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the witnesses and it does not read the record. It sits as a body, acts upon the briefs filed by the examiner and the argument by counsel.

Mr. Wooden. In the past, the examiner's report was advisory to the Commission and the Commission may accept it or disregard it.

Mr. REECE. Of course. On the question of procedure;

What is the relationship of the examiner, I mean, what relationship does he stand in? He is on employ of and named by the Commission. Who has brought the proceedings?

Mr. WOODEN. The Federal Trade Commission issued the complaint, according to the requirement of the statute when it had reason to believe that the law was being violated.

Mr. REECE. When the court names a Commissioner to hear a case to which you referred, he is sitting for the court. He has had nothing to do with instituting the proceeding; therefore, he is unprejudiced, so far as between the Government and the defendant, that is, as is the judge.

Does the examiner and any who stand in the intermediate position between the examiner and the Federal Trade Commission and on up to the Commission, occupy that same relationship to the defendant that the court occupies of completely an impartial body, so far as bringing and prosecuting the proceeding is concerned ?

Mr. WOODEN. Well, that goes into the philosophy of the statute under which the Federal Trade Commission was set up, and by reason of which it was given these commingled functions and made its duty under the statute to proceed on behalf of the public.

If you want to say that possibly an agency so constituted may not act in the public interest as a court does, why, the quarrel is with the philosophy underlying the statute. That is all there is to it.

Mr. REECE. Speaking for myself alone, I certainly do not have that view about it, that is, about that agency or other agencies of the Government, for that matter. I only assume that they are acting in the interest of the public.

Mr. WOODEN. It is somewhat analogous to the practice of courts that sometimes issue an order to show cause.

Mr. REECE. You are a reasonable man: if you were engaged in business, and being in business you are still a reasonable man,

I presume you would be, and the Federal Trade Commission should feel that you had transgressed the law and its regulations and would institute a proceeding against you, and then the appropriate agencies of the Commission should, after formulating the complaint, cite you for hearing and trial, would you feel that it stood exactly, or that you stood in the same unprejudiced position before it, that you would if the complaint had been instituted by some other civil authority and you were cited before a court to have a trial and adjudicate the differences of opinion? Of course, there would be differences of opinion, otherwise you would not be engaging in the practice.

Mr. WOODEN. It seems to me that the situation is quite analogous to what happens when a court issues an order to show cause, sometimes in even a contempt proceeding where the court is involved, you might say, as a party.

In other words, its status is involved. One can make those theoretical criticisms, but it is a practical situation that we are confronted with. Congress, evidently, thought that in creating these agencies to meet the situation and the problems involved, they had to combine these functions in one agency.

Mr. REECE. I am not satisfied that Congress was wrong in doing so, but now the question involved here is, having done that, as our economic system grows more and more complex and the regulations become more far reaching, should we, under those circumstances, provide a more adequate right of appeal?

With a view of making sure that we continue to operate under law and not arbitrary action.

Mr. WOODEN. In my judgment, that would tend to cripple the agency that Congress thought ought to have these commingled functions because it would tend to transfer

Mr. REECE. So far as I am concerned, I am primarily concerned in providing an adequate appeal and not to do so would cripple thg commission.

Mr. WOODEN. I think that will appear more fully as I go along in my statement that I have prepared.

Mr. SADOWSKI. That is what I would like for you to do is to go along with that statement.

Mr. WOODEN. In the other Supreme Court case I was referring to the findings of a Federal district court were accepted because "they have substantial support in the record” (A. & P. Tea Co. v. Grosjean, 301 U.S. 412, 420).

The long delay in the Johnson case suggests another objection to substituting the preponderance rule for appellate purposes in our cases. Knowledge that the appellate court is free to substitute its judgment on the facts for the Commission's findings will encourage respondents to make long records, to insist on cumulative evidence and to offer evidence of slight relevancy and materiality. There would be always the hope that the reviewing court can be impressed by the sheer volume of respondents' evidence, the number and importance of their witnesses, and the plausibility of their interpretations of or inferences from the facts. The Commission has numerous cases where the very size of the record would impose upon the appellate court an enormous burden which properly belongs to the trial body, unless the distinction between the functions of trial and appellate tribunals is to be no longer observed.

In Zell versus American Seating Co., Judge Frank of the Circuit Court of Appeals for the Second Circuit said:

Perhaps nine-tenths of legal uncertainty is caused by uncertainty as to what courts will find, on conflicting evidence, to be the facts of cases (138 F. (20) 641, 647, 648 (1943)).

