ceedings are required in the public interest. The same consideration may be had upon motion in matters which have reached the trial stage.

However, the same exceptions apply to settlement of matters by this procedure ås prevail in our stipulation policy insofar as they concern violations with intent to defraud, instances of Clayton Act violation or restraints of trade, and those involving failure to disclose material facts in the advertising of inherently dangerous and probably injurious drugs. Rules have been promulgated for over 150 industries. Administration after their promulgation has as its object maintenance of its continuing cooperation between the Commission and the industry to promote law observance. Rules for some industries create a committee on trade practices to cooperate with the Commission and to perform such acts as may be legal and proper to put the rules into effect.

Plans for increased utilization of this procedure, based upon increased congressional appropriations for such purpose, are high on our agenda. It deserves the greater emphasis now being accorded to it. In the last analysis the conference procedure has demonstrated its usefulness by actual experience. It is unsurpassed for developing widespread understanding of trade-term meanings and of the circumstances under which a seller has a duty to avoid deception by disclosing the facts concerning his product. Encouragement of simultaneous and wholesale abandonment of unethical practices accords with the policy of the law. It is good business, too. Both uniform law observance and flagrant disregard of its concepts are chain-reaction phenomena. It stands to reason that the conferences can contribute significantly to the preservation of fair competition as the primary regulatory force of our free-enterprise system of capitalistic economy.

The O'Hara bill (H. R. 3871), introduced in the House of Representatives on June 17, 1947, by Congressman Joseph P. O'Hara, proposes to amend section 5 (b) of the Federal Trade Commission Act to read as follows:

"(1) Whenever the Commission shall have reason to believe that any such person, partnership, or corporation has been or is using any unfair method of competition or unfair or deceptive act or practice in commerce, and if it shall appear to the Commission that a proceeding in respect thereof would be to the interest of the public, it shall, by any of its attorneys designated by it for such purpose, file in the district court of the United States for the district, or in the United States court of any Territory, in which such person, partnership, or corporation resides or maintains his or its principal place of business, a complaint stating its charges in, that respect and praying that the court enter an order requiring such person, partnership, or corporation to cease and desist from using such method of competition or such act or practice.

"(2) The Rules of Civil Procedure for the District Courts of the United States shall govern such proceeding.

"(3) Any person, partnership, or corporation may at any time make application and upon good cause shown may be allowed by the court to intervene and appear in said proceeding by counsel or in person.

"(c) If upon conclusion of its hearing the court shall be of the opinion that the method of competition or the act or practice in question is prohibited by this Act and that the enjoining of it would be to the interest of the public, it shall enter such order in the nature of a permanent injunction, as it shall deem appropriate.

"(d) The decision or order of the court shall be subject to review at the instance of the Commission or any party to the proceeding as provided in sections 128 and 240 of the Judicial Code, as amended (U. S. C., 1940 edition, title 28, secs. 225 and 347)."

The O'Hara bill proposes to amend section 13 (a) to read as follows: "(a) Whenever the Commission has reason to believe

"(1) That any person, partnership, or corporation is engaged in, or is about to engage in, the dissemination or causing of the dissemination of any advertisement in violation of section 12; and

"(2) That the enjoining thereof, pending the entry of a final decree pursuant to section 5, would be to the interest of the public;

the Commission may forthwith institute a proceeding as authorized by section 5 and move therein to enjoin the dissemination or the causing of the dissemination of such advertisement. Upon proper showing a temporary injunction or restraining order shall be granted without bond."

The O'Hara bill also proposes to amend section 16 to read as follows:

"SEC. 16. Whenever the Federal Trade Commission has reason to believe that any person, partnership, or corporation is liable to a penalty under section 14,

it shall certify the facts to the Attorney General, whose duty it shall be to cause appropriate proceedings to be brought for the enforcement of the provisions of such section."

Finally the O'Hara bill proposes that:

"In any case where the Federal Trade Commission, prior to the date of the enactment of this act, has issued a complaint under subsection (b) of section 5 of the Federal Trade Commission Act as in force prior to the enactment of this act, the provisions of the Federal Trade Commission Act as in force prior to the enactment of this act shall apply as though this act had not been enacted." The O'Hara bill proposes to take from the Commission the power to make findings as to the facts, to decide whether the Federal Trade Commission Act has been violated, to issue orders to cease and desist, and transfers such powers to the United States district courts, leaving to the Commission only the function of initiating and prosecuting proceedings under that act. This bill would emasculate and destroy the effectiveness of the Commission to negotiate stipulations to cease and desist and to promulgate trade practice rules. The Commission's proceedings would have to be filed in the Distric Court of the United States for the District or in the United States court of any territory, in which the respondent resides or maintains his or its principal place of business. In rendering the decision in such proceedings, one district court judge would be substituted for the five Commissioners. The civil penalty proceedings provided for in section 5 would be abolished and contempt proceedings for violations of the court's injunctive order would seem to be the only remedy. Deprived of its power to decide cases the relation between the Commission and its attorneys would be much like that existing between a United States district attorney and his assistants. The question would then arise as to why there need be any Commission at all, and why, if it be desirable to put the decision in the hands of a single judge without specialized experience, it would not be equally desirable to require that all investigation and prosecution be handled only by district attorneys without specialized experience.

