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f Ih1DEX TO APPENDIX PAGP Modified Order to Cease and Desist ................. 1 Findings as to the Facts and Conclusion .............. 4 Commission's Exhibits Numbers 48.................. . 11 49. 50. 53. 58. 225. 227. 13 15 17 19 ..... 21 ..... 22 228 ................. 23 229 ................. 24 Article-Cigarette Ad Fact andl Fiction .............. 25 Stipulation as to the Facts, dated Nbvern e r-20-,t944-~9 Stipulation dated January 17, 1945 .................. 34 Order Rescinding Approval of Stipulations and~ Reopening Case for Further Testimony ..................... 36 Motion to: Strike from the Record the "Order" of the Com- mission dated June 2, 1945, and all Proceedings taken pursuant thereto; and to Proceed to Dispose of the Pro- ceeding upon the Record as it existed~ on January 17, 1945 .... ................................ 38 Letter dated April 9, 1945, from Perkins, Daniels & Perkins to the Fed'erat Trade Commission, to which was an- nexed proposed Stipulation as to the Facts and corre- spondence between Counsel and the Commission re- garding the negotiations leading to the Stipulations of November 20, 1944 and January 17, 1945 .......... 40

t i 1. UNITED STATES' OF AMERICA BEFORE FEDERAL TRADE COMMISSION COMMISSIODIERS': Lowell B. Mason, Acting Chairman William A. Ayres John Carson~ James M. Mead In the Matter of / DOCKET No. 4922 P. LORILLARD COMPANY, a corporation MODIFIED ORDER TO CEASE AND DESIST This proceeding was heard by the Federal `1'rade' Commis- sion upon the complaint, answer of the respondents, testimony and other evidence taken before trial examiners of the Com- mission theretofore duly designated by it, recommended deci- sion of the trial examiner and exceptions filod therem by coun- sel SllDDa_r[in th P rnrr,nl _ ----~~.''

2 for modifying said ord'er to cease and desist; and~ the Commis- sion having considered such additional proposals and having rejected same for the reason that an order to cease and desist embodying such proposals would not adequatelly protect the public against a continuation or resumption of the practices found to be unfair and deceptive, and being of the opinion that the order to cease and desist heretofore issued in this proceeding should be modified' in the respects set forth: in said'l rule to show cause: Now, THEREFORE, IT IS o1MExEV that said order to cease and desistbe, and the same hereby is, modified to read~ as fol- lows: "IT IS oPJ)E-anv that tlie respondent, P. Lorillard Company, a corporation, and its officers, representatives, agents, and em- ployees; directly or through any corporate or other device, in or in connection with the offering for sale, sale, and distribu- tion in commerce, as ` comrnerce" is defined in the Federal Trade Commission~ Act, of its products Beech-Nut cigarettes,. Sensation cigarettes, Old GoU cigarettes, and Friends smoking tobacco, do forthwith cease and desist from representing by any means, directly or indirectly._ "(1)1 That~ Beech-Nut cigarettes, or any other cigarette composed of substantially the same blend of tobaccos, or the smoke therefrom, will not harm or irritate the throat;, or will provide any defense against throat irritation; or that the extra length of Be.ech-Nut cigarettes, or of any other cigarette of substantially the same length, will filter out or eliminate the harmful properties in the smoke from such cigarettes or will cause the smoke from such cigarettes to be cooler than the smoke from cigarettes of standard length; provided, however, that nothing herein shall be construed to prohibit the respondent from representing that during the time the extra: of any such cigarette is being smoked the smoke therefrom will contain less irritating properties and will be cooler than the smoke from standard length cigarettes;

"(2) That Sensation cigarettes, or any, other cigarettee composed of substantially the same blend of tobaccos, aree made of extra-choice imported and domestic tobaccos, or are top quality cigarettes, or are made from the finest to- bacco that~ can be bought; "(3) That Old Gold cigarettes or the smoke therefrom contains less nicotine„ or less tars and resins, or is less irri- tating to the throat~ than the cigarettes or the smoke there- from of any of the six other lieading brands of cigarettes; or "(4) That Friend's smoking tobacco, or any other smok- ing, tobacco manufactured in substantially the same man- ner, is rum-cured, or that the process by which a rum flavor- ing is addedl to such tobacco enriches the tobacco or causes the smoke therefrom to be any less irritating m the throat or any cooler than if such rum flavoring were not added; or that the smoke from~ Friends smoking tobacco, or from any other smoking tobacco composed of substantially the same blend of tobaccos, will not'~ irritate the mouth or throat of a smoker, or is cool, or is free from bite, burn, or harsh- ness. . "IT IS FURTHER ORDEREID that respondent shall, within sixty (60) days after service upon it of this order, file with the Com- mission a report in writing, setting forth in detail the manner and form in which it has complied with this order." By the Commission. /s/ D. C. DANIEL D. C. Daniel, Secretary. ISSUED: May 24, 1950

4 UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION COMMISSIONERS: Lowell' B. Mason, Acting Chairman, William A. Ayres, John Carson, James M. Mca& In the Matter of P. LORILLt1RD COMPANY, a corporation. DocxET No, 4922. FINDINGS AS TO THE' FACTS--AND CO11dCLUSION mony and other evidence, the trial examiner's recommended decision and exceptions thereto by counsel supporting the com- Pursuant to the provisions of the Federal Trade Commission Act, theFederal' Trade Commission on March 2, 1943, issued and subsequently served its complaint in this proceeding upon the respondent, P. Lorillard Cornpany,, a corporation of the State of New Jersey, charging said respondent with the use of unfair methods of competition in commerce and unfair and de- ceptive acts and practices in commerce in violation of the provi- sions of that Act. After the filing of the respondent's answer to the complaint, testimony and other evidence were introduced before trial examiners of the Commission theretofore duly desig- nated by it and such testimony and other evidence.were duly recorded and fil'ed in the office of the Commission. Thereafter this proceeding regularly came on for final hearing before the Commission upon the complaint~, the respondent's answer, testi- ._

plaint, and brief in support of the allegations of the complaint (no brief having been filed by respondent and oral argument not having been requested); and the Commissions having duly considered the matter and being now fully advised in the premises, finds that this proceeding is in~ the interest of t'he pub- lic and makes this its findings as to the facts and its conclusion drawn therefrom. FINDINGS AS TO THE FACTS PARAGRAPH SEVnrr: In the course and conduct of its af'ore- said business and for the purpose of aiding and promoting the sale of its aforesaid Old GoU brand of cigarettes, respondent disseminated and caused to be disseminated, by the United States mails, in magazines of nation-wide circulation and news- papers of interstate circulation, by local radio broadcasts and by nation-wide hookups of broadcasts, and by other means in com- merce, advertisements in which it' represented directly and by implication that of the seven~ leading brands of cigarettes, Old Gold cigarettes are lowest in nicotine content and are lowest in throat,irritating tars and resins; and that the July 1942 issue of. Reader's Digest, a monthly magazine of nation-wide and inter- national circulation,, contained a report'of tests of seven leading cigarettes, which tests showed that the smoke from Old Gold cigarettes had less nicotine than~ the smoke, from the other six brands tested and that Old Gold cigarettes contained less throat= irritating tars and resins and were easier on the throat than the other six brands tested. PARAGRAPH EIGHT: Throug4 the use of the aforesaid repre- sentations respondent has represented to the public that both 'the tobacco in Old' Gold cigarettes and: the smoke therefrom contain less nicotine than the tobacco and the smoke therefrom of any of six other leading brands of cigarettes and that Old Gold cigarettes contain less tars and resins and are therefore less irri- tating to the throat than any of six other leading brands of cigar- ettes. It is established by scientific evidence that the nicotine

0 6 content of the smoke of a cigarette is in direct proportion to the nicotine content of the tobacco contained in the cigarette itself. It is further established by scientific evidence that the nicotine content of the tobaccos used in the manufacture of popular brand's of cigarettes, including respondent's Old Gold brand and the six other brands with which respondent's Old GoU cigar- ettes were compared, varies greatly, not only as among the sev- eral types of tobaccos usedi (principally flue-cured, Burley, and Maryland) but al'soas among the indkvidual plants of the same types of tobacco on the same farm and in the same field, and even as among the leaves on the same plant. These variations are due to a number of variablc factors; including weather con- ditions, type of soil, method of fertilization and cultivation, method of harvesting, and handling after harvesting. There is no index by which the tobacco buyers for any cigarette manu- facturer can judge the nicotine content in tobacco leaves by visual inspection. Also due to the aforementioned variations in the nicotiine content of tobacco, constancy in the nicotine con- tent of the tobaccos purchased by any cigarette manufacturer cannot be maintained through the purchase of only the leaves in a: certain position on the tobacco plant, or by sampling speci- mens of the tobaccos, or in any other manner. There is no known practical process by which the nicotine ain the tobacco leaf may be removed or substantially reduced without at~ the same time destroying the tobacco for commercial use. Because of tlre large amount of tobacco leaves used in the manufacture of cigarettes and the extreme variability in nico- tine content of the leaves, it is not practically possible for respondent, or any of the other manufacturers of leading brands of cigarettes, to! maintain a constancy of nicotine in the -finished cigarette. The record contains certain testimony and reports ~concerning a series of tests which were made by the Food and Drug Administration, at the instance of the Commission, 'for ,the purpose of determining, among other things, the nicotine content of the tobacco in andl the smoke from a number of cigar- ettes of six of the largest selling brands, including responclent's ;Old Gold brand. The results of these tests showed that -the

7 nicotine content of both the tobacco in and the smoke from the individual cigarettes involved in the tests varied greatly, both in actual weight and in percentage by weight of the cigarettes, not only as among the six different brands but also as among the individual cigarettes of the same brand. Since the nicotine content of the tobaccos used by respond- ent in the manufacture of its Old GoU cigarettes as well as those used by the manufacturers of other leading brands of cigarettes varies materially, and since it is not practically possible for respondent, or any of its principal competitors, to know the nicotine content'~ of the tobaccos purchased, or to remove or sub- stantially reduce such nicotine content, or to maintain constancy in the amount of nicotine in the finished cigarette or in the smoke therefrom, it follows that respondent's Old Gold cigar- ettes and the smoke therefrom do not contain any less nicotine than do the cigarettes and the smoke therefrom of other leading brands on the market. With respect to the aforesaid representations that Old Gold cigarettes contain less tars and resins and are therefore less irritating to the throat than any of six other leading brands of cigarettes, it is establ7shed' by scientific_evidence that 4he- -tars- and resins in the tobaccos from which respondent's Old Gold cigarettes, as well as other popular brands of cigarettes, are made vary considerably, as does the nicotine content, and for the same reasons. It is not practically possible for respondent, or any of its principal competitors, to determine the amount of tars and resins in the tobaccos purchased, or to remove or substantially reduce the amount of tars and resins in such tobaccos, or to paintain constancy in the amount of tars and resins in the fin- ished cigarettes: The testimony and reports concerning a series of tests made by the Food and Drug Administration, mentioned hereinabove in connection with the nicotine content of cigar- ettes, also show that for the individual cigarettes involved in the .tests the amount of tars and resins in the smoke varied greatly, both in actual weight and in percentage by weight of the cigar- ettes, not, only as between the six different brands tested but also as among the individual cigarettes of the same-brand. The 4': 11

