, the Federal Trade Commission “Annual Reports”.
[Posted on L&P on Jan 20, 21, & 22, 2011.]
The US Federal Trade Commission “Annual Reports” have lots of information about some obscure and some not-so-obscure fountain pen companies. The FTC was established in 1914, so, sadly, there are no reports before that date, and the first report doesn’t appear until 1916. Here’s the complete list of the PDFs of the reports listed by year. But if you open up any of the links on that page, you can simply change the year in the URL to get all the annual reports from 1916 to the present. Once the PDF opens up in your browser, you can perform word-searches there, or you can save it to your files and search it with a PDF viewer. You can search for any pen company name, or you can find all the pen companies by searching for the word “pens”.
The first two reports have nothing in them concerning pens, but after 1918 they really get rolling. They peter out during the Depression, and mostly concern fly-by-night cheap, novelty pens, and pen companies such as Acme, Spors, Eclipse, Arnold, and Wearever, but there are still some real nuggets there. The pen information starts to die out during WWII, but right after the war the Commission takes on the lifetime guarantees, and there is some interesting stuff there about the “Big 4” pen companies. I’ll be posting some of my findings in these reports, but in the meantime, have fun playing around in this new play pen.
Waterman’s Resale Price Maintenance
To get things started, here’s the best one first, Waterman’s in 1918. And it also appeared first in the list of complaints concerning pen companies that the FTC had to deal with. It concerns Waterman’s. All the page numbers cited are from the PDFs, not the actual page numbers of the reports. It makes it much easier to find the relevant passages I am quoting.
In the 1918 report, p.93, “Complaint No. 89, Apr 15, 1918, Federal Trade Commission v. L.E. Waterman Co.”, makes its first appearance. The charge is,
Stifling and suppressing competition in the manufacture, marketing, and sale of fountain pens by fixing specified standard resale prices and refusing to sell to those who will not agree to maintain such prices.Bad boys, those Watermans. This complaint wasn’t dealt with for four years, and the FTC eventually issued this attempt at a resolution of these “Resale Price Fixing Cases” with this statement in their 1922 report, p.252.
The Commission disposed of a number of complaints by dismissal; where the charge was maintenance of resale prices, these complaints had been on suspense pending the decision of the Beechnut case in the Supreme Court of the United States, and after that decision these cases, if brought to trial, would have necessitated an entire new investigation because of their age, and so were dismissed without prejudice to the right of the commission to institute new proceedings in event it was found that the practices complained of were continued in conflict with the decision of the Supreme Court.The cases in point included Complaint No. 89. But it wasn’t over yet, not by a long shot. Waterman’s persisted in its bad ways, so in the 1927 report, pp.269-70, and pp.277-79, the FTC had to resort to publishing a series of “Stipulations To Cease And Desist”. The stipulations were published after deleting the names of the “respondents”, or companies involved, apparently so that they wouldn’t feel singled out, but it’s quite obvious that we’re still dealing with plain, old Waterman’s. There’s lots of good information to be mined there.
Stipulation No. 49
Retail price maintenance–Fountain pens, etc.–Respondent, a corporation engaged in the manufacture of fountain pens, metallic pencils, and similar products, and in the sale and distribution of the same in interstate commerce, and in competition with other corporations, individuals, firms, and partnerships, entered into the following stipulation of facts and agreement to cease and desist forever from the alleged unfair methods of competition used in the sale of its products.
Respondent, for more than one year prior to June 1, 1924, adopted and carried out and used in interstate commerce a policy, or plan by which it sought to secure the maintenance by retail dealers of certain resale prices suggested by it on certain of its products. During the period heretofore mentioned said corporation repeatedly announced its resale prices to the trade and made it known generally that no cutting of these prices by retail dealers would be permitted, and that it would refuse to sell dealers failing to maintain such prices. In pursuance of such policy and in order to prevent price-cutting dealers from securing its goods, said respondent sought and secured the cooperation of its customers in procuring information of price cutting on the part of dealers handling its products, and used such information to prevent such price-cutting dealers from continuing to handle such respondent’s products. Said corporation also used the services of its salesmen in investigating instances of price cutting and in inducing such price-cutting dealers to maintain its prices in the future. In certain cases of price cutting said respondent requested assurances, promises, or informal agreements for the maintenance of its resale prices in the future, and in case such was refused the necessary steps were taken by respondent to cut off such dealers and to refuse thereafter to ship further goods to them, and such dealers’ accounts on the company’s ledgers, or other records were marked “Do not ship,” and no goods were thereafter permitted to go forward to such dealers until and unless the respondent received from them such assurances, promises, or informal agreements as satisfied the corporation that such dealers would in the future observe and maintain said resale prices.
