The court said that the judicial function "is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body."

20

99 19

The opinion pays high compliment to the experts on this Board and is a strong presentation in support of the theory of bureaucratic infallibility. The members of this Board are entitled to commendation. They do not deem themselves to be crusading enforcers of an act. The strongest boost, however, that has been made for administrative absolutism is a concurring opinion in the recent case of Bingham v. Commissioner,2 decided June 4, 1945, in which it is said that in a review of a decision by the Tax Court the sole question before a circuit court of appeals is whether the decision by the Tax Court presents "a clear-cut mistake of law. There should be an end of the matter once it is admitted that the application made by the Tax Court was an allowable one." 21 A mere mistake of law is insufficient. It must be "clear-cut." This opinion further states that the intention of the Dobson case was to

66* * * centralize responsibility in the Tax Court, to minimize isolated intrusions by the circuit courts of appeals into the technical complexities of tax determination except when the Tax Court has clearly transcended its specialized competence."

99 22

Here seems to be a very frank confession that the Court in the Dobson case was intending to centralize responsibility in the Tax Court-a province which I always thought belonged to Congress, and which undiluted attribute Congress did not mention, but Congress said, in effect, to the Circuit Courts of Appeals: "You reverse this thing if justice and law require it."

What is meant in the statute providing for review by the circuit courts of appeals in the use of the term "in accordance with law" and the term "as justice may require"? If I am correct in the assumption stated earlier in this discussion that judicial power means the power to administer justice to the people according to the prescribed forms of law, then the obligation to do justice called for by the Tax Court statute brings the judicial power of the circuit courts of appeals into full function. I submit that any court which cannot review either the law or the facts upon which a decision of the Tax Court is based is in a poor fix trying to do justice.

Give me the right to fix the facts and you may have the right to declare the law. If ascertaining the truth is not the first step in the administration of justice, then I confess that I have no conception of the process. The right to know the truth is an integral and essential attribute that belongs to a court of justice. If ascertainment of the truth is not an inegral and necessary part of the exercise of judicial power, then why find the facts? Why not let the judge issue an ex parte fiat? If finding the facts is a part of the judicial power, and if the judicial power is vested in the courts in cases and controversies mentioned in section 2 of article III, or if the judicial power is the power to administer justice, and if in the administration of justice it is necessary first to know the truth, how can Congress or the Supreme Court withhold from the courts on review the right to be satisfied as to facts? For to withhold from them the right to know the truth is to withhold from them an essential and integral part of the judicial power, without which the demands of justice cannot be known, and the law cannot be properly applied.

In conclusion I wish to submit for your consideration this concept: That Congress may vest in nonjudicial boards and tribunals finality of decisions in all matters which do not come within the traditional concept of cases and controversies unless the decision of such boards and tribunals denies a citizen a right under the Constitution and laws of the United States. But in any instance in which Congress provides for a review in the courts of cases and controversies arising out of the subject-matter mentioned in section 2 of article III, thereby calling into operation the judicial power-the power and the duty to do justice-it cannot take away from the courts any part of the judicial power to do justice.

The power, the right, the duty, to do justice are constitutional attributes of the Federal courts that cannot be whittled away in cases before them by denying to such courts the power to find the truth. The taking away from the courts

19 320 U. S. at 501.

20 89 L. ed. 1191.

21 Id., at 1200.

22 Id., at 1201.

the power to find the truth and to declare it though the heavens fall, is one way in which Congress has ordained and established that its courts shall be inferior courts, but it is not the way the makers of the Constitution intended that it should be done.

THE FEDERAL TRADE COMMISSION'S INTRUSION UPON THE TRIPARTITE SEPARATION OF POWERS

In his foreword to the George Washington Law Review's symposium on the Federal Trade Commission (1940, p. 250), S. Chesterfield Oppenheim spoke of the Commission as "another intruder upon the traditional tripartite separation of powers to which the American system was said to be consecrated."