8 tars and'resins in the smoke from all cigarettes have an irritating effect on the human body. Respondent's Old Gold cigarettes contain no less tars and' resins t'han other leading bran.d's of cigarettes and, therefore, the smoke from respondent's Old Gold cigarettes is no~less irritating to, the human body, or easier on the throat, than the. smoke from other leading brands of cigarettes. The Commission finds from, the evidence that the aforesaid representations by respondent that the tobacco in Old Gold cigarettes and the smoke therefrom contain less nicotine than the tobacco and the smoke therefrom of any of six other leading brands of cigarettes on the market, and that its Old Gold cigar ettes contain less tars and resins and are therefore less irritating to, the throat than any of six other leadirig brands of cigarettes, are false; misleading, and deceptive. The July 1942 issue of Reader's Digest contained an article entitled "Cigarette Ad' F'act and Fiction", which was based on a report by a research laboratory on certain tests of seven com- mercial brands of cigarettes. Respondent: in its advertising, made representations concerning said article and the report on which it was based, assct out in Paragraph Seven hereof, without disclosing significant facts contained therein. Said article showed that the average amount of nicotineper cigar- ette and'the percentage of tars in the smoke from the cigaret'testesteJ varieJ but little as between thedifferent brands of cigar rertcs, an& contained thefollowing statement with respect to the tests reported on therein:"The laboratory's general conclusion will be~ sad news for the advertising copy writers, but good' news for the smoker, who, need no longer worry as to which cigarette can most effectively nail down his coffin. For one nailisjust about as good as another. Says the laboratory report: 'The differences between brands are, practicallv speaking, small, and no single brand is so superior to its conrpetitors~ as to justi fy its selection on the ground that it is less hkrmf ul'." q--a-_,~,

In fact, the difference shown: in said article in the average amount of nicotine content per cigarette in the smoke of the Old Gold cigarettes tested and that in each of two other brands tested was only %771s7 of an ounce, and thee difference shown in said~ article between the average amount of nicotine content per cigarette in the smoke of thc, brand of cigarette reported as having the highest'average amount of nicotine content per cigarette and the average amount of nicotine content per cigar- ette of the Old Gold eigarettes tested was only %s s z s of an ounce. The difference shown in~ said article in the percentage of tars in: the smoke of the cigarette reported to have the highest percentage of tars and the percentage~ of tars reported to be contained in the smoke of the Old Gold cigarettes tested was only 0.39 of one percent. The testimony of expert witnesses establishes tlhat'~ these differences in the nicotine content and in the percentage of tars in the, smoke of the cigarettes tested are insignificant from a physiological standpoint. The representations by respondent concerning said article failed' to disclose that the results of the tests reported therein showed that the differences in~ amount and percentage of harm- ful substances in the tobacco: and-irr thc-sTnokr-a€ the cigare es tested were insignificant and that the smoke from the Old Gold cigarettes tested was no less harmful than was the smoke from the six other brands of cigarettes tested. The Commission finds from the evidence of record that said representations were mis- leadfing and deceptive. CONCLUSION The acts and practices of the respondent as herein found are all to the prejudice and injury of the public and of respond- ent's competitors and constitutc unfair methods of competition in commerce and unfair and deceptive acts and practices in

10 commerce within the intent and meaning of the Federal Trade Commission Act. By the Commission. /s/ LowELr B. N'InsoN, LowFLL B, MnsoN, ActingChairman. fsEAZ) ISSUED: March 31, 1950: AzrESr: /s/ D. C ~: DANIEL D. C. DANIEL, Secretary.. t 4

11 Conuijission's Exhibit No. 48 Cigarette facts Unmasked by Reader's Digest Impartial tests find OLD GOLD lowest in Nicotine OLD GOLD lowest in Throat- Irritating Tars and Resins SEE HOW YOUR BRAND COMPARES WITH OLD GOLD Reader's Diy;est assignrd a scienufic testing IaLwra- ronto find uut ahuut cigarettes- They tested seven tead- ink ciR.trrttes and Rcader's Digest published the results. Thc cigerrtc whose smoke was lowest in nicotine was Old Guhf The aK.irrtre with the least throarirritating tars and resins w-as Old Gold. On both these maior counts Old Gold was best among all sc.en ciKarenes tested_ Get )uly- Readcrs Digest. Turn to page 5. See what this hil;hly respcctcd msy;-ne repurts- Whrn you do, you'11 say "Erum nuw un my cigarette is Old Gold." P. LORILLARD COMPANY Blcndcrs Of finc [obaccos sincc 1760

r 12 This advertisement appeared'~ in the followingpublications- NBw'spapera in Ngw York City Herald Tribune (M) Times (M) World Telegram, (E) Sun (E) Journal American (E) Mirror (Tabloid M) News (Tabloid: M) Dat'a , Siae 6/29/42 1,500 lines 6/29/42 1,5001ines 7/' 1/42 1,5001ines 7/ 1/42 1,5001ines 7/ 1/42' 1,5001ines 6/29/42 1,000 lines 6/30/42 1,000 lines

13 Conu'tiissioi2's Exhibit No. 49 Reader's Digest Exposes Cigarette Claims!... Impartial tests find OLD GOLD lowest in Nicotine and Thro~t- Irritatingand Resins SEE HOW YOUR BRAND COMPARES WITH OLD GOLD Reader's Digest assigned a scientific testing labora- tory to find out about cigarettes. They tested sesen lead- ing cigarettes and Reader's Digest published the results. The cigarette whose smoke was lowest in nicotine was Old Gold. The cigarette with the least throat-irritating tars and resins was Old Gold. On both these major counts Old Gold was best among all sesen cigarettes tested. Get /ufy Reader's Digest. Turn to page S. See what this highly reshectcd magazine reports. When you do, you'll say "From now on my cigarette is Old Gold." P. LORILLIRD COMPANY Blenders of fine tobaccos since 1760 W

14 This advertisement appeared in the following publications- Newspapers in NBw York Gity Date 6ize Herald Tribune (M) 7/2/42 1,000 lines Times (M) 7/2/42 1,00017nes Mirror (Tabloid'; M)7/2J42 1,000 lines News (Tabloid M) 7/2/42 1,000 lines

15 Cotumi,sio>;><'s Exhibit No. 50 Are Cigarette Claims True or ~ PM u 0 Reader's Digest exposes cigarette claims! Impartial tests find OLD GOLD lowest in Nicotine, lowest in Throat-Irritating Tars and Resins! SEE HOW YOUR BRAND COMPARES WITH OLD GOLD Reader's Digest assigned a scientific testing laboratory to find out about cigarettes. They tested seven leading cigarettes and Reader's Digest published the results. The cigarette whose smoke was lowest in nicotine was Old Gold. The cigarette with the least throat-irritating tars and resins w-as Old Gold. On both these major counes Old Gold was best among all seven cigarettes tested. Get July Reader's Digest. Turn to page 5. See what this highly respected magazine reports. Yod11 say, "From now on my cigareae is Old Gold." Light one: Note that mild, intentting flavor. Easy on throat? Sure: And nrure smoking pleasure: Yes, it's the neuOid Gold-finer yet since "Something New has been Added." P. LORILLARD COMPMIY, Established 1760

16 This adVhrtisement appe~ared' in the following publ7cations- Nerocspapera in New York Oitg~ Date Bize Herald Trihune~ (M)~ 7~/7/42~ 1,0001ines~~ Time.s: (M )~~ 7/~7 /42 1,0001ines W~orld Telegram (,E) 7/6/42 1,000~~ lines Sun (E) 7/6/42 1,000 lines Journal Arnerican~ (E) 7~/6/42~ 1~,0001ines Mirror (Tabloid M)~ 7/9/42 1,0001ines NeEVs (Tabloid M) 7/7/42 1,000 lines

17 Commission's Exhibit No. 53 FIRST! AMONG 7 LEADING BRANDS, IMPARTIAL TESTS BY READER'S DIGEST SHOW OLD GULD III IN NICOTINE IN IRRITATINGTARS AND RESINS Rcader's Digest employed a scienri8c testing,laboratory to find out about 7 leading brands of cigarettes. Rea& the unbiased report of the results in the July issue of this world•famous magazine. * Thc smoke of Old Gold was lowest in nicotint tontrntP * The smoke oPOld Gold was IOwest in throat-irritating tars arrd retins!' Judge your own cigarette on this independent basis. Find out how good yorrr smoke can bc-with new Old Gold!' The swing everywhere is to new Ol&Golds!. P. Lori117rd Company, Established 1760

18' This advertisement appeared in the following publications- Newspapers in New York City Dnte Size Herald Tribune (M) 7/17/42 1,000 lines Times (IVI) 7/16/42 1,000 lines World Telegram (E ) 7/21 /42 1,000 lines Sun (E) 7/24/42 1,000'lines ]ournal Arnerican~ (E) 7/24/42 1,0001ines Mirror (Tabloid M) 7/15/42' 1,0001ines News (Tabloid M) 7/17/42 1,000 lines This advertisement also appeared in 748-line size in out-o.£- city newspapers. M 4h i-a .14 C©

19 Co><n><nission''s Exhibit No. 58 Citation 1 ,TI NewOLD GOLD rI~y /V/COT/NE / 111wfs T/NG ~~ y JRiP/fA ~,qRSANORE.f/Ns ~u ~r~oeonu se.nede mccer ntrc IN IMPARTIAL READfR'S DIGEST TESTS OLD GOLD method of processing tobacco reduces Nicotine and Irritants On two~majpr counts Old Gold was firit among 7 leading brands in the tests reported by Reader's Digest in July. The scientific laboratory em- ployed by this respected, world- famous magazine found: st The smokeof Old Gold LOWEST inn nicotine ir Old Gold LOWEST in throat- irritating tors and resins These are the 6ndings of a scientihc laboratory employed by Reader's Digest to give information to readers. The makera of Old Gold use an est.a rtrP in preparing Old Gold' tobacco. Tests show it consistently reduces nicotine and takes out for- eign odors and irritants. No wonder the new Old Gold is converting,smokers everywhere! Try it. Experience its dklicious new nste. No laboratory can sh'ow, you that!! You'Il'get a new idea of how enjoy- ablk a cigarette can be' P. Lurilt.rd Cemp.q, Eaabtished't760

This advertisement appeared in the following publications- Newspapera in New York City Date Size Herald Tribune (M) 8/4/42 1,000 lines Times (M) 8/3j42 1,0001fines World Telegram (E) 8/4/42 1,000 lines Sun (E) 8/3/42' 1,0001ines Journal American (E) 8/3/42 1,000 lines Mirror (Tabloid M) 8/3/42 748 lines News (Tabloid' M) 8/3/42 748 lines

Commission's Exhibit No. 225 J. WALTER THOMPSON COMPANY OLD GOLD PROGRAM July 1, 1942 COMMEI1cIAL I GARRED: Since last Wednesday, millh'ons ofAmericans have had' a chance m read the startling article "Cigarette Ad Fact and Fiction," in the July issue of Reader's Digest. This magazine, with much the largest circulation, in, Amer- ica, gives cigarEtte! smokcrs, the impartial report of a scientific testing laboratory. Whatever brand you smoke, read~ this unbiased report of the testing laboratory employedi by Reader's Digest. The laboratoryreport'ed, for instance, that of seven leading cigarettes tested, the one whose smoke. was lotivest'innicotinewas the new Old Gold. Old Gold was lowest, too;ii- tars aird-resins-- a major cause of throat ii•ritation, No doubt you've wondered "Just what~ cigarettewouU I smoke if I knew the f acts about every one?" Get the July Reader's Digest. Read it. After you do, we believe you'll'; decide-as so many smokers are doing-that you want to change to new Old Golds. Light one up! Notice that miU smooth interesting flavor. Ahd Throat-ease? Sure! And~ smoking pleasure! Plcnry of that. Yes, it's the new Old Gold-finer than ever since some- thing new has been added!