If that statement be applied to the proposal to substitute the preponderance rule for appellate purposes it puts the proposal in the category of one which is certain to increase legal uncertainty by providing a trial de novo on the record made before the Commission.

One reason which would warrant the withholding—I have touched on this already but I want to amplify it—of a favorable report on this provision of the present bill is that the McCarran-Sumners bill which has been reported favorably to the Senate and is now pending as S. 7

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undertakes to deal with the subject for all administrative agencies. Dean Stason stated to this committee as follows:

Now, I say if the McCarran-Sumners bill becomes law-and it is a bill that has been given the most careful consideration for many years—it will effectually improve the administrative process, and assuming that it applies to the Federal Trade Commission, I would say that the preponderance of evidence rule would no longer be necessary (typewritten transcript, p. 21).

He thereupon suggested that if the McCarran-Sumners bill were passed the preponderance rule now in the present bill be amended to read as follows:

The findings, inferences and conclusions of the Commission as to the facts shall be conclusive if, and only if, they are found to be supported by substantial evidence upon consideration of the whole record, or such portions thereof as may be cited by the parties (typewritten transcript, p. 22).

While the proposed amendment is couched in terms of the substantial evidence rule, Dean Stason nevertheless agreed with Congressman Reece that it "would accomplish the same purpose that the preponderance of evidence language as now embodied in the bill is intended to accomplish” (ibid. pp. 22, 23). If that is correct it would seem to follow that S. 7 with its quite similar language regarding substantial evidence based upon a consideration of the whole record is open to objections similar to what might be made to any direct proposal to substitute the preponderance rule. It corresponds to one of the various constructions of the substantial evidence rule which Dean Stason in his 1941 testimony on administrative procedure said was "quite as objectionable as is the other extreme" because it would make the court the final arbiter on factual issues, would overload the courts, and would destroy the conclusiveness of administrating findings "which common sense and good administration demand” (hearings before a subcommittee of the Committee on the Judiciary on Administrative Procedure, May-July 1941, p. 1356).

It is interesting and relevant in this connection to observe that there was much difference of opinion among competent lawyers as to what effect similar language in the bills pending in 1941 would have on the substantial evidence rule. Acting Attorney General Biddle, referring to the contention that such language was only a statement of the present substantial evidence rule, said:

I do not know whether it means that or not. Why were the words “on the whole record” put in unless it means that the scope of the review of the facts is not pointed out? I think a court, inimical to the administrative activity of any particular agency, would take that “unsupported by substantial evidence on the whole record” and would decide there was enough evidence to give the right to review the case. I just have that doubt in my own mind (ibid., p. 1438).

In a supplementary written statement, Mr. Biddle said concerning the words "upon the whole record :">

Its effect is ámbiguous; those who have supported it before this Senate committee have not been able to identify its meaning or extent, other than to say that it broadens the substantial evidence rule. How much it broadens the rule they have been unable to say. It may be an open invitation to courts to substitute their judgment for that of the administrative agencies; in any event, it is a cause fertile of unending litigation (ibid. p. 1496).

With regard to the substantial evidence rule and the words "upon the whole record,” Attorney General Biddle also pointed out that Mr. A. T. Vanderbilt, one of the authors of a bill containing such a provision and a member of the minority of the Attorney General's

Committee on Administrative Procedure, had stated to the house of delegates of the American Bar Association that there was agreement that such language "was an advantage over the mere substantial evidence rule” (hearings on Administrative Procedure, pt. 3, p. 1495).

Dean Stason would now appear to have confirmed the views of those who then feared the possibility of weakening or frustrating the substantial evidence rule while seeming to incorporate it in a statute.

However these conflicting concepts and opinions may be resolved it would be more logical to have them resolved in connection with S. 7 which has been favorably reported to the Senate than in connection with the present bill which has just reached the stage of hearings before this subcommittee.

In his authoritative work, "Administrative Justice and the Supremacy of Law in the United States," John Dickinson, former Assistant Attorney General of the United States (1935–37), and at present, I believe, solicitor general for the Pennsylvania Railway Co., argues against the courts substituting their judgment for that of the administrative body on all conclusions to be drawn from the evidence, even though it bears on constitutional questions. He states:

There are two good reasons against it. It destroys the effectiveness of administrative regulation by reducing the administrative body to a practical nullity with a barren power of initial recommendation; and it yields no gain in security for the rights of property. Indeed, there is an actual loss in security, because greater confusion and not greater certainty is bound to be the outcome of the practice (p. 201).

