today by the Federal Trade Commission. I think that the difficulty that any lawyer has-and this goes to both sides when he appears before an agency of that kind, he does not know the rules. They are not sufficiently defined, so that he does not know what belongs in and what does not, what is relevant and what is not; and the minute you have that uncertainty you tend to extend the whole hearing procedure. I think that would have the other effect, sir.

Mr. ROGERS. That is all.

Mr. LEA. Mr. Chairman.

Mr. O'HARA. Mr. Lea.

Mr. LEA. Mr. Sullivan, do you have the statement of President Wilson explanatory of this act at the time it was enacted?

Mr. SULLIVAN. I think I have it, sir.

Mr. O'HARA. Mr. Sullivan, I have it here, if I may read it, and see if you agree with it.

Mr. SULLIVAN. Go ahead; it is probably the same one.

Mr. O'HARA. The quotation is this: On January 20, 1914, President Wilson in a special message to Congress asked that an Interstate Commerce Commission be established to enable business to understand explicitly what is forbidden. The President said:

The business of the country awaits also, has long awaited and has suffered because it could not obtain, further and more explicit legislative definition of the policy and meaning of the existing antitrust law. Nothing hampers business like uncertainty. Nothing daunts or discourages it like the necessity to take chances, to run the risk of falling under the condemnation of the law, before it can make sure just what the law is. Surely we are sufficiently familiar with the actual processes and methods of monopoly and of the many hurtful restraints of trade to make definition possible, at any rate up to the limits of what experience has disclosed. These practices, being now abundantly disclosed, can be explicitly and item by item forbidden by statute in such terms as will practically eliminate uncertainty, the law itself and the penalty being made equally plain.

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And the businessmen of the country desire something more than that the menace of legal process in these matters be made explicit and intelligible. They desire the advice, the definite guidance, and information which can be supplied by an administrative body, an Interstate Trade Commission.

Mr. SULLIVAN. I have to rely again on memory, sir. I do not think that is precisely the one I had in mind; but I will be very glad to accept that as a statement of the philosophy behind this which I think prompted them at the time.

Mr. LEA. I think, Mr. Sullivan, the purpose for the original legisla tion was a little broader than you indicated in your remarks at the opening of your statement awhile ago. It was recognized that a very large proportion of the business concerns that are engaging in alleged unfair practices are doing so innocently and business concerns are accused of engaging in unfair practices when they have no intention whatever to violate the law. One theory of this law was to give those accused a chance to quit the practices that might be unfair without being subjected to penalization; and in the cases where it developed that the businessman concerned was deliberately engaging in unfair practices, knowing what he was doing, that he ought to be penalized; but that this act should give the innocent man protection without being forced to the necessity of going to court.

So it was intended as an instrument to serve the welfare of the legitimate interests of the country; encourage business and promote it; but to penalize the willful violator.

Mr. SULLIVAN. I am glad to be reminded and corrected, sir. Thank

you.

Mr. O'HARA. Any further questions? Mr. Sullivan, in that connection it might be well if you would insert in the record when you complete your testimony or subsequently if you will, please, the quotation which you had in mind from President Wilson, if there is any question about it.

Mr. SULLIVAN. I will, sir.

Mr. O'HARA. In that connection, Mr. Sullivan, this theory upon which the Federal Trade Commission was founded-would you say it has worked out that way as a matter of fact?

Mr. SULLIVAN. I would say in the main it has worked the way it was intended. I think that is being neither overgenerous or critical. I think it has worked that way.

I said, so far as my clients, they think so too. They think that the Federal Trade Commission has had a very useful function in preventing unfair or improper trade practices. They have no quarrel, basically, with the Federal Trade Commission in its experience. The quarrel is with this procedure. That is the quarrel.

Mr. O'HARA. Well, I think a good many courts have passed upon the question. I think some of our greatest men of this country have been quoted as saying that they never wanted to sit as judge or prosecutor in their own case. Is that not true?

Mr. SULLIVAN. That is fundamental, sir. I do not care whether one possesses the wisdom of Moses, so long as that situation exists under the law, it presents a difficult question. I do not think the man exists who is sufficiently unbiased in all instances to judge the matter after the fact when he had issued the original complaint. That would infer at least that he had some special kind of judgment. I do not think that he exists.

