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We have fought a great war and are trying to fight a great peace to secure and preserve the freedom of the peoples of the earth. Let us be consistent and also free our own people from the grosser forms of administrative persecution and give back to us some of the rights we thought had been secured for us under the Constitution and Bill of Rights.

Vice President and Secretary.

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Washington, D. C. GENTLEMEN : The members of the Associated Drug and Chemical Industries of Missouri, which association comprises all the leading manufacturers of drugs, chemicals, and cosmetics in this State, unanimously favor the passage of H. R. 2390, which is presently before your committee. Attached hereto are its brief arguments in favor of the passage of said bill. This association respectfully requests your most favorable consideration. Yours very truly,


By John A. MUELLER, Cochairman, Legislative Committee. H. R. 2390, introduced by the Honorable B. Carroll Reece of Tennessee, proposes to amend certain aspects of the act creating the Federal Trade Commission in the following particulars :

A. SECTION 5 (c).

1. Provides that a person, partnership, or corporation may appeal an order of the Commission to the United States circuit court of appeals praying that the order be modified or set aside.

2. Authorizes the circuit court of appeals to modify the order of the Commission as in its judgment the circumstances of the case may require.

Comment.--The original act authorized the appellant to pray that the order of the Commission be modified or set aside. The original act gives the court authority to modify the order. Thus, the only change here proposed is to allow the person, partnership, or corporation involved to seek modification. Although the court has had power to modify the order all along, they have so interpreted their authority as to reduce their control of the remedy to a nullity. With the amendment here proposed, the appellant can properly set forth his reasons and arguments why the order should be modified and thus acquaint the court with facts which otherwise might not come to the attention of it. It is felt that this proposed amendment does not in any way change the act, but merely provides language that more clearly expresses Congress' intent.

3. Requires that the findings of the Commission be supported by the preponderance of the evidence in order to be conclusive.

Comment.--The original act stated that the findings of the Commission as to facts were conclusive if supported by “evidence.” From time immemorial, lawsuits have been decided by the preponderance of the evidence, and it is believed that Congress intended all along that the Federal Trade Commission's findings must be based upon a preponderance of evidence rather than on a mere scintilla. But under the wording of the original act, the courts have repeatedly stated that their hands are tied and that they are not authorized by the act to weigh the sufficiency of he evidence. The courts have held that so long as there is some evidence which supports the findings of the Commission that they are obliged to accept these facts as conclusive. This is not justice.

The Supreme Court of the United States has held that this act does not offend the due-process clause of the Constitution since the act contains a provision for judicial review. However, do we have true judicial review when the appellate court is restrained from determining whether or not the findings of the Commission are based upon a preponderance of the evidence? As an administrative agency of the Government, the Federal Trade Commission is the complainant, investigator, prosecutor, judge and jury. As judge and jury, it can scarcely be unbiased when it is also the complainant and prosecutor. If some evidence

only-rather than a preponderance of the evidence-is all that is required to make its findings conclusive, it is impossible that substantial justice can be done.

It is not believed that Congress ever intended that this situation exist, and it is felt that the courts have misinterpreted Congress' meaning. In order to clarify the intent of Congress, the proposed amendment inserts the words, "the preponderance of the" before the word “evidence” wherever it appears, and thus leaves no further room for misunderstandings by the court.

B. SECTION 5 (1)

1. Makes the penalty for each violation $1,000. 2. Sets a ceiling of $10,000 in the aggregate for violation of a single order.

Comment.The original act provided a maximum penalty of $5,000 for each violation of the Commission's orders. No aggregate total sum is set out. Using false advertisement as an example, each single advertisement constitutes a violation of the order. Were the courts to impose the maximum penalty for each advertisement published, a fine large enough to destroy an offender could legally be imposed. The courts have not as yet imposed fines of so large a sum as to be completely destructive. However, as the law now stands the Federal Trade Commission may ask the courts to impose the maximum penalty where in the aggregate that penalty would wipe out the offender. The Commission may use the threat of this as a sword over the heads of many concerns.