r 22 Commission's Exhibit No. 227 July 14, 1942 OLD GOLD PROGRAM July 15, 1942 COMMERCIAL I ANNOUNCER: Here's news for every smoker in America-news that has helped many thousands in their selection of a cigarette. Look on page 5 of the July Reader's Digest-at the article "Cigarette Ad Fact and Fiction." This reports on a test of leading brands of cigarettes made by a scientific laboratory. An impartial study, understand-made for Reader's Digest- the most widely read publication in America-with a reader- ship of highest intelligence. The article shows exactly what cigarettes were tested-and how ea& brand measured up. The results? Of seven leading brands tested,, Reader's Digest reports that~ the smoke of new Old Gold was lowest in nicotine content! Old Gold was lowest, too, inn tars and resins-a major cause of throat irritation. Old Gold had the least of these irritants, acording to these impartial tests. What cigarette will give you more smoking pleasure? Try new OU Golds and find' out. Enjoy a delightful' rare new taste.. Again something new has been added to New Old Golds-- and it's making new friends every day! Don't forget Read'er's Digest tests show New Old Golds lowest in nicotine-and lowest in throat-irritating tars and resins. ~

23 Commission's Exhibit No. 228 July 15, 1942 COMMERCIAL 11 ANNOLT.NCER : July 13, 1942 Here's new knowledge to help you in judging your ciga- rette ... an unbiased„ impartial report on the comparative merits of leading brands of cigarettes ... not made by any cigarette company but by a magazine. You'll find it on page 5 of the current Reader's Digest-the article entitled "Cigarette Ad Fact and Fiction." What happened was this. Reader's Digest, whose integrity and~ high standing, are unquestionedl throughout the world, wanted to give its readers impartial information about cigarettes.. So it empl'oyed a scientific laboratory to-tes ea 'rng cigarettes and! report impartialllv on its findings. The July Reader's Digest reports that of seven leading brands tested, the smoke of new Old Golel! was lowest in nicotine. And Old Gold smoke was lowest in throat-irritating, tars and resins, too. Read this report! Then try New Old Golds. You'll discovez a delightfully different, new kind of smoke. Everywhere the swing is to the New Old Golds. Again something new has been added!

July 21, 1942 OLD GOLD PROGRAM July 22, 1942 COMMERCIAL I ANIWOUNCER;' If you pride yourself on judging things with an open mind'; you'll want to read the article "Cigarette Ad Fact and Fiction" on page 5 of the July Reader's Digest. This reports some start- ling information about cigarettes: People of highest'~ intelligence depend on Reader's Digest to keep them well-informed. Rccentliv, this highly respected magazine employed aa scientific laboratory to make an impartial test-yes, a test unsoliciteJ by any cigarette manufacturer-an absolutely unbiased test-of seven leading brands of cigarettes -and' to report on their comparative claims. You-as an intelligent smoker-will certainly be interested in the findings. Reader's Digest reports ... The cigarette whose smoke was lowest in nicotine was Old Gold. " The cigarette with the least throat-irritating tars and resins was Old Gold. Yes--on both these major counts, Old Gold led the other leading, brands! Try the cigarette millions now smoke!' Enjoy extra pleasure a delightfuli new taste-in mild new Old Gold! Again something new has been added!I Reader's Digest's tests, remem- ber, showed the smoke of New Old Gold was lowest in nicotine -lowest in throat-irritating tars and resins. 24 Commission's Exhibit No. 229 I

25 Cigarette Jd Fact and Fiction By Roden' Littell HILE W cigarette advertising remained in the re,alm ofl fancy one couldn't hclp ad- miring it at', tiines, for many were the phrases it added' to the language - I'd Walk a Mile for a Camel, Not a Cough in a Carload, Blow Sonte My Way, Reach for a Lucky Instead of a Sweet. Btit more recently ciga- rette advertising has taken to spoil- ing its pretty flights of the imag- ination by resort to percentages, anaN'ses; chemical terms, and mar- ket reports: In order to find out'which ciga- rette adverx~i'sing claims were fact, which fiction, and which a blend of both, The Reader's Digest com- missioned a research laboratory to make a scries of objective tests. Sevenn brands were chosen: the best sellers (the so-called' "Big Five" - Lueky Strike, Camel, Chesterfield, Philip Morris, Old Gold); the extra-long Pall Ivtall;:and Avalon, a representa- tive ro-cent cigarette. Twenty-four cigarettes of each brand, taken; from packages bought ini the open market, were "smoked" in a robot made of glass tubes andi flasks, which ptrmitted complete col- lection, for accurate analysis, of the nicotine and tars containedin the smoke of each brand. Other precise data were noted4 such as the amount of nicotine in the tobacco and the lengtLof time required by the robot s to smoke each cigarette down to a butt two centimeters long-slfightly over three quarters of an inch. 'I'he laboratory's generall conclu- sion will be sad news for the adver tising copy writers, but good! news for the smoker, who need no longer worry as to which cigarette can, most effectively nail down his coffin. For one nail is jiu.st about as good as an- other. Says the laboratory report: "The differences betweenibrands are, practically speaking, small,, and no single brartd is so superior to its corn- petitors as to justif'y its selection on the ground that it is less harn ful:" How small the variations are may be seen from, the data tabulated oni page 7. Smoking Time. The time taken by the laboratory robot to smoke Big Five cigarettes varied from an aver- age of 9 minutes 6 seconds (Lucky Strike, Chesterfield) to ro minutes (Camel). Here is a claim that has been made for Camel: "By burning z5, percent slower than the average of the four other largest-selling brands tested - slower than any of them - Camels give you a smoking plus equal, on the average, to five extra smokes per pack." Note that this ad doesn't say which four brand's were tested. So "tested" is a we2sell word. Weasel words are the adman's way of crossing his fingers behind his back when he makes a somewhat elastic statement~. According to the

6THfiREi1DER'S DIGEST arithmetic of the tabulation, the averagc Camel smokes only si.r per- cent slower than the average of the other four best sellers;. Nicotine. The nicotine foundin Big Five cigarette smoke varied from 2.04 milligrams(Old~ Gold)~ to z.4G('Philip Morris). There are z8;37o milligramst~oan ouncc. In a recent campaign Lucky Strike made this statement: "For over two years the nicotine content of Luckies has been 12 percent less than the average of the four othcr leading brands - less than any of them~" But it's the nicotine in the smoke that matters, not the nicotine in thetobacco: According to Column 2 of the tabulation on page 7, Lucky Strike smoke contains one percent less than the average of the other leaders. Old Golds have the least of 211, 2.04 milligrams. The difference between the amounts of nicotine in~ the smoke of Lucky Strikes and Camels was something you could put on the point of a pin. But cigarette advertising copy writers would have little to write about if they didn't use pin point differences. That is why they have become so expert at training a neg- ligible little flea of a fact to hop all over the U. S. and bite its way into the consciousness of the nation's cash custorners: For some months Camel printed advertising has featured this state- ment: "The smoke of slower-burning Camels contains 28,percent less nico- tine than the average of the four July other largest-selling cigarettes tested -- less than any of them - accord- ing to: independent scientific tests of the smokeztse ft'° A simplecaleula- tion based'on Colhmn: 2 of the tabu- lation shows that, according to our own "independent, scientific" labo- ratory,, the smoke from Camels con- tained more nicotine than the smoke of Old' Golds and, instead of z8 per- cent less, only z:rr percent less than the average of the other four largest sellers. Incidentally, smoke from the to-cent Avalon contained as little nicotine as smoke from a; Camel. Tars and Resins. These products of combustion are the villains ~ that irri- tate, rather than the nicotine. Wherr you suck on a cigarette through~ a handkerchief, it's the tars that stain the cloth a peevish yellow-brown; Almost all cigarettes have at one time or another claimed superior mildness. Chesterfield, comparatively conservative in, its advertising, relies heav.ilyon this vague attribute. Mild- ness can't be measured - it can't even be defined. But the robot did measure the amount of tar in, ciga- rette smoke. To~the extent that tars are uniformly irritant, we have a yardstick. About all the robot was able to say inm regard to Chesterfield's mildness was that Chesterfield smoke con- tained a higher, percentage of tars and' resins than any of the other six cigarettes tested. Old Gold had the least. The advertising genius who thought itp "Not a Cough in a Car- load"' seems unaware of Old Golds' s

27 1942 ,CIGARE'1'TF AD FACT AND FICTION virtues: they had the best score of all see`cn cigarettestest'cd for The Read- er's LI)igest~ as to nic- otine and tar in their smoke. Instead of cashing in on these buried treas- ures; Old Gold is plugging La takia - the Something iwTew which Has Been tldde& Latakia is, not a new arrival. It is an aromatic Near Brand (rhe ftrrt five are the so-called " Big Five ") ., Lucky Strike. Camel ...... Chesterf eld . . . Philip 14orris_ . Old Gold ..... ,As-alon ....... Pall A1all:..... "RiGFive" Averag ........ Easterni tobacco which has long been used ini certaini pipe tobaccomix~- tures. And' Old Gold' doesn't say how much of this "costly, rare, very flavorful Mediterranean leaf" has been added. Filtering. Pall Mall claims that the "modern d'esign" of its extra lengt~h "filters the smoke and protects your throat." This is not true if, as ob- viously happens most, of the time, people smoke it, down to the same length butt as a regular size cigarette. The laboratory report showed that Pall Mall smoke was third highest in percentage of both tars and nico- tine, and that, because of Pall Mall's extra length, its smoke was high- est in actual amount of nicotine per ciga re t te. Evcry cigarette is its own filter, poor or goodi according to how, it is smoked. If you tamp a! cigarette our after a few puffs,, irritants are held back in the unburned' tobacco: But What the Robot Found Nicotine in Smo~e Smoking (average Tars in Time rnilligrams Smoke ( fier cigarette) per cigarette) ( percent). 99 mim 6 sec. 2,:22. 2_ r9 10 " o ~• 2.20 . 2,13 9 6 .. 2.27 2,37 9 << 36 .. . 9, .. 54 .. 7 , .~ 54 12 .. 24 " 9. 32, .. 11 2.qb 2.04 2.20 2.24 4 1.98 2.i4' 3.02 2.23 2.z4 ~ 2~.:I8~. 7 if you~are one of those last-cigarette- before-thc-gallows fiends who smoke them down to where they singe your mustache, you'1l get a triple ration of tars and nicotine. The longer the butt, not the longer the cigarette, the better it acts as a filter. This commercial plug was reccntly 4iearcl-irr-x44r+FrMorn--s-~ar: "Eminent physicians report that the smoke of four other leading brands averaged more than three times as irritant as the arnazinglydifferent Philip Morris:- an irritant effect whichlasted five times as long," The findings of the eminent glass robot employed by The Reader's Digest are that Philip Morris ciga- rette smoke had the highest percent age of nicotine, and the second high- est percentage of the tar and' resins, of all seven~ brands tested. More Than the Market Price. Many of the basic facts about cigarette manufacture are unknown to the bDb