Mr. O'HARA. Now, this bill, Mr. Sullivan, would not prevent the Federal Trade Commission from going through the orderly processes in connection with Mr. Rogers' question, in the event the Federal Trade Commission had a complaint before them as to wrongful practices of an individual or business firm and there is still nothing to prevent them from making a stipulation with the defendant without going into court under this bill.

Mr. SULLIVAN. I see nothing to prevent it.

Mr. O'HARA. That he will cease and desist that practice. Is that not true?

Mr. SULLIVAN. I see no prohibition in this bill, sir, except as to the exercise of its present judicial functions.

I find that and nothing else.

Mr. O'HARA. The bill would prevent the issuance of an order to cease and desist?

Mr. SULLIVAN. Yes, sir.

Mr. O'HARA. But still the functions as outlined by President Wilson in his message, even with this bill, Mr. Sullivan, there is nothing to prevent the Federal Trade Commission from going to John Doe and saying, "You are violating the law," if he said, "I did not do it. If I am doing it I am doing it innocently. I will stipulate with you, enter into a stipulation with the Commission that I will cease and desist." That is the practice. There is nothing in the bill that prevents that?

Mr. SULLIVAN. Nothing whatever.

Mr. LEA. Do you know to what extent the decisions of the Federal Trade Commission have been reversed by the appellate courts?

Mr. SULLIVAN. I could not answer you on that. I actually do not know in an accurate way, sir.

Mr. LEA. I presume before the hearings are through, someone can answer that question.

Mr. SULLIVAN. Someone probably has those statistics. This is prejudging it, sir, but I would say in view of these decisions, it is almost impossible to get a reversal in the circuit court. If one higher court will say, "Even though we thought the testimony below was biased, but still we have to affirm," I do not see any practical way of getting around it. Any lawyer who gets a reversal in the circuit court, I take my hat off to him.

Mr. O'HARA. He should retire right there, should he not?

Mr. SULLIVAN. That is the monument to his career right there. Mr. LEA. I understand that the facts show that the vast majority of cases that go to the Federal Trade Commission are adjusted and no call is made on the courts for action, so that phase of the Federal Trade Commission seems to be working all right.

Mr. SULLIVAN. Sir, on that, as to Federal agencies, and I have others in mind now, but specifically on this one, where that right exists an the individual knows when he comes in, as the previous witness said, he has got to spend an awful lot of money and spend a lot of time defending his right, even if he believes thoroughly in his right, he is deterred initially from attempting to exercise his right. It just costs too much money. That is the difficulty. While the power is resident in the Commission under the present bill, it is impossible to tell how far it operates, but that it does exist I feel certain.

Mr. LEA. Of course, if we gave the Commission power to tell him what he must do without any power to enforce it, that would be the exercise of a judicial function in that respect.

Mr. SULLIVAN. If somebody questioned it and someone said, "I don't believe you," you could take them into the Federal court.

Mr. LEA. I am questioning whether you would injuriously affect this adjustment power that the Commission now exercises, which is a very valuable function, I think.

Mr. SULLIVAN. I have no doubt.

Mr. LEA. That is all.

Mr. O'HARA. There is no question in your mind. Mr. Sullivan, that this bill does not affect that adjustment power of the Commission?

Mr. SULLIVAN. It does certainly not affect it one way or the other. However, how it will act in practice I do not know, and I do not pretend to know. I should think-let us assume that this bill is the law today, and let us assume that somebody comes in to see the Federal Trade Commission at their request and insistence. Now, it may be that he will not as readily yield to their suggestion or even their demand that he quit doing whatever he is doing that they complain of, if this were the law, as he would today. But if the man then judges his case on what is presented to him on the other side and he says, "Well, I am going to get licked in the end anyhow, I might just as well face the music now and enter into some agreement with these people", I do not think it would substantially change the per

centage of settlements at all. It would postpone the event a little bit, that is about all.

Mr. LEA. Is it not true that a great many administrative agencies of the Government have a responsibility of making findings? Now, that being true, would it not seem advisable that the same rule as to the amount of evidence, as to the weight of evidence required, should apply to all of them?

Mr. SULLIVAN. Surely; why not?

Mr. O'HARA. I hope to stay in Congress long enough to take each of them, one by one.

Mr. SULLIVAN. I see you are looking to a long career, sir.
Mr. O'HARA. Are there any other questions, gentlemen?

Mr. BUSBEY. Mr. Sullivan, is there anything in the present act that requires the Commission to handle a complaint within a certain period of time, thereby not subjecting the company they are complaining against to a long process before the Commission and a lot of legal expense?

