chain stores, hardware stores, department stores, and house-furnishing· stores, with branch sales offices in Chicago and Los Angeles; in competl~ tion with others who made and sold similar products and uf!ed word "stainless" only as a mark, brand, or stamp for or in advertising such products made of the chrome-Iron alloy, stainless steel, and truthfully used words or term!'! "chromium plate" or "chromium plated'' to Indicate a carbon steel product plated with chromium, and did not employ such words as "stainpruf" as a stamp, brand, or mark for or in advertising such chromium-plated articles that were not in fact stainproof and corrosion resistant- ( a) Stamped its aforesaid products, regardless of whether made from carbon steel or chromium alloy steel, with word "stainless," In utter disregard of well established trade custom among cutlery manufacturers, silversmiths, and trade generally, of using said word to designate cutlery made fr01n chromium-alloyed steel, and failed to inform purchasers as to whether or not its said products were chromium plated or were in fact made of tho said more costly solid stainless steel, as long understood by trade and ultimate purchasers from word "stainless" as meaning, as applied to knives, cutlery, and tableware, said high-grade type of chromium steel alloy with its high degree of resistance to oxidation and corrosion against most media, and as used by manufacturers and distributors in their cata· logs and advertising material to designate only those products made o! stainless steel as aforesaid ;

With result that purchasers, In Ylew of the almost idcntlcnlly similar appear· ance of the two kinds of products, purchal'led lts chromium-plated knives and other fint tableware of Inferior quality, as and for products, the metallic parts of which were made of solld alloyed or stainless steel and were not the cheaper carbon steel articles with utterly thin and inadequate chromium plating and notorious amenability to corrosive influence, and quality of rusting rapidly in presence o! water, dampness, acid!'! or shnilnr agents;

(b) Sold and distributed carbon steel, chromium-plated knives marked "stain· pruf," made of earbon steel plated as above set forth, notwithstanding fact said products were extremely susceptible to corrosion and were not in fact stainless in any sense, and were further subject to corrosion by reason of tendency of plating to brenk through sharpening or other abrasive action, etc., and in its advertising of its said "statnpruf" product.~ ns gnarnntet>ll against st11lnlng by 11clds contained in Y<'getnbles, fruit;:c, and NATIONAL SILVER CO. 723 722 Complaint meats and against discoloration In ordinary use, warns:>d against scourfug materials to polish the blades ;

With effect of deceiving wholesalers, jobbers, retallers, and ultimate purchasers into buying said cheap and inferior chromium-plated carbon steel knives, cutlery, and tableware, marked "stainless" and "sta!npruf," as and for products made of genuine stainless steel, and of placing, as result of its said: advertising and misbranding, in the bands of Its wholesale and retail dealers, the means of dece:>iving ultimate purchasers, and with capacity and tendency to divert to it trade of competitors engaged in selling in commerce products of the same kind or nature which they truthfully advertise:

Held, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Before Mr. Edward 111. Ave-rill, trial examiner. Mr. Marshall Morgan for the Commission.

B1·ill, Bergenfeld & Bt·ill, of New York City, for respondent. AMENDED AND SUPPLEMENTAL Complaint.

Whereas, The Federal Trade Commission did heretofore, to wit, on August 7, 1933, issue its complaint herein charging and alleging that the respondent corporation is,_ and has been, guilty of unfair methods of competition in interstate commerce within the intent and meaning of Sec~ion 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914; And, wh.ereas, This Commission, since the issuance of said complaint, has been advised that the respondent therein is, and has been, Using unfair methods of competition in interstate commerce other ~han, and in addition to, those in relation to which the Commission Issued its complaint aforesaid on August 7, 1933, in violation of the Provisions of Section 5 of said Act;

