minimum rules which in the public interest and in the interest of individual industries should be followed by all.

For example, we have laws and regulations governing the issuance of securities. I think that today securities dealers, investment houses, stock exchange officials, and businessmen generally would be among the first to oppose wiping out all our laws and regulations in this area. They know this would result in the "law of the jungle" where every man, be he businessman or not, buyer or seller, has to look out for himself. There are, of course, many other examples of regulation of certain business activities, the necessity for which is clearly evident.

Let me emphasize, Mr. Chairman, my basic preference is for as little Government regulation as possible. I think individuals and industries should set their own high standards of conduct and follow these standards. Yet we know, and experience amply demonstrates, that self-regulation cannot always be effective. Usually the overwhelming majority of businessmen in any particular industry or activity earnestly and sincerely desire to follow high ethical standards. of conduct--and yet there will be a small minority willing and anxious to go to the absolute limit that existing law may allow even though the net result may unquestionably be a misleading or deceitful practice. What does the businessman with the higher standards then do? He is likely to find that his own business practices and his own basic preferences must in some way be compromised in order to meet the competition of the marketplace. I am not talking here about a violation of existing law or illegal activity; rather, I refer to that pattern of conduct which in its practical effect is clearly seen to be misleading or deceitful, and, therefore, harmful to the general public and harmful to the business or industry which is involved.

My generation has witnessed a revolution in marketing practices, especially involving the relatively low priced items which go into what has been termed the "consumers' market basket." It is a long time since my boyhood when the retail grocer literally "broke bulk" and sold cheese, crackers, eggs and other grocery and dairy products in quantities measured and packaged on the spot at the time of purchase.

I had, Mr. Chairman and gentlemen, that experience in a grocery

store.

Today the retailer receives these products already packaged and labeled by the manufacturer.

The attractive packages which we see in our stores today perform many good and desirable functions. They protect the product; they assist in fixing convenient units for the consumer to purchase; and these attractive packages serve as an effective salesman for the products. In performing these useful and desirable functions, the packaging helps reduce the overhead expenses of the retailer, helps to make the product available to the consumer in less time, and I believe makes a genuine contribution to the consumer in putting before the consumer a vast, attractive display of goods. And I yield to no one in support of the function of advertising as a vital and helpful ingredi ent in our national economy. Advertising-imaginative but not misleading advertising-has been and will continue to be a major factorin the development of the American economy.

But a byproduct of the great advances which we have made in marketing has been the understandable tendency to exploit the advertising function of the package or label to the very limits. This has led in some cases to very extravagant claims or misleading appearances designed to gain a competitive advantage.

This committee has held extensive hearings, and you have evidence before you about packaging and labeling practices which by most anyone's standard would be regarded as undesirable or at least questionable. I might mention a figure which gives some idea of the extent to which packaging and labeling practices affect our total econcmy. It has been estimated that the consumer commodities which would be principally affected by the provisions of Senate bill 387 represent in economic activity more than $70 billion a year. This is a huge amount, and any undesirable practices potentially affecting $70 billion worth of business a year is of such importance to our total economy as to merit the careful consideration of Congress.

While our special concern for this bill relates to the interest of the Department of Commerce in the business community, I certainly do not overlook the importance of this legislation to the consumer. And, further, I cannot escape the conclusion that this is a good example of the proposition that what is good for the consumer is also good for the business economy.

The bill now before you would authorize the Secretary of Health, Education, and Welfare to issue regulations as to foods, drugs, or commodities coming under the Food, Drug, and Cosmetic Act and would authorize the Federal Trade Commission to issue regulations covering other products.