Certainly it is only just that some ceiling be set. As Mr. Reece himself has so aptly stated it, “The amount of the ceiling is not important. The principle is.” It has long been said that the power to tax is the power to destroy. Let it never be said in the United States that the power to penalize is the power to destroy.

C. SECTION 15 (A), SECTION 15 (F) (ADDED) AND SECTION 19 (ADDED) 1. Certain involved phrases are stricken in section 15 (a) and the following substitution is proposed: “So as to prevent deception resulting from indirection and ambiguity, as well as from statements which are false."

2. A definition of the term “label” is given in section 15 (f).

3. Matters coming under the jurisdiction of the Food, Drug and Cosmetic Act are removed from the jurisdiction of the Federal Trade Commission insofar as the Food, Drug and Cosmetic Act as exclusive jurisdiction.

Comment.There can be no doubt that Congress intended that certain authority be delegated to the Federal Trade Commission and certain authority to the Food, Drug and Cosmetic Act. The proposed change in section 15 (a) and the new sections 15 (f) and 19 merely more clearly define and explain what matters come under which governmental agency. Congress never intended that the duties of these two administrative bureaus should overlap, causing them to step on each other's toes. However, by the original wording of section 15 (a) the Federal Trade Commission's interpretation was that it must regulate advertising in regard to representations which Congress intended to come within the scope of the Food, Drug and Cosmetic Act. Control of representatives regarding qualities of foods, drugs, devices, and cosmetics has been delegated under the Food, Drug and Cosmetic Act. The Federal Trade Commission was delegated jurisdiction over false advertisement, or advertising that was deceptive by means of indirection or ambiguity. The proposed new wording more clearly sets out the degree of control and authority the Federal Trade Commission is given so that it will not encroach upon matters which properly come under the Food, Drug and Cosmetic Act.

New section 15 (f) defines the term “labeling.” There is a great distinction between a label and an advertisement. The original act specifically states that labeling is excluded from the term “false advertisement.” However, the act did not undertake to define the term "labeling” and because of this confusion has arisen. By incorporating a definition of the term "labeling” into the act, there should no longer be the confusion which up until the present time has existed.

New section 19 removes from the jurisdiction of the Federal Trade Commission foods, drugs, devices, and cosmetics insofar as they come under the Federal Food, Drug and Cosmetic Act. It is felt that Congress never intended that any dual jurisdiction exist, but experience has proven that it has. It is necessary for the proper conduct of a business that the interpretations of one governmental agency be relied on. It is not proper that one governmental agency give a go sign while another governmental agency gives a stop sign on the same matter. Congress did not intend this, but it has in fact existed. The proposed new section places controls where they should be, and where it is believed Congress intended them to be.

In summarization, it is not believed that H. R. 2390 deprives the Federal Trade · Commission of any of its rights, authorities, or duties that Congress intended to bestow upon it. The changes proposed are concise and self-explanatory, and they merely set out more clearly the original meaning and intent of the Congress. Respectfully submitted.


Cochairman, Legislative Committee.


New York, N. Y., February 18, 1946. Re H. R. 2390. Hon. B. CARROLL REECE,

House Office Building, Washington, D. C. DEAR MR. REECE: I write this letter in behalf of the Grocery Manufacturers of America and the American Pharmaceutical Manufacturers' Association, for insertion in the record of the hearings on this bill; and I add that it expresses my own view as well.

This bill amends sections of the Federal Trade Commission Act; and we approve the amendments thus made, as and to the extent now stated :

Section 5 (c): We approve its amendment whereby the Commission's findings as to the facts are only conclusive, on the court review of a cease and desist order, "if supported by the preponderance of the evidence.” For this is the right and just rule of evidence, in the circumstances.

Section 5 (1): We approve its amendment to place a reasonable ceiling on the aggregate amount of a civil penalty for the violation of a final cease and desist order. For such a ceiling is manifestly indicated.