Now, therefore, Acting in the public int~rest, pursuant to the provisions of the Act of September 26, 1914, aforesaid, the Federal 'I'trade Commission charges that National Silver Company, a cor- ~oration, has been and now is using unfair methods of competition In interstate commerce in violation of Section 5 of said Act, and states its charges in that respect as follows: • ~ARAGRAPH 1. The respondent is a corporation, organized and ex- Isting under the laws of the State of New York with its principal Place of business located at 61-65 'Vest 23rd Stroot, in the City of New York, State of New York, and for several years last past has bee.n engaged in the business of selling and distributing to jobbers, Whol!:'sale and retail dealers in cutlery, rhain stores, hardware stores, 724 FEDERAL TRADE CO:\Il\IISSION DECISIONS Complaint 24 F. T. C. department stores, and house furnishing stores, knives, other cutlery and tableware. Said respondent causes said knives, cutlery and tableware when sold by it, to be transported from its principal place of business in the State of New York into and through the various other States of the United States to the purchasers thereof. In the course and conduct of its aforesaid business, the respondent is and for several years has been, in direct and sulistantial competition with other individuals, partnerships and corporations engaged in the sale and distribution in interstate commerce of knives, cutlery, and tableware, both like and similar to those sold by respondent. PAR. 2. Through long usage the terms "stainless steel" and "stainless," when used in association with knives and other cutlery, have become and are known in the trade and by the general public to designate cutlery composed of an alloy of steel containing not more than 0.70% of carbon and from 9% to lG% of chromium. Certain grades of knives and other cutlery sold and distributed by respond- ~nt, as aforesaid, are manufactured in simulation of "stainless steel" knives and cutlery, ·when in truth and in fad, they are not coinposed of such an alloy of steel, and are not "stainless steel'' as known to and understood by the trade and the general public. In the course and conduct of its aforesaid business, respondent solicits its business by advertising in catalogs and price lists widely distributed among customers and prospective customers, in which -catalogs and price lists the aforesaid certain grades of its product arc by respondent described as "stainless" and by stamping on the blades thereof, respondent describes and designates such knives and -cutlery as "stainless." Respondent thereby has falsely represented and does falsely represent to prospective purchaser those certain grades of its products to be such products as are known by the trade and general public as "stainless steel," when in truth and in fact, such grades of cutlery by respondent so described and branded are made from carbon steel plated with chromium, and so prepared .as to imitate genuine "stainless steel."

PAR. 3. Among the grades of knives and other cutlery advertised and described in its catalog, and sold and distributed by the 1·respondent in interstate commerce, as aforesaid, is a carving knife bearing the trade name "NASCO'' and stamped. "stainpruf." Said knife is made from carbon steel and is merely chrotninm phted. The term "stainpruf'' stamped on said knife is and was employed by respondl"nt to be the equivalent in meaning of the term "stainproof" in its common, general accrptance, and was, and is, intended by respondent to, and docs, create the impression upon the trade NATIONAL SILVER CO. 725 722 Complaint and the general public, and causes the trade and general public to believe, that said carving knife is so made, and is of such quality, as that it resists rust stain and corrosion. Such is not the fact with respect to said knife, it being neither rust nor stain proof on its surfaces, its cutting edge, nor otherwise. PAn. 4. Among other grades of knives and cutlery advertised and described in its catalog, and sold and distributed by responclentt as aforesaid, in interstate commerce, are certain knives and fork::; stamped "stainless," when in truth such knives and forks are composed of carbon steel, merely chromium plated, and are not stainless in fact. In addition to thus falsely representing to prospective purchasers in interstate commerce that those certain grades of its products are such products as are known by the trade and general public as "stainless steel" when in truth such was not the fact and ~aid knives and forks were so prepared as to merely imitate genuine "stainless steel," the said knives and forks, as now charged and alleged, are not stainless or rust proof in fact, but on the contrary will and do rust and stain when brought in contact with agencies which do not stain, rust or blemish a stainless steel made from an alloy of steel containing not more· than .7% of .carbon and from 9% to 16% of chromium. Said knives and forks, apart from and consideration of the technical or trade acceptation or meaning of the word "stainless" as applied to a manufacturing process for steel, are not stainless in fact, using the term "stain less" as a mere common dictionary word.