In that symposium, writing on highlights in the evolution of the Federal Trade Commission, Huston Thompson, a former Chairman of the Commission, said (p. 261):

"To serve on a commission is to learn the danger of relying on a rather cherished epigram to the effect that ours is a Government of laws and not of men, for, after all, at least 50 percent of it is Government by men, and it is personalities who play the great part in evolving the policies under which a commission shall proceed."

And again (p. 264):

"The assertion that any governmental department is a government by persons as much, if not more, than by laws, is illustrated in the changing of the membership of the Federal Trade Commission."

Excerpt from an address by Gilbert H. Montague, of the New York bar before forum o fadministrative law of the Essex County Bar Association, Newark, N. J., entitled "Getting Along With the Government Agencies," April 9, 1945, printed in the Congressional Record of May 14, 1945:

"LITIGATING WITH THE GOVERNMENT

"Litigation of any kind is a nuisance to a businessman, but litigating with the Government is most wasteful of all in lawyers' fees and executives' time.

"As a litigant, the Government has advantages of unique prestige, unrivaled powers of publicity, specially trained legal talent, and inexhaustible resources. "Such Government agencies as the Federal Trade Commission and the National Labor Relations Board have also the advantage that in all their prosecutions they are both prosecutor and judge, and are empowered by statute to make decisions in their own favor, even though such decisions be contrary to the weight of evidence."

Excerpts from final report of Attorney General's Committee on Administrative Procedure, 1941, additional views and recommendations of Messrs. McFarland, Stason, and Vanderbilt.

(p. 203)

"THE SEPARATION OF FUNCTIONS

"History and tradition have given English-speaking peoples a governmental pattern which they regard as the essence of fair adjudication. They regard the legislature as the first forum in matters between the Government and the citizens; in the legislature, made up of representatives of all the people, their needs are presented and general solutions devised. The investigator or prosecutor follows; it is his duty to enforce the law by discovering wrongdoing and bringing wrongdoers to justice. But the prosecutor is not allowed to judge as well as to prosecute. Instead, he must prepare his case, summon witnesses, and present reliable evidence at a hearing before a court which is independent of the prosecutor. Even a judge in a court of law is not the sole judge. A jury of citizens must first say whether they approve the imposition of criminal penalties or money damages. The judge may then say whether, notwithstanding the permission given by the jury, the imposition of penalties or damages is 'lawful.' Not even then is the process finished, for the right of appeal to a higher tribunal has come to be regarded almost as essential as the right to a trial.

"In the administrative process, however, these stages of making and applying law have been telescoped into a single agency. In this concentration customary and separate procedures have disappeared. The legislature no longer prescribes the rules but in large part leaves this function to the administrative agency. And administrative rules are usually incomplete, since it is easier for an admin

The

istrative agency to judge each case as it arises than to formulate rules. agency which prescribes rules is also the investigator, the prosecutor, the judge, and to a large extent the appellate tribunal. It is given a staggering load of work and must necessarily delegate many of these functions to subordinates. One employee acts as prosecutor, another as presiding judge, and another as appellate judge. There is no jury. The litigant often feels that, in this combination of functions within a single tribunal or agency, he has lost all opportunity to argue his case to an unbiased official and that he has been deprived of safeguards he has been taught to revere."

(P. 206)

On January 12, 1937, President Roosevelt transmitted to Congress the report of his Committee on Administrative Management, together with a special message, in which (Report With Special Studies, 1937, pp. iii-v), he said:

*

**

*

"I have examined this report carefully and thoughtfully, and am convinced that it is a great document of permanent importance. The practice of creating independent regulatory commission, who perform administrative work in addition to judicial work, threatens to develop a 'fourth branch' of the Government for which there is no sanction in the Constitution."

In Palmer v. Ultimo (C. C. A. 7th) 69 F. (2d) 1, 2), the court said:

"In respect to the other contention that the inspector was investigator, prosecutor, and fact finder, it must be said that such a practice is unfortunate and subject to criticism, yet it does not establish such unfairness as to vitiate the findings of such official. This hearing was by an administrative department where the procedure is quite different from that which prevails in courts."