Respondent agreed to cease and desist forever from enforcing the maintenance of its said resale prices, (1) by securing by means of requests or invitations, either expressed or implied from the said respondent, to its customers for cooperation in procuring for its information instances of price cutting on the part of other dealers, or by seeking to secure the cooperation of its customers in procuring for it information as to instances of price cutting on the part of other dealers and by using the information obtained through such cooperative methods to prevent such dealers from handling said respondent’s products; (2) by using the services of its salesmen or other representatives in investigating instances of suspected price cutting and in inducing price-cutting dealers, when detected, to give assurances, promises, or informal agreement to restore and maintain said corporation’s suggested resale prices; (3) by securing or accepting from price-cutting dealers, either directly or through its salesmen or other representatives, assurances, promises, or informal agreements as to the future maintenance by such dealers of said corporation’s resale prices; (4) by marking the accounts of price-cutting dealers on said corporation’s ledgers or otherwise with the words “Do not ship”, or other similar expressions, and withholding further shipments from such price-cutting dealers until satisfactory assurances, promises, or in formal agreements have been given by them as to the future said resale prices; (5) in general, by carrying out any policy of resale price maintenance by limiting or restricting retail dealers in their freedom of fixing their own resale prices by means of any of the cooperative methods set forth above.
Respondent also agreed that if it ever resumed any of the said means and methods for the purpose, or with the effect, of enforcing maintenance of resale prices upon its products, or should, in any manner, violate the terms of this stipulation, then in any proceeding before the commission based thereon the facts herein stated shall be deemed to have been proved and their truth admitted by said corporation and this stipulation shall be admissible in evidence to establish the said facts.
Stipulation No. 57But again that wasn’t the end of it. In the 1934 FTC report, p.70, the case is brought up yet again without naming the respondent, obviously Waterman’s.
Price maintenance–Fountain pens, etc.–Respondent, a corporation, engaged in the manufacture of fountains pens, mechanical pencils, and other allied products, and in the sale and distribution of the same in interstate commerce, and in competition with other corporations, individuals, firms, and partnerships likewise engaged, entered into the following stipulation of facts and agreement to cease and desist forever from the alleged unfair methods of competition used by it in the sale of its products.
Respondent, in the course and conduct of its business, adopted a policy or plan by which it sought to secure the maintenance, by wholesale and retail dealers, of certain resale prices suggested by it to be charged by said wholesale and retail dealers respectively, for the various products manufactured and sold by respondent. Respondent repeatedly announced said resale prices to the trade and made it known generally that it would refuse to sell to any wholesale or retail dealers failing to maintain such prices, or selling to others who had failed to maintain the same. Pursuant to said policy and in order to prevent price-cutting dealers from securing its products, respondent secured the cooperation of its Jobber customers and others in procuring for it information as to instances of price cutting on the part of retail dealers’ handling said products and used such information to prevent such price-cutting dealers from continuing to handle said products. Respondent exacted assurances, promises, or informal agreement from offending dealers for the future maintenance of such prices, and when such assurances were not given, respondent refused thereafter to ship its goods to them. Respondent instructed its salesmen to report instances of price cutting and the source of supply of such price-cutting dealers, and said respondent also required its jobber customers to sign so-called wholesale contracts whereby said jobbers have recognized their obligation to resell said product to the retail trade at discounts not to exceed the schedule regularly maintained by said corporation. Respondent adopted and put into use a system of code letters which were placed on the boxes containing its fountain pens sold to jobbers for the purpose of enabling said respondent to trace the source of supply of price-cutting retailers; and said respondent also made notations in its records to the effect that its goods should not be shipped to dealers who failed to maintain said resale prices with the result that no goods were sold to such dealers unless and until said respondent received from them such assurances, promises, or informal agreements as satisfied said respondent that said dealers would in the future observe and maintain said prices.
Respondent agreed to cease and desist forever from enforcing the maintenance of its said resale prices; (1) by seeking to secure the cooperation of Its customers, wholesale or retail, in procuring for it information as to instances of price cutting on the part of other distributors of its said products; (2) by securing or accepting from price-cutting dealers, either directly or through the representatives, assurances, promises, or informal agreements as to future maintenance of said corporation’s resale prices as a condition of the shipment of further goods; (3) by utilizing any system of code letters or other symbols for the purpose of tracing the source of supply of price-cutting dealers; (4) by keeping records of the names of the price-cutting dealers and entering herein “Do not ship” or other similar notices as a means of preventing such dealers from securing said corporation’s product until satisfactory assurances, promises, and/or informal agreements shall have been given by them as to the future maintenance of such resale prices; (5) by requiring its jobber customers to sign any form of contract or agreement by which they recognize their obligation to maintain said corporation’s resale prices; (6) and in general by carrying out any policy of resale price maintenance whereby the freedom of wholesale or retail dealers in fixing their own resale prices is limited or restricted by means of any of the cooperative methods set forth herein or any similar cooperative methods.
