FTC Boner

The Federal Trade Commission in recent years has seldom struck out. Of 4,942 complaints issued since 1933, it made all but 126 stick without court action, won all but five of its court cases for a net batting average of .999. But last fortnight the FTC was caught way off base, sent red-faced to the showers.

Five years ago the FTC cracked down on the Kidder Oil Co. of La Crosse, Wis., manufacturers of a graphite lubricant called Koatsal. According to the FTC charges (at once broadcast from its busy mimeograph machines) Koatsal did none of the things President Joseph K. Kidder claimed it would do when added to automobile crankcase oil. Ex-newspaper man Kidder had little money; his business was sick from the adverse publicity, and fighting the FTC charges looked like a long and expensive process. But he was sure the FTC was wrong. When it asked him to sign a stipulation admitting that Koatsal did not soak into metal but was held on by "capillary attraction" (a scientific impossibility), he became surer than ever.

Instead of signing the stipulation, Kidder demanded hearings, soon found himself on a legalistic merry-go-round which whirled him around for five years. The FTC held hearings in a half dozen different cities (with Kidder often acting as his own lawyer to save money), finally issued a cease and desist order: stop representing that Koatsal has any lubricating value except for what oil it contains. A less stubborn man might have let this blow finish him; Kidder stuck on until he reached U. S. Circuit Court of Appeals. There last fortnight he won his case. Impressive was the list of FTC blunderings which the decision made clear:

> The FTC never had tested Koatsal to find out what it could and could not do. Instead it relied on Bureau of Standards tests of another graphite lubricant.

> The Bureau of Standards tests were seven years old at the time of the Kidder hearings, were described from memory by witnesses who had kept no records of them.

> The tests were made on a detached motor operating with complete lubrication, had no bearing whatever on what a graphite lubricant would do when the oil film was broken.

After this sad record was spread out, FTC officials admitted last week they had "slipped badly," said they would reorganize their legal setup so that no FTC lawyer would ever go to court again with sieve instead of brief. But Mr. Kidder was left to wonder whether he had won anything but a moral victory. Said he: "The FTC [was] about as successful in putting us out of business as they would have been had we not appealed."

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