Charles W. Cromer doing business as Shalwin Hosiery Mills

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IN THE MATTER OF CHARLES W. CR01IER DOING BUSINESS AS SHAL WIN HOSIERY l\IILLS COMPLAINT, FINDINGS, AND ORDER IN REG.-\RD TO THE ALL£WED VIOLATION OF SEC. 5 OF AN ACT OF CO:\"GRE:::iS API'HOVED SEPT. :!6, 191-l Docket 2194. Complaint, Apr. SO, 1936-Deci8iQn, Feb. 21, 1939 Where an individual engaged in manufacture of ho>'iery which lmd uppeanmce and feel of silk but which was composed largely of rayon aud cotton, and in sale and distribution thereof to purchasers in Yarious other States, in substantial competition with those engaged in sale and distribution of hosiery of same type, kind, and grade and of various other types, kinds, and grades, and including those who do not represent, brand, label, advertise, or describe their said product falsely or deceptively aud do uot represent that their said produ(?t contains more silk than is in fact present thereinfa) Caused to be stamped on two types of his 1mid h(Jsiery, words "Pure THREAD SILK," together with words, on one of said types, ''Reinforced with Art Silk," and words, on the other, ''Reinforced with Fine Rayon," nnd placed on both types lahel setting forth, in part, "New Style Split Foot Silk Hose are made of the finest materials," etc., and represented thereby, directly and by implication, to members of the purclutsiug public, that such hosiery coutaiued silk, product of the cocoon of the silk worm, as the principal or major constituent therein, and contained said product in a proportion or quantity larger than that present in said ha:-;iery, top, heel, 'toe, and sole of which were made of cotton, and body of which, de~ignated by term "PURE THREAD SILK" as aforesaid, was composed of 87 percent rayon and 13 percent silk, with pe;-centage of silk in whole hose amounting ta only 3 percent thereof by weight;

(b) Caused to be stamped on ano~her type of hose sold and distributed by him wot·ds "Rayon reinforcing Two THHEAos Pur:E SILK," with said last four words in large con~picuous tyve and first words in :;;mall and les:'l conspicuous type, and thereby represented, directly and by implication, to members of the purchasing public in nu!ous States as ufore~aid, that such hosiery contained silk as aforesaid as principal or majo;: c:onstituent therein, and also in proportion or quantity larger than that of rayon present in said product, top, heel, toe, and sole of which were made of cotton, with body thereof, stamped with words "Rayon Reinforcing Two 'fHHE.I.DS Pure SILK," containing approximately 60 percent rnyon and 40 percent silk; 'With result of thereby placing in the hands of dealers means or instrumentality of deception and fraud whereby they were euabled, aided, and assisted in misleading and deceiving members of the purchasing public as to the contents of said ho!iiery and the quality, Yalue, grade, and substance tlwreof; and (c) Caused to be stamped on substantial number of said hose words "50¢ per pair," and represented thereby tllllt said price was customary and ordinary retail value thereof, facts bP!ng it was fictitious and murh higher than that at which it was customarily offered for sale nnd sold at retail; SHALWIN HOSIERY l\IILLS 813 g12 Complaint With effect of mis!Pading and deceiving members of purchasing public in the yarions States into the eri'OJteous and mistaken belief that such false and misleading statements and representations were true, and that said hosiery contained silk as above set forth, aud of causing members of such public to purchase substantial quantities of said hosiery because of such erroneous and mistaken belief and of then•by diverting unfairly trade to him from eompetltors in >;aid commNce who truthfully advet·tise and represent their respe<'tive hm;iery and materials contained therein; to the injury of comvetition in commerce:

lleld, That sud1 nets nnrl practic-es were all to the prejudice and injury of the public aud competitors anti constituted unfair methods of competition. Before !llr. 1V. 1V. Slle]JpaJ•d and !llr. jJfiles J. Furnas, trial examiners.

lllr. llarry D. lllicllael and M1•. Willian~ L. Pencl.:e £or the Commission.

Complaint Pursuant to the provisions of an Act o£ 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 Charles "\V. Cromer, doing business under the name and style of Shalwin Hosiery Mills, has been and is using unfair methods of competition in commerce as "commerce" is defined in said act, and it appearing to said Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in tt:.t respect as follows:

PARAGRAPH 1. That said respondent, Charles "\V. Cromer, doing business under the name and style of Shalwin Hosiery 1\Iills, is now and has been engaged for more than 3 years last past, under said trade name, in the manufacture of hosiery and in the sale and distribution thereof in commerce, as herein set out, with his factory or mill, office, and principal place of business in the city o£ Hagerstown, in the State of Maryland. Said respondent, in the course and conduct of his said business, causes the hosiery, manufactured and sold by him, to be transported from his said place o£ business in Maryland to, into, and through SUttes of the United States other than Maryland to various and numerous customers in such other States to whom such hosiery is or has been sold. Respondent's usual course of dealing is to sell his hosiery to jobbers, wholesalers, and retail dealers through whom or which it is in turn sold to members of the consuming public.