PAR. 5. Under the foregoing facts and circumstances, both the designation and branding by respondent of certain of its products as "stainless" as set out in paragraphs 2 and 4 above, and the branding by respondent of certain of its products as "stainpruf," as set out in paragraph 3 above, including the advertising, clescription, and price lists of such products in respondent's catalogs, are false and misleading and ha,-e the capacity and tendency to deceiw, and do deceive, wholesalers, jobbers, retailers ancl the ultimate purchasers into buying that which they did not intend to buy, and through its price lists, catalogs, and misbranding, as a forPsn id, respondent has placed and is placing in the hands of its wholesal<>r and retailer ill interstate commerce, the means of deceiving the ultimate purchasers. The aforesaid practices have had the capacity and tendency to divert to respondent the trade of competitors engaged in selling in inter- Rtate commerce, products of the same kind ancl nature as those of respondent, which products are truthfully advertised, and constituteunfair methods of competition in commerce within the intent and 726 FEDERAL TRADE C0:\11\IISSION DECISIONS Findings 24 F. T. C. meaning of Section 5 of an Act of Congress, entitled "~\.n Act to create a Federal Trade Commission, to define its powers and duties. and for other purposes," approved September 26, 1914. UEPORT, FINDINGS AS 1'0 Tile FACTS, AND ORDER Pursuant to the provisions 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," the- Federal Trade Commission on August 7, 1933, issued and served its original complaint in this proceeding on respondent, National Silver Company, charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act, and on September 29, 1933, issued and served its amended and supplemental com· plaint on the said respondent, charging it with the use of unfair methods of competition in commerce other than, and in addition to, those in relation to which the Commission issued its original complaint as aforesaid. After the issuance of said complaints, and the filing of respondent's respective answers thereto, testimony and other evidence in support of the allegations of the complaints were introduced by Marshall Morgan, attomey ior the Commission, before Edward M. Averill, an examiner of the Commission theretofore duly designated by it, and in opposition to the allegations of the complaints by Abraham Brill, attomey for the respondent, and said testimony 11nd other evidence were duly recorded and filed in the ofliee of the Commission. Thereafter, the proceeding came on for final hearing before the Commission on the said complaints, the answers thereto, testimony ancl other evidence, briefs in support of the complaints and in opposition thereto, and the oral arguments of counsel aforesaid; and the Commission having duly consid('red the ::arne and being now fully advised in the premises, finds that this proceeding is in the interest of the public, and makes this its findings as to the facts and its conclusion drawn therefrom: Findlngs AS TO Tile FACTS PARAGRAPH 1. The respondent is a corporation, organized, and existing under the laws of the State of New York, with its principal place of business located at 61-65 WPst 23rd Street, in the City of New York. Respondent, for several years last past, has bren in the business of selling and distributing knives and other cutlery and tableware to jobbers, wholesale ancl retail dealers, in cutlery, chain stores, hardware stores, department stores, and house-furnishing NATIONAL SILVER CO. 727 122 Findings stores. Respondent causes said knives, cutlery and tableware, when sold by it, to be transported from its principal place of business in the State of New York to the purchasers thereof located in States of the United States other than the State of New York, and into the District of Columbia.

In the course and conduct of its aforesaid business, the respondent is, and for several years last past has been, in direct and substantial ·competition with other corporations, individuals, firms, and partnerships engaged in the sale and distribution in interstate commerce of knives, cutlery, and tableware. Respondent employs a number of salesmen, directed .by a sales manager. It maintains branch sales offices in the city of Chicago, directed by its New York office, and a branch office in Los Angeles, Calif., carrying its own stock. P .AR. 2. Stainless steel, as used in the manufacture of cutlery, is an alloy produced from iron, chromium and carbon, and sometimes contains other minor alloying elements. Chromium is present in per- ·tentages ranging from 9 to 16%, and carbon in percentages not ·exceeding .7%. The metal or alloy so produced has through long commercial usage become known to and designated by steel and cutlery manufacturers, the cutlery trade, retailers, and the purchasing and consuming public by the term "stainless." This term as 'llpplied to steel indicates a very specific type of chromium-steel alloy Which has the quality of resisting oxidation and corrosion against lnost media. To a markedly greater degree than is true of carbon steel, chromium-steel resists alkaline materials, fruit acids, nitrio ·Ucids, dampness and water, salt air and salt water, and weather conditions, including rain and snow. It is a much more expensive Product to manufacture than carbon steel, and is comparable to carbon steel at normal temperatures and markedly superior to it at elevate<! ranges.

Stainless steel possesses great tensile strength, and takes and retains a higher polish than carbon steel, which carbon steel <loes not retain b~cause it is far less resistant to oxidation and scaling. Stainless .steel is from 50% to 400% stronger than ordinary steel; can be t·olved, drawn, stamped, forged, pressed, machined, cast, spun, Punched, braced, soldered, welded, ground, and polished. It is furllished in plates, shapes, sheets, bars, rods, flats, strips, tubing, wire, forging, blanks, billets, ingots, castings, etc. It has the inherent nnd combined characteristics of tremendous strength, resistance to corrobion, to high temperature, to erosion and to abrasion, and has the ability to take and permanently retain a highly polished surface. Stainless steel is either wholly or substantially immune to the action Findings 2-1 F. T. C. of nearly a hundred corrosive agents. The discovery of stainless steel has been one of the major outstanding developments in metallurgy in the last twenty years.