Mr. SULLIVAN. Well, the present act provides, and I am quoting right from the text here, "shall issue and serve on such person, partnership, or corporation a complaint stating its charges and containing a notice of a hearing upon a date at least 30 days after the service of the complaint." I see no limitation as to how long past the 30 days or how long the hearings will continue.

Mr. BUSBEY. I was interested in that case that you brought up a while ago, which I presume is the exception, which took 22 years before the Commission. I can see why a great many companies, if they had to go through long years of litigation before the Commission and a lot of legal expense and inconvenience to the company, would be willing to capitulate, because it would not mean that much to them.

Mr. SULLIVAN. They would just give up, that is all, and say "It is not worth it."

Mr. BUSBEY. That is all, Mr. Chairman.

Mr. O'HARA. Are there any other questions, gentlemen?

Mr. Sullivan, we are very grateful to you for your appearance, and the committee is indebted to you for the facts in your presenta

tion.

Mr. SULLIVAN. Thank you, Mr. Chairman.

Mr. O'HARA. The next witness is I. W. Digges, general counsel of the Association of National Advertisers.

Mr. Digges, the committee will be happy to hear from you at this time, and will you state your name and residence?

STATEMENT OF ISAAC W. DIGGES, GENERAL COUNSEL OF THE ASSOCIATION OF NATIONAL ADVERTISERS, NEW YORK, N. Y.

Mr. DIGGES. My name is I. W. Digges. I am an attorney residing at Bedford, N. Y. My appearance is in behalf of the Association of National Advertisers, to endorse H. R. 3871. That organization is a nonprofit membership corporation of the State of New York, with approximately 500 manufacturing companies as its members, representing a general cross section of American industry, and whose common interest is the promotion, through advertising, of the marketing, sale, and distribution of manufactured goods in the United States.

The board of directors of that association has authorized me to appear in its behalf pursuant to your invitation.

While appearing for the association, I would not wish to hide my own professional endorsement of this measure behind the anonymity of a trade association, although an important one.

I am receiving no compensation for my appearance here, Mr. Chairman. I am and have been for some 15 years general counsel for the association, which I represent under a fixed retainer which would not be varied in any manner whether I appeared or did not appear.

It seems to me, Mr. Chairman, that it would be difficult to find any general practitioner of law who would oppose the principle of the O'Hara bill. Given his choice, I assume that all of us as lawyers would prefer to have our cases tried in court rather than before a quasi-judicial agency of the Federal establishment, no matter how competent it might be. Assuming this natural desire on the part of the bar, it would seem that some outweighing considerations of public interest should be present in order to set aside this traditional method of adjudicating cases in the protection of the interests of our clients.

I think the questions are, "Are those considerations of public interest present?" and "Is the present method of operation under the Federal Trade Commission Act that which originally was intended by Congress?"; and "Even if it is the procedure which was originally intended by Congress, is it fair to inquire as to whether 34 years' experience under that act has been such as to warrant a reappraisal of the experiment?"

Those are the three questions I would like to address myself to very briefly.

As to the public interest, I think it may properly be said that the public interest requires the expeditious handling of controversial legal issues by competent tribunals. I think this is clearly applicable to business controversies, for during the pendency of these matters management must remain unsure as to its future rights and insecure in making future plans. It is certainly no secret to this committee that the issuance of a Federal Trade Commission complaint provides a field day for one's competitors, who may even have initiated the proceeding by complaining to the Commission. On occasion, the Commission's complaints are made the subject of magazine and newspaper articles, and a quick trial under those circumstances seems to me to be very much in the public interest.

Now, has this aspect of the public interest been protected? A committee of this House has found that in antitrust cases the time consumed in the administrative process between the application for complaints and the date of final action by the Commission to have been in 2 cases over 8 years, and in 5 cases over 7 years, and in 8 cases over 6 years, and in 12 cases over 5 years, and 28 cases over 4 years, and 63 cases over 3 years, and 114 cases over 2 years, and 248 cases over 1 year, and 345 cases over 6 months.

According to that same committee, the time required to complete those cases in which cease and desist orders were issued, in 2 cases was over 7 years, 3 cases over 4 years, and 12 cases over 3 years, and 27 cases over 2 years, and 42 cases over 1 year, and in 43 cases over 6 months.

From these statistical data, Mr. Chairman, and what I have been told by other lawyers practicing before the Commission, I believe the conclusion fairly may be drawn that promptness and expedition in