The idea that the factual issues in cases arising under the Federal Trade Commission Act should be tried by the courts may seem plausible at first because private litigants have to settle their differences before judges who, while trained and experienced in the judicial process of determining factual issues in adversary cases, are not experts in the specialized fields in which fall at least a number of matters handled by them, such as medical questions.

As stated by the Circuit Court of Appeals for the Third Circuit in Pep Boys— Manny, Moe & Jack, Inc. v. Federal Trade Commission (122 F. 2d 158 (1941)), "The procedure in the Federal Trade Commission Act is prescribed in the public interest as distinguished from provisions intended to afford remedies to private persons." Congress did not make the Commission a court as it might have done. Instead, it created a Commission responsible to Congress itself and did not make it a part of the judicial branch of the Government which is independent of Congress. In a more primitive society Congress might pass a separate bill defining and forbidding each violation of fair trade practice. Under modern conditions this appeared impracticable, hence, Congress created a Commission responsible to it to apply the general standards prescribed by Congress to the facts of particular

cases.

The O'Hara bill would put an end to quasi-judicial powers and functions of the Commission which it has exercised under the Federal Trade Commission Act for over 30 years and under which a large body of administrative law has been built up for the guidance of business under the safeguards of judicial review. The whole philosophy of dealing with the increasing complexities of modern commerce through an agency directly responsible to the legislature and which acts as an agent of the Congress in its constitutional function of regulating commerce among the States would be abandoned if this bill were to become law. The philosophy of dealing with the problem through an agency which specializes in such complexities so that it becomes expert in them is a philosophy that the courts have frequently recognized with approval.

The Commissioners, because of their appointment for limited terms, are presumably more responsive to the will of Congress than are Federal judges who have a constitutional life tenure. The idea that the Commission acts as prosecutor, judge, and jury involves the idea that the President may appoint and the Senate may confirm men who maladminister their trust. While such an appointment might at some time be made, there is no reason to believe that the President and

the Senate would be any more fortunate in their selection of judges responsive to the will of Congress than in the selection of Commissioners.

The present act provides the public and respondents with a more complete trial of the facts than the courts appear able to supply and affords all of the legal protection which the proposed bill offers. This would be true even if crowded court dockets would permit expeditious trials. Those who make a business of deceiving or exploiting the public can be more quickly and more adequately dealt with by those who can devote their entire time to cases involving those in such one-crop enterprises. The recently filed report of the Judicial Conference of Senior Circuit Judge held in Washington, D. C., stated that at the end of 1947 there were 10,099 civil cases pending in the United States District Court for the Southern District of New York, and with 12 district court judges, this court will be able to dispose of not more than 2,000 of these cases per year. If Commission proceedings are instituted under this bill against those making a business of deceiving or exploiting the public, who reside or maintain their principal places of business in the southern district of New York, there would be a delay of approximately 5 years before the trials of such proceedings could even begin.

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The Attorney General's Committee on Administrative Procedure stated in its final report that "The 94 Federal district and territorial courts are structurally incapable of the same uniformity in the application of law as a single centralized agency *. The need of bringing to bear upon difficult social and economic questions the attention of those who have time and facilities to become and remain continually informed about them was recognized very early * * * It is thus apparent that varied types of subject matters * have been entrusted by Congress to administrative agencies, at least in part, for similar reasons: In order to assure continuous attention to their clearly allocated responsibility for the initiation of legislative policies * * for example, Congress, believing it necessary to supervise and check competitive practices which tended toward monopoly and restraint of trade, in 1914 created the Federal Trade Commission * * * (pp. 14, 15, 16, 17).

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In creating the Federal Trade Commission as a single centralized agency, Congress recognized the desirability and necessity for uniformity in the application of the law. If the O'Hara plan is adopted, uniformity in the application of the law would be impaired. The 94 separate district and territorial courts may render as many differing opinions as there are courts. This bill would prevent the Commission from taking uniform corrective action on an industry-wide basis and would substitute therefor an individual complaint procedure in these separate district and Territorial courts. Such a plan could produce the worst possible situation in business relations if one or more individual companies are deprived of their right to use a certain method of competition while 50 additional companies of the same industry would be permitted, through neglect, delay, or conflicting determinations of the courts, to continue to use the same competitive method. A business man may find that he is entitled to use one method of competition in one area of the United States while he is denied to use the same method in another area. The timing of separate court proceedings, the necessary delay and differing periods of delay, and the conflicting determinations of separate courts could readily result in the ruin of one competitor and the financial gain of another. Consequently, until the Supreme Court of the United States has spoken, the O'Hara plan would create a state of confusion and uncertainty in the law that would be intolerable and most prejudicial to business interests.

