made with equal validity-or invalidity, if you will-of all other administrative agencies. The Federal Trade Commission is no more vulnerable to attack on this basis than is the Interstate Commerce Commission, the Securities and Exchange Commission, or any of the other agencies which regulate business and at times must, in the public interest, step heavily on the toes of offenders. Reform of the FTC on this score, if such reform is necessary or desirable, should be part of a general review of the attitude of the Congress toward all regulatory agencies. Whatever basic changes in administrative procédure are made should be in harmony with the findings of the Attorney General's Committee on Administrative Procedure as incorporated into the basic premises of the Administrative Procedure Act.

If it is desired to achieve real reform in a constructive manner, the proper method, I believe, would be to give the Administrative Procedure Act time to work and then to undertake a dispassionate survey with the aid of the organized bar as to the merits and demerits of the Administrative Procedure Act. I do not think that the long months of extended hearings held on the Administrative Procedure Act by the Judiciary Committees of the House and Senate should be ignored, nor the solution enacted into law by unanimous approval of Congress, nullified.

I should point out to the committee, from my observations as a practitioner who has tried leading cases before the Federal Trade Commission and the courts, that much of the clamor against governmental regulatory agencies comes from certain persons and organizations which have been successfully regulated in the public interest. In this connection, I call to the attention of the committee the thoughtful comment of one eminent student of administrative law, Prof. Frederick K. Beutel, professor of administrative law, College of William and Mary, formerly Assistant Solicitor of the Department of the Interior. Professor Beutel observed in a paper in the Federal Bar Journal:

"Many of the persons backing these bills are well-meaning amateurs who have in mind a particular fancied or real injustice to themselves or to their clients caused by either good or bad administration of a single Government agency, and believe that they are accomplishing valuable public reform by offering their blanket bills covering a maze of subjects about which they have no knowledge. But there is another and more sinister force behind the drive for 'administrative reform.' Included among the advocates of the bill, probably in a small minority, are a group of lawyers consciously and keenly intent upon deliberately attempting to block the functioning of Government regulation in the public interest against their own clients and using the talk of justice, judicial review, and the like as a means of securing the social advantage of the interests which they represent. The amateurs would do well to consider whether they care to continue to act as dupes for this selfish minority. In any instance, this voluntary reorganization of government by amateurs and people who have an ax to grind ought to come to an end" (Frederick K. Beutel, The Problem of Reform of Administrative Procedure, 6 Fed. Bar Journal 264, 286-287, April 1945).

The danger of the type of legislation exemplified by the bill before this committee is that it may serve to advance selfish ends in the manner suggested by Professor Beutel. A regulatory agency which places restrictions on the right of almost every businessman in the country to formulate an independent sales policy in the light of his own selfish interests, regardless of the public interest in safeguarding fair competition, inevitably earns for itself criticsm and crtics. The only sound approach toward the dfficult and important problem of reconciling the right of the individual to fairness and due process of the law with the right and obligation of the Government to carry out, effectively and efficiently, the policies set forth by Congress is to inquire into the problem dispassionately and constructively. Irritation over the regulatory activities of one agency should not lead to punitive legislation in the hope that the policies of Congress will be administered differently by the courts. The latter approach is clearly inconsistent with the dignity of Congress and its obligation to safeguard the public good.

I. ANALYSIS OF BILL

The O'Hara bill (H. R. 3871) would cripple the Federal Trade Commission by taking from it the power to determine whether there has been a violation of the Federal Trade Commission Act. That power would be transferred to the United States district court. The Commission would be left only with the function of initiating and prosecuting proceedings under the Federal Trade

Commission Act. A further limitation on the Commission is found in the provision of section 5 (b) (1) that the FTC is to bring proceedings only in the district court of the Federal jurisdiction in which a person, partnership, or corporation charged with an unfair method of competition maintains his or its principal place of business. This would prevent the Commission from filing a complaint in the district in which the unfair method of competition had been utilized.

Section 5 (b) (2) provides that the existing rules of procedure, carefully evolved by the Commission from its years of experience in regulating business, are to be superseded and that the suit to enforce the Federal Trade Commission Act would be governed by the rules of civil procedure for the district courts of the United States.