Section 15: We approve its amendment to add a new paragraph (f), which defines the term "labeling” as in the Federal Food, Drug, and Cosmetic Act. For this paragraph was erroneously omitted from that section, when it was enacted; and it contains a necessary definition.

Section 19: We approve the addition of this section, to provide that food, drugs, devices, and cosmetics shall be exempt from this act to the extent of the application or extension thereto of the Federal Food, Drug, and Cosmetic Act._For such a provision will operate to eliminate jurisdictional conflict between the Federal Security Agency, in administering the aforesaid act, and the Federal Trade Commission, in administering the supplemental law against a false advertisement of food, drugs, devices, and cosmetics, enacted by the WheelerLea amendment of the Federal Trade Commission Act. But it is added : we recommnd that such false advertising law should be transferred to the Federal Food, Drug, and Cosmetic Act, as a matter of public policy and in the interest of all concerned.. For the Federal law against the adulteration, misbranding, and false advertisement of food, drugs, devices, and cosmetics is best consolidated in that act, for unified administration by the Food and Drug Administration of the Federal Security Agency. Respectfully yours,



Washington, D. C., February 15, 1946. Hon. B. CARROLL REECE,

New House Office Building, Washington, D. C. MY DEAR MR. REECE: You recently addressed a letter to our association asking for our views on your bill amending the Federal Trade Commission Act, H. R. 2390. Since it was impossible for a representative of our association to appear at the hearrings on this bill I am very glad to state our position at this time.

The International Apple Association has a direct and vital interest in matters such as that covered by H. R. 2390. The association is a nonprofit organization of growers, shippers, and distributors of apples and pears. Its membership is located in all of the important producing sections and distributing markets of the United States. It is composed of the leading apple and pear growers and shipping organizations, individual shippers and firms, apple and pear cooperative associations, wholesale dealers, distributors, exporters, and our members interested in other lines of our industry. In addition, its membership extends to many foreign countries, including Canada, the United Kingdom, Continental Europe, South America, and Australasia. The International Apple Association is now in its fifty-second year, one of the oldest agricultural associations in the United States, and is representative of the apple and pear industries of the United States.

The association wishes to go on record as endorsing the amendments which H. R. 2390 would make to the Federal Trade Commission Act, as contained in sections 1, 2, 3, and 4 of this bill.

Because of the many regulations, administered by various Government agencies, under which our and other agricultural industries have to work, we consider it highly desirable that wherever possible these regulations be coordinated under one agency. For that reason we would welcome the amendments contained on page 5 of your bill, lines 10 to 16, providing that wherever the Federal Food, Drug, and Cosmetic Act applies that action as administered by the Federal Security Agency will govern.

At the present time the many agencies regulating our industries add considerably to the burdens of our members and we are very anxious to see that this new section to the Federal Trade Commission Act is added without delay. Sincerely yours,

SAMUEL FRASER, Secretary, International Apple Association.


Memphis, Tenn., February 15, 1946. Memorandum for Hon. B. Carroll Reece, House Office Building, Washington, D. C.

On February 6, 1946, this writer sent a memorandum to Col. James B. Murphy, our attorney, 1206 Palmetto Building, Columbia, S. C., copy to Mr. Harry D. Wilson, our president, Baton Rouge, La., will quote it :

“As soon as practicable please tell this writer, with return of the enclosed file, whether or not in your opinion the Southern Association should support the Reece bill, H. R. 2390.

“This matter escaped the writer's attention until he read an editorial clipped from the Journal of Commerce, which you will find next attached.

“First opportunity, after seeing the Journal of Commerce editorial discussion of said bill, this writer contacted, over the telephone, Congressman Reece, whom he has known personally for years; like yourself, he is a good businessman and an able lawyer; he hails from Johnson City, Tenn. ; has been representing the first district of that State since 1933.

“The Congressman was duly appreciative of our inquiry about the status of his bill, "To amend the act creating the Federal Trade Commission, to define its powers and duties, and for other purposes'; he has made two speeches in the House suggesting said bill, these you will find in said file.