PAR. 2. That, during the time above mentioned, other individuals, firms, and corporations in various States of the United States are and have been engaged in the manufacture, sale, and distribution o£ Complaint 28F.T. C.

hosiery of the general type, kind, and grade as that made and sold by respondent as hereinafter described, as well as other types, kinds, and grades of hosiery, and such other individuals, firms, and corporations have caused and ·do now cause their said hosiery, when sold by them, to be transported from the various States of the United States where they are located to, into, and through States other than the State of origin of the shipment thereof to the purchasers thereof at their respective places of location. Said respondent has been, during the aforesaid time, in competition in interstate commerce in the sale of his said hosiery with such other individuals, firms, and corporations.

P .AR. 3. That one of the types of men's hosiery made and sold by respondent is made of cotton so far as the top, heel, toe, and sole are concerned while the remaining part thereof is made of a mixture of rayon and silk, each thread consisting of approximately 60 percent rayon and 40 percent silk. The percentage of silk in said hosiery is only a small fraction of the whole. Respondent, in the sale of said hosiery as aforesaid, causes to be stamped thereon the following statement:

Rayon Reinforcing TWO THREADS PURE SILK The words "Two Threads Pure Silk" are stamped in large conspicuous type while the word "Rayon" is in smaller and less conspicuous type. The effect and implication of said statement, as so printed, is to create the false impression on the purchasing public that said hosiery is composed in substantial part of silk.

PAR. 4. That, during said period as aforesaid, but prior to the use of the transfer stamp as stated in the preceding paragraph, respondent stamped such hose as therein described as follows: PURE TIIHEAD SILK Reinforced With Fine Rayon Made in U. S. A.

On a label or tag attached to the top of some such hose, the following statement appeared:

SHALWIN New Style Split-Foot -SILK HOSF'.r- Are maue of the finest Materials null will give the wearer complete satisfaction SHALWIN HOSIERY MILL~ 815 812 Complaint Another type of transfer stamp formerly used by respondent on socks made as aforesaid was the following:

DURENE TOP AND FOOT First Quality Rayon Reinforced with Two Threads Pure Silk Made in U. S. A.

Such hose so stamped also had attached thereto labels or tags with the wording thereon as last above described.

That, at one time within the period as aforesaid, respondent manufactured and sold as aforesaid a type of hose of the same general type as above described, but with a silk content of only about 13 percent exclusive of the top, heel, toe, and sole. Said type of hose, and also that previously described, were stamped with a transfer stamp as follows:

Pure Thread Silk Reinforced With Art Silk Made in U. S. A.

and also Pure Thread Silk Reinforcrd With Fine Rayon 1\Iade in U. S. A.

That the s.. id representations imply and import that the· major portion of said hosiery is made from silk, the same being the product of the cocoon of the silk worm, or that the major portion of the parts of such hosiery so stamped and described is made from silk, and that the rayon content so designated constitutes a relatively small part of each piece of such hosiery or of the part thereof so designated, '"hen, in fact the major portion of each piece of such hosiery as 'vell as of such portions thereof as contain silk are made of material or materials other than silk.

PAR. 5. That, in many instances in the sale of his said hosiery above described, respondent has caused to be stamped upon such hose the following price mark as the retail price at which such hose is and should be sold, to wit:

50¢ per pair when, in truth and in fact such price was fictitious and much higher than hose of the quality and price at the factory would warrant and higher than the retail prices at which such hose has customarily been offered for sale and sold.

816 FEDERAL TRADE CO:\:IMISSION DECISIONS Findings 28 F. T. C. PAR. 6. That the representations of respondent as aforesaid have had and do have the tendency and capacity to confuse, mislead, and deceive members of the public into the belief that respondent's said hosiery is composed in large part or wholly of silk, the product of the cocoon of the silk worm, and that it is of a quality and price higher than it is in fact and to cause and induce such members of the public to buy said hosiery because of the erroneous beliefs engendered as above set forth. Said stampings and statements placed upon and attached to said hosiery further plac;e in the hands of retail dealers, who handle and sell the same, an instrument of fraud and deceit by means of which they may mislead and defraud the purchasing public. Said practices of respondent also have the tendency and capacity to divert trade to respondent from competitors engaged in the sale in interstate commerce of hosiery of the same or simi Jar grade and kind as well as that made wholly of silk. There are among the competitors of respondent those who in no wise make the same or similar misleading representations as made by respondent as herein set out and who _truthfully and accurately state the r:_uality of their merchandise, the materials of which it is made and the normal price at which it should be sold at retail. As a result thereof, substantial injury has been and is now being done by respondent to competition in commerce between and among the various States of the United States.