The protection now afforded by the fact that the Federal Trade Commission has five members so that five trained minds weigh the complex facts of a Federal Trade Commission case and agree on a decision by majority vote will also be abandoned. Instead, one district judge without specialized training will make the decision.

H. R. 3871 provides that if the court is of the opinion that the method of competition or the act or practice in question is prohibited by the Federal Trade Commission Act, and that the enjoining of it would be in the interest of the public, it shall enter such order, in the nature of a permanent injunction, as it shall deem appropriate. Apparently enforcement of the injunction would be had only by contempt proceedings for violations of the court's injunctive order. Neither section 5 nor section 16 of H. R. 3871 provides for the civil penalty suits now permitted by the Federal Trade Commission Act. The Commission would be prohibited from issuing further cease-and-desist orders. Under the present act, civil penalty suits are applicable only where final Federal Trade Commission orders have been violated.

Fines for false advertising of food, drugs, cosmetics, and devices under section 14 of the present act are continued by section 16 of H. R. 3871. Section 2 of H. R. 3871, however, provides that the injunction against such advertising, provided for by section 13 of the present act, may be sought only at the time when the Commission files its complaint in the district court under the provisions of the proposed amendment of section 5 of the Federal Trade Commission Act. Upon proper showing at that time, the court, in its discretion, may grant a temporary injunction (sec. 2, H. R. 3871).

Section 4 of H. R. 3871 provides that suits instituted by the FTC prior to the enactment of this act shall be governed by the provisions of the present Federal Trade Commission Act.

II. APPROACH TO ADMINISTRATIVE LAW OF O'HARA BILL IS UNWISE

This brief analysis of the provisions of the O'Hara bill demonstrates that the bill seeks to remedy what is regarded as defects in Federal Trade Commission procedure or policy by dumping the entire problem of enforcing the Federal Trade Commission Act into the lap of the already overburdened courts Inasmuch as the Federal Trade Commission Act, and the other acts enforced by the Federal Trade Commission, provide adequately for judicial review and a fair day in court on the question of the manner in which the agency has applied the applicable law, the end here sought to be achieved necessarily is that determination of facts is to be made by the courts. The basic assumption inherent in the legislation appears to be that justice can only be had in the courts and that the administrative agency and the administrative process are arbitrary, capricious, summary, and inept. Speaking from the vantage point of years of experience of defending the interests of companies charged with violation of one or another of the acts entrusted to the Federal Trade Commission, I can say that I find this whole concept prejudiced and preposterous.

The anguished outcries for abandonment of the administrative process and the constant attacks upon the functioning of the Federal Trade Commission and other regulatory agencies reflect a basic misconception of what an agency like the Federal Trade Commission was intended by Congress to achieve. After all, as Prof. J. V. Masters observed in Making Administrative Action Safe (1938) (24 A. B. A. J. 837, 838), "Some Machiavelli did not retire into a closet at night and emerge the next morning with the abominable bureaucracy all thought up and planned out."

The real truth of the matter, of course, is that the administrative agency was evolved by Congress to meet a very real need. The circumstances which led in 1887 to the creation of the Interstate Commerce Commission are well known. Congress, goaded by clamoring public opinion, recognized the need for regulation of the railroads of the country and the establishment of workable and efficient methods for curbing the abuses which had marked their growth. Similar complex problems of pressing national importance led to congressional enactment of the Sherman Antitrust Act. Congressional dissatisfaction with the manner in which the antimonopoly policy expressed in the Sherman Act had, in practice, bogged down in legal technicalities and narrow court decisions resulted in adoption by Congress of the Federal Trade Commission Act which established the Federal Trade Commission to carry out the public policy expressed in the Federal Trade Commission Act. In every case where a quasijudicial agency has been established by Congress, it has been brought into being because Congress felt that the advantages of the administrative procedure were necessary in the public interest. Inevitably, there have always been groups which have regarded the growth of the administrative process as unwise or dangerous. Some, like Dean Roscoe Pound, have argued, on the analogy of the development of the equity courts in England, that the administrative process should be taken over and consolidated with the court system. Others have regarded the cumbersome procedure of the courts as a haven of refuge from the efficiency of the enforcement activities of the administrative agency. The objections raised by those who take a constructive approach, like Dean Pound, should be met by thoroughgoing study along the lines demonstrated by the history of the Administrative Procedure Act. Only this dispassionate approach can avoid the ever-present danger that interference with the work of one or another administrative agency serves the special interest of selfish pressure groups.