28. 8 THE READER'S DIGEST public. Otherwise Lucky Strikes would be laughed right back into their cartons for their current cam- paign, a series of boasts that the makers of Luckics paid 29, or 35, or 46, or some such percent "more than the average market price" for to- bacco at auctions in various southern towns. Many different grades of tobacco are bought,, at different prices, for different tobacco prodhlcts. There's tobacco for eigaret~tes,, for chewing, for cigars, for pipes. Average the price for all of them and: you get the "average market price." The to• bacco in all the big brands of ciga- rettes, being of the highest grades, costs more than the "average market price." There's also ground for be- lieving, according to evidence dug up by the Department of Justice in~a recent case against several of the big tobacco companies, that the prices they pay for their tobacco are re- markably uniform~ Because the prices of the finish4 Big Five cigarettes are the same, be- cause the ehemical! differences be- tween them are slight, because the tobacco and the method of man- ufacture are essentially similar, the problem of choice all comes down to Q+avor. One cigarette is chosen over another because the smoker„ though he knows nothing about cigarettes, knows what lie likes. But does he? Some interesting at- tempts to answer this qµestion have been made. Consumers Uniorr put seven, brands of cigarettes, the names of which had beenlinked out, before 198 habitual' smokers, and asked them to tell what they were smok- ing. For the Big Five, scores varied from 83 percent wrong oir Old Gold to go percent wrong on Philip Morris. Dr. Carl I. Hovland; Director of G'raduate Studies in Psychology at Yale, rounded up 95 heavy smokers, each of whom named his fa.°orite brand, and, another brand which he particularly disliked. Dr. Hovland had! themi all smoke eight of each brand and, guess whi& was which. By pure chance each man could have guessed eight out' of the 16 right. The actual result yielded~an average of only 8.6. So perhaps even personal pref- erence is a myth, and it makes no earthly difference which of the lead- ing cigarettes you buy. That's why the poor ad writers, when they scratch~ their heads in search of self- ing points, so often hit the bump in their skulls marked "fictionL"

29 UNITED STATES oF AMERICA BEFORE, FEDE~~R~~AL~ TRADE COMMISSION STIPULATION AS TO THE FACTS Pursuant to the provisions of the Federal Trade Commis- sion Act, the Federal Trad'e Commission,, on March 2, 1943, issued its complaint against respondent, P. Lorillard Company, designated in the said' complaint as P. Lorillard Company, Inc., (which said misnomer is hereby expressly waived by respondent~ P. Lorillard~ Company,, and respondent P. Lorillard Company hereby expressly agrees that the Federal Trade Commission may make and enter its findings and order in this proceeding against said respondent P. Lorillard Company, with the same effect as if it had been designated in the complaint herein as P. Lorillard Company)', and caused such complaint to be served as required by law, in which it was charged that said respondent was and had, been using unfair methods of competition and unfair and deceptive acts and': practices in commerce in violation of the provisions of said Act. Said respondent P. Lorillard Company duly filed its answer to the said complaint. IT' IS' HERESY STIPULATED AND AGREED by and between W: T. Kelley„ Chief Counsel' for the Federal Trade Commis- sion and the respondent, that, subject to the approval of the Federal Trade Commission, the following statement of facts may be made a part of the record herein, and that such state- .

30. ment of facts together with the. testimony and evidence already taken and such further testimony and! evidence as may be taken subsequent to the date of this, stipulation, may all be taken as the facts in this proceeding; and that the said Commission may proceed upon the testimony and evidence already taken, upon said statement of facts and upon such testimony an& evidence as may be taken subsequent to the date of thisstipulation, to makeits report, stating itsfhndings as tothe facts (including in- ferences which it'~ may draw from~ the said stipulated facts and fromi thetesdmony and evidence already taken and which may be taken) and its conclusion based thereon, and enter its order disposing of the proceeding. STATEMENT OF FACTS PARAGRAPH ONF,: Respondent P. Lorillard Company is a New Jersey Corporation with its principal office at 15 Exchange Place, Jersey City, N. J., and with its executive offices at 119 West 40th Street, New York City. The, said company has fac- tories for the manufacture of tobacco products in Jersey City, New Jersey, Louisville, Kentucky, Richmond, Virginia and'' Middletown, Ohio. On or about the 15th day of April', 1926, , the said company began the manufacture of, and now manufac- tures, a brand off cigarettes known~ as "OLU GoLD". On or about October 1, 1940, the said company began the manufacture of, and still manufactures, a brand of cigarettes known as "BEEcx- NuT". On or about the first day of January, 1938, the company began the manufacture of a brand of cigarettes known as "SErr- SATION". The said company is not now manufacturingsaid Sen- sation cigarettes,, having, ceased the manufacture thereof on or about the 15th day of June, 1943. In or about April, 1937, the said company began the manufacture of, and still manufac- tures, a pipe tobacco known as "FxiErrns" smoking tobacco. During the periods referred to hereinabove, the said company was engaged, and, except in the case of Sensation cigarettes,, still is engagedy in the sale and distribution of the tobacco prod- ucts hereinabove mentioned, in commerce between and among ~' ~ ~ 3 I M~.

F: 31 various states of the United States, and it has caused ands ex- cept for Sensation cigarettes, now causes the above-named tobacco products, when sold by it, to be transported from the fac- tory or factories where manufactured, to the purchasers thereof in various other states of the United States than that in which the said products have or arc now being manufactured. P. Loril- lard Company is now, and for several years past has been, one of the larger manufacturers of tobacco products in the United States, and is now, and for many years past has been, in sub- stantiali competition with other corporations, persons, firms and partnerships engaged in the manufacture and'~ sale of tobacco products in commerce between and among the various states of the United States. PAxncR:nPrr TErr: The Reader's Digest is a monthly maga- zine published in Pleasantville, New York, from which it has a wide circulation. There were printed and distributed on sub- scriptions and the news stands throughout the United States approximately 5,000,000 copies of the July, 1942 issue of The Reader's Digest. There were printed, -distrilxtted arrd-sokFiTr foreign countries approximately 799,000 copies of the July, 1942 issue of The Reader's Digest. In the said issue of the said magazine, and on pages 5 to 8'thereof, inclusive, there appeared a copyrighted article by Robert Littell entitled~ "Cigarette Ad' Fact and! Fiction"which article statedthrat under a commission by "The Reader's Digest" a research~ laboratory had~ made "a series of objective tests" of seven brands chosen~for the purpose; to-wit, "Lucky Strike", "Camel", "Chesterfield", "Philip Mor- ris", "Old Gold", "Pall Mall", and "Avalon", in a manner "which permitted complete collection, for accurate analysis, of the nicotine and tars contained'~ in the smoke of each brand", and said article further stated that the results of said tests showed that of these seven brands "Old! Golds have the least of all" of nicotine and that "Old Gold has the least" of tars and resins. Said article also contained the following tabulation of the data ascertained by the tests referred tp in the article:

' 32 Brand (the firstfive Nicotine in Smoke (average T6rB in are.theso.oalledl BmokingTime Milligramsper8aaoke "Rig Five" ) (per cig4retCe) cigareEt,e): (percent) Lucky Strike .. 9 min. 6 see. 2.22 2.19 Camel ...... 10 " 0 " 2.20 2.13 Chesterfields .. 9 " 6 " 2.27 2.37 Philip Morris . 9 " 36 " 2.46 2.24 Old Gold'.... 9 " 54 " 2:04 1.98 Avalon ... ... 7 " 54 " 2.20 2.14 Pall Mall .... 12 " 24 " 3.02 2.23 "Big Five" Average ... 9 " 32 " 2.24 2.18 The said article stated,, among other thingsc "The laboratory's generalconelusion' wilt be sad~ ncws for the advertising copy writers, but good' news for the smoker, who need no longer worry as to which cigarette can most effectively nail down his coffin. For one nail is just about as good as another. Says the laboratory report: 'The difFerences between brands are,, practically speaking, small' and no siviglebrandis sol superior to its competitors as to justi fy its selection ont'he groundthatitislessharmtul:' Howsrnallthe variations are maybeseeny from tl>.e data tabulated on page 7."' Neither P. Lorillard Company nor any officer or employee of that company had any knowledge or intimation of the tests referred to in this Paragraph Ten, or of said article published by the Reader's Digest, until it appeared in tbe July, 1942 issue of that magazine, and neither P: Lorillard Company nor any officer or employee of that company was in any way responsible for said tests or said art~iclle~ In the course and' conduct of its business described in Paragraph One hereof, and for the purpose of aiding arid pro- moting the sale by it in interstate commerce of its said "OLD GoLn" brand of cigarettes, respondent, beginning immediately after the publication of said article in the July, 1942 issue of The Reader's Digest, and' continuing, until July, 1943, dis- seminatcd, and caused to be disseminated, by the United States mails, in magazines of nationwide circulation, in newspapers of interstate circulation, by' local radio broadcasts and by nation- wide hook-ups of broadcasts, and by other means in commerce,

33 advertisements in which~ it was stated that respondent's "OLD GoLD" cigarettes were reported' in said article as the "lowest in throat irritating tars and' resins" and "lowest in nicotine" of the seven brands of cigarettes mentioned in the article, according to the said~ tests mad'e for The Reader's Digest and described in said article. In said~ advemtisements reference was made to the tests and article as the basis of and authority for said state- ments. A number of said advertisements contained statements urging the public to read said article and setting forth the name of the magazine, the issue, the name of the article, and the pages of the issue at which it could be foundl Said advertise- ments did not set forth the figures from the table quoted above nor did they set forth the laboratory's general conclusion here- inabove quoted. At the time of said advertisements respondent had neither made nor caused: to be made any tests of its "OLD GoLD" ciga- rettes which showed' that at the time of said! advertisements its "Oz.D GOLD" cigarettes were "lowest in nicotine" and were "lowest in throat irritating tars and resins" and at the time of said advertisements respond'ent had no information as to any tests on such qualities except that-whieh-appeared in-saidju y 1942' issue of The Reader's Digest. FEDERAL TRADE COMMISSION By /s/ W. T. KELLEY W. T. Kelley, Chief Counsel P. 1'_,ORILLARD ~ COM PANY /S/ PERKINS, DANIELS & PERKINS By /s/ F. J. DANIFI,S Counsel for Respondent. Dated this 16th day of November, A. D., 1944. APPROVED: Nbvember 20, 1944. ` FfiDERAL TRADE COMMISSION By /s/ Ons B. JOHNSON Otis B. Johnson, Secretary

34 UNITED STATES OF' AMERICA B ExaRE FEDERAL TRADE COMMISSION In the Matter of P. LORILLARD COMPANY, INC. STIPULATION DocxET No. 4922. Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on MarcL 2, 1943, issued its complaint against respondent and caused such complaint to be served as required by law, in which it was charged that said respondent had been using unfair methods of competition and unfair and d'eccptiveacts and practices in commerce in violar tion of the provisions of said Act. The respondent being desirous of expediting said! proceeding; IT IS HEREBY STIPULATED AND AGREED by and between Richard P. Whiteley, Assistant Chief Counsel for the Federal Trade Commission, and the respondent that, subject to the approval of the Federal Trade Comnaissions the said Federal Trade Commission may proceed upon the said: complaint, the answer of respondent, the testimony and evidence, the stipula- tion of facts entered into November 16, 1944, and approved by the said Cornmission on November 20, 1944, and a part of the record herein, and the stipulation entered into before the Trial Examiner on December 4, 1944, and being on page 196 of the transcript of the hearing held that~ day, to Inale its report, stating its findings as to the facts, and its conclusion

