Midwest Publishing Company

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IN THE MATTER OF MIDWEST PUBLISHING COMPANY, AND W AI.jTER H. GORHAM, INDIVIDUALLY, AND AS PRESIDENT OF MIDWEST PUBLISHING COl\IPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. ri OF AN ACT OF CONGRESS APPROVED SEPT. 20, 1914 Docket 2893. Complai11t, Aug. 10, 1936-Deci~ion, Mar. 18, 1938 Where a corporation and an individual, substantially sole owner thereof and responsible for its policies and activities, engaged in sale of its so-called "l\fodern American Encyclopedia," together with extension service therefor, through agents and representatives supplied with advertising folders, prospectuses, sample volumes, order blanl;:s or contracts, sales talks, and other literature and paraphernalia for exhibition, distribution, and use in connection with sale or solicitation thereof; pursuant to a scheme to foist upon purchasing public at a profit said old and obsolete set of reference books, of little or no value as such, and consisting of reprints, poorly made on inferior papl'r from plateg cast fn 1891, and ownership of which-h plates changed bands from time to time, and then currently Issued and sold under aforesaid decl:'ptive and misleading title-- ~a) Represented verbally through said authorized agents, etc., and through advertisements, letters, etc., to prospective and actual purchasing public throughout United States, that tht>lr said "Modern American Encyclopedia" was in fact a new, modern, and up-to-date encyclopedia and reference work, and had been kept pl'rpetually up-to-date and up to the minute, facts being, printed as aforesaid, with only few page or minor revisions between 1912 and 1922, and none fn following decade, and only minor ones betwe~>n 1932 and 1934, and none of substance since, it had not bl'l'n for many years, and was not thl'n, a modern or up-to-date ref~>rence work which in any reasonable degree m~>t needs and requirements of purchasing and using public for reliable work of reference;

·(b) Set forth in broadside, issued as part of their advertising and in which was included expression ''keep abreast of the times," list of 33 persons prominent in particular fields of learning or indu~;try, and rept·l'sented that each had contributed substantially to said alleged new and modern work, facts being none had made any contribution thereto or done anything in connection therewith to make It new and modern so as to enable purchaser to keep abreast of the times, and only contribution wns a very slight one on the part of a few to the original work in 1891 and earlier re"risions thereof, and some of persons so listed had been dead for a number of years; o(c) Represented that in order to keep said ''Modern American Encyclopedia" from becoming obsolete and getting out of date, they would furnish a 10year, quarterly, loose-leaf, extension service to purrhasers which made and kept information in set current, facts being that they discontinued ~;uch loose-leaf service within first 2 years of said 10-year period and issued and used in lieu thereof so-called Year Book, for which they usually demanded uml received $1 a yl'ar, and which they offered to purchasers, after expira- .tlon of said period, for $7.50 a year, but which was of little or no authorita· Complaint 26F.T.C.

tive value as reference work, and did not make and keep information in set current, etc., and $7.50 price of which was not regular or intended retail price, but fictitious, and used and offered solely to induce purchasers to believe that book was of a much greater value than $1, or regular price at which offered ;

(d) Represented in many instances to prospective purchasers that set's regular price, at which offered, ranging from $15.75 to $19.80, was a special and reduced one and much less than its usual price, represented as several times the true one, and variously stated former as being from $59 to $80, with extra charge for 10-year, quarterly, loose-leaf, extension service, ranging from $1 to $7.50 a year, facts being no sets were ever sold for more than offered price and higher figures were either for original issue when new or for sets in special deluxe bindings;

(e) Represented that certain other books, Yalue of which was stated as being equal to or in excess of total purchase price of set, would he delivered to proi"pective purchasers free and as a gratuity and as a result of purchase' of encyclopedia, facts being so-called "free" books were not thus given, but price thereof, including profit to themselves, was in<'luded in and made part of purchase price of set, and value of said pretended, free books was not equal to or in excess of purchase price of set; (f) Falsely represented tba t price quoted at any time for said offrr was "just what" purchaser is "to pay" for everything', facts being extra annual, or total, price was later demanded for 10-year service of current replacement pages or Year Book;

(g) Represented that other purchasers or persons bad recommended prospect for special list of those to receive set at alleged pretended F;peclal price, or to receive complimentary set free in return for card to be filed, facts being no such recommendation bad been made and no free sets were given out, but cards obtained were used by them in procuring entree to other prospects, and books promised free were not sent ;

With effect of misleading and deceiving substantial portion of purchasing public· into erroneous belief that said representations were true and into purchaseof said books in and on account of said erroneous and mistaken beliefs induced by said acts and practices, and with result that trade was diverted unfairly to them from their competitors who do not resort to false and deceptive practices in sale of their respecti>e reference books, and with tendency and capacity so to mislead and deceive: Held, That such acts, practices and representations were all to the prejudiceand Injury of the public and competitors and constituted unfair methods of competition.