The manner in which the Supreme Court approaches this complex problem is well indicated by the unanimous decision of the Supreme Court in Federal Communications Commission v. Pottsville Broadcasting Co. (60 Sup. Ct. 437). Speaking for the Court, Mr. Justice Frankfurter, one of the most thoughtful students o fthe administrative process, observed:

"Courts, like other organisms, represent an 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 over 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 century ago the opinion of eminent spokesmen of the law. Perhaps the most striking characteristic of this movement has been the investiture of administrative agencies with power far exceeding and different from the conventional and judicial modes for adjusting conflicting claims-modes whereby interested litigants define 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 Naion in the enjoyment of facilities for transportation, communication, and other essential public services. *** These differences in origin 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 Division 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 administrative 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 to read the laws of Congress through the distorting lenses of inapplicable legal doctrine."

The warning by the Supreme Court that legal doctrines and the judicial process may hamper, rather than protect, the achievement of justice, if they are applied in blind substitution for the administrative process, is cogent and salutary. The basic problem posed by the O'Hara bill is what is the proper relationship of the administrative agency to the court system in an economic system of unparalleled complexity. Congress has set forth as its policy the basic determination that unfair methods of competition, monopolistic practices, and abuse of competitive freedom should be restrained. In the light of its experience with the Sherman Antitrust Act, it established the Commission as an agency responsible to Congress itself and not as a part of the coordinate judicial branch of the Government. Its experience with the Interstate Commerce Commission had demonstrated the effectiveness and efficiency of this procedure and the adequate safeguard which it gave to protection of the constitutional rights of those charged with having violated the law.

The respect due the judgment of Congress in this regard is exemplified by the decision of the Supreme Court in Federal Trade Commission v. R. F. Keppel & Bro., Inc. (291 U. S. 304 (1934)):

"While this Court has declared that it is for the courts to determine what practices or methods of competition are to be deemed unfair (Federal Trade Commission v. Gratz), in passing on that question the determination of the Commission is of weight. It was created with the avowed purpose of lodging the administrative functions committed to it '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 If the point were more doubtful than we think it, we should hesitate to reject the conclusion of the Commission, based as it is upon clear, specific and comprehensive findings supported by evidence. We hold that the Commission correctly concluded that the practice was an unfair method of competition within the meaning of the statute."

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The wisdom of placing reliance on the judgment of administrative agency experts, qualified to determine the real weight of facts in a complex field of economics or merchandising, has been repeatedly recognized by the courts. The desirability of this basic concept of administrative law was well stated by Mr. Justice Stone in The Common Law in the United States (1936) (50 Harv. L. Rev. 4, 16), where he observed that the substitution of new methods of control for the controls traditionally exercised by the courts was "a substitution made necessary. not by want of an applicable law, but because the ever-expanding activities of Government in dealing with the complexities of modern life had made indispensable the adoption of procedures more expeditious and better guided by specialized experience than any which the courts had provided "

Appointment to a Federal bench does not make an individual an expert in the specialized and complex fields of learning with which the Federal agencies deal. Due process is more readily achieved, in fact, by determining the relevant facts by qualified experts through the administrative process rather than embracing the fiction that a Federal judge adds to his knowledge of law an intimate and specialized knowledge of accounting, merchandising, fair methods of advertising, and the host of other difficult problems which the experts of the Federal Trade Commission now determine in the light of their specialized knowledge.