11 AR. 3. The first popular development of stainless steel was in the cutlery field. Harry Brearley, an Englishman, was granted a United States patent on September 5, 1916. In his application, Brearley stated that his invention related to new aml useful improvements in cutlery or other hardened and polished articlef> of manufacture where non-staining objects were desired, and that it had for its object a tempered steel cutlery blade or other hardened article having a polished surface and composed of an alloy practically untarnishable, when hardened, or when haruened and tempereu. "This alloy," he stat~d, "is malleable, and can oo formed, rolled, hari1ened, tempered and polished under ordinary commercial conditions." Brearley further stated that his invention resulted from the discov· ery that the addition of certain percentages of chromium and carbon to iron will produce a steel capable of taking a polish and of having the above specified characteristics.

The American Stainless Steel Company was organized in 1918 in Pittsburgh, Pa., for the purpose of holding and exploiting various patents covering stainless steel. Among the patents so acquired was the Drearley patent of Hl16, and the Haynes and Cox patents, and others, the Brearley cutlery patent antedating all other such patent:>. Said American Stainless Steel Company entered upon a campaign, national in scope, to advertise and develop the use of stainless steel. This company has expended more than $500,000 in such advertisin~, has entered into numerous agreements licensing others to manufacture this product, and has enumerated many articles for the manufacture bf which it has recommended that its "stainless" or "stainles:> steel" Le used. Included among tlwse were such products as trill1ming and mechanical prtrts for automobiles, bumpers, lmb caps, knivesr forks, and scissors. ..:\..tl vertisements of this product were carried in periodicals of national circulation as far back as 1919, and continued for a period of fifteen years. Thousands of pamphlets were also distriLutl'd during this rwriod, explanatory of stainless steel, its characteristics and its nst>s. In all of said advertisements tlw .\mericnn Stainless Stel'l Company HsPd tlw word "stainless" in a noun sense to indicate ami clenote the product which is also designated as '·The 1\Ietal of Endless Possibilities."

As a result of the continuous advertising of this pnHlnrt uwr a period of fiftl:'en years, both the manufacturing and the purchasing and using public came to recognize anu still recognizes stainless steel or "stainless'' as a high-grade type of chromium-steel alloy, possessi11g NATIONAL SILVER CO. 729 7:!2 Findingl'! to a high degree the quality of resisting oxidation and corrosion against most media. The manufacturing and the using public for a number of years have been led to expect, and now llo expect, when they purchase knives, cutlery and tableware marked "stainless," to lee£>.ive articles, the cutting portions of which are manufactured from said chromium-steel alloy, and which possess the characteristics above t'llumerated.

PAn. 4. The manufactm!:'rs of cutlery, including table cutlery ami flatware, and silversmiths, as a trade practice and custom, use the Word "stainless" to designate knife blades, forks, and kindred articles lnade by them from the chromium-steel alloy, stainless steel. It is the practice of manufacturers of stainless steel cutlery and flatware to stamp the word "stainless" upon the blade of said ware, and to superimpose on that the name of the manufacturer. Many silversmiths and manufacturers of cutlery, in pursuance of such trade cus· tom, mark and stamp stainless steel cutlery, particularly the knife blades of the same, as indicated below :

'towle Staluless, Russell ~tuinless, Coodell StuinlellS, ~tainless, under which are the words Clyde Uutle1·y Company-Stalnless, Universal Resistain, (;ommunity Stainless, D. Harrington & Co., Stainless, I. N. S. & Company Stainless, Ontario Stainless. The word "stainless~' thus ~tamped by manufacturers and distributors upon their cutlery and other tableware h,as through long and continuous usage come to signify both to the manufadurer, to the distributor, to the retailer, and to the ultimate purchaser and user, that such cutlery is produced from stainless steel, that is, from chromium-steel alloy.