In Federal Trade Commission v. Klesner (280 U. S. 19, 27) the Supreme Court said:

"While the Federal Trade Commission exercises under section 5 the functions of both prosecutor and judge, the scope of its authority is strictly limited.” This, however, was in 1929 before the Commission's authority was clearly extended.

John Bene & Sons v. Federal Trade Commission ((C. C. A. 2, 1924) 299 Fed. 468, 471):

"The Trade Commission, like many other modern administrative legal experiments, is called upon simultaneously to enact the roles of complainant, jury. judge, and counsel. This multiple impersonation is difficult, and the mainte nance of fairness perhaps not easy; but we regard the methods pursued [by the Federal Trade Commission] in showing Proper's diminution in sales as lacking in every evidential or testimonial element of value, and opposed to that sense of fairness which is almost instinctive." [Italics added.]

Excerpt from a statement made by James M. Landis, dean of the Harvard Law School, formerly a member of the Federal Trade Commission in a

SYMPOSIUM ON ADMINISTRATIVE LAW

(9 American Law School Review, 139)
(P. 183)

"When I went to the Federal Trade Commission, I found that the findings of that Commission were, as a matter of practice, drafted by the Commission's attorney in the case, the prosecuting attorney. It seemed to me absolutely wrong that that should be so. True, the Commission exercised an independent judgment before it said, 'Issue an order, or do not issue an order,' but the findings supporting that order were drafted by the Commission's own attorney who had presented the case. Naturally, he tied up the respondent, so the respondent couldn't move, with the findings he drafted."

Excerpt from a speech, Administrative Agencies and the Law, by Roscoe Pound, dean emeritus of Harvard Law School-printed in Women Lawyers Journal, spring edition, 1945.

(P. 6)

"One of the most serious features of administrative adjudication is that administrative agencies act as judges in cases in which they are also prosecutors and so in effect act as judges in their own cases. Many of these agencies entertain complaints, institute investigations upon them, begin what are in effect prosecntions before themselves, allow their own subordinates to act as advocates for the prosecution, and often make the adjudications in conference with those same subordinates."

Excerpt from statement of Representative Hatton W. Sumners, March 9, 1946: "Washington bureaucrats can now go to the average citizen with powers and authorities that no king ever possessed. For they make the rules which have the force of law. They construe the rules. They enforce the rules. And no citizen, practically speaking, has the power to resist."

“By concentration of governmental power and drafts upon the Federal Treasury, we have now a financially 'busted,' great, piled-up mass of governmental confusion beyond human comprehension, impossible of democratic control, extravagant, wasteful, inefficient, and by its nature the instrumentality of favoritism, tyranny, oppression, and corruption and the destroyer of the self-reliance and self-respect and governmental capacity of the people, qualities without which no people can remain free."

Hon. JOSEPH O'HARA,

House of Representatives,

THE TOILET GOODS ASSOCIATION, INC.,
New York 20, N. Y., April 22, 1948.

House Office Building, Washington 25, D. C.

DEAR SIR: The Toilet Goods Association, Inc., representing manufacturers of 90 percent of the perfumes, cosmetics, and other toilet preparations sold in the United States, is vitally interested in H. R. 3871 on which we understand hearing will begin April 28, 1948, before a special subcommittee of which you are chairman.

The association does not desire to take up the time of the subcommittee with a verbal presentation, and we respectfully request that this letter representing the views of the association on this measure be inserted in the record of the hearings in lieu of a personal appearance. The association and its members favor the principles of H. R. 3871 and strongly believe that the present procedure of the Federal Trade Commission which practically denies access to the courts to a defendant in matters initiated by the Commission, should be amended in order that the Commission is forced to try its cases before an impartial tribunal. We would, however, strongly urge an amendment to H. R. 3871 designed to transfer the control of the advertising on drugs and cosmetics now under the jurisdiction of the Federal Trade Commission to the Food and Drug Administration. Such an amendment would resolve the conflict in jurisdiction now existing between the Federal Trade Commission and the Food and Drug Administration which has led to difficulties in enforcing laws against unfair advertising and improper labeling.