The O'Hara bill proposes an inflexible procedure with no provision for quickly and immediately altering, modifying, or setting aside orders of court when required by the public interest or changed conditions of fact or of law. If it is discovered through science or improved business techniques that a competitive method, act, or practice, which 6 months or 6 years ago was prohibited as a violation of the Federal Trade Commission Act, is now perfectly fair and in accord with that act, the Commission may immediately and quickly reopen, alter, modify, or set aside its order to cease and desist if so required by the public interest or changed conditions of fact or of law. If it were necessary to proceed in the various separate courts for the same purpose, considerable delay would ensue which would be prejudicial and harmful to business rivals and, again, competitive advantages and disadvantages would result.

The O'Hara bill involves a fundamental change in theory and policy of government as well as in the distribution of governmental powers. The theory of the bill is that there should be no commingling in one agency of functions that are quasi-legislative, quasi-judicial, and quasi-executive. Circuit courts of appeals

and the Supreme Court have repeatedly held that such commingling of functions in one administrative body is not unconstitutional, is not contrary to articles I, II, and III of the Constitution of the United States, and is not contrary to the "due process" clause of the fifth amendment to the Constitution of the United States. Sears Roebuck & Co. v. Federal Trade Commission (258 F. 2d 307 (C. C. A. 7, 1919)); National Harness Manufacturers Assn. v. Federal Trade Commission (268 Fed. 705 (C. C. A. 6, 1920)); Chamber of Commerce v. Federal Trade Commission (280 Fed. 45 (C. C. A. 8, 1922)); Arkansas Wholesale Grocers Assn. v. Federal Trade Commission (18 Fed. 2d 886 (C. C. A. 8, 1927)); Federal Trade Commission v. Klesner (280 U. S. 19, 27 (1929)); Federal Trade Commission v. McLean & Son (84 F. 2d 910 (C. C. A. 7, 1936) ) ; Federal Trade Commission v. Martoccio Co. (87 F. 2d 561 (C. C. A. 8, 1937)).

Of course Congress has the power, the duty, and the responsibility of determining public policy regarding these matters, but the O'Hara bill, and the argument of those supporting it, seem to reflect a philosophy of government which would reopen a basic controversy supposedly long since settled in the public interest.

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The Supreme Court has said that "Court and agency are the means adopted to obtain the prescribed end * through coordinated action." United States v. Morgan (307 U. S. 183, 191 (1939)). Again, the Supreme Court has said "Courts, like other organisms, represent interplay of form and function." The history of Anglo-American courts and the more or less narrowly defined range of their staple business have determined the basic characteristics of trial procedure, the rules of evidence and the general principles of appellate review. Modern administrative tribunals are the outgrowth of conditions far different from those. To a large degree they have been a response to the felt need of governmental supervision of economic enterprise a supervision which could effectively be exercised neither directly through self-executing legislation nor by the judicial process. That this movement was natural and its extension inevitable was a quarter of a century ago the opinion of eminent spokesmen of the law." Federal Communications Commission v. Pottsville Broadcasting Co. (309 U. S. 134 (1940)).

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The address of Elihu Root, as president of the American Bar Association, was cited by the Supreme Court with approval. In this address Mr. Root said: "There is one special field of law development which has manifestly become inevitable. We are entering upon the creation of a body of administrative law quite different in its machinery, its remedies, and its necessary safeguards from the old methods of regulation by specific statutes enforced by the courts There will be no withdrawal from these experiments. We shall go on; we shall expand them, whether we approve theoretically or not, because such agencies furnish protection to rights and obstacles to wrongdoing under which our new social and industrial conditions cannot be practically accomplished by the old and simple procedure of legislatures and courts as in the last generation" (41 A. B. A. Rep. 355, 368–69).