Catalogs and other advertising material of cutlery manufacturers nnd distributors employ the word "stainless" to designate those prodllets only which are made of stainless steel. A stainless steel knife ground in daily use will not stain or tarnish .a.s a result of grindillg or sharpening; it remains stainless under such g-l'finding so long as a piece of it is left, and the corrosion "resisting flu a litit>s of said knife suffer no deterioration from nicking or scratching 01· l1rnding. Such a stainless ~teel knife made fifte!:'n ye.ars ago i~ now as senicrnblc in the kitchen as though it WE're made today. PAR. !>. In arldition to the stainless ste>el cutlery manufacturerl as ltrr('inahove describerl anrl posses.'ling the characteristics SJWCifiNl. knh·rs. cutlE>rv and tableware are also manufactured. with knife hla1JPq of carbon st;E>l, E>ither plain or chromium-plated. A carbon ste>rl knifp hla1lP iR one made' of the ordinary n,nalloyNl RteE>l, conta.ining 110 C'hrominm 11.s an alloy anrl hE>ing rE>Rrlily snscE>ptihle to rust, stnin. 730 FEDERAL TltADE COM:MtSSJON DECISIONS Findings 24 F. T. C.. and conosion. A chromium plated knife blade is manufactured of carbon steel upon which has been deposited a thin coating of chromium, or of nickel and chromium. The chromium plated carbon steel cutlery is not stainless or corrosion resistant. A stainless steel knife costing from 25¢ to 30¢ can be duplicated, ns to appearance, by a chromium plated carbon steel knife costing approximately 6¢. A thirty piece set of chromium plated flatware can be bought from a well-known mail order house for 98¢, while a one· dozen piece set of stainless steel flatware of similar a-appearance can - be bought from the same mail order house at from $1.18 to $7.00 per set.

A carbon steel knife blade, a stainless steel kni:fe blade, and a chromium plated knife blade are made and finished by cutlery manufacturers so as to look exactly alike to the eye. In fact, the thrre types, given a similar finish, are so much alike that cutlery experts: including manufacturers of cutlery, are not able to tell them apart. Numerous tests have shown this to be the fact. The only way in which any purchaser can distinguish a chromium-plated carbon stet-1 knife from a stainless steel knife is by the word "stainless" stampr<l upon the blade of the knife. When the word "Stainless" is stampt'cl upon a chromium plated knife, the purchaser expects to receive a n<l hPlievc~s he is receiving a knife made from stainless steel. PAn. 6. Respondent herein, the National Silver Company, distributes and sells knives, cutlery, and tableware made of the chromiumsteel alloy, stainless steel, and similar articles made of carbon steel 1 chromium-plated, stamping such products, regardless of whether they llfe made from carbon steel or chromium alloyed steel, with the word "stainless." The respondent has also sold and distributed a carbon steel chromium-plated knife marked "Stainpruf". Respondent's salesmen do not inform the purchasers of its products whether the said products are made of solid metal, that is, stainless steel, or whether they are chromium-plated. Said purchasers, in view of the almost identically similar appearance of the two products, are unable to detect the difference, and have purcha~d and do purchase chromium-plated knives and other flat tableware of inferior quality in the belief that the metallic parts of said products are composed of solid alloyed or stainless steel Department and other stores identified<l in the record as having sold chromium-plated cutlery stamped "stainlrss" oMained such goods from the respondent. The salesmen of r!'spowlent had no knowledge of any other firm, person or manufacturer save the respondent itself, which marked or stamped chromhuHplated cutlery with the word "stainless." Respondent did not prodnee n single chromium-plated knife or fork, stamped "stainless." that hacl NATIO~AL SILVER CO. 731 7:!2 Findings been so stamped by anyone other than the respondent. It did not present, as a witness, a single cutlery manufacturer or silversmith in the United States who brands or stamps, or has stamped, a chromium-plated knife or fork with the word "stainless." Respondent did not produce a single catalog put out by any manufacturer or jobber or department store in the United States in which chromium plated knives or forks are advertised and branded with the word "stainless." Respondent alone has followed the practice of stamping or btanding chromium-plated knives and forks with the word "stainless" in utter disregard of the well established trade custom in this country among cutlery manufacturers, silversmiths, and the tradegenerally of using the word "stainless" to designate steel cutlery lllade from chromium-alloyed steel.

