bill in some other way be effectuated by the Federal Trade Commission, I would suggest a little different treatment of the power to modify. And may I again make my suggestion concrete by reading from an interlineation in my notes?

I would let the sentence beginning on line 12, page 2, read as follows: Upon such filing of the petition and transcript, the court shall have jurisdiction of the proceedings and of the question determined therein, and shall have power to make and enter upon the pleadings, evidence, and proceedings set forth in such transcript, a decree affirming, modifying, or setting aside the order of the Commission, or modifying the remedial provisions of the order, if they are deemed by the court to be unreasonably harsh or severe.

May I read that again? I would suggest those words read as follows:

The court shall have the power to make and enter upon the pleadings, evidence, and proceedings set forth in such transcript, a decree affirming, modifying, or setting aside the order of the Commission, or modifying the remedial provisions of the order, if they are deemed by the court to be unreasonably harsh or severe.

That would give the court the power to deal with the question of rationality of the remedy without putting upon the court the burden of determining the full limits of the remedy.

At the present time, under court decisions, the discretionary power over the remedy rests with the Commission, with no review by the courts. The proposed amendment, that is, H. R. 2390, would, if construed as I believe it is intended to be construed, transfer full discretionary power from the Commission to the court. As I have said, I think that goes too far if the Commission makes its process fairly quasi judicial. The proposal that I would make then is this: If the Commission does so, does come under the McCarran-Sumners bill, or the equivalent, the court be given the power to set aside the provisions concerning the remedy if it finds them to be unreasonably harsh or severe. In other words, the court does not manufacture the remedy, but it asks itself this question: Is this prescribed remedy, the remedy prescribed in the cease and desist order, one which a reasonable Commission might reasonably feel necessary to achieve a corrective result in this case? If so, it will be sustained. On the other hand, if the court should feel that the remedy set forth in the cease and desist order goes further than necessary to correct the evil discovered, is harsh and severe for the purpose of the case, it could modify the remedy accordingly.

The CHAIRMAN. Can you cite any other case in which, by statutory law, a court has similar control over remedies?

Dr. STASON. No; I cant, offhand.

The CHAIRMAN. Isn't the main purpose involved here to see that persons in interest are given a fair trial?

Dr. STASON. That is right.

The CHAIRMAN. In the judgment of the court, insofar as it can exercise judgment as to the facts? A litigant's interest is in a fair trial. These administrative agencies must be primarily responsible for the determination of facts. Then the fundamental function of the court is to protect him against injustice by the Commission. Isn't the protection of him, so far as the remedy is concerned, involved in that question whether he had a fair oportunity and had been treated fairly by the Commission?

Dr. STASON. No, sir; I don't believe I would agree with that fully. It seems to me that a respondent before an administrative agency can be given a fair trial on the facts, the law can be fairly applied to the facts to reach a conclusion of guilt, and still he may be unfairly treated when the remedy is attached, when the penalty is prescribed by the agency having authority to prescribe the penalty. In other words, I think there are three stages where unfairness to a private respondent can result: Either in the determination of the facts, or in the application of the law to the facts, or in the terms of the penalty, or what I would call remedial measures.

Now we have felt that the Commissioners being expert, and having expert assistance available, are well qualified to deal with the fact issues, so we leave to them the determination of the fact issues, subject to a reasonable measure of judicial control to correct palpable errors. On the law questions the courts conventionally retain control and the statutes, in almost all instances, provide for review on questions of law.

Now we come to the third stage, namely, the remedy. Who is going to determine the question of what remedy is to be applied? Of course, in dealing with the problems that the Federal Trade Commission must deal with, its judgment concerning the appropriate remedy should be very good, and is very good, and should be given a high degree of authority. It should be given as high a degree of authority as its decisions on the facts, but there ought to be some control in the courts to prevent unreasonably harsh action. At the present time, as I read the cases, the courts are saying the question of remedy is entirely discretionary, it is entirely with the agency to determine. It seems to me that something a little more han that is necessary if a full measure of justice is to be afforded.

The CHAIRMAN. Does your theory install the court as a substitute for the Commission?

