LIMIT OF COMMISSION'S JURISDICTION OVER POWER REGULATIONS Mr. LAMBERTSON. To what extent is the Tennessee Valley Authority duplicating your work, especially in connection with the Muscle Shoals project? Mr. McÑINCH. Not at all. Theirs is a construction project, in reference to the sale of electricity, while ours has purely to do with the administration. There is no conflict or overlapping or duplication whatever between the two. Mr. LAMBERTSON. The big proposition at Muscle Shoals is to determine power rates, approximately? Mr. McNINCH. Yes. Mr. LAMBERTSON. That is also your authority? Mr. McNINCH. No; this Commission does not determine power rates; it has only the most limited rate jurisdiction. Theoretically we have jurisdiction over rates and power, electricity, used in interstate commerce, and there it is limited again. We do not have jurisdiction where the adjoining States concerned agree on the regulation of that interstate traffic. So our jurisdiction, in fact, is very, very limited. We have not exercised it at all. Mr. DRAPER. And it is limited to licensees? Mr. McNINCH. It is limited to licensees and their wholesale customers. There is one other theoretical field of regulation, and that is in those States that have no commissions authorized to regulate. There are six such States. There, again, where the State legislature has delegated to the governing bodies, the municipalities, the regulation of rates in those particular municipalities, we are ousted of jurisdiction. So only in very few hamlets and villages would this Commission have even any theoretical rate regulating power, because it is all exercised either by the State regulatory bodies or municipal bodies in the various States. In fact, we have not regulated rates. Mr. LAMBERTSON. I knew you did not regulate rates, but I supposed the information you had was a basis for that, primarily, that that was the primary basis for that. Mr. McNINCH. If you refer to the rate survey particularly, the facts and information thus obtained will be available for the use of State regulatory commissions and will doubtless be very helpful in handling rate problems. The Tennessee Valley Authority, as I understand it, is intended to show, under certain circumstances, what power may be generated and sold for, and what would be a fair price under comparable circumstances. In that sense we might be considered as supplementing one another, the rate survey and the Tennessee Valley Authority's activities in power. Mr. LAMBERTSON. That was the big, important idea in everybody's mind, as to what the Tennessee Valley Authority would accomplish. FRIDAY, DECEMBER 7, 1934. FEDERAL TRADE COMMISSION STATEMENTS OF GARLAND S. FERGUSON, JR., CHIARMAN; EDWIN L. DAVIS, AND W. A. AYRES, COMMISSIONERS; FRANCIS WALKER, CHIEF ECONOMIST; JAMES A. HORTON, CHIEF EXAMINER; OTIS B. JOHNSON, SECRETARY; AND C. G. DUGANNE, ASSISTANT SECRETARY ESTIMATES FOR 1936 Mr. WOODRUM. This morning we take up the estimates for the Federal Trade Commission. The items are as follows: For five commissioners, and for all other authorized expenditures of the Federal Trade Commission in performing the duties imposed by law or in pursuance of law, including secretary to the Commission and other personal services, contract stenographic reporting services; supplies and equipment, law bocks, books of reference, periodicals, garage rentals, traveling expenses, including not to exceed $900 for expenses of attendance, when specifically authorized by the Commission, at meetings concerned with the work of the Federal Trade Commission, for newspapers and press clippings not to exceed $400, foreign postage, and witness fees and mileage in accordance with section 9 of the Federal Trade Commission Act, $1,373,309: Provided, That the Commission may procure supplies and services without regard to section 3709 of the Revised Statutes (U. S. C., title 41, sec. 5) when the aggregate amount involved does not exceed $50. For all printing and binding for the Federal Trade Commission, $30,000. JUSTIFICATION OF APPROPRIATION ESTIMATES Mr. DAVIS. The following statement is presented for the hearing: APPROPRIATION, FEDERAL TRADE COMMISSION, 1936 The estimates of the Federal Trade Commission for the fiscal year 1936 are not in excess of appropriations available for the fiscal year 1935 and are based entirely on the continued performance of the regular work of the Commission in pursuance of existing law and provide only for the salaries of the permanent and normal staff and the customary expenditures of travel and other m scellaneous items of expense. The continuing duties of the Commission are in pursuance of the Federal Trade Commission Act, certain sections of the Clayton Antitrust Act, the Export Trade Act, and such duties as are provided for and are being performed by the