The chromium-plated cutlery distributed and sold by the respondent is made from a base of carbon steel electrically plated with nickel and chromium. Carbon steel is notoriously subject to corrosive influences, and rusts or oxidizes rapidly in the presence of water, damp- Hess, acids, or similar agents. Said chromium-plated cutlery is characterized by the element of porosity; that is to say, the underlying ~Jase metal becomes exposed to the atmosphere because the plating Is porous.

Chromium is the most porous plating known, and is of negligible Value when used alone to protect the underlying base of carbon stet'l against corrosion. For corrosion protection the common practice is ?rst to apply to the underlying metal a very heavy layer of nickel. lhe degree of protection afforded depends upon the thickness of the llickel plating applied; the thicker the nickel, the more protection ntrorded.

The specifications for plating on carbon steel approved by thll United. States Bureau of Standards call for a minimum of 0.0005 of an inch of nickel for good protection under mild conditions and at least 0.001 of an inch of nicke] for severe conditions. The Bureau's conclusions based upon a summary of exposure tests is that chromium eoatings from 0.00002 of an inch to 0.00003 of an inch add very little to the protective value of said coatings but maintain their bright. appearance owing to their resistance to tarnish; and that relatively ~lnek chromium coatings, from 0.00005 of an inch to 0.0001 of an inch IInprove the protection against corrosion, especially in an industrial ntmosp here.

!he plating expert of the U. S. Bureau of Standards testified in tlus proceeding that "any coating of chromium less than one hundred- !~ousandth of an inch, over any coating of nickel less than one tenlousandth of an inch will furnish very little protection as a coating 732 FEDERAL TltADE CO:\DUSSIOX DECISIOXS Fiudiug~ 24 F. T. C. ()f steel if the steel is subjected to any corrosive influences"; that a thickness of nickel less than one ten-thousandth of an inch "is insufficient to furnish protection against corrosion regardless of what may be the thickness of the chromium that you put over it". Hequircments for the plating of carbon steel to be used, among other things, for cutlery, specified by other plating experts not connected with the United States Government are that the nickel plating Le not less than 0.0002 of an inch, preferably 0.0005 of an inch, and that the chromium plating shall be from 0.00002 to 0.00003 of an inch. The chromium plating on the cutlery and other tableware products distributed and sold by respondent is utterly thin and inadequate. Various specimens of respondent's chromium-plated cutlery were tested at the United States Bureau of Standards to ascertain the thickness of the plating thereon. These tests revealed plating of nickel of thicknesses ranging from 0.00006 to 0.00008 of a inch, and plating of chromium ranging from 0.000007 to O.OOOOOV of an inch. No underlying cop par at all was found undernE>ath that plating. These thicknesses, as used by the respondent, in the opinion of well-known plating expe>rts, were entirely inadequate to furnish satisfactory protection. They were merely just "a flash" "a quick job," just "smell plating," requiring only a five-minute period for the plat· ing, a relatively cheap operation; thin plating as plating goes, and distinctly poor for protective purposes. The plated objE>ct would be a Imost as much subject to corrosion as if these weak deposits had not been put on at all. Cutlery plating affording the best protection would be commercially impracticable owing to the cost of and time required for the plating operation-2% homs in all. This would constitute very expensive plating. For a knife blade this time would make this cost of the operation almost prohibitive from a commercial standpoint.

Tests made by the Bureau of Stanuarus show that the chromiumplated carbon steel cutlery sold by respondent as "stainless'' is not ~tainless or corrosion resistant in fact. Portions of a chromium· plated fork of the rE>spondent, stamped "stainless" subjected to a 24hour salt spray test, were attacked, showing the presence of rust in various locations, both on the tines and howl. An unmounted <·hromium-plah•d knife blade sold by respondent and stamped "Stainpruf," after having its cutting edge ground, to simulate ordi· nary use, when placed in tap water>r brcame rusty and later, when cle>aned and placed in a salt spray for 24: hours, was severly attnckE'd on the ground edge and along the plated surfaces as wt>ll. Portions of another of rN;pondcnt's chromium-plated forks, NATIONAL SILVER CO. 733 722 Findings stamped "stainless," when subjected to a 24-hour salt spray test, S~lowed the presence of rust, both on the bowl and c,n the tines, partrcularly at the cutting edges. One of respondent's chromium-plated knife blades stamped "N asco Stainpruf," when subjected to the same salt spray, showed a tremendous amount of corrosion on one side, not confined to the cutting edge but on the surface as well, and the ground edges were severely rusted.