“Have had some experience with the Federal Trade Commission ; recall discussion by attorneys of the conditions referred to, who said that they were unfair, that the bill should be amended

*. And “Congressman Reece's bill is, in effect, the amendment said attorneys thought should be made."

Colonel Murphy answers on the 8th; next attached is a copy of his reply. Am following up with President Wilson. Am confident can arrange with Colonel Murphy to appear, both for himself and our association, in support of your bill before the committee handling it. What are your suggestions?

C. C. HANSON, Secretary. cc: Col. J. B. Murphy, attorney, 1206 Palmetto Bldg., Columbia, S. C.; Harry D. Wilson, president, Baton Rouge, La.; and our other 12 members, and friends, individually addressed.

“Social control” of industry will serve only to intensify the evils which it pretends to correct.

In all industry, each legislative move creating new problems seemingly requires new regulation and a new extension of Federal power.

There should be no interference with normal industrial competitive processesprice relationship, productivity, employment and allied factors.



COLUMBIA, S. C., February 8, 1946. DEAR COLONEL HANSON : In response to your letter of February 6, 1946, requesting my views on H. R. 2390, introduced in the House of Representatives by Congressman Reece, I have carefully considered this bill in its entirety and unhesitatingly state that in my opinion is meritorious and strikes at the base of one of the greatest evils our country is now confronting: law by commissions and regulatory agencies not subject to review by the courts.

Immediately the proponents of this school of thought will say, “It is the facts and not the law," but when you circumscribe the facts with long established rules of evidence, you blend them and the question becomes mixed facts and law. In any event, in its final analysis, the facts make the law, for the law is only crystallized public opinion reduced to statutes.

There is nothing to prevent a Commission from hearing one side of a question and thus excluding relevant evidence and, thus, preventing the courts from even hearing evidence on all points at issue.

Webster defines "substantial" as, “of considerable size or amount; vital, important, strong, real solid, true," and thus the testimony of one single witness may be taken and his testimony certified as “substantial,” and our courts are now powerless to even look further into the record, although 20 or more other witnesses of unimpeachable veracity might flatly contradict this one witness. The “preponderance of the evidence,” the universal rule of law in all civil courts, would cure this flagrant abuse now in practice.

May I give an example of the dangers incident to accepting “substantial evidence?" Military law provides that if the record of trial contains “any” substantial evidence, the case must be held “legally sufficient to support the findings of the court” by the Board of Review (the supreme court of the Army).

I recall a case where an ignorant, illiterate Filipino woman identified a Negro, whom she had never seen before, at a distance of 10 feet on a dark night, and his conviction for murder was sustained as the court considered this “substantial evidence.” Other facts pointed to his guilt, but identification was essential. The Board of Review was powerless to take any action. This shows the great danger in departing from the civil rule of a “preponderance” and substituting “substantial”.

In these troublesome times, where capital and labor seemingly are “at each others throats,” every safeguard possible should be invoked to see that "equal justice” to all is administered, including the innocent bystander, 127,000,000 Americans who are not alined with either capital or labor. Unhesitatingly, I recommend unrestrained support of H. R. 2390. Sincerely,

JAMES B. MURPHY, Attorney at Law.


NEW YORK, N. Y., February 5, 1946. Hon. B. CARROLL REECE,

House Office Building, Washington, D. C. DEAR CONGRESSMAN REECE: In your consideration of H. R. 2390, the following resolution adopted by the NDTC last December at their annual meeting might be of interest to you:

Resolved, That the National Drug Trade Conference favors enactment of the necessary legislation to restrict administrative practice wherein the administrative agency serves as prosecutor, judge, and jury, and to provide for impartial, speedy, and capable independent determination of all disputed situations of fact." Best of good wishes. Respectfully yours,




New York 20, N. Y., May 18, 1945. Whereas the primary jurisdiction of labeling of foods, drugs, and cosmetics is vested with the Food and Drug Administration, while the primary jurisdiction over the advertising of foods, drugs, and cosmetics is vested in the Federal Trade Commission, and

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