35 based thereon and enter its order disposing of the proceeding without the filing of exceptions to the Trial Examiner's Report, the presentation of argument or the filing of briefs. AND IT I5 HEREBY FURTHER STIPLILATED AND AGREED that wherever in saidi report of the Trial Examiner the term or phrase "sub-paragraph (e), of paragraph 3" of the complaint is used, that term or phrase means sub-paragraph (e) of PARA- GRAPH FouR of the complaint. FEDERAI, TRADE' COMMISSION By /s/ RICHARD P. WHITELEY RICHARD P. WHITELEY, Assistant Chief Counsel. P. LORILLARD COMPANY By /s/ F: J. DANIELS Counsel for Respondent Dated this 16& day of January A. D. 194'5.. APPROVED:' January 17, 1945. FEDERAL TRADE COMMISSION ; By /S/ OTIS B. ,OHNSOX OTTS B. JOHNSON Secretary

36 UNITED STATES OF AMERICA BEFORE FE1)ERALTRADECOMMISSION At a regular session of the Federal Trade Commission, held at its office in the City of Washington, D. C., on the 2nd day of June, A. D. 1945. COMMSSSIONERS : EWiN L. DAVIS, Chairman,, CiARLAN!D S. FERGUSON, CHARLES H. MARCH,. WILLIAM A. AYRFS, ROBERT E. FREER. In the Matter of P. LORILLARD COMPANY, INC., a corporation. Docket No. 4922 ORDER RESCINDING APPROVAL OF STIPULATIONS AND REOPENING CASE FOR FURTHER TESTIMONY This matter coming~on to beheard'by the Commission upon the motion of the Chief Counsel of die Commission that it withdraw its approval of the stipulation as to the facts executed by the Chief Counsel and counscl for respondent, date&Novem- ber 16, 1944, and approved by the Commission on November 20, 1944, and that it withdraw its approval of the stipulation executed bytheAssistantChiefCounsel and counsel forrespond- ent, dated January 16, 1945, and approved by the Commission

37 on January 17, 1945, and upon the further oral motion of the Chief Counsel that this case be reopened for the purpose of taking additional testimony in support of and in opposition~ to the alle:gations of the complaint, and the Cornmission having duly considered said motions and the oral arguments and briefs filed in support~ of and in opposition thereto, and the record, and being now fully advised' in the premises; Ir zs oxDZRnD that the action of the Commission of P+lovem- ber 20,, 1944, approving the stipulation as to the facts dated November 16, 1944, and its action~ of January 17, 1945, approv- ing the stipulation as to the facts dated January 16, 1945, be, and the same hereby are, reconsidered and rescinded. IT Is FURTHER ORDE.IIL•D that this case be,, and the same hereby is, reopened for the taking of additional' testimony in support of and in opposition to the allegations of the complaint. By the Commission. `5/ ~TIC_B_jaLuqsoN OTTs B. JoH1VSON, Secretary. [SEALI

38 UNITED STATES OF ' AMERICA BEP'ORE FEDERAL TRADE COMMISSION Zn the Matter of P. LORILLARD COMPANY, INC., a corporation. MOTION TO STRIKE FROM THE RECORD THE ""ORDER" OF THE COMIVIISSION' DATED JUNE 2, 1945, AND ALL PROCEEDINGS' TAKEN' PURSUANT' THERETO: AND TO PROCEED TO DISPOSE OF THE PROCEEDING UPON THE RECORD AS IT EXISTED ON JANUARY 17, 1945 COMES Now the respond'ent herein, by its counsel, Perkins, Daniels & Perkins, Esqs., and Herbert~ M. Bingham, Esq., and appearing specially and only for the purpose of this motion respectfully moves the Federal Trad'e Commission (1) to strike from the reco4 in this proceeding as null, void and of no effect the, so-called "Order rescinding approvali of stipulations and re-opening case for further testimony" dated June 2, 1'945; and all proceedings in this matter held pursuant to said so-called order of June 2, 1945, and~ (2) to proceed upon the record as it stood on January 17, 1945, namely, upon the complaint herein, the answer of respondent, the testimony and evidence taken before Trial Examiner Webster Ballinger, the stipulation of facts dated November 16, 1944, and approved' by the said Com- mission on November 2q; 1944, the stipulation entered before the Trial Examiner on December 4, 1944, the report of Trial Examiner Webster Ballinger, dated January 6, 1945, and the stipulation dated January 16, 1945, and approved by the Com-

39 mission on January 17, 1945„ to make its report, stating its find- ings as to theiacts and its conclusions based thereon and enter its order disposing of this proceeding. As grounds for said motion respondent shows: (1) That the action of said Commission in issuing the so-called "Order" of June 2, 1945, was null, void, and without any authority in law. (2) That even had the so-called "Ord'er" of June 2, 1945,, been lawful and proper there is no testimony and evidence in the subsequent proceedings held pursuant' to said so-called "Order" upon which the Commission could issue any broader or more comprehensive order than it can issue on the basis of the stipulation of facts dated November 16, 1944, and approved by the Commission on November 20, 1944. P. LoRILLnRn COMPANY, Respondent; By its Attorneys PERICINS,, LI.Al*IIELS' SY PFRKTNS,By: /s/ FREEEMAN J. DANIELS FREEMAN J. DANIELS 30 Rockefcller Plaza New York 20, New York /s/ HERBERT M. BINGHAM 1-IERBE+RT M. BINGRAM Tower Building Washington 5, D. C. O f Counsel: /s/ ROBERT B. TYLER ROBERT B. TYLER 30 Rockefeller Plaza New York 20, New York

I .40 PERKINS, DANIELS & PERKI'NS. Attorneys & Counsellors At Law 30 Rockefeller Plaza New York 20 April 9, 1945 Federal Trade Commission,. Washington, D. C. Re: P. Lorillard Company-Docket No. 4922. Gentlemen : We have received a letter dated March 26, 1945, signed by Edward L. Smith, Attorney of the Federal Trade Commission, and delivered to us at the direction of Richard P. Whiteley, Assistant Chief Counsel of the Federal Trade Commission. With this letter were enclosed copies of a proposed' supple- mental stipulation in the above entitled procceding. A copy of the letter and of the proposed supplemental stipulation are annexed hereto. We cannot consider entering into the proposed supple- mental stipulation for the following reasons: 1. Beginning in J,anuary of 1944 we, as attorneys for the Respondent, entered into a long series of negotiations with Mr. Smith, Mr. Whiteley and other attorneys of the Federal Trade Commission to reach agreement upon the f acts and to embody them in a stipulation. At least ten conferences between attor- neys f or Respondent and attorneys f or the Commission were held, numerous draf ts of proposed stipulations were tendered to us by the attorneys for the Commission and considerablee correspondence took place between the respective attorneys. Finally, on November 13, 1944, we executed and returned to the attorneys for the Commission the stipulation as to the facts subsequently approved by the Commission. This final stipula- ~ tA ~. ,ta ~ a7 ~ ~

n 41 tion was approved' by Messrs. Smith and Whiteley and was executed by Mr. W. T. Kelley; Chief Counsel of the Federal Trade Commission, under date of November 16, 1944, and was approved by the Federal Trade Comnbission on November 20; 1944. Counsel for Respondent waived formal proof of all exhibits offered in behalf of the Commission and the only charges in the Complaint upon which testimony was taken were those contained in Paragraphs Five and Twelve of the Complaint re- lating to testimonials. Hearings on this issue were had immedi- ately following approvali of the stipulation and, as set forth in the Trial Examiner's Report, "the record' was closed Decem- ber 4, 1944". Thereafter, by a stipulation~ dated January 16, 1945, executed by counsel for Respondent and Richard P. Whiteley,, Assistant Chief Counsel, exceptions to the Trial. Examiner's Report~, presentation of arguments and filing of briefs were waived. This stipulation, which also authorized the! Federal Trade Commission to make its report, state its findings and its conclusions, and enter its order disposing of the pro- ceeding, was approved by the Commission on January 17, 1945. On lA!Iarch~ 20, 1945, onn motion of the ie Counse Iatc March 17; 1945, the Federal Trade Commission issued a rule to show cause why its approval of the stipulations in the above entitled action should not be withdrawn. We take it for granted this means such withdrawat of your approvat as would leave none of the parties to the stipulation in any way bound by it, as we signed! not as a unilateral agreement but only because the other parties to it were to sign it and you were to approve it. Any other way of dealing would be very unf air and was never contemplated by us. 2. There is no claim of discovery of new matter or that any deception has been practiced. This is just a bald attempt to get into the stipulation in this way admissions and conclusions that we specifically refused to put in the stipulation during the nego- tiations because they would have been and are contrary to the facts.

42 The matters contained in the proposed supplemental stipu- lation-and particularly the main point of that stipulation re- lating to the amount of nicotine, tars and resins contained in OLD GoLns and other cigarettes-were repeatedly and thor- oughly discussed during the negotiat~ions preceding the agree- ment on~ and~ execution of the stipulation. This matter of nico- tine, tars and resins was in fact the principal topic of the nego- tiations and its treatment in the stipulation was more carefully considered'than any other point in that~ stipulation. Mr. White- ley and Mr. Thomerson of his office took an active part in these discussions and the final stipulation was arrived at after numer- ous drafts had been rejected by one side or the other. Our posi- tion on this was made perfectly clear to the Chief Counsel's office as early as February 24, 1944, when we wrote: "This statement [referring to the statement in a draft of stipulation submitted to us embodying substan- tiall~ the thought of the present proposed supplemental stipulation] is wholly unacceptable to us and to our client forthe reason that it is not in~accordwith the facts. We cannot recommend that they sign any stipulation embodying that thought in any manner." Our position on this remained the same during all the negoti- ations and~ it was well known to Mr. Wliiteley that we would enter into no stipulation containing any such matter as is in the proposed supplemental stipulation. With~ that full knowledge he approved cxecution~ of the stipulations which he now seeks to have declared null and void. 3. On January 25, 1945, Messrs. Davies, Richberg, Beebe, Busick & Richardson, counsel for R. J. Reynolds Tobacco Com- pany in~ Federal T'rade Commission proceeding, Docket No. 4795, wrote a letter to the Federal Trade Commission suggest- ing that the Commission withhoU its finali order in Respond- ent's proceeding until the Commission had considered and weighed the evidence in the Reynolds proceeding. The Secre- tary of the Commission "by direction of the Commission` in a

43 letter dated January 29, 1945, advised Reynolds' counseli as follows: "In view of the fact that a stipulation of facts cov- ering substantially all' the allegations of the complaint has been entered' into in, the case of P. Lorillard Com- pany, Inc., and in view of its consistent policy under which each case is decided upon its own merits and record, and also in view of the public interest, the Com- mission has decided that it would not: be advisable to postpone final action upon the P. Lorillard Company r, case. We think this position of the Commission entirely correct. We do not understand why the Reynolds Company undertakes to thus interfere in our case. Shortly after this action by the Commission, and~ early in February 1945, Mr. Smith called on us andl stated that he had~ been instructed by Mr. Whiteley to advise us that unless we would execute a supplemental stipulation further covering, Paragraph Nine of the Complaintthe sapulations already ex- ecuted would be set aside by the Commission and the case set down for trial. This advice came as a distinct shock to coun- sel, who were unahle to believe that one in the responsible posi- tion of Assistant Chief Counsel of the Federal Trade Commis- sion would attempt arbitrarily to set aside stipulations that had been entered into after lengthy negotiations, carried on in the~ utmost good faithy where there was no suggestion of fraud or concealment of facts and where there had been no change in the law or the facts. However, at a conference held on Feb- ruary 19, 1945, Mr. Whiteley informed counsel for the Re- spondent that this was indeed the situation andi that unless a supplemental stipulation, to be submitted to us, was signed~ the stipulations already approved by the Commission would be rescinded and we would be so notified. It is indeed fortunate that the unorthodox procedure threatened was supplanted by due process.