Portions of one of respondent's chromium-plated forks, stamped "stainless" on the bowl, when subjected to the salt spray test, showed rust spots all over the sample, particularly along the sheared edges. A number of carbon steel knife blades, plated for comparative Purposes with plating of the same character and thickness as that ~tised by the respondent, namely, with from O.OOOOG to 0.00008 of an 11lch of nickel and thereafter with from 0.000007 to 0.000009 of chromium, were subjected to various corrosion tests. These samples corroded when immersed in grapefruit juice, lemon juice, acetic acid, and in distilled water for extended periods. Chromium-plated knives, plated 'with the same specifications cor· roded when subjected to December weather, specimens subjected to humid atmosphere arising from a 2% solution of vinegar corroded, ltlld specimens similarly chromium-plated and subjected to 48 hours of salt spray corroded.

On the other hand, stainless steel blades subjected to the aboveme.ntioned tests rl'mained shiny and clean and bright. Stainless steel knrves and forks as sold by the respondent, subjected to the salt spray test by the U. S. Bnreau of Standards, successfully withstood such test.

PAn. 7. The respondent submitted the results of chemical tests conducted in its behalf upon certain groups of unmounted chromium- Plated fork blades. The said forks so tl'stecl had been plated with a coating of chromium from 40 to GO times as thick as that appearing on the original speciml'ns of its cutlery furnished the Commission b~ the respondent, and had beneath this chromium plate undetermined thicknesses of nickel and cor)per. It does not appear whether sajd forks had bren or whe being sold by the rl'spondl'nt, nor by Whom they had been plated. The fork blades so tested were reported as. having successfully withstood a salt spray list, but they did not ''"Ithstand certain other corrosion tests to which thry were subjected. ?ne of tJ~em, after being immersl'd for an extende~l period of time 1? orange juice showed the Ll'rrinninrr of corrosion and rust on one tr ' "' ,., . ne. Another of the said forks, similarly snbjl'ctl'd to a 5% solution of acetic acid, showed two ditfl'rent spots at which the chromium 14G7:iGm-3!) Yo!. 2-! 4!) Findings 24F. T. C.

plating had started peeling off. The blade of this fork showed rust on its shank, on the front and back sides and on one of the inside tines near the bowl, all resulting from the action of the acetic acid. Another fork blade of the same lot immersed in lemon juice for an extended period, showed evidence of corrosion of the inside of the first tine. Another of the same forks subjected to the action of orange juice, showed . the beginning of rust and corrosion. Two of the fork blades, submitted respectively to the salt spray test and to distilled water, were reported as not corroding. PAR. 8. The breaking of plating on cutlery by sharpening or other abrasive action will cause and hasten corrosion in the presence of moisture. Dissimilar metals of opposite polarity being thus brought into contact with each other, electrolytic or battery action is created, and corrosion not only results but is hastened. Nickel and chromium nre negative to steel and, in a moist atmosphere, the iron goes into solution and the nickel and chromium accelerate the corrosion of the object made of iron or steel. On the other hand, there is no electrolytic action between the component parts of an alloy. The sharpening of a chromium-plated carbon steel knife tends to wear the chromium plate away. Any abrasion on a plated knife is likely to cut through, and the carbon steel beneath will be attacked and will rust or corrode. After one grinding or sharpening the chromium plate along the ground or sharpened edge of the blade is destroyed, and the broken plating, ceasing to be stain resisting, the blade will corrode and rust. . There is a further tendency for chromium plate tO' flake or chip off when abraded. It is more difficult to put a satisfactory plating on a fork than on a knife, owing to the tines or prongs of a fork. When the plating on a piece of carbon steel is broken, and moisture or dampness gets to the underlying surface, the steel underneath rusts and a rust streak appears on the nickel plate. The respondent, in advertising or representing its knife stamped "stainpruf," after guaranteeing that the cutlery will not be stained by acids contained in vegetables, fruits, or meats, and that it wjll not rust or discolor in ordinary use, sets forth the following cautions in its advertising directions:

To clean, it ls only necessary to wash in warm water and dry with cloth. Do not use scouring materials to polish the blades. The knife concerning which this caution was given was a chromium-plated knife.