Before Mr. John lV. Norwood, trial examiner. Mr. lVm. T. Ohantland for the Commission.

Complaint 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, having reason to believe that '\Valter H. Gorham and :Midwest Publishing Company, hereinafter re- 1\IIDWEST PUBLISHING CO., ET AL. 941 939 Complaint ferred to as respondents, have been and are now using unfair methods of competition in commerce, as defined by said act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Midwest Publishing Company, is a corporation duly organized and existing under the laws of the State of Illinois. Respon<.lent, 'Valter H. Gorham, is the sole owner of 1'respondent, Midwest Publishing Company (except qualifying shares in the name of the secretary), and fixes its policies itnd directs its activities. Respondents' plant, office, and principal place of business is located at 540 North Michigan A venue, Chicago, Ill. Respondents are now and for some time have been engaged in the business of selling books, chief among which is a set of reference books now called "Modern American Encyclopedia," together with extension service therefor.

PAR. 2. Said respondents being engaged in business as afor~said, cause said books, when sold, to be transported from respondents' place of business in the State of Illinois to the purchasers thereof located at various points in States of the United States other than the State from which shipments are made. Respondents now maintain a constant current of trade in commerce in said books, distributed and sold by them, between and among the various States of the United States.

PAn. 3. In the course and conduct of their said business, respondents are now and have been in substantial competition with other individuals and with firms and corporations likewise engaged in the business of distributing and selling reference books, in commerce among and between the various States of the United States. PAR. 4. In the course and conduct of their said business in selling and seeking to sell said encyclopedia, and the extension services, respondents employ various agents, solicitors, salesmen, and represent· atives, who are authorized and directed to solicit orders for, and to sell said commodities to prospective purchasers in the several States, said salesmen and representatives ordinarily traveling from place to Place and canvassing prospective purchasers at such places. Respondents furnish such salesmen and representatives with advertising folders, prospectuses, sample volumes, order blanks or contracts, sales talks, and other literature and paraphernalia, which are exhibited, distributed, and used in connection with the sale or solicitations for the sale of said books, and extension services. Upon a sale being made by such salesmen or representatives, the purchaser is asked to sign a printed order or contract which is then transmitted 16045lm--39--VOL.26----62 FEDERAL TRADE COMMISSIO~ DECISIO~S942 Complaint 26F.T. C.

to the respondent. Respondent thereupon causes a shipment of said books and extension services to be made to such purchaser fron Chicago, Ill. At the time the order is signed the salesman or repre· sentative usually collects a down payment from the purchaser, and the order or contract so signed ordinarily requires additional pay· ments in installments until the total purchase price is paid in full. PAR. 5. During the time above mentioned, in the course and conduct of their said business, respondents, tlu·ough verbal statements made by their agents, salesmen, representatives, and employees, and by means of their advertisements, letters, order blanks, sales talks, and other literature used and distributed and exhibited to prospcc· tive purchasers and to purchasers, have represented and now repre· sent to the prospective and actual purchasing public throughout the United States the matters and things hereinafter set forth: 1. That said so-called "Modern American Encyclopedia" is a new, modern, and up-to-date encyclopedia and reference work. The truth and facts are that ·walter II. Gorham, and two asso· ciates organized an Illinois corporation known as "Modern Ameri· can Company," and also organized respondent corporation, )lid"'est Publishing Company. Acting through the former, respondent nnd said two associates purchased a set of old plates made in 1891 from11 which, at various times from 1891 to 1933, four prior owners hud printed and sold five separate issues or editions of reference books, under four different titles, to-wit: the original issue or edition Wl15 called "New Practical Ueference Library"; the second and third issues or editions were called "New Students' Reference "\Vorks"i the fourth issue or edition was called "Students' Reference "\Vorks''i and the fifth issue or edition was called "Students' Encyclopedia.'' From these old plates, very slightly revised, Modern American Cou· pany has been and now is printing, as calle~ for by respondent Gorham and his associates above named, a sixth issue or editioJl under the name "Modern American Encyclopedia," "193-1 Edition,'' and "1935 Edition." Respondents, having bought said sets, sell und distribute same in commerce as above described. Respondents also failed and neglected in any proper way to disclose to or inform its prospective purchasers of the fact that its said so· called Modern American Encyclopedia is an old work, as above de· scribed, and is substantially the same as prior sets of reference works put out at various times from 1891 to 1933 under the various other names and titles above stated.