Dr. STASON. I don't think so. Not in the proposal I make, at least. It simply says this, that the court may modify the remedy if it finds it to be unreasonably harsh or severe. It is equivalent to the power of the court to set aside a decision on the facts, if it finds it to be contrary to the substantial evidence on the whole record.

Mr. O'HARA. Dean, aren't you wavering a little bit in my favor for a trial de novo?

Dr. STASON. A trial de novo to me, Mr. O'Hara, means a new trial on a proceeding in court with a record being built up in the court, and the court having full authority to deal with the questions of fact and law and remedy.

Mr. O'HARA. I appreciate that, but, Dean, what is troubling me about your suggestion-and I have the greatest respect in the world for your suggestions-is that an important question of fact may be brought out in a case; the trier of the facts may have a witness on the stand; he observes him, and while that witness is not impeached, the trier of facts may discount that testimony 100 percent, whereas the appellate court may not do so. You suggest, if I follow you correctly, that very interesting contention here-a reviewing authority on the part of the court which goes beyond the question of law. What troubles me is you are giving in part a trial de novo power to the reviewing court, without saying so. You are limiting that court. I think prob

ably it will be true-I don't know-that in a great many of these cases that are tried, they are not appealed. Occasionally you get the type of case where the person affected feels that the law has been misapplied, or there has been the taking of a small part of the testimony and basing a decision on it, when it is outweighed by other testimony. In either of those cases, Dean, it seems to me a complete remedy is only obtained by a trial de novo. I think if appeals were resorted to merely for the purpose of delay, it would be a bad situation, but I think in a serious case where you have a very close question of fact and a very close question of law, that actually the remedy for the person or corporation affected would be only by trial de novo. I don't wish to labor that point, but that is what troubles me.

Dr. STASON. There is a very important question of governmental policy that is involved in the situation that you have stated. The question is, What shall be the division of labor between the governmental agency with its technical staff and all of its equipment on the one hand, and the court on the other? Where shall the line be drawn? Mr. O'HARA. No. It is a struggle between the three coordinated branches of our Government on the one hand, and a supergovernment called bureaucracy on the other. That is the way I view it. It is a very serious thing to my mind, of whether we are getting away from the theory of the legislative, executive, and judicial into another form of government that our forefathers never intended. We either maintain or destroy constitutional government.

Dr. STASON. Well, I have proceeded on the assumption that we have the administrative agencies as an essential part of our governmental scheme, and our best efforts should be devoted to making them work as fairly and effectually and effectively as possible, and to working out the wise dividing lines between their authority and the authority of the courts. Now, if we do adopt the principle of the trial de novo, then by so doing, you bring about several collateral results which may not be so good. In the first place, you burden the courts with a very considerable mass of litigation that the courts would find difficult to dispose of. And, in the second place, you would be taking the authority and responsibility away from the commissions, making it unlikely that they would be developed in an authoritative and responsible way. In the third place, you would by adopting the trial de novo technique put to one side whatever benefits might be obtained by the very large technical staff and equipment of the agency. So that it seems to me that the wise course to pursue is one short of trial de novo, is one of working out a division of labor by which the technical work will be done by the administrative agency, but the court will be given the power to check palpable errors wherever they arise, whether they arise in connection with fact issues or law questions or remedies. That is my theory.

Mr. ROGERS. Dean, just one question: Why, in your opinion, should this review be. in the circuit rather than in a district court? Why should a man in my district have to travel long distances to get to a circuit court? Why shouldn't he be permitted to register his appeal in the district court?

Dr. STASON. That is a question that has some rather large implications. I suppose, in a brief sentence, the principal reason for going to the circuit court instead of starting in a district court and working

on up is one of expedition. It saves one step on the way to the
Supreme Court, if it is the kind of case that is going to go there.
Mr. ROGERS. Then why not go direct to the Supreme Court?
Dr. STASON. Directly to the Supreme Court?

Mr. ROGERS. Yes; if you want to save steps.

Dr. STASON. I suppose the Constitution might prevent it. I am not arguing for it on that ground; I am simply trying to state the reasons why it is achieved in this way. Another reason is this: In connection with these governmental problems that have such wide incidence, it is desirable to develop some kind of uniformity of practice. If the appeals go to 10 circuits, there will at least be only 10 different rules on any one subject, assuming that they never get to the Supreme Court; whereas, if they were carried to the numerous district courts, there would be a tendency to diversify that would be much stronger. I am trying to think of the reasons in favor of an appeal to the circuit court of appeals. I suppose the matter of expense is involved; two trials are cheaper than three.