44 We have made this letter long and fulll and have addressed it to the Commission rather than to Mr. Smith for the reason that we wish it to be perfectly clear to the Commission, and~ thereby to all, why we cannot and will not enter into the pro- posed supplemental stipulation or negotiate with respect' to it~. So that the Commission may be fully informed, we are attach- ing hereto copies of the l.etters written by counsel for Respond- ent to the attorneys for the Commission and photostats of the correspondence received from counsel for the Commission with reference to the stipulat7onin qucstion, We respectfully re- quest that this letter and the three copies thereof, together with all the exhibits attached thereto, be made a part of the record in the above entitled proceedir,g. Very truly yours, /s/ PERKIluS, DANIELS & PERKINS

45 FEDERAL TRADE' COMMISSION Washington F. J. Daniels, Esq., Perkins, Daniels & Perkins, 30 Rockefeller Plaza, New York, New York March 26, 1945. In re: P. Lorillard Company, Inc., Docket No. 4922. My dear Mr. Daniels: Today is the earliest since our telephone conversation~ of the 21st instant that it has been possible t'o prepare the supple- mental draft of the stipulation in this matter, which you asked to have forwarded to you. Accordingly, I enclose herewith the original and four copies. If the draft should be satisfactory to you, please execute the original and three copies and return them to me. The fifth copy -you-mray-keep-foryourr files. One of the signed copies will bc ! rcturned to you upon approval of the stipulation by the Commission, Mr. Whiteley is of the opinion that the enclosed draft removes certain objections to a supplementall stipulation you may have had in mind. He has asked me to advise you that due to the care taken in drafting this stipulation (all of the facts being taken into consideration); he doubts whether he would be willing to consider any material modification of the draft enclosed. Yours very truly, /s/ EDWARD L. SMrrH EDWARD L. SMIrH,

46 UNITED STATES OF AMERICA BE,FORE FEDERAL TRADF COMMISSION In the Matter of P. LORILLARD COMPANY, INC. DOCKET No. 4922. SUPPLEMENTAL STIPULATION AS TO THE FACTS IT IS' HEREEY STIPULATED AND AGREED by and between Richard P. Whiteley„ Assistant Chief Counsel for the Federal Trade Commission, and respondent P. Lorililard Company (erroneously named4 in the complaint herein as P. Lorillard Company, Inc.) that, subject to the approval of the Fed'eral Trade Commission, the following stipulation of facts, including inferences the Commission may draw from the stipulated facts, may be made a part of the record herein, supplementing the stipulation as to the facts in this matter entered into be"veen W. T. Kelley, Chief Counsel for the Federal Trade Commis- sion, and the respondent on N'ovember 16; 1944,, and approved~ November 20, 1944, and supplemental also to the stipulation- entered into between Richard P. Whiteley, Assistant Chief Counsel for the Federal Trade Commission, and thc respondent on January 16, 1945, and approved by the Commission on January 17, 1945; and IT IS HEREBY FURTHER STIPULATED AND AGREED by and between Richard P. Whiteley, Assistant Chief Counsel for the Federal Trade Commission, and t1le respondent that, subject to the approval of the Federal Trade Commission, the said Federal Trade Commission may proceed upon the complaint.

~f herein, the answer of respondent, the testimony and evidence, the stipulation of facts entered into November 16, 1944, in- cluding inferences the Commission may draw from the stip- ulatedi facts, approved by the said Commission on November 20, 19441, and a part of the record herein, the stipulation entered' into before the Trial Examiner on~ December 4, 1944, page 196 of the transcript of the hearing that day, and the aforesaid stipulation dated January 16, 1945, and~ approved by the Commission January 17, 1945, and upon this stipulation, to make its report stating its findings as to the facts and its con- clusion based thereon and enter its order disposing of the proceeding without the presentation of argument or the filing of briefs. SUPPLEMENTAL STATEMENT OF FACTS PARAGRAPH ONF : The Federal Trade Commission is able to produce competent and qualified witnesses who if sworn as witnesses in this proceeding would testify to the follbwing, which the Federal Trade Commission may -=ider-wiiie- same force and effect as if such witnesses had been duliy sworn and had so testified. In truth and in fact the content of nicotine, or tarry matter, and of other substances, irritating to the throat and nasal passages of the smoker and otherwise harmful, varies con- tinually in respondent's cigarettes and the smoke therefrom, as they are offered for sale to the general public; and the relative content of nicotine, of tarry matter and of such substances in ' respondent's cigarettes as compared with that of competing brands of cigarettes likewise varies continually. The number of variable factors involved in the growing of tobacco for cigarettes, in the blending and processing of such tobacco into cigarettes, and in the packing„ handling and distribution of such cigarettes to the consumer make it impossible for respondent or any of its competitors to produce and market the large volume of

48' cigarettes, which they respectively sell, with a standard or constant content of nicotine, tarry matter and other harmful substances. Among these variable factors are differences in weather conditions during the tobacco-growing season in differ- ent localities in which tobacco of the same variety is grown; differences in such weather conditions from year to year, differences in the soil in which cigarette tobacco is grown and in the cultyvation~ and fertilization thereof; variation in the mixing and blending of the varieties of tobacco incorporated in the cigarettes; variations in the changes brought about in cigarette tobacco in the processing thereof; deviations in the density with which the tobacco is packed in cigarettes and in the weight of the, cigarettes themselves; variations in methods of handling, and! distribution of cigarettesandi changes and differences in climatic conditions affecting cigarettes after they leave the factory where nrade: In truth and in fact, there is no practicable method! whereby the content of nscotine, tarry mat- ter and other harmful substances in the general run of re- spondent's cigarettes as they reach the consumer or in those of its competitors, or in the smoke therefrom, can be ascertained with any degree of accuracy for any appreciablelength of time. Any test which may be made to determine such content must as a practical matter, be limited to a few samples, infinitesimal in number as compared with the total number of such cigarettes on sale at any one time, and the results obtainable from any such test are indicative of nothing more than the facts sought to be ascertained as of the particular time and place of the initiation of the test. In truth and in fact,, the differences in the content of nicotine, tarry matter and other harmful sub- stances to be found in respondent's cigarettes as compared with those of competing cigarettes, and such differences among the cigarettes of such competitors, are so minute as to be insignificant and undetectable from the! standpoint of the effect which such substances have on~ the smoker of respondent's 1'J U1

49 cigarettes as compared to that experienced by the smoker of competing brands. PARAGRAPH Two: During the period of time mentioned in the complaint, in the course and conduct! of its business described in the complaint, and for the purpose of aiding and promoting the sale by it in the commerce therein described,, of its "Old Gold" brand of cigarettes, the respondent disseminated and caused to be disseminated by United States mails, in maga- zine of nation-wide circulation, in newspapers of interstate cir- culation, by local radio broadcasts and by nation-wide hookups of broadcasts and by other means in commerce, advertisements, samples of which appear in the record as exhibits and which relate to the nicotine and irritating tar and resin content of "Old Gold" cigarettes and of certain competing brands of cigarettes, and advertisements representing, directly and by implication, (a) that "Old Gold" cigarettes are made of prize crop tobacco; (b) that the tobaccos in such cigarettes are the finest that money can buy. PARACRAPH THxEn: In fact, during tlie period~ of-time described in the complaint all of the tobacco contained in "OU Gold" cigarettes was not prize crop tobacco nor was all of such tobacco the finest that money can buy. PARAGRAPH FouR: The aforesaid advertisements, state- ments and represent'ations have had the capacity and tendency to mislead'i and may have misled some of the purchasing public, into the beliefs (a) that of the seven leading brands of ciga- rettes "Old Gold" cigarettes are lowest in nicotine content and are lowest in throat irritating tars and resins; (b) that, "Old Gold" cigarettes contain only prize crop tobacco; (c) that all of the tobaccos in such cigarettes are the finest thati money can buy; and have had the capacity and tendency to cause said

purchasing public to purchase "Old Gold" cigarettes in such erroneous beliefs. FEDERAL TRt1DE' COMMISSION By ...................... Richard P. Whiteley, Assistant Chief Counsel. P. L,ORILLAItD COMPANY By ...................... Dated~ this day of A. D., 1945. APPROVED: FEDE.RAL TRADE COMMISSION By ..................... Otis B. Johnson, Secretary.

51 January 6; 1944. Edward L. Smiths Esq., Attorney, Federal Trade Commission, Washington, D. C. Dear Mr. Smith: Mr. Tyler has told me of his pleasant conversation with you yesterday, and! mentioned the fact that it was possible that you might be in New York next week. From my conversation with you in Washington a couple of weeks ago, and from Mr. Tyler's conversation with you yester- day; it seems entirely possible that if we could have a conference here in New York we might come to an agreement as to cer- tain phases of the P. Lorillardl Company case and dispose of them prior to the hearings. I know we are both interested' ir, effecting any saving of time and effort, and! if you are or could be in New York on Monday of next week, we should be very glad to see you.. With kind regards, I am Sincerely yours;,

Y 52 January 28, 1944. Edward L. Smiths Esq., Attorney„ Federal Trade Commission,, Washington, D. C. Dear Mr. Smith : I appreciate very much the courtesies extended to me the first part of this week when I was in Washington. ' As I understand it now, we are to; await your trip to New York to give further consideration to the Lorillard stipulation, We will have available at'~ our offices such~ records as may be necessary for our proposed stipulation of facts:. I hope it will be possible for you to give us a little advance noticc as to when your trip up here will be convenient to you. With kindl regards, I am Sincerely yours, FJD:V to

. 53 FEDERAL TRADE COMMISSION Washington February 3, 1944. F. J. Daniels, Esq., Perkins, Daniels & Perkins, 30~ Rockefeller Plaza, New York 20, N. Y. Re: Docket 4922 P. Lorillard Company, Inc. Dear Mr. Daniels: My delay in answering yours of the 28th ult. is due to the fact that I have been engaged, as you may know, in the trial of the Reynolds Case. If it is satisfactory to you, I will confer with you at your office in New York at 2:00 o'clock, Thursday after- noon, the 10tL inst., regarding the proposed stipulation of facts in this~ matter. If, in the meantime, you will furnish me with the various dates which are missing from the proposed' draft you submitted to me, and you will'- furnish.-nne---with &--dates-or approximate dates on which the different advertisements were begun and on which they were terminated, I shall undertake to submit to you at the conference a draft of stipulation complete in all respeCts. Unless I hear from you to the contrary, I shall assume that the time suggested is convenient to you. With best regards, I am Very truly yours, /s f EDWARD L. SmrrH Edward L. Smith.