The chief value of any reference book or set is that it is in fact "Modern" and contains the latest facts and data available on each suj· ject treated. The purchasing public generally buys such reference l\UDWERT PUBLISHING CO., ET AL. 943 Complaint books or sets or encyclopedias chiefly for the purpose of procuring such Up-to-date facts, data and information, and generally rely implicitly Upon them as furnishing exactly that, up to the date of actual issue. Reference books which purport to be, but are not of that character, are not only in themselves misleading, deceptive, and of little or no value for the purposes for which purchased, but are in fact injurious to the Purchasing public who consult and read them, by reason of the misguided reliance placed on the antiquated data, Hroneous facts, and superseded theories and processes therein set forth or treated. The 111any and rapid scientific, historical, and other changes and discoveries that have occurred since 1891, the date of the plates from which re- Rpondents' issues of the so-called "l\Iodern American Encyclopedia" are printed, render it practically valueless as a reference work. For these reasons, all claims, representations, and implications, as above described, made by respondents, have been and are false, fraudulent, misleading, deceptive, airel injurious to the purchasing public in that they tend to and do confuse and mislead the public into the. belief that they are buying and obtaining for use a new and useful up-to-date reference work.

2. As a part of their advertising of said work and to induce its purchase, respondents issued a broadside containing the expression "Keep abreast of the times." This broadside contains a list of 33 persons, each prominent in some particular field of learning or industry, and tl'spondents represented that each of these had contributed substantially to such alleged new and modern encyclopedia. In truth and in fact, not one of the persons named in said lists has lllade any contribution to the "Modern American Encyclopedia" or done anything in connection therewith to make it a new and modern eneyclopedia so as to enable a purchaser to "keep abreast of the times,~' save that some few of the persons named did contribute very slightly to the said original work in 1891, and the ('arlier revisions thereof. Some of the persons listed have been dead for a number of years. The use and circulation of said broadside and list is false, deceptive, and misleading, and tends to and does further the deception of the lllembers of the purchasing public into the belief that they are receiving a work which is new and "modern," and is being kept "abreast of the times," by substantial contributions from the several persons on said list.

3. Part of the sales talk which sales people of respondents were and are instructed to make, is as follows:

1\Jrs. Miller, one valid complaint against Pncyclopedias ls that they get out ot date very quickly. At the rate the world movps today it ls not too much to say that an encyclopedia depreciates in value at least ten per cent a year. That Complaint 2GF.T.C· rate o! depreciation means that in ten years an encyclopedia is obsolete and of no value like an old city directory. But the publishers of this encyclopedia dO not permit it to get out of date.

The purpose and effect of such sales talk was and is to further impress upon prospective purchasers the quick obsolescence of such reference work, the modern and up-to-date character of respondents' said encyclopedias, by thus coupling with a correct statement as to the rapid obsolescence of all authoritative reference works, the direct assertion that the encyclopedias which respondents are selling are not permitted to get out of date.

The truth and fact is that such assertion is grossly false, contrary to the :facts as above set forth.

4. Respondents represented that, in order to keep the "Modern American Encyclopedia" from becoming obsolete and from getting "out of date," they would furnish a 10-year quarterly loose-leaf service to purchasers which makes and keeps tne information in the set current. 'Vhen less than 2 years of the 10-year period had expired, as to the first of such loose-leaf services promised, the quarterly loose-leaf service was discontinued and in lieu thereof the respondents issued and now use a so-called year book, for which they usually demand and receive a price of $1 per year and which they offer to furnish to purchasers after the expiration of the 10-year period for the sum of $7.50 per year.