No sharper criticism of the approach taken by the O'Hara bill can be found than the following comment by A. II. Feller in his paper Administrative Justice, 27 Survey Graphic 494, October 1938:

66* * * The trend toward administrative legislation has been accompanied by an even more striking trend toward administrative justice, and a large part of the job courts has, of necessity, been given over to the administrative side of the Government. As the functions of the state continue to expand, the processes of the ordinary law courts are found to be inadequate to cope with the complex problems which arise. Specialized knowledge, which the judges cannot possibly possess, is needed. The common law rules of evidence, designed to prevent untrained jurymen from running riot, hamper speedy determination. Nor can the judicial process deal readily with controversies involving technical and economic

data. The mass of business under the new regulatory statutes is such that the judicial system cannot handle it. In the 15 months from April 1937 to June 1938, the National Labor Relations Board handled over 12,000 cases. Most of these cases are disposed of quickly, informally, and without the necessity of hearings. Others require extensive hearings and result in huge records running into many thousands of pages. If this business had been handed over to the Federal courts they would have been swamped. And the Labor Relations Act is only one out of a considerable number of regulatory agencies which the last 50 years have brought forth."

The O'Hara bill would destroy, among other basic principles of the administrative process, the advantage of carrying on a broad investigation of technical and complex problems in the flexible manner required by the nature of the problem, unhampered by the technicalities of the procedures of courts of law. The advantage of such general investigations, now carried on by the Federal Trade Commission was recognized by the Seventh Circuit Court of Appeals in deciding the A. E. Staley Manufacturing Company case:

"Pleadings before the Commission are not required to meet the standards of pleadings in a court where issues are attempted to be framed with a measure of exactness which is designed to limit the broad sweep of investigation that characterizes the proceedings of administrative bodies." (A. E. Staley Manufacturing Co. v. Federal Trade Commission, 135 F. (2d) 453, 454 (C. C. A. 7th, 1943)).

The same court has set forth, with approval, the philosophy which motivated Congress to grant quasi-judicial powers to the Federal Trade Commission: "With the increasing complexity of human activities, many situations arise where governmental control can be secured only by the 'board' or 'commission' form of legislation. In such instances Congress declares the public policy, fixes the general principles that are to control, and charges an administrative body with the duty of ascertaining within particular fields from time to time, the facts which bring into play the principles established by Congress. Though the action of the Commission in finding the facts and declaring them to be specific offenses of the character embraced within the general definition by Congress may be deemed to be quasi-legislative, it is so only in the sense that it converts the actual legislation from a static into a dynamic condition. But the converter is not the electricity. And though the action of the Commission in ordering desistance may be counted quasi-judicial on account of its form, with respect to power it is not judicial because a judicial determination is only that which is embodied in a judgment or decree of a court and enforceable by execution or other writ of the court" (Sears, Roebuck & Co. v. Federal Trade Commission, 258 Fed. 307, 312 (C. C. A. -7, 1919)).

It has fallen to my lot many times, as a practitioner specializing in practice before the Federal Trade Commission, to review the legislative history of the Federal Trade Commission Act. From the dusty pages of the Congressional Record of 1914, the intense concern of the leaders of that period with the problem of the growth of monopolies and the spread of unfair methods of competition speaks with renewed vigor and statesmanship. The men of that day, Senator Newlands, Senator Cummins, and later President Wilson supported a Federal trade commission because they sought to eliminate the delays and uncertainties incident to judicial enforcement of the antitrust laws. The official report of the Senate Committee on Interstate Commerce set forth their view that an administrative agency was the proper and necessary method to maintain free competition-free to all upon equal terms

"It is believed that through the intervention of such a body of men, the legislative policy with respect to combinations and monopolies could be vastly more effective than through the courts alone, which in most cases will take no cognizance of violations of the law until months or years after the violation occurs, and when the difficulty of awarding reparation for the violation is almost insurmountable." (Report of Senate Committee on Interstate Commerce of February 26, 1913, p. xv.) Even the most cursory study of the legislative history of the Federal Trade Commission Act indicates that the statesmen who enacted this legislation into law rejected the basic concepts of the O'Hara bill. Thus, Gerard C. Henderson, who was a leading student of the Federal Trade Commission Act, summarized the legislative history as follows:

"The reason for conferring upon the Commission this typically judicial function must have been that Congress expected that the problems which would be encountered would be of a technical and specialized character, calling for experience and training which a court might not possess, but which could be