PAR. 7. The above acts and things done by respondent are all to the injury and prejudice of the public and the competitors of respondent in interstate 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.

REPORT, FINDINGS AS TO THE FACTs, AND Onder Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on April 30, 1936, issued and served its complaint in this proceeding upon respondent, Charles W. Cromer, trading as Shalwin Hosiery Mills, charging him with the use of unfair methods of competition in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer thereto, testimony and other evidence. in support of the allegations of said complaint were introduced by Harry D. Michael, attorney :for the Commission, and in opposition to the allegations of the complaint by respondent, before W. W. SHALWIN HOSIERY 1\IILLS 817 812 Findings Sheppard and Miles J. Furnas, examiners of the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony and other evidence, brief in support of the complaint (respondent not having filed brief and oral argument not having been requested), and the Commission having duly considered the matter, 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.

FINDINGS AS TO THE FACTS ·pc\R.\GRAPH 1. Re~pondent, Charles \V. Cromer, is an individual trading and doing business as Shalwin Hosiery Mills and having his office and principal place of business in the town of Hagerstown, State of Maryland. Respondent is now, and has been for more than 6 years last past, engaged in the business of manufacturing, selling, and distributing hosiery in commerce among and between various States of the United States. Respondent causes such hosiery, when sold by him, to be transported from his aforesaid place of business in the State of Maryland to the purchasers thereof at their respective points of location in various other States of the United States. Respondent maintains, anrl at all times mentioned herein has maintained, a course of tnde in commerce in said hosiery among and between various States of the United States.

PAR. 2. Respondent is engaged in substantial competition in C'0mlllerce among and between various States of the United States with other individuals and "·ith firms, partnerships, and corporations selling and distributing hosiery of the same type, kind, and grade as that manufactured and sold by respondent· and of various other typest kinds, and grades. Among such competitors in said commerce are lnany who do not represent, brand, label, advertise, or describe their hosiery falsely or deceptively and who do not represent that their hosiery contains more silk than is in fact present in such hosiery. PAR. 3. In the course and conduct of his business as aforesaid, and for the purpose of inducing the purchase of his hosiery, the respondent has caused such hosiery to be sold and distributed in commerce among and between various States of the United States bearing certain hrands, labels and stamps purporting to relate to and be descriptive of the silk content of the said hosiery.

818 FEDERAL TRADE COl\Il\IISSIOY DECISIONS Findings ::?8F.T.C. Respondent caused to be stamped on one type of hose which he sold and distributed as aforesaid the following statement and · representation :

PURE THREAD SILK Reinforced With Art Silk Made in U. S. A.

and on another type of hose the following: PURE THREAD SILK Reinforced With Fine Rayon l\Iade in U. S. A.

Respondent caused to be placed on both of the above types of hose a label which read on one side:

l\lannfactured by Shalwin Hosiery l\Iills and on the other side:

Shalwin N0w Rtyle Split Foot Silk Hose are made of the finest materials and will give the wearer complete satisfaction In truth and in fact, the top, heel, toe, and sole of such hosiery was made of cotton. The body of said hose designated by the term "Pure Thread Silk" is in fact part rayon and part silk, in the pHcentage of rayoi).-87 percent, and silk-13 percent. In truth and in fact, the percentage of silk contained in the whole sock is only 3 percent of the I{ose by \Yeight.

Respondent caused to be stamped on another type of hose which he sold and distributed as aforesaid the following statement and representation :

Rayon reinforcing TWO THRE.\DS PURE SILK The words "Two Thrf.'ads Pure Silk" are stamped in large, con· spicuous type on said hose while the word "Rayon" is in small and less conspicuous type. In truth aml in fact, the top, heel, toe, and sole of said hosiery are m~de of cotton. The body of said hosiery, stamped with the words "Rayon reinforcing Two Threads Pure Silk," contains approximately GO percent rayon and 40 percent silk. By means of such stamps, brands, and labels disseminated as aforesniu, respondent has represented, directly and by implication, SHAL WIN HOSIERY 1\IILLS 819 812 Findings to members of the purchasing public situated in various States of the United States that such hosiery contains silk, the product of the cocoon of the silkworm, as the principal or major constituent therein, and contains silk, the product of the cocoon of the silkworm, in a proportion or quantity larger than the proportion or quantity of rayon present in such hosiery.