Respondent further agreed that should it ever resume or indulge in any of the practices in question, or in any manner violate the terms of this stipulation, the facts herein set forth shall be deemed to have been proved and their truth admitted by said respondent and this stipulation shall be admissible in evidence to establish such facts.
Alleged Resale Price MaintenanceHere’s a conversation with Waterman in The American Stationer on Nov 22, 1894, p.939. Most of it deals with the Waterman’s method of curtailing price cutting by retailers. Waterman’s had been forcing their Resale Price Maintenance policy on their dealers for over 40 years at this point, in 1934, and after the first ruling in 1918, they had been dragging it out and defying the FTC and breaking the law for about 16 years.
A nationally known manufacturer of fountain pens, desk sets, ink, and automatic pencils was charged, in a complaint issued Jan 25, 1934, with enforcing a system of resale price maintenance in the sale to the public of its products.
It is alleged that the respondent sells only to retail dealers, and requires those dealers to resell the company’s products to the public at prices which are fixed by it. The company has about 20,000 dealers throughout the United States. The complaint alleges that it enlists and secures the support of its officers, agents, and employees and the cooperation of dealers in enforcing and maintaining the system of resale price maintenance.
Watermann and Waterson
Here are a couple of unrelated infringements of the “Waterman” trade name. One involves a stylograph imprinted with the name Watermann Ink Pencil, discussed on Zoss. The 1924 FTC report, p.319, deals with this case.
Complaint No. 1045, Daniel Platt, doing business under the name of Watermann Ink Pencil Co. Charge: Unfair methods of competition are charged in that the respondent, engaged in assembling and selling ink pencils and fountain pens, simulates the trade name and marking employed by the L. E. Waterman Co., well known as the manufacturer of Waterman’s Ideal Fountain Pens, and in that the respondent claims to be a manufacturer of Ink pencils, with a factory in the Borough of Brooklyn, when in fact said respondent has no interest in any factory for the manufacture of such articles, all for the purpose of misleading and deceiving the purchasing public, in alleged violation of section 5 of the Federal Trade Commission act. Status: Awaiting answer.In the 1925 FTC report, p.300, they published a list of “Proceedings Disposed Of July 1, 1924, To June 30, 1925” including Complaint No. 1045, which is now listed as, “Disposition: Dismissed, respondent having gone out of business”.
I have found information on two pen companies that tried to get away with using the name “Waterson”, one at the beginning of the 20th century, and one in the 1920s and 30s. In the 1929 report, p.270, the FTC dealt with the latter company.
Complaint No. 1610, in the matter of James Kelley. Charge: Unfair methods of competition are charged in that respondent engaged in a mail order jobbing business in fountain pens, pencils, and novelties falsely represents that he manufactures the articles he sells; stamps the words “14K Waterson”, “Iridium”, and/or “Warranted 14K”, on parts of fountain pens sold by him, which are of poor quality and low cost, when in truth such parts are not iridium, nor 14 carat, nor have the pens any connection with the well known “Waterman” fountain pen; supplies customers with fictitious price tags bearing the amounts $2.50, $7, $8, $10, etc., and with coupons advertising special reduced prices for a limited time only, when in truth such prices are purely fictitious and in excess of the value of the pens, all In alleged violation of section 5 of the Federal Trade Commission act. Status: At issue.However, in the 1937 report, p.81, the FTC was still dealing with James Kelley.
On July 23, 1936, the FTC filed an application with the Second Circuit Court, New York, for the enforcement of its order directed against this respondent, an individual with headquarters in New York, and engaged in a mail-order jobbing business in fountain pens, pencils, and specialties. The order, based on findings supported by evidence, forbade Kelley from making certain misrepresentations in connection with his business, for example, that he manufactured the products he sold, that he conducted the business of a large mail-order concern, that purchasers of his articles saved the middleman’s profit, that his pen points were tipped with iridium and were made of 14-carat gold, and that his fountain pens were worth as much as $8 and $10. After argument, the court affirmed the Commission’s order from the bench on Feb 3, 1937.The court case number is 87 F. (2d) 1004, if anyone has access to LexisNexis.
After WWII, the FTC finally dealt with the unrealistic lifetime guarantees offered by pen companies. Most of the time when this issue is dealt with by pen collectors, they bring up the Parker “Blue Diamond” guarantee. But in the 1945 report, p.80, the FTC deals with the “Unfair Practices” of all the “Big 4” fountain pen companies, W. A Sheaffer Pen Co., Complaint No. 4337, The Parker Pen Co., No. 4338, Eversharp, Inc., No. 4590, and L. E. Waterman Co., No. 4617.