In truth and in fact, said year book is of little or no authoritative value as a reference work and does not make and keep the information in the set current and thereby prevent it from becoming obsolete and from getting "out of date." The price of $7.50 at which the year book is offered after the expiration of the 10-year pe.riod, is a fictitious pri~e and not the regular or intended retail price at which said year book 15 to be sold, and is used and offered solely to induce purchasers to believe that the year book is of a much greater value than the price at which it is now offered, $1 per year. In truth and in fact, the price of $1 per year for said year book is the regular price for it, and such price will yield respondent a profit on any reasonable volume of s~]es. 5. Respondents offer the "Modern American Encyclopedia" at prices ranging from $15.75 to $19.80 a set and, in many instances, represent to prospective purchasers that this is a special and reduced price, muc~ less than the usual or regular price at which the set is sold. In su.c instances, the rE>presentation is made that the usual or regular prlce at which the set is sold is several times that at which it is being offered0and the usual or regular price is variously stated to be from $59 to $S per set, with an extra charge for the 10-year quarterly loose-leaf service, variously quoted to be from $1 to $4 per year. MIDWEST PUBLISHING CO., ET AL. 945 Complaint The truth and fact is that no sets of respondents' encyclopedia Were ever sold for more than the offered price, the higher prices named were either for the original issue when it was new, or for sets in special De Luxe bindings, and the usual or regular price for the set was from $15.75 to $19.80.

6. To induce prospective purchasers to purchase said encyclopedia the respondents, in many instances, represent that certain other books, the value of which is represented as being equal to or in excess of the total purchase price of the set, will be delivered to said prospective Purchaser free and as a gratuity, if the encyclopedia is purchased. In truth and in fact, said "free" books are not given as a gratuity but the price therefor, including a profit to the respondents, is included in and made a part of the purchase price of the set, and the Value of said "free'' books is not equal to or in excess of the purchase price for the set.

7. Respondents represented that the price quoted at any time for the set offered is "just what" the purchaser is "to pay" *. * * ''for everything."

This representation was false and deceptive in that an extra annual or total price was later demanded for the 10-year service of current replacement pages or Year Book.

8. Respondents represented that other purchasers or persons had recommended the prospect for a special list to receive the set at the alleged special price aforementioned or to receive a complimentary set free in return for a card to be filed.

The truth is that no one had so recommended any prospect, aml that no free sets were given out, but when cards were obtained they Were used by respondents in procuring entree to other prospects, and the books promised to be sent free were not sent. 9. Respondents at all times have recklessly hired applicants for sales positions indiscriminately and with no effort to learn of their character and capacity, and have permitted and acquiesced in the representations made by such sales people touching said set which "'ere made to the prospective purchasers among other ways in form anu substance in all the manners hereinbefore llescribed. The whole plan and methods employed by respondents constitute lllerely a scheme to foist upon the purchasing public, at n. profit, an old and obsolete set of reference books of little or no value as referellce books, by reprints poorly made on inferior quality of paper, from plates cast in 1891, and now issued and sold under the deceptive and misleading title "Modern American Encyclopedia." PAn. 6. The aforesaid acts and practices of the responde>nts have the tendency and capacity to and do mislead and deceive a sub- Findings 26F.T.C.

stantial portion of the purchasing public and cause it erroneously to believe that said representations are true, and, because of such erro~ neous belief, to purchase these reference books of the respondents, with the result that trade in said commerce is unfairly diverted to the respondents from said competitors who do not misrepresent their reference books, to the substantial injury of said competitors and to the injury of the public.

PAR. 7. The above and foregoing acts, practices, and representa· tions of the respondents have been, and are, all to the prejudice of the public and respondents' competitors as aforesaid, and have been, and are, unfair methods of competition within the meaning and intent 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." REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of an Ac.t of Congress approved Sep· ternber 26, 1914, entitled "An Act to create a Federal Trade Commis· sion, to define its powers and duties, and for other purposes," thfl' Federal Trade Commission, on August 10, 1936 issued and on August 12, 1936 duly served its complaint in this proceeding upon respond· ents, Midwest Publishing Company, a corporation, and ·walter Jl. Gorham, individually and as president of Midwest Publishing CoJll· pany, a corporation, charging them with the use of unfair methods of competition in commerce in violation of the provisions of said act. No answer was filed by either respondent but after the issu· ance of the complaint, testimony and other evidence in support of the allegations of said complaint were introduced by Wm. T. Cha~t· land and Henry Junge, Jr., attorneys for the Commission, and l11 opposition to the allegations of the complaint by respondent ·waiter H. Gorham appearing in his own behalf and on behalf of respondellt Midwest Publishing Company, a corporation, before John ,V. Nor· wood, an examiner of the Commission, theretofore duly designated by it, and said testimony and other evidence were duly recorded l\l1d filed in the office of the Commission .

.Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, testimony and other evidence and brief in support of the complaint, no brief having bee~ filed by respondent (no oral argument having been requested), all the Commission having duly considered the same and being now full~ ad vised in the premises, finds this proceeding is in the interest 0 , the public, and makes this its findings as to the facts and its concltl' sion drawn ther~from :

::\IIDWEST PUDLISHING CO., ET AL. 947 939 Findings FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Midwest Publishing Company, is a corporation duly organized and existing under the laws of the State Of Illinois. Respondent, 'Valter II. Gorham, is the sole owner of :respondent, Midwest Publishing Company (except qualifying shares 1h the name of the secretary), and fixes its policies and directs its activities. Respondents' plant, office, and principal place of business is located at 540 North Michigan A venue, Chicago, Ill. Respondents are now and for some years have been engaged in the business of selling books, chief among which is a set of reference books now called "Modern American Encyclopedia," together with extension service therefor.

PAR. 2. Respondents, being engaged in business as aforesaid, cause ~aid books, when sold, to be transported from their place of business ln the State of Illinois to the purchasers thereof located at various Points in States of the United States other than the State from "'which said shipments are made, and respondents have maintained a course of trade in commerce in said books and extension services sold and distributed by them, between and among the various States of the United States.

PAR. 3. In the course and conduct of their said business, respond- ?nts are now and have been in substantial competition with other llldividuals and with firms and corporations likewise engaged in ~he business of distributing and selling reference books and services ~ connection therewith, in commerce among and between the various states of the United States.

Pan. 4. In the course and conduct of their said business in selling and seeking to sell said encyclopedia, and the extension services, respondents employ various agents, solicitors, salesmen, and representatives, who are authorized and directed to solicit orders for, and to sell said reference books and the extension services in conllection therewith to prospective purchasers in the several States, and said salesmen and representatives travel from place to place ~nd canvass prospective purchasers. Respondents furnish such sales- Plen and representatives with advertising folders, prospectuses~ samt e Volumes, order blanks or contracts, sales talks, and other literai~te and paraphernalia, which are exhibited, distributed and used a ~connection with the sale or solicitations for the sale of said books, n extension services. 'Vhen a sale is made by any such salesman0 pl'· representative, the purchaser is asked to sign and does sign a. e~~n.ted order or contract which is then transmitted to the responde~t:· .~respon~ents thereupon cause a shipment of said ~ooks and lls1on services to be made to such purchaser from Chicago, Ill. Findings 26 F. T. (J. At the time the order is signed the salesman or representative usually collects a down payment from the purchaser, and the order or con· tract so signed ordinarily requires additional payments in install· ments until the total purchase price is paid in full. PAR. 5. During the time above mentioned, in the course and con· duct of their said business, and as inducement to the purchase o:f said books and services, respondents, through verbal statements made by their agents, salesmen, representatives, and employees, and by means of their advertisements, letters, order blanks, sales talks, and other literature used and distributed and exhibited to prospective pur· chasers and to purchasers, have represented to the prospective and actual purchasing public throughout the United States, that respond· ents' so-ealled "Modern American Encyclopedia" has been and is in filet a new, modern, up-to-date encyclopedia and reference work, and that it has been kept perpetually up-to-date and up to the minute. Reference books are valuable only in proportion to their accuracy and up-to-dateness.. Failing in either, they are to that extent in nnd of themselves misleading and deceptive to those who buy and use them in reliance upon their up-to-date accuracy. Obsolescence of such works approximates 10 percent per annum, so that. i:f unre· vised such a work in 10 years becomes practically valueless :for it5 intended purposes.