Commission in pursuance of sections 3 (b) and 6 (c) of the National Industrial Recovery Act. The estimates for work under the National Industrial Recovery Act are included in the appropriation estimate for the fiscal year 1936, whereas the amounts necessary in connection with this work during the fiscal years 1934 and 1935 were covered by allotments made by the National Recovery Administration. The following is a break-down by divisions of the Commission's estimates for the fiscal year 1936, the estimated expenditures for the fiscal year 1935, and the expenditures for the fiscal year 1934, the figures for the fiscal years 1334 and 1935 being based on net salary payments. The following represents the functions of the divisions listed above: Administrative Division.-The Administrative Division conducts the business affairs of the Commission and is made up of units usually found in Government establishments, the functions of such units being governed largely by general statutes. These units are accounts and personnel, publications, dockets, mails and files, supplies and equipment, stenographic, and library. Economic Division.-The Economic Division carries on certain of the general inquiries of the Commission whether directed by the President, by Congress, or the Attorney General, or the Commission itself, such as the current investigations regarding power and gas utilities, price bases, dairy products, textiles, etc. Chief Counsel.-The Chief Counsel is legal adviser to the Commission and is charged with the duty of supervising preparation of complaints and other legal process directed by the Commission, the prosecution and defense of all cases before the Commission and in the courts and the work of the export trade section. Chief Examiner Division. The chief examiner supervises legal investigating work of the Commission. This includes investigation of applications for complaints preliminary to the correction of unfair methods of competition under the laws administered by the Commission. To this division are also referred special inquiries primarily of a legal nature which the Commission may be directed to do by the President, either House of Congress, or the Attorney General. At the request of the National Recovery Administration this Division investigates and reports the facts in respect of alleged violation of codes of fair competition approved by the President. Trial Examiner's Division.-The functions of the Trial Examiner's Division are subdivided as follows: (1) Trial Examiners preside at the trial of formal complaints issued by the Commission, (2) settlement of applications for complaint by stipulation, and (3) preside as special master in taking testimony in connection with the investigations under congressional resolutions. Trade Practice Conference Division.-The Trade Practice Conference Division conducts preliminary inquiries to determine the feasibility of holding a conference for a given industry, and when such a conference is authorized by the Commission it is arranged for by this division. The chief of this division, generally in conjunction with a Commissioner, participates in such conferences in a consultative and advisory capacity, presiding over the conference in the absence of the Commissioner. Special Board of Investigation Division.-The Special Board of Investigation deals with false, misleading, and fraudulent advertising published in magazines, newspapers, and periodicals and fraudulent advertising disseminated by means of radio broadcasts. The special board reports the results of its investigations, together with recommendations to the Commission, in such cases as are deemed appropriate for Commission action. 66 The estimate of the Federal Trade Commission for printing and binding for the fiscal year 1936 does not contemplate an increase in this expense over the estimated expenditures for the fiscal year 1935, and it is believed that the amount estimated for the fiscal year 1936, $30,000, will be necessary, due to the completion of the public utilities investigation and the printing of the final company investigation reports and a digest report covering all monthly interim reports which have been submitted during the period of the investigation. Mr. WOODRUM. Judge Davis, at this point we would be glad if you would give us a brief statement of the set-up and the work of the Commission, which will give us a background for such questions as we wish to ask. First, we would like to have the names of the Commission as at present constituted. Mr. DAVIS. Garland S. Ferguson, Jr., chairman; Edwin L. Davis; Charles H. March; William A. Ayres. There is a vacancy now. INCREASE IN WORK OF COMMISSION CHIEF EXAMINER'S DIVISION Mr. Chairman and gentlemen, the Commission has been exceedingly busy during the last fiscal year, and is even more so now, as