Continuing this discussion the Supreme Court said:

"Perhaps the most striking characteristic of this movement has been the investiture of administrative agencies with power far exceeding and different from the conventional judicial modes for adjusting conflicting claims-modes whereby interested litigants defined the scope of the inquiry and determine the data on which the judicial judgment is ultimately based. Administrative agencies have power themselves to initiate inquiry, or, when their authority is invoked, to control the range of investigation in ascertaining what is to satisfy the requirements of the public interest in relation to the needs of vast regions and sometimes the whole Nation in the enjoyment of facilities for transportation, communication, and other essential public services. These differences in orign and function preclude wholesale transplantation of the rules of procedure, trial, and review which have evolved from the history and experience of courts. Thus, this Court has recognized that bodies like the Interstate Commerce Commission, into whose mold Congress has cast more recent administrative agencies, 'should not be too narrowly constrained by technical rules as to the admissibility of proof' (Interstate Commerce Commission v. Baird, 194 U. S. 25, 44), should be free to fashion their own rules of procedure and to pursue methods of inquiry capable of permitting them to discharge their multitudinous duties. Compare New England Divisions Case (261 U. S. 184). To be sure, the laws under which these agencies operate prescribe the fundamentals of fair play. They require that interested parties be afforded an opportunity for hearing and that judgment must express a reasoned conclusion. But to assimilate the relation of these admin

istrative bodies and the courts to the relationship between lower and upper courts is to disregard the origin and purposes of the movement for administrative regulation and at the same time to disregard the traditional scope, however far-reaching, of the judicial process. Unless these vital differentiations between the functions of judicial and administrative tribunals are observed, courts will stray outside their province and read the laws of Congress through the distorting lenses of inapplicable legal doctrine" (Federal Communications Commission v. Pottsville Broadcasting Company, supra).

A very clear and concise statement from a legal viewpoint, of the nature of the Commission's functions, is contained in Rathbun v. United States (295 U. S. 602 (1935)), where that Court stated:

"The Federal Trade Commission is an administrative body created by Congress to carry into effect legislative policies embodied in the statute in accordance with the legislative standard therein prescribed, and to perform other specified duties as a legislative or as a judicial aid. Such a body cannot in any proper sense be characterized as an arm or an eye of the Executive. Its duties are performed without Executive leave and, in the contemplation of the statute, must be free from Executive control. In administering the provisions of the statute in respect of 'unfair methods of competition'-that is to say in filling in and administering the details embodied by that general standard-the Commission acts in part quasilegislatively and in part quasi-judicially. In making investigations and reports thereon for the information of Congress under section 6, in aid of the legislative power, it acts as a legislative agency. Under section 7, which authorizes the Commission to act as a master in chancery under rules prescribed by the court, it acts as an agency of the judiciary. To the extent that it exercises any executive function-as distinguished from executive power in the constitutional senseit does so in the discharge and effectuation of its quasi-legislative or quasi-judicial powers, or as an agency of the legislative or judicial departments of the Government."

Similarly, the Supreme Court stated in Federal Trade Commission v. R. F. Keppel & Bro., Inc. (291 U. S. 304 (1934))), that:

"It [the Federal Trade Commission] was created with the avowed purpose of lodging the administrative functions committed to it in 'a body specially competent to deal with them by reason of information, experience, and careful study of the business and economic conditions of the industry affected,' and it was organized in such a manner, with respect to the length and expiration of the terms of office of its members, as would 'give to them an opportunity to acquire the expertness in dealing with these special questions concerning industry that comes from experience' (report of Senate Committee on Interstate Commerce, No. 597, June 13, 1914, 63d Cong., 2d sess., pp. 9, 11)."

This commingling of quasi-legislative, quasi-judicial, and quasi-executive functions in the Federal Trade Commission was not created inadvisedly. On the contrary, it was considered necessary by the Congress in order to allow the Commission to reach effectively the objectives of the basic legislation and the problems toward the solution of which the antitrust laws are directed. As you who are familiar with the legislative history of the antitrust laws will recognize, various different approaches to the solution of the problem were suggested. The Bureau of Corporations, for instance, which was the Commission's immediate predecessor, was established in 1903, with the power to gather, compile, and publish reports concerning business practices, on the theory that adequate publicity would so activate public opinion as to make it expedient for those engaged in undesirable practices to abandon them. Another approach is expressed in the Sherman Act, which places largely in the courts the power of preventing combinations and monopolies in restraint of trade. Still another approach is expressed in the Clayton Act which proscribes certain specified and enumerated practices. The Federal Trade Commission, as finally constituted, embodied something of all these approaches but with the addition of the power to implement a broad standard by rule, regulation, or order, either generally or in specific cases, and to act as an arm of the Congress in defining and proscribing unfair methods of competition which might not be specifically covered by other legislation.

The Federal Trade Commission was designed to be an expert body, trained and experienced in the problems of business relationships. While a list of all the practices considered in 1914 to be detrimental to the public and to honest businessmen, might have been attempted and the results incorporated in the form of prescriptions in a statute, no one could foretell what unfair practices might in the future be devised, or what practices, then considered unobjectionable, might under new conditions become undesirable.