Respondents' said so-called "Modern Encyclopedia" is printed fronl plates originally made long prior to 1912 when they changed hands· The plates had been reset in 1908, after which and until 1922 there had been made only some few page revisions, or revisions of Jess amount. In about 1922 the plates again twice changed hands, the latter vendee at that time holding and owning them without revision until about 1932 when they were purchased by the Modern American Corporation, a holding company, in part owned by respondent Go;~ ham. Since 1932 only minor revision work has been done on sa~d plates and none of substance since 1934, so that respondents' sal d "Modern American Encyclopedia" has not been :for many years an is not now a modern or up-to-date reference work which in any rel· • 11 sonable degree meets the nee<ls and requirements of the purchasln., and using public for a reliable reference work. . d PAR. 6. As a part of the plan or scheme to sell and distribute sill ":Modern American Encyclopedia" and the extension service in cow nection therewith in interstate commerce, and as inducements to pro· curing purchasers therefor- ( a) Respondents, as a part of their advertising of said work an~ to induce its purchase, issued a broadside containing the expressl~ "Keep abreast of the times." This broadside contains a list of MIDWEST PUBLISHING CO., ET AL. !)49 03D Findings persons, each prominent in some particular field of learning or industry, and respondents represented that each of these had contributed substantially to such alleged new and modern encyclopedia. In truth and in fact, not one of the persons named in said lists has made any contribution to the "Modern American Encyclopedia'' or done anything in connection therewith to make it a new and modern en• cyclopedia so as to enable a purchaser to "keep abreast of the times," save that some few of the persons named did contribute very slightly to the said original work in 1891, and the earlier revisions thereof. Some of the persons listed have been dead for a number of years. (b) Respondents represented that, in order to keep the "Modern American Encyclopedia" from becoming obsolete and from getting :'out of date," they would furnish a 10-year quarterly loose-leaf servlce to purchasers which makes and keeps the information in the set current. 'Vhen less than 2 years of the 10-year period had expired, as to the first of such loose-leaf services promised, the quarterly looseleaf service was discontinued and in lieu thereof the respondents issued and now use a so-called year book, for which they usually demand and receive a price of $1 per year and which they, offer to furnish to purchasers after the expiration of the 10-year period for the sum of $7.50 per year. In truth and in fact, said year book is of little or no authoritative value as a reference work and does not ~lake and kee.p the information in the set current and thereby prevent lt from becoming obsolete and from getting "out of date." The price of $7.50 at which the year book is offered after the expiration of the 10-year period, is a fictitious price and not the regular or intended retail price at which said year book is to be sold, and is used and offered solely to induce purchasers to believe that the year book is of a :rnuch greater value than the price at which it is now offered, $1 Per year. In truth and in fact, the price of $1 per year for said year hook is the regular price for it, and such price will yield respondent a Profit on any reasonable volume of sales. (c) Respondents offer the "Modern American Encyclopedia" at l\tices ranging from $15.75 a set to $19.80 a set and, in many instances, re~resent to prospective purchasers that this is a special and reduced Price, much }pss than the usual or regular price at which the set is Sold. In such instances, the representation is made that the usual or :regular price at which the set is sold is several times that at which it ~s being offered, and the usual or regular price is variously stated to e from $59 to $80 per set, with an extra charge for the 10-year quarterly loose-leaf service, variously quoted to be from $1 to $7.50 Per Year. The truth and fact is that no sets of respondents' encyclopedia were ever sold for more than the offered price, the higher Findings 26 F.T.C· prices named were either for the original issue when it was new, or for sets in special De Luxe bindings, and the usual or regular price for the set was from $15.75 to $19.80.

(d) Respondents, to induce prospective purchasers to purchase said encyclopedia, in many instances, represent that certain other books, the value of which is represented as being equal to or in excess of the total purchase price of the set, will be delivered to said prospective purchaser free and as a gratuity, if the encyclopedia is purchased. In truth and in fact, said "free" books are not given as a gratuity but' the price therefor, including a profit to the respondents, is included in and made a part of the purchase price of the set, and the value of said "free" books is not equal to or in excess of the purchase price for the set.

(e) Respondents represented that the price quoted at any time :for the set offered is "just what" the purchaser is "to pay" • * • "for everything." This representation was false and deceptive in that an extra annual or total price was later demanded for the 10-year service of current replacement pages or Year Book. (f) Respondents represented that other purchasers or persons had recommended the prospect for a special list to receive the set at the alleged special price aforementioned or to receive a complimentary set free in return for a card to be filed. The truth is that no one had so recommended any prospect, and that no free sets were given out, but when cards were obtained they were used by respondents in procuring entree to other prospects, and the books promised to be sent free were not sent.

(g) Respondents have permitted, authorized, and benefited fronl, the representations made to prospective purchasers by their agents concerning said set, which representations were made as hereinbefore set out, and in various other forms.