N 54 February 4, 1944. Edward L. Smith, Esq., Federal Trade Commission, Washington, D. C. Re: Docket 4922-P. Lorillard Co. Dear Mr. Smith: I have your letter of February 3y 1944, in which you state you are planning to confer with us at our office at two o'clock on Thursday afternoon, February 10th, That time will be convenient'~ for us, and we sha1t look forward to seeing you then. I note that you are planning, to go ahead with the drafting of the proposed stipulattions and that you desire informationwith respect to the dates, or approximate dates, on which cer- tain manufacturing,operations were begun and terminated, andl upon which certain advertising campaigns were begun and ter- minated'. These dat'es are as follows:The manufacture of "OLD GoLID" cigarettes was commenced' on or about April 1926. The manufacture Uf "SENSATION" cigarettes was commenced on or about January 1938, and~ the manufacture of this brand was discontinued on or about July 1943. The manufacture of "FxrnNns" Smoking,Tobacco: was com- menced on or about April: 1937. The advert'ising of `BEECHNUT" Cigarettes was commenced on~ or about October 1, 1940. The advertising of "SENSnTioN" Cigarettes was commenced on~ or about February 1938. "OLD Goz,n" Cigarettes were wrapped in a double cello- phane jacket from about January 1936 until September 8, 1941, and it~ was only during this period that the advertisements stat- ing that they were "Ever Fresh" etc. were ~ disseminated. The advertising of "FRIENDS" Smoking Tobacco was begun about April 1937.

rr 55 Advertisements containing reference to The Reader's Digest tests were disseminatcJ from the latter part of June 1942 until about July 1943. I believe the above~dates are all that are needed to fill in the blanks which occur in the draft of stipulation. With kindest personal regards, I am Yours very truly,

56 FEDERAL TRADE COMMISSIONWASf3ING11ON February 16, 1944. FF. J. Daniels, Esq., Perkins, Daniels & Perkins, 30 Rockefeller Plaza, New York, N. Y. Re: Docket Nb. 4922 P. Lorillazd Company, Inc: Dear Mr. Daniels: You will find enclosed herewith five (5) copies of the final draft of stipulation as to the facts in this matter. Assuming thatt the stipulation is satisfactory„ I wish you wouU sign and return to: me! four of these copies,keepingt'he fifth for your files. The stipulation, with the corrections agreed upon here yesterday, differs firoin the stipulation we discussed on the 10th inst., in the following particulars: The word "That" beginning the third new sentence on page 2 has been eliminated'' sol that the sentence begins with the word «On,,. Inthe~ next~ following, sentence, the date has been changed! from the first day of July, 1943 to read "the 156 day of June, 1943". At our conference yesterday, we changed the word "In" begin- ning the next sentence, to the word "On". I think that the word "In" is preferable to the word "On"; accordingly the sen- tence begins with the word "In". In Paragraph Two, the parenthetical expression "and by nation- wide hook-ups of broadcasts" has been eliminated and after the word "advertisements" in the next line there have been inserted

lb 57 the words "'some of which", and the word "containing" in that line has been changed to the word "contained". In the next line, the expression "easy on your throat" has been changed to read' 'extra easy on your throat"'. After the secondi word, which is "of'; in the second paragraph of Paragraph numbered Two have been inserted the words "the „ advertisements containing .. After the word "cigarettes" in the first line of Paragraph Three have been inserted the w.ords "like all cigarettes". A semicolon has been inserted af ter the word~ "smoke", which is the last word of the fourth line of Paragraph Three. In the next following line the word "nor" has been eliminated, and in its place have been inserted the words "and do not". The word "cooling"' in the same line has been changed to the wordi "cool"„ and the commai after the word "it" in the same line has been eliminated. The word "to" which occurs twice in the next line has been changed ini both places to the word "at", and the sameshange has been made in the last clause of the same sentence. From Paragraph Four has been eliminated the parenthetical expression, and' in the line following, after the word "advertise- ments" have been inserted the words "Some of which contained", the word~ "containing" being elirninated.. After the word "of", which is the second word in the second paragraph of Paragraph Four have been inserted the words "the advertisements containing". In Paragraph Five, after the word "and" appearing in the sec- ond line, have been inserted the words "when compared with cigarettes in a higher price field". After the word "advertisements" in next to the last line in the first paragraph of Paragraph Six, have becn inserted the words

i 58 "some of which" and the word "containing" has been changed to the word, "contaaned". In Paragraph Seven, after the fifth word in the second sen- tence, which is "cigarettes", have been inserted the following words: "like all other cigarettes". The words "double cellophane" have been eliminated from Paragraph Scven, and after the word "cigarettes", which is the second word in the last clause of the last sentence in Para- graph Seven, have been inserted the words "like all other cig- arettes". In the first new paragraph on page 7, the word'i "small" has been substituted for the word "insignificant". From the second paragraph on the last page have been elimi- nated the words "and deceive". In~ the hope that it will be easier for you, to check these changes, I enclose herewith, a copy of the proposed st'ipulation discussed here yesterday, with the corrections and changes made thereon in lead' pencil. With my best:, regards and wishing to be remembered to Mr. Caldwell, Mr. Perkins and Mr. Tyler, I beg to, remain Very truly yours, /s/ EAWAPID L. SMITH Edward L. Smith Enclosures C!t

, 59 Mr. Edward L. Smith, Federal Trade Commission, Washington, D. C: February 24, 1944. Re: Docket No. 4922 P. Lorillard Company Dear Mr. Smith: Wee have received your letter of February 1 fith with whicla you enclose five copies of proposed stipulation in the above matter. We have gone over the stipulation and find that in the main it is satisfactory to us and in such shape that we can rec- ommend it to our client. One matter, however, is so important that we felt we should bring it to your attention before taking, up any of the other details. That is the next-to-the-last sentence in the last subparagraph of Paragraph Ten, reading as follows: "in fact, the differences in the amounts of nicotine,-aTsand resins in the cigarettes mentioned in the said art7eleof The Reader's Digest were so small' as not to justify the representation that 'OLD GoLns' are the lowest in nicotine, tars and resins of the cigarettes mentioned in the said article." This statement is wholly unacceptable to us and' to our client, for the reason that it is not in accord with the facts. We cannot~ recommend that they sign any stipulation embodying ;that thought in any manner. Accordingly, we must insist that thd above quoted sentence be deleted. We suggest that the sen- tence immediately following, that one be started with the words in fact".. With kind personal regards, in which my associates join, Iam Very truly yours, FJD:v

60 FEDERAL TRAllE: COMMISSION' Washington March 2, 1944. F. J. Daniels„ Esq., Perkins, Daniels & Perkins, 30 Rockefcller Plaza, New York 20, New York Re: Docket No. 4922, P. Lorillardl Company. Dear Mr. Daniels: Your letter of February 24, 1944, to Mr. Edward L. Smith with reference to thc proposed stipulation was received by me during his absence from the city. He will return about March 11 and will then reply to your letter. I might state that I am very doubtful that a stipulation with the paragraph, in question, eliminated would be acceptable. This is one of the principal issues raised in the complaint and one which, we feel quite confident that~ we can establish. However, Mr. Smith willl take this matter up with you upon his return. Very truly yours, IsI RICHARD P. WHITELEY Richard P. Whiteley, Assistant Chief Counsel.

61 March 8', 1944 Richard P. Whiteley, Esq., Assistant Chief Counsel, Fed'eraI Trade Commission, Washington, D. C. Re: Docket No. 4922 P. Lorillard' Company. Dear Mr. Whiteley: I have and thank you for your letter of March 2nd. We shall of course be very glad to hear from Mr.:Smith upon his return about March 11 th. A literali reading of your letter would indicate that we wished~ a"paragraph" eliminated from the stipulation. The objection mentioned in our letter related to one sentence of a paragraph, and that is the sentence about which there has never been any agreement between us. However, we will be gladi to discuss the matter with Mr. Smith after he has returned to Washington. - - Very truly yours, FJD:V

62 FE,DERAL TRADE COMMISSION Washington F. J. Daniels, E'sq., Perkins, Daniels,and Perkins, 30 Rockefeller Plaza„ New York 20, New York March 21, 1944. In re : Docket No. 4922, P. LoriMrd Company. Dear Mr. Daniels:. Upon my return to Washington, I discussed with Mr. Whitel'ey your letter to me dated the 24th ultimo, and your letter to him dated the 8th instant. We suggest the elimina- tion of the sent'encc in the lest subparagraph of Paragraph Ten, set out ini full' in your letter of the 24th ulkimo. In the place of that sentence, we suggest the following: "While the tests conducted by the Readers Digest did show that respondent's 'OLD GoLD' cigarettes con- tained less nicotine, tars and resins than were contained in competing brands tested, the differences inthe amount of nicotine, tars and resins shown by said tests were so small as not to justify the representation that `OLD GOLDS' were the lowest in nicotine, tazs and resins of the cigarettes mentioned in the said! article, unless such representation also stated that the differ- ences between the brands tested were small and that no single brand was so superior to the competitors, be- cause of the lesser content of nicotine, tars and resins, as to justify its selection on the ground that it is less harmful." In going over the drafted st'ipul'ation agains I notice that the word "that" beginning the first new paragraph on page 600 ~ 1-~ CD ~

63 f should be eliminated and that the first word of the sentence should be the word "the". The second word' "each" in the last sentence on page 6, the sentence being completed on the fol~ lowing page, should be eliminated, and in its place should be substituted the word "all". If these changes should be satisfactory to you, please advise me and I shall have the stipulations redrafted to carry the changes indicated, and I shall send them to you for approval and signature. Your letter of the 8th instant indicates that you might wish to discuss this matter with me and with Mr. Whiteley. If you do care to discuss the matter with us, we shall be avail- able for such discussion the balance of this week and until Wednesday of next week. Yours very truly, /S/ EDWARD L. SMITH Edward L. Smith

64. March 24, 1944. F,dward L. Smith, Esq., Federal Trade Commission, Washington, D. C. Re: Docket No. 4922 P. Lorillard Company. Dear Mr. Smith: I have today received your letter dat'ed! March 21st, but which I note was not postmarkedi until'' 4:00 P. M. on March 22nd-hence the delay. I have tried to reach you on the telephone today, but unsuccessfully. LTnfortunately; two of the vice presidents with whom I would have to take up the matter of final approval of the stipu- lation~ in the above matte.r are out of the city. They will be back on Monday, at which time I hope I will be able to discuss the matter with them. I shall be in communication with you either Monday or Tuesday. FJD:v Sincerely yours

65 FEDERAL TRADE COMMISSION Washington October 7, 1944. Freeman J. Daniels, Esq., Perkins, Daniels & Perkins, 30 Rockefeller Plaza, New York, New York. In Re: Docket Nb. 4922, P. Lorillard & Company. Dear Mr. Daniels: With regard to your suggestion made to me here lasti week that'~ there is still a strong probability of disposing of this pra ceeding by stipulation, I wish to advise you that I should bee glad to confer with you in New York City regarding such stipulation on Thursday or Friday of the week of the 9th instant. I shall be obliged to you if yorr-wr11-letTne lnaw-whi& of these days will be convenient to you and the time of the day most convenient to you. Very truly yours, lS/ EDWARD L. SMITH EDWARD L. SMITII 46

I 66 WESTERN UNION October 11, 1944 Edward L. Smith, Federal Trade Commission, Washingtons D. C. Will be glad to see you Friday morrling this week. F. J. DANIELS