Since 1906 when the original Food and Drugs Act was passed, the Food and Drug Administration has fairly and consistently administered that law with respect to the labeling of food, drugs, and cosmetics. Its procedures are regular and call for the trial of cases in the courts. The advertising of such products might be considered as an extension of labeling and the experience and knowledge gained by the Food and Drug Administration on labeling laws particularly fits that agency for the task of making the advertising claims of such products conform to the interests of the purchasing public.

The record of the Federal Trade Commission in matters of this kind is hardly clear and the policy of the Federal Trade Commission with respect to advertising and claims made therein have from time to time changed so radically as to virtually deny justice to the affected manufacturer. In addition the delay entailed in the Federal Trade Commission's procedure has been so great as not only to deny justice to the respondent but to seriously jeopardize the interests of the ultimate consumer.

On the other hand, the record of the Food and Drug Administration is completely clear in both respects.

Accordingly the Toilet Goods Association strongly urges that H. R. 3871 be passed with an amendment which would transfer control of advertising of toilet goods to the Food and Drug Administration.

Respectfully yours,

S. L. MAYHAM, Executive Vice President.

The CHAIRMAN. The next witness is Mr. Walter B. Wooden, Associate General Counsel of the Federal Trade Commission. Before he proceeds, may I inquire whether there is anyone else present who wishes to testify in behalf of the bill? If not, you may proceed, Mr. Wooden.

76551--48- -14

STATEMENT OF WALTER B. WOODEN, ASSOCIATE GENERAL COUNSEL, FEDERAL TRADE COMMISSION

Mr. WOODEN. Mr. Chairman and members of the committee, I have been Associate General Counsel of the Federal Trade Commission for about 2 years and as such have been in charge of the Commission's appellate work. This has involved the briefing and argument of the Commission's cases on review and in the various United States circuit courts of appeals and in the Supreme Court of the United States.

Among the cases I have handled in such courts are the Cement Institute case, decided by the Supreme Court on April 26 last, and the so-called Glucose cases, decided by it in April 1945.

Prior to becoming Associate General Counsel in charge of appellate work, I had handled a number of cases for the Commission in the courts, but between 1939 and 1945 I was Assistant Chief Counsel in charge of trials before the Commission in cases involving restraints of trade under the Federal Trade Commission Act and violations of the Clayton Act, as amended by the Robinson-Patman Act.

From 1924 to 1939 I was a trial attorney engaged in trying adversary proceedings before the Commission and specialized in trade restraints and Clayton Act cases. Many of these involved combinations in restraint of trade among groups of competitors organized into trade associations.

From 1915 to 1924 I was a field investigator for the Commission and the last 6 years of that period I was in charge of the Commission's Chicago office which handled legal investigating work in the area bounded roughly by Pittsburgh on the east and Denver on the west, and between Minneapolis and New Orleans on the north and south.

I make this broad statement of my experience with the Commission in order to qualify myself as a witness having direct personal knowledge of certain facts which have been brought into issue by the proponents of this bill. In this connection I have primarily in mind the letter of Dean Roscoe Pound to Congressman O'Hara in which he said of the Federal Trade Commission:

As the matter stands at present, that Commission sends out investigators to gather up a vast amount of gossip and hearsay, reaches a conclusion, and then goes through a form of hearing to justify its predetermined conclusion when it becomes necessary to invoke the aid of the courts or when the order of the Commission may come before a court of review.

As one who was himself an investigator and a supervisor of investigators for 9 years during the adolescent period of the Commission, and as one who has examined the records of other investigators throughout the history of the Commission, I know that it is simply not true that investigators are sent out to gather up a vast amount of gossip and hearsay as a basis for the Commission's action. It is and always has been the practice for the Commission's investigators not to rely on gossip and hearsay but to trace back to its original sources all important information.

Documentary corroboration is always obtained where possible. Responsible representatives of proposed respondents are interviewed as a check upon information obtained elsewhere and their files and records are examined for relevant evidence.