They were ordered to cease making unqualified representations that their fountain pens were unconditionally guaranteed for the life of the user, or for any other designated period, when a service charge, usually 35 cents, was made for repairs or adjustments. The respondents were ordered to discontinue using such terms as “Lifetime”, “Guaranteed for Life”, “Life Contract Guarantee”, “Guaranteed Forever”, or “Guaranteed for a Century” to describe or refer to their pens, and representing that the pens were unconditionally guaranteed for any designated period of time, unless the respondents, without expense to the user, made repairs or replacement of parts necessitated during the designated period by any cause other than willful damage or abuse. The orders did not prohibit the respondents from representing truthfully that the service on their pens, as distinguished from the pens themselves, was guaranteed for life, or any other designated period, even though a charge was imposed in connection with such servicing, providing the terms of the guarantee, including the amount of the charge, are clearly and conspicuously disclosed in immediate conjunction with such representations.In spite of that, the FTC was still dealing with the issue in the 1946 report, p.86 and p.88, in a list of the “Cases Pending In Federal Courts”.
L. E. Waterman Co., New York, Second Circuit, New York, upon stipulation of counsel, dismissed a petition to review a Commission order prohibiting false and misleading advertising in connection with the sale of fountain pens.
Parker Pen Co., Janesville, Wis., Seventh Circuit, Chicago, misrepresentation of fountain pens through use of statements such as “Guaranteed For Life” and “Life Guaranteed”.In 1947, p.96, the Parker case was still listed amongst the cases pending in the federal courts.
The Parker Pen Co., Janesville, Wis., the Seventh Circuit Court, Chicago, modified and affirmed the Commission’s order forbidding misleading advertising of guaranties in connection with the sale of fountain pens.There was also a case against the Vacu-Matic Carburetor Co., Wauwatosa, Wis., no relation to Parker.
In 1948, p.108, there was a list of the terms prohibited in the new “promulgated rules”, the improper use of such terms as “rolled gold plate”, “gold plated”, “plate”, “plated”, “gold fill ed”, “gold electroplated”, “gold electroplate”, “gold”, “karat gold”, “karat”, “carat”, “sterling”, “sterling silver”, “silver”, “solid silver”, “sterline”, “Duragold”, “dirigold”, “noblegold”, “goldine”, and “miragold”.
In 1949, p.68, the FTC reported on the “Pending Trade Practice Proceedings” concerning the,
Fountain pen and mechanical pencil industry. The proposed rules for this industry, on which public hearing was held during the year, included specific requirements for the use of such terms as “iridium tipped” and “osmiridium tipped” to describe the nibs, or tips of fountain pen points, and also for use of such terms as “gold”, “rolled-gold plate”, “gold filled”, and “gold electroplated” as descriptive of any part of pens or mechanical pencils. Misuse of such terms had necessitated numerous corrective proceedings by the FTC against members of this industry. It was a primary purpose of the proposed rules to clarify the legal requirements respecting these subjects and to provide a basis for industry-wide correction of these and other unfair trade practices.In 1950, p.73, the FTC reported on the “Trade Practice Conferences” on the,
Fountain pen and mechanical pencil industry. Members of this industry are engaged in manufacturing and marketing fountain pens, ball point pens, dip pens, mechanical pencils, and parts for such products. Annual sales at retail are $250,000,000 aggregate. The rules are directed to the elimination and prevention of various types of unfair trade practices. They offer a yardstick to industry members in curbing misleading advertising, and covered specifically the false use of the terms “Iridium tipped” and “Osmiridium tipped”. They also deal with deceptive practices with respect to gold content. The provisions are designed to provide the industry with a comprehensive understanding of the requirements of the law.
Gold (Plated) Nibs
One of the most interesting facts revealed by these reports is the extent to which the noname, fly-by-night companies tried to get away with misrepresenting the quality of their nibs. One way that they did this was by passing off gold-plated nibs as solid gold by burying the word “plated” under the section. To be honest, when I first heard of such stories at pen shows and on the pen message boards, stories of finding fountain pens with nibs with the word “plated” pushed inside the section, but without seeing actual examples of such pens, I thought that these stories were apocryphal, or old-husband’s tales, or that they were at least scattered instances of after-market replaced nibs. But between 1919 and 1940, there were at least ten cases against companies such as Turner & Harrison, Shatkun & Kahn, which later became Wearever, Levin Bros., Standard Fountain Pen Co., Karl Guggenheim Inc., Henry Lederer & Bros. Inc., the aforementioned James Kelley’s Waterson, and the Shafner Lifetime Pen Co., another instance of trade name rip-off. All were charged and given cease and desist orders for this fraudulent practice. It was a real eye opener to see these frauds exposed and substantiated by the paper trail of the FTC cases, but I’m not going to give you the numbers and dates for these complaints in order to leave you the pleasure of discovering the actual cases on your own.