PAR. 4. In truth and in fact, said hosiery branded, stamped. labeled, and represented as aforesaid has the appearance and fpel of silk but is composed largely of rayon and cotton. Said hosiery is not composed of nor does it contain silk, the product of the eoco·.Jn of the silkworm, as the principal or major constituent of said hosiery. The proportion or quantity of rayon is larger than the proportion or quantity of silk present in such hosiery. Such silk as is or may be present in the first type of hose described above is less than 5 percent of the hose by weight, to wit, 3 percent of the hose by weight. P,\r.. 5. Through the me of the aforcsaid labels, brands, and stamps in the sale and distribution of said hosiery in comme.rce among and between nrious States of the United States, respondent has thereby placed, and is continuing to placel in the hands of dealers a means or instrumentality of deception and fraud whereby such dealers are enabled, aided, and assisted in misleading and deceiving members of the purchasing public as to the contents of said hosiery and the quality, value, grade, and substance thereof. PAR. G. In the course and conduct of his business as aforesaid respondent hr'" caused to be stamped on a substantial number of said hose the words "50c per pair," which serves as a representation by the respondent that 50 cents per pair is the customary and ordinary retail value of said hose. In truth and in fact, such purported retail value is fictitious and is much higher than the pric.e at which such hose is customarily and ordinarily offered for sale and sold at retail. PAR. 7. The use by respondent of the foregoing false and misleading statements and representations disseminated as aforesaid has had, and now has, the capacity and tendency to, and does, mislead and deceive members of the purchasing public situated in various Sta~s of the United States into the erroneous and mistaken belief that such false and misleading statements and representations are true and that said hosiery contains silk, the product of the cocoon of the silkworm, in a larger proportion than is in fact present in such hosiery, and that such hosiery is composed of or contains silk in a quantity or proportion larger than the proportion of rayon contained in said hosiery, and causes members of the purchasing public to purchase substantial quantities of said hosiery because of said enoneous and mistaken belief. As a result, trade has been diverted Oruer 28 F.T.C.

unfairly to the respondent from his competitors in said commerce who truthfully advertise and represent their respective hosiery and the materials contained in such hosiery. In consequence thereof, injury has been, and is now being, clone by respond.ent to competition in commerce among and betweeu various States of the United States. COXCLUSION The aforesaid acts and practices of the respondent, as herein found, .are all to the prejudice aml injur-y of the public and of respondent's competitors and constitute unfair methods of competition in commerce within the intent and meaning of the Federal Tmtle Commission Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondent, testimony, and other evidence taken before Miles J. Furnas and ,V. ,V. Sheppard, examiners of the Commission theretofore duly designated by it, in support of the allegations of said complaint and in opposition thereto, brief in support of the complaint, respondent having waived filing of brief and not having requested oral argument, and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It i8 ordered, That the respondent, Charles ,V. Cromer, individually and trading and doing business as Shal win Hosiery Mills, or under any other name or names, his representatives, agents, and employees, directly or through any corporate or other device in connection with the offering for sale, sale, and distribution of hosiery in commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing in any manner whatsoever that the hosiery manufactured or sold by him contains "silk" or "pure thread silk,:' the product of the cocoon of the silkworm, in greater quantity, percentage, or degree than is actual1ly the case.

2. Advertising, offering for sale, or selling, hosiery composed in whole or in part o£ rayon without clearly disclosing the fact that such hosiery is composed of rayon, and when such hosiery is composed in part of rayon and in part of other fibers or materials, such fibers or materials, including the rayon, shall be named in the order of their predominance by 'wight, beginning with the largest single constituent, prm·ided that if any particular fiber in said hosiery is not. present SHALWIN HOSIERY MILLS 821 ~12 Order in a substantial amount by weight, the percentage in which such fiber is present shall then be specifically disclosed. 3. Using the words "silk~., or "pure thread silk," or words of similar import and meaning, to describe, designate, or refer to hosiery which is not composed wholly of silk, the product of the cocoon of the silbmrm, provided that in the case of hosiery composed in part of silk and in part of materials other than silk, such words may be used as descriptive of the silk content if there are used in immediate connection and conjunction with the word "silk," in letters of at least equal size and conspicuousness, words truthfully describing and designating each constituent fiber or material thereof in the order of its predominance by weight, beginning with the largest single constituent, ami provided that if any particular fiber in said hosiery is not present in a substantial amount by weight, the percentage in whkh such fiber is present shall then be specifically disclosed. 4. Using the term "pure thread silk reinforced with rayon" to de- -scribe, designate, or refer to any hosiery other than that in which the chief constituent is pure thread silk, the product of the cocoon of the silkworm, combined solely with rayon as a reinforcing substance.

5. Marking, stamping, or affixing to such hosiery, or the containers thereof, or otherwise representing as the customary or regular retail prices therefor, prices which are in fact fictitious and greatly in excess of the prices at which said hosiery is regularly and customarily offered for sak and sold at retail.

This order shall not be construed as permitting the use o£ the unqualified word "silk" to designate, describe, or refer to weighted silk. It i8 further ordered, That the respondent shall, within 60 days after service upon him o£ this order, file with the Commission a report in writing, setting forth in detail the manner and form in which he has complied with this order.

Syllabus 28 F. T. C.