The bill provides that on certain matters regulations must be issued, for example:

To require statement of net quantity of contents;

To establish minimum standards of prominence for such statements; To prohibit addition of qualifying words as to quantity of content; To prohibit "cents off" type of advertising on packages and labels other than by retailers:

To prohibit deceptive pictorial material on packages and labels. Also, the bill would authorize, but not require, the Federal Trade Commission or the Secretary of Health, Education, and Welfare. in their respective areas of jurisdiction, to issue regulations covering establishment of reasonable weights or quantities of contents; prevention of deceptive packaging; establishment of standard-size designations; and otherwise providing for information to the consumer as to ingredients and composition of contents as would be necessary to prevent deceptive or misleading packaging.

I think it is important to emphasize that these discretionary regulations cannot be issued by the Federal Trade Commission or by the Secretary of HEW unless they first make an official determination that these additional regulations are "necessary" to establish or preserve fair competition by enabling consumers to make rational comparisons between products or to prevent the deception of consumers.

I note that subsection (f) (p. 6) of the proposed bill provides that the two agencies administering the law would consult with other Government agencies having special competence before promulgating a proposed regulation under their discretionary authority. I believe

it would be desirable for such consultation with interested Government agencies to take place on both types of regulations, that is, those which are required to be issued under subsection (c) (p. 2) as well as those which are discretionary pursuant to subsection (e) (p. 5). Of course, any proposed regulation would be published in the Federal Register in advance of its adoption so that all persons who would be affected would have an opportunity to submit their specific views in writing as well as to consult with the Government agencies before the regulation was put into effect.

I believe at the time of the introduction of Senate bill 387 it was referred to as a "civil measure," meaning that it is not a bill creating a new criminal offense and providing criminal penalties for violation. I understand, however, as it is now written, the bill does contain criminal penalties in two instances. One of these relates to willful failure to supply samples of a package or label on request of the administering agency involved. Perhaps a criminal sanction for such a failure can be justified, but I wonder if a proper and adequate civil penalty would not be just as effective in achieving compliance. For example, a specific civil forfeiture of so much for each day for willful failure to supply samples would seem to me to be sufficient.

The other item which would carry a criminal penalty would be violation of regulations issued under this law by the Secretary of Health, Education, and Welfare. It is provided that this would constitute a violation of the penal provisions of the Federal Food, Drug, and Cosmetic Act.

I believe that the type of conduct at which this legislation is aimed is most appropriately dealt with by civil regulation rather than criminal punishment.

I notice, Mr. Chairman, you have indicated the same general idea. I would hope, therefore, that some modification in language with respect to these two points now written to provide criminal penalties could be made so that the entire bill would be consistent with the announced intent and purpose of enacting legislation not in the form of a criminal law but as a civil regulatory measure.

It may well be, Mr. Chairman, that when the two agencies which would be directly involved in administering this proposed legislation present their views to the committee, they will have suggestions on some of the details or would recommend some changes in the language of the bill. I believe, however, that the bill now before you is in its major particulars a sound one and merits the favorable consideration of the Congress.

Thank you.

Secretary HART. Mr. Secretary, thank you very much for a strong and thoughtful statement. Needless to say, I welcome the statement on the record that this bill does have the support of this administration.

Mindful of your very broad business experience and background, and being further reminded of that by Senator Ervin, I was struck by your references on page 4 to the harm that is done to business by these practices that we seek to remedy or eliminate-whether or not they are deceptive or only confusing-I take it, to paraphrase you, that you feel very strongly that honest competition is hurt by practices such as the committee has discussed at one time or another in our hearings.

Secretary HODGES. Very definitely, Mr. Chairman.

I might volunteer this:

I have said to my business friends all over the country that I wish we did not have a single regulatory agency. I wish it had been possible that the public had had its protection fully so that none would have ever been created, and I would say the same thing to any other industry now that might have to have regulation.

I think they can prevent regulation if they will do their own policing, but there comes a time when it is not done sufficiently.

Senator HART. On that point, you referred to your visit to the Packaging Institute Conference last fall.

Secretary HODGES. Yes, sir.

Senator HART. Where you, I am sure, in very friendly fashion delivered a lecture. The reaction, as found in an editorial in the February 1963 issue of "Modern Packaging," I think, is relevant at this point. If there is no objection, I will insert it in the record.