67 FEDERAL TRADE COMMISSION Washington F. J. Daniels, Esq., Perkins; Daniels & Perkins, 30 Rockefeller Plaza, New York, New York. . Dear Mr. Daniels: November 3, 1944. Re: Docket No. 4922 P. Lorillard Company. Enclosed herewith~ you will find original and five (5) copies of the draft of stipulation which we arrived at yesterday. Your attention is directed to the statement in the preamble regarding the filing of respondent's answer. The second' paragraph of the draft omits any waiver of briefs or oral argument. Mr. Whiteley has suggested the change which is contained in the last sub-paragraph of Para- graph Ten. This change, I think, does no-t ciarige e ou t intended to be expressed in the last previous draft. If the draft is satisfactory, please sign and return the original and four copies. The other copy you may retain. Upon the approval of the stipulation by the Commissions at least one signed' copy will be forwarded to you. However, if it should be : more convenient to you, you may hand me the signed original and' copies in New York where I shall be next week in connection with the Reynolds case. You will find me at our offices at 45 Broadway from 2:00 p.m., November 8, through the week, or at the Plymouth Hotel, 143 West 49th Street. Enclosure Yours very truly, /s/ EDwAxn L. Smrc'x EnwnRn L. SmixH

68 . November 13, 1944. Edward L. Smith, Esq., Federal T'radc Commission, Washington, I). C. Re: Docket No. 4922 P. Lorillard Company. Dear Mr. Smith: I enclose to you the original and three executed copies of the Stipulation in the above case as finally agreed upon by us when you were in our offices last Friday. You will find the Stipulation in all respects following the one sent to me with your letter of November 3, 1944, , except that in Paragraph Ten we have inserted the one word "copyrighted" and the last sub- paragraph of Paragraph Ten has been rewritten in the form uponi which we agreed Friday. I am gl~ad that we have been! able to dispose of this matter by stipulation, thus saving a great deali of time and expense, both to the Commission and' to the respondent. While I feel that our client is giving up a number of points that might be decided otherwise by the Commission, nevertheless since none of the cigarette advertising complained of has been used by the respondent for well over a year, the company has authorized us to execute the Stipulation. I appreciate the careful consideration accorded us by you and Mr. Whitelley, and I particularly want to thank you for your patience in our many conferences. Sincerely yours,

69 FEDERAL TRADE COMMISSION WASHINGTON F. J. Daniels„ Esq., Perkins, Daniels & Perkins, 30'Rockefeller Plaza, New York City 20, New York. November 15, 1944. Re: Docket No. 4922,. P. Lorillard Company, Inc. Dear Mr. Daniels: This is to acknowledge the receipt of yours of the 13th inst and of its inclosures, and to thank you for your co-operation in arriving at the terms of the stipulation. It will be promptly submitted to the Commission and you will be advised of its action thereon. You will also be advisedl in due course whether any testimony and further evidence will be offered. _ Very sincerely yours, /s/ EnwnRn L. SMrrs EnwAnn L. SMiTS.

70 FEDERAL TRADE COMMISSION WASHINGTON November 22, 1944. F. J. Daniels, Esq., . Perkins, Daniels & Perkins, 30 ' Rockefeller Plaza, New York, New York. In re: P. Lorillard Company, Inc., Docket No. 4922. Dear Mr. Daniels : As I advised you over the telephone! yesterday, the Com- mission on the 20th inst. approved'' the stipulation of facts in this case entered into by you and the Chief Counsel for the Commission on November 16. I enclose herewith a signed copy.. At thc hearings in New York I wish you would produce ari advertisement in which use was made of a testimonial given: your advertising agency by Miss Frances Bonham~ of Alexan- dria, Virginia, in which advertisement there was also a photo- graph of Robert King, then a student at~ Rutgers University. I would also like you to produce an advertisement' in which use was made of a testimonial given you by Samuel Kilboun whose addkess is 1408 Graybar Building, 420 Lexington Avenue„New York, New York. I have made a list of the exhibits in evidence which are advertisements containing photographs of or statements by vari- ous testirnonialists. Since this list may be of some assistance to you at the hearings, it is as follbws: Exhibit Teatimoniallets 134 Francesca Doane and~ Bruce I-leatley 135 Gus Steck 136 ' Francis E. Robinson and Mrs. William Gay, Jr. 137 Mrs. Jay Henry and Eddie Stewart

s 71 Eahibit Teetimonialiete 138 Elaine Drake and Earl Harper 139 Elizabeth Frear 140 Thomas Martindale, William B: Powell and Mrs. Douglas Rowland 141 Carl Moebus and Miss Charlotte Mantell 142 Earl H'arper and Millicent Barr 143 Vera Breed and Carl' Moebus 144 Eddie Stewart 14:5 Bruce Heatley and Mrs. Mason Britton 146 Mrs. Douglas Rowland and Thomas Martindale 147 Carl Moebus 148' Miss Margaret Curry 149 Francis E. Robinson~ 150' Mrs. Haley Fiske and Jack Coble 151 Bob King 152 Raymond Van Wagner, Jr.,, and Mrs. Van Wagner 153 Pati Hill, Charles of the Ritiz and Max Kunze 154 Mrs. Evelyn Fletcher and Peggy Owens 155 Richard Condon 156 Dorothy Montgomery, Alex Calvert and J. M. McClanahan - 157 Selma H. Liev, Dorothy Cleary, Fred J. Liev and John Cleary 158 Barbara Lown and William J. Bursaw 159 Doris Wallin, Katherine Dietz and Carl R. Wirl 160 Ruth Stuart, Henry W. Philips and Chris Nelson, Jr. As to the testimonialists whose names were used in adver- tisements not in evidence, I shall be obliged to youl if you will produce such advertisements at the hearings in; New York begin- ing the 29th inst. Yours very truly, /s/ EnwAxn L. Smrr.H .. EvwnR.n L. Smrrx. Enclosure.

72 FEDERAL TRADE COMMISSION~ Washington January 11, 1945. F: J. Daniels, Esq., Perkins, Daniels and Perhins, 30 Rockefeller Center, New York, New York. Re: Docket No. 4922, P. Lorilla4 Company, Inc. My dear Mr. Daniels: During the progress of at least one of the many confer- ences we have had in this matter, as I recollect it, yon~ were given the impression~ that should this proceeding be ready for final disposition before any of the other contemporaneous cig- arette cases, the, Commission might withhold final disposition of this case until disposition of such other cigarette cases. In subsequent conferences, again as I recollect it, youi suggested that neither you nor your client would have any objection to the final disposition of this proceeding just as soon as it would reach the stage of final disposition, even though that might be prior to the time for the disposition of any of the other such cases. Because of the suggestion, hereinabove mentioned, that the Commission might:, withhold final disposition of this case until the disposition of the others, and because also of my recollec- tion that you later expressed a willingness that the case be disposed of as soon as it was ready for disposition, without re- gard to the time of the disposition of the other cases, in order to avoid any misunderstanding, I shall be obliged to you if you will: advise me promptly whether you have any objection to the disposition of this procecding without regard to the time of the disposition of the others.

73 In another letter written to you today I have enclosed a draft of stipulntion which, if satisfactory to you, will be tendered to the Commission for approval. Upon its being approved, assuming that you have no objection to: the final disposition of the proceeding prior to the, disposition of any of the other cigarette cases, the Commission will be advisedl that'~ the pro- ceeding is ready for immediate final disposition. Yours very truly, f s/ ' EDwARll L. SMITH Edward L. Smith

74 FEDERAL TRADE: COMMISSION Washingtm January 12, 1945. F. J. Daniels, Esq., Perkins, Daniels & Perkins, 30 Rockefeller Center, New York 20, New York. Re: Docket No. 4922, P. Lorillard Company„ Inc. My dear Mr. Daniels: You are probably in receipt of the trial examiner's report by this time. I assume, that you do not intend to file any ex- ceptionst'o the report. I, likewise, shall not file any excep- tions. I understood from our discussion here in Washington Tuesday that if you would not file exceptions toi the report and if I would not file exceptions, you would waive brief and oral' argument. With the report' not being excepted to by either side, I do not see the necessity for writing a brief and making an oral argument. I think you will agree. If you do agree, I sug- gest that you consider, and if it be satisfactory, that you sign and return the originall and~ four of the carbon copies of the enclosed draft of stipulation to me. If the stipulation should be approved, I shall return one of the copies to you for your files. Yours very truly, /s/ EnwnRn L. Siurrx Edward L. Smith.

75 January 15, 1945 Edward~ L. Smith, Esq., Federal Trade Commission,. Washington, D. C. Re: Docket No. 4922 P. Lorillard' Company, Inc. Dear Mr. Smith: I have your letters of January 11 th and 12th and find no objection to the stipulation enclosed. I have signed the original and five copies and rettirnl them~ to you herewith. I note that you caught the error regarding subparagraph (e) of Paragraph~ Four.. As I understand it,, with the approval and filing of this stipu- lation, no exceptions will be made to the Report of the Trial Examiner, and there will be no argument or briefs fi1ed. You are correct' in your assumption in your letter of January l lth that we have no objectioni to the final disposition of this proceeding, 'and that we do not desire that our proceed~inrt_ ie held up pending d2sposition~ of any of tlie other cigarette cases. With kind regards, I am, Sincerely yours, Encs.. FJD:V ,I ::

r 76 FEDERAL TRADE COMMISSION' Washington January 20, 1945. F. J. Daniels, Esq., Perkins; Daniels & Perkins 30 Rockefeller Plaza, New York, New York. Re: DocketNo: 4922, P. Lorillard Company, Inc., Dear Mr. Daniels: Enclosed~ herewith are two: signed copies of the stipulation waiving exceptions, briefls and'i oral argument in this matter. With my best regards, I am Enclosure. Very truly yours, /s/ EDWARD L. SMI7H Edward L. Smith.

77, PERKINS, DANIELS & PERKINS Attorneys & Counsellors At Law 30 Rockefeller Pliiza New York 20 June 8, 1945 Otis B. Johnsons Esq., Secretary, Federal Trade Commission, Washington, D. C: Re: P. Lorillard Company - Docket No. 4922 Dear Mr. Johnson: Under date of April 9; 1945,, our firm addressed a letter to the Federal Trade Commission, enclosing three copies of the originali, to each of which certain exhibits were attached. Our letter requested that it, and the exhibits, be made a part of the record in the above-entitled proceeding. Will you please advise whether or not our letter was made a part of the record, and, if so, oni what a~t became a part t hereof. Thanking, you, I am, Very truly yours, /s/ F. J. DANIELS FJD:V

IL 78 FEDERAL TRADE COMMISSION Washington 25 June 25, 1945. F. J. Daniels, Esq., Perkins, Daniels & Perkins, 30 RockefellerPlaza, New York 24, New York. Re: P. Lorillard Company,. Docket No. 4922 Dear Sir: Receipt is acknowledged of your letter of June 8, 1945, referring t& the fact that under date of Aprit 9, 1945; your firm addressed~ a letter to the Federal Trade Commission, with exhibits, requesting that said letter and exhibitsbe made a part'of the record in the above entitl4 proceed'zng. The letter of April 9, 1945, ~together with die exhibits at- tached thereto, was considered by the Commission in~ connec- tion with the action taken by it upon thee motions of the Chief Counsel of the Commission tol set aside certain stipulations and to reopen this case for further evidence in support of and in opposition to the alllegations of the complaint, and, in accordance wit4 your request, your letter of April 9 and the accompanying exhibits attached thereto have been made a part of the record in this proceeding in that said letter andl exhibits are submitted and filed as a part of the answer filed by you to the Chief Counsel's motion to rcopen.. By direction of the Commission. /sl Oris B. JOHNSON OTIS B. JOHNSON, - Secretary

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