Mr. Dickinson also says: No court should make a decision without understanding whether it is applying a legal principle or merely differing from the fact-finding body as to an inference peculiar to the case. Without such understanding, the one will inevitably invade the province of the other; and the process of administrative application of standards should not be interfered with except for the conscious purpose of developing or enforcing precepts of law (p. 331).

I submit that to substitute the preponderance rule for appellate purposes would not be for the "conscious purpose of developing or enforcing precepts of law” but would inevitably promote judicial invasion of the administrative fact-finding process by providing a trial de novo on the original record.

In an article on administrative tribunals published in the Michigan Law Review of February 1938, Dean Stason said that because of the responsibility of such tribunals to the legislative and executive branches and because of judicial review, "tyranny resulting from 'irresponsibility' seems beyond the range of possibility” (vol. 36, pp. 556, 557).

He also said: If the determining power of an administrative tribunal is reduced to zero by virtue of subjecting its decisions to full judicial review upon both the law and the facts, and if, pending judicial review, the status quo is preserved, the administrative tribunal is as completely shorn of judicial power as though it were reduced to the status of prosecuting officer. Under such circumstances it becomes in effect a referee, preparing records for the court to use in actually deciding the

cases.

Dean Stason further stated that the administrative tribunal is designed to accomplish a specific task of regulation and—

Its principal reason for being is that the Congress or the State legislature, as the case may be, has concluded that a certain area of business, industrial, economic, or social activity demands regulation, and, being unable to regulate by self-executing legislation, an administrative tribunal is created for the purpose. The principal task of the tribunal is to regulate. To aid it in its task it is imple. mented with a variety of powers. Some of these powers happen to look some what like, and may be classified as, judicial in nature. Others may be classified as legislative in nature. Still others may be administrative. However, all of their powers are simply incidental to the principal objective, regulation. Any reorganization which cuts away the tools provided to serve the regulatory process necessarily will reduce the effectiveness with which that process is carried on.

The necessary effect of a trial de novo on the record made before the Commission would be just what the Supreme Court said long ago in U. S. v. L. & N. R. R. Co. (235 U. S. 314, 321) would be the effect if it were to sustain the view of the Commerce Court that it had the power to set aside a finding of the Interstate Commerce Commission. It said that under such a power the Commission “would become but a mere instrument for the purpose of taking testimony to be submitted to the courts for their ultimate action." Since Dean Stason has stated here that the preponderance rule for appellate purposes will operate to produce a trial de novo on the testimony taken before the Commission, it follows that under it the Federal Trade Commission would become a mere instrument for the purpose of taking testimony to be submitted to the courts for their ultimate action."

That then is the ultimate issue, whether Congress wants to reduce the power and functions of this Commission to that extent, just as in earlier years the railroads wanted the power and functions of the Interstate Commerce Commission reduced. The issue is whether what the Supreme Court referred to in the L. & N. case as “the progressive evolution of the legislative purpose” is here to be replaced by a regressive involution of the legislative purpose that Congress expressed in the original act of 1914 and reaffirmed in the Wheeler-Lea amendment of 1938. Do we want to put this Commission in the same helpless position that the Interstate Commerce Commission occupied in its earlier years because the courts sought to determine what was the preponderance of the evidence ?

The majority of the Attorney General's Committee on Administrative Procedure in its 1941 final report, discussing the proposal to give appellate courts the power to weight and determine the preponderance of evidence, made this observation:

If the change would require the courts to determine independently which way the evidence preponderates, administrative tribunals would be turned into little more than media for transmission of the evidence to the courts. It would destroy the values of adjudication of fact by experts or specialists in the field involved. It would divide the responsibility for administrative adjudications (final report, p. 91).

The proposal to substitute the preponderance rule for appellate purposes is in effect a proposal to emasculate the administrative process by removing from it its vital and distinctive function as trier and finder of the facts. Unless it were for reasons that should have inhibited Congress from conferring such function upon the agency in the first place, there is no more reason to remove that function and transfer it to the appellate courts than to remove and transfer it from a trial court.

The Supreme Court in Mississippi Valley Barge Company v. United States stated:

The judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body (202 U. S. 282 (1934)).

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