Senator HRUSKA. Mr. Chairman, will you yield at this point? Would it not be well to request the witness to furnish a copy of his statement to the Packaging Institute, so we may insert that in the record as well?

it.

Senator HART. Indeed, it would be.

Secretary HODGES. I would be very happy to, Senator Hruska. Senator HART. We will hold the record open at this point to receive

(The documents referred to may be found on p. 463.)

Senator HART. The note struck by the editorial is, first, a reminder that the Secretary did urge the industry to adopt a specific code. The editorial suggests the reason assigned for developing the code was to have an adverse effect on the Hart bill. But, in any event, the suggestion is a good one.

Then the editorial describes the complete inadequacy of the code as it finally was given birth, and it suggests, using the expression "a sad state of affairs," five basic rules which such a code properly should have. It makes the point that if such a code had been adopted, it would "take from the Hart bill its air of necessity."

These relate to, and deal with, items which are in the proposed bill: the statement of weight or quantity of contents must appear with unquestionable legibility on the main panel; size and shape in reasonable ratio to contents; product illustrations related to what you find when you get the package open; "cents off" should not be used unless the regular price is also stated; and the economy size should be banned, since the retailer's price may make the statement untruthful. The editorial suggests that these abuses lay the whole packaging industry open to criticism.

As you said, Mr. Secretary, these abuses have grown from the excesses of competition. That is an interesting editorial, and I think, taken together with your comments at the Institute, will be helpful.

I take it that it is your judgment that a measure such as thiswhich, generally, is described as a consumer measure indeed does protect business, or at least honest businessmen, by establishing certain basic standards and making available a means to establish standards in those areas where the bill, itself, does not do it?

Secretary HODGES. Yes, sir.

Senator HART. Thank you very much.

Senator Hruska?

Senator HRUSKA. Thank you for coming here, Mr. Secretary. You always add a great deal to any record that you participate in making. On page 6 of your statement you indicate that the consumer commodities that would be affected by this bill represent an economic activity of some $70 billion a year. Would there be any breakdown on that?

Secretary HODGES. We could get

Senator HRUSKA. I mean as to general, broad category? For example, food would be one?

Secretary HODGES. Yes, food would be the bulk of it, Mr. Hruska. Senator HRUSKA. Yes, it would be the bulk.

Secretary HODGES. Yes.

Senator HRUSKA. And, yet, there are others.

Could you get us a breakdown of that?

Secretary HODGES. We could get you a list of that.

Senator HRUSKA. We would want to know how much, for example, would be covered or not covered by food, and then, of course, the Federal Trade Commission has certain jurisdiction over packaging and advertising.

Secretary HODGES. Yes, sir.

(The material supplied follows:)

The following data are based on an analyses of the statistics published in the Survey of Current Business, July 1962, p. 14.

Dollar volume of products covered by S. 387, 88th Congress

Food (less meats and poultry, alcoholic beverages, and unpackaged produce 1).
Drugs (less prescriptions 1).

Toilet articles (less custom blended cosmetics 1).

3.0

3.5

Cleaning and polishing preparations and miscellaneous household supplies and paper products (nondurables).

Tobacco products.

Senator HRUSKA. And that way our thinking could probably be helped.

You are aware, I am sure, of the jurisdiction of the Food and Drug Commission, Food and Drug Act and the jurisdiction of the Federal Trade Commission.

Have you at any time given any thought to the adequacy of funds. for the purpose of enforcing the jurisdictions of those two bodies? Secretary HODGES. No, Senator Hruska, I have not, and I think the questions you raised a while ago are certainly good and searching questions, and I gather that either between you and the committee and elsewhere there is a difference of opinion as to whether or not we now have adequate laws and regulations. I would not have an opinion on that. I would certainly say this:

That if, in the judgment of yourselves and your staff, working with these agencies, you find they have the laws and have the personnel, I would certainly hate to add either to the law or to the personnel.