PAR. 9. A household and department store survey as to the meaning of the term "stainless" was made by respondent in New York City NATIONAL SILVER CO. 735 722 Findings and environs. A set of questions not seen by nor shown to the person interviewed was used by respondent. No person wrote his own answer or was shown how it was worded. In the first question asked, the word stainless was presented . in a distinctly adjective sense. AU sorts of replies were reported from these surveys, many of them contradictory and confused. Sixteen percent of those interviewed are reported as indicating a material that would not rust or stain. Only one person out of five hundred reported to have been interviewed made any reference to chromium plate. A number of cutlery salesmen from New York department stores offered by respondent in the capacity of experts or opinion witnesses knew comparatively little of the manufacture or manufacturers of cutlery or of cutlery markings and the significance thereof.

PAR. 10. There are among the competitors of respondent, corporations, firms, partnerships and individuals who manufacture knives, cutlery, and table flatware similar to that sold by the respondent. Such competitors of respondent use the word ''stainless" only as a. mark, brand, or stamp for, or in advertising knives, cutlery and table flatware made of the chrome-iron alloy, stainless steel, and they likewise truthfully use the words or terms "chromium plate" or "chromium plated" to indicate a carbon steel product plated with chromium, and they uo not employ such word as "stainpruf" as a stamp, brand, or mark for, or in advertising chromium-plated knives, cutlery, and table flatware that are not in fact stainproof and corrosion resistant.

PAn. 11. The representations of respondent as hereinbefore set ~orth in falsely stamping, branding, marking, describing, designat- Ing and advertising cheap and inferior products, to wit, chromiumplated carbon steel knives, cutlery and tableware with the word "stainless," thereby falsely representing such products to be made of !he alloy stainless steel, and the further stamping, branding, mark- Ing, describing, and advertising of certain of its chromium-plated carbon steel knives and flatware cutlery as "stainpruf," are false and misleading and have the capacity and tendency to deceive, and do ?eceive, wholesalers, jobbers, retaij.,rs, and the ultimate purchasers Into buying chromium-plated carbon steel products as and for those lllade of genuine stainless steel, and through its advertising material ~nd misbranding, as aforesaid, respondent has placed and is placing ln th~ hands of its wholesaler and retailer in interstate co~rce, t?e means of deceiving the ultimate purchasers. The aforesaid prachces have had the capacity and tendency to divert to respondent the trade of competitors engaged in selling in interstate commerce, prod- 736 FEDERAL TRADE COl\IMISSION DECISIONS Order 24F. T.C.

ucts of the same kind and nature as those of respondent, which products are truthfully advertised, and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914.

CONCLUSION The aforesaid acts and practices of the respondent, National Silver Company, are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce, within the intent and meaning 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."

OHDF.R TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the original and amended and supplemental complaints of the Commission, the answers of respondent thereto, testimony and other evide11ce in support of the allegations of said complaints and in opposition thereto, taken before Edward ~L Averill, an examiner of the Commission theretofore duly designated by it, briefs filed herein, and oral arguments by Marshall Morgan, counsel for the Commission, and by Abraham Drill, counsel for the respondent, and the Commission having made its findings as to the facts and it~onclusion that said respondent has violated the provisions of an Act of Congress approved September 26, 1914, entitled "An Act .to create a Federal Trade Commission, to define its powers nnd duties, and for other purposes."

It i8 ordered, That the respondent, Nutionnl Silver Company, its officers, representatives, agents, and employees, in connection with the offering for sale, sale, and distribution of knives, cutlery and tableware in interstate commerce or in the District of Columbia, do forthwith cease and desist from:

1. Using the word "Stainless" as a trade name, brand, stamp, label or part thereof, or otherwise, upon or for knives and flatware cutlery, or in advertising or representing the same unless such knives and flatware cutlery are made of steel containing from 9% to 16% of chromium and containing not more thnn 0.7% carbon. 2. ~[arking, branding, stamping, designating or advertising chromium-plated knives and flatware cutlery with the "·ord "Stainpruf," NATIONAL SILVER CO. 737 722 Order or with a similar word or words indicating that such products are in fact stainproof. · It is further ordered, That the respondent shall, within 60 days ~after service upon it of this order, file with the Commission a report ln writing setting forth in detail the manner and form in which it has complied with this order.

Syllabus 24F. T. C.