Mr. ROGERS. But you could presumably get an appeal from a district court

Dr. STASON. There may not be.

Mr. ROGERS. Would it be cheaper for the respondents to go direct to the district court rather than to the circuit court, in the first place? Dr. STASON. I think it boils down to a question of judicial expediency-which is the more effective way of doing it? An objection to it you have already stated, the distance one has to go in order to seek relief.

Mr. ROGERS. Plus the expense.

Dr. STASON. Plus the expense. We have weighed the pros and cons, and we have come out with the circuit court of appeals as the answer in quite a considerable number of statutes. It is not a matter of much

The CHAIRMAN. How much more time do you require, doctor?

Dr. STASON. Mr. Chairman, I am entirely through. I will be glad to answer any questions.

Mr. RABIN. Doctor, you gave us the language you would suggest if the McCarran-Sumners bill were adopted. Let us suppose it were not adopted. Are you satisfied with the language in this bill now,

H. R. 2390?

Dr. STASON. If it were not adopted, and if the commission did not effectuate the procedures in some other way, then I think the language as suggested has merit.

Mr. RABIN. Let us assume this bill were passed, and let us assume the high courts did find that the facts were suported by a preponderance of evidence. Then I assume the facts would be conclusive. Now, do you believe under the language, of this bill as drawn, that the courts would have the right to change the sentence, or change the remedy?

Dr. STASON. No.

Mr. RABIN. They wouldn't, under this bill?

Dr. STASON. Oh, under the bill?

Mr. RABIN. Yes.

Dr. STASON. Under the other clause of the bill, namely, the amendment prescribing that the order may be modified as in its judgment

the circumstances of the case require, I think the court might construe that to permit a change of remedy. If I were doing it, though, I would say so in so many words.

Mr. RABIN. I understand that, but I wanted your understanding of the bill as now presented. Let us assume that the courts should find the facts to be supported by a fair preponderance of evidence, and therefore the facts became conclusive. Do you believe, under the phraseology of this bill the court would then have the right to change the remedy? Let me put a preliminary question: Do you believe the court should have the right to change the remedy?

Dr. STASON. Yes; I believe the court should have the right to change. the remedy if it finds it too harsh.

Mr. RABIN. Even under the terms of this bill?

Dr. STASON. Yes.

Mr. RABIN. Now, do you believe this bill gives it that right?

Dr. STASON. As now worded?

Mr. RABIN. As now worded.

Dr. STASON. It may be so construed, and probably would be.

Mr. RABIN. It is open to construction, and you prefer it be written in exact language?

Dr. STASON. That is right; it is open to construction and I think there is a chance it might go the other way.

The CHAIRMAN. Thank you, Dr. Stason. Mr. Digges, how much time do you require?

Mr. DIGGES. Not more than 15 minutes.

The CHAIRMAN. We are somewhat behind on our schedule. We are trying to let those from out of town get away.

STATEMENT OF ISAAC W. DIGGES, REPRESENTING THE
ASSOCIATION OF NATIONAL ADVERTISERS

Mr. DIGGES. My name, Mr. Chairman, is Isaac W. Digges; I am an attorney at law, of Bedford, N. Y. I appear here as counsel for the Association of National Advertisers. I am not quite so disinterested as the witness who just preceded me. That organization is an organization composed of some 400 manufacturing companies, some large, some small, and some medium-sized, who use the vehicle of national advertising in the marketing of their goods, wares and merchandise.

The Reece bill has been fully discussed, and I believe clearly understood by the board of directors of that organization, and it is pur-' suant to their instruction that I appear here to testify with regard to one portion of it.

It happens also that I have, over a period of the past 20 years, appeared in cases from time to time, as attorney for respondents, in Federal Trade Commission proceedings. However, in what I expect to say, I hope not to refer directly or by conclusion to any case in which I have had a personal interest, nor do I appear here as a special pleader for the food, drug, or cosmetic industries.

The association which I represent has never appeared in a commission proceeding, either for it or against it; it has never been made the subject of a Commission complaint.

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