PAR, 7. The whole plan and methods employed by respondents constitute merely a scheme to foist upon the purchasing public, at !\ profit, an old and obsolete set of reference books of little or no value as reference books, by reprints poorly made on inferior quality of paper, from plates cast in 1891, and now issued and sold under the deceptive and misleading title "Modern American Encyclopedia." . PAn. 8. There are among the competitors of respondents engaged 1!1 the sale of books of reference, as mentioned in paragraph 3 hereof, corporations, firms, partnerships, and individuals, who do not in coil· nection with such sale, resort to the false and deceptive practices hereinabove set forth.

PAR. 9. The aforesaid acts and practices of the respondents have t:h~ tendency and capacity to, and do, mislead and deceive a substantlll 1\IIDWEST PUBLISHING CO., ET AL. 951 Order portion of the purchasing public into the mistaken and erroneous belief that said representations are true and into the purchase of rrespondents' reference books in and on account of the aforesaid erroneous and mistaken beliefs so induced by the acts and practices of the respondents. ...\s a result trade has been diverted unfairly to the respondents from their aforesaid competitors who do not resort to false, misleading, and deceptive acts and practices in the sale of their respective competitive reference books. CONCLUSION The above and foregoing nets, practices and representations of the tespondents have been, and are, all to the prejudice and injury of the "PUblic and of respondents' competitors as aforesaid, and have been, -and are, unfair methods of competition within the meaning and intent of Section 5 of an Act of Congress, approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to ilefine its powers and duties, and for other purposes." . ORDER TO CEA>;E AND DESIST This proceeding having been heard by the Federal Tra.de Com- Uli~sion upon the complaint of the Commission (no answer having Leen filed by respondent), testimony and other evidence taken before .John '\V. Korwood, an examiner of the Commission theretofore duly ~lesignated by it, in support of the allegations of said complaint and 11l opposition thereto, and brief by counsel for the Commis..sion, and thl! Commission having made its findings as to the facts and its conelusion that said respondents have violated the provisions of an Act of Congress approved September 2G. 1914, entitled "An Act to create -~ Federal Trade Commission, to define its powers and duties, and or other purposes."

It i8 ordered, That the respondents, Midwest Publishing Company, a corporation, and its officers, and 'Valter H. Gorham, individually, .and their respeetiYe represpntatiYes, agents, and employees, in conlllc~ion with the offering for sale, sale, and tlistrilmtion of encyclo- Pedia now entitled "l\Iodern American Encyclopedia" and extension services in connection therewith and of other books, in interstate ~~tnmerce or in the District of Columbia, do cease aml desist from, ~rectly OJ' indirectly, or through :my corporate or other device, u v-ertising or in any other manner representing: . 1· That respondents' so-called "Modern American Encyclopedia" -. new, modern, up-to-date encyclopedia or reference work, or that as been kept up-to-date.

Order 26F.T.C- 2. That any person or persons, especially those prominent in par· ticular fields of learning, have contributed substantially or at all to any revision of said so-called ''Modern American Encyclopedia," when such is not the fact.

3. That respondents furnish any extension service of a kind or characwr that will keep said "Modern American Encyclopedia~' up-to-date, unless and until they furnish such service. 4. That the regular price for v.-which respondents will furnish tothe purchaser of said "Modern American Encyclopedia" an annual extension service is greater than the price at which said extensions service is actually and usually sold.

5. That respondents furnish any specified character of extension service for any specified term of years, when such is not the fact. 6. That the regular prices at which the sets of encyclopedias and services are habitually and generally offered are special prices or reduced prices offered only to a selected list of persons, for special reasons.

7. That other allegedly valuable books offered in connection with said "Modern American Encyclopedia" are given free or as a gratuity when in fact the price named includes payment at a profit for all of the books so offered and delivered.

8. That any price that a purchaser will be required to pay for the books and services offered and sold, is different from the total price which respondents actually collect or attempt to collect. 9. That any prospect has been recommended to receive a set of said reference or other books and services in connection therewith at s special price, or as a free gift, or in return for a testimonial letter, when any of said representations are untrue. It is further orde,red, That the respondents shall, within 60 days after service upon them of this order, file with the Commission ll report in writing setting forth in detail the manner and form in which they have complied with this order.

DIXIE HATCHERIES, ET AL. 953 Complaint