is evident from the results in different divisions. For instance, if I may illustrate by some comparative figures, take the legal investigation division, which is generally designated as the Chief Examiner's division. During the last fiscal year there was a 40-percent increase in cases received by them as compared with the previous year. In other words, during the fiscal year 1933-34 that division received 2,988 cases, as compared with 2,123 for the previous fiscal year, and that division completed 2,618 cases in the last fiscal year, as compared with 2,091 for the fiscal year 1932-33, or an increase in work of 25 percent. However, as a result of this substantial increase in cases on hand, that division had on hand at the end of the fiscal year 1934, 1,021 cases, an increase of 58 percent over those for the previous fiscal year, showing, of course, that there is still a great deal of work to be done. The increase has been even greater for the last 5 months, from July 1 to November 30, 1934, both in cases received and in werk dispatched, without going into figures, unless you desire the figures or the percentages. INVESTIGATIONS MADE FOR N. R. A. With further reference to the Chief Examiner's Division, in addition to the regular investigation work under the direction of the Federal Trade Commission Act and the Clayton Act, this Division has been given a great deal of work by reason of the N. R. A. During the past 12 months, I should say, they have conducted about 270 cases for the N. R. A. Is not that correct, Mr. Horton? 102526-35-17 Mr. HORTON. From January 1 to the present time the Division has handled 270 cases submitted to it by the National Recovery Administration, in addition to a number of general investigations conducted primarily for the information and guidance of the Recovery Administration. Mr. DAVIS. These investigations, conducted at the request of the N. R. A., ranged all the way from investigations of individual cases to investigations of whole industries, some of them requiring a considerable time and number of men. Mr. WIGGLESWORTH. With a view to enforcement? Mr. FERGUSON. Just complaints of alleged violation of the codes. Mr. DAVIS. They would call for an investigation and report to them. As you gentlemen will recall, the National Industrial Recovery Act provided that the Federal Trade Commission should conduct such investigations as were requested by the President in aid of the administration of the act, and, of course, the Administrator in requesting these investigations acted for the President, so I understand. There was a direct injunction upon us in the act to conduct any of those investigations which they requested. Now, those investigations were desired by them for various purposes to aid them, in some instances, to determine what provisions should be incorporated in a code; they frequently have complaints with regard to violations of the code or petitions or complaints in favor of changes in the codes; and they have constantly had rehearings and reconsiderations of various provisions in various codes, and these investigations were to arm them with the information which they desired to use in the determination of those various questions. There have been innumerable questions arising, of course, in the administration of the N. R. A. Act, and I think it may be fairly said that the Federal Trade Commission has rendered more assistance, by far, than any other agency. In addition to the investigations made at the request of the N. R. A. for their information, we, of course, have had a number of cases under our own jurisdiction upon complaints or appeals. As you are aware, the N. R. A. Act provides that a violation of a code approved by the President is an unfair method of competition within the meaning of the Federal Trade Commission Act. The N. R. A. Act also provides that "nothing in this title shall be construed to impair the powers of the Federal Trade Commission "; and, in addition to that, the President issued an Executive order in which he, we think, reiterated the law but called public attention to the fact that either the N. R. A. could refer a case to us for decision or any citizen aggrieved by any decision of the N. R. A. had the right of appeal to the Federal Trade Commission. We have a number of those cases pending now. Mr. WOODRUM. Do you know, Judge, how many of those appeals have been taken from decisions of the N. R. A.? Mr. DAVIS. Of those appeal cases I recall three-the Rubber Shoe Manufacturers' case, the Ramsey case, and the Purity Ice Co. case. Mr. WOODRUM. They are cases where manufacturers or individuals complaining of the code regulations have appealed to you for what? Mr. DAVIS. It is where they have refused to abide by provisions of the code or orders of code authorities. For instance, take the Rubber |