Mr. Thomas of Texas, chairman of the Independent Offices Subcommittee, made the following remarks which are contained on page 4761 of the Congressional Record: They have six-hundred-and-eighty-and-some-odd employees, and 187 of them are devoting their time to housekeeping activities.

"Do you know of any type of personnel in the Government that we have more of than economists and statisticians? Every Government agency of any magnitude has economists and statisticians, and the taxpayers of this country are sick and tired of a lot of statisticians and economists and fact finders burdening business. There are 51 engaged in this work, which is twice too many. We have directed that some of the cut come out of those 51 economists. We also have directed that some of the cut come out of housekeeping facilities. We directed that not a single cut come out of the antimonopoly work, which is really the backbone of this agency's entire operations. We have not hurt

this agency in the slightest.

work."

* * *

* * and we directed that not one man be taken from antimonopoly

Justification

The appropriation bill as passed by the House is $289,000 less than the estimate submitted by the Federal Trade Commission and approved by the Bureau of the Budget. In the fiscal year 1949 Congress appropriated for salaries and expenses for the Federal Trade Commission $3,401,510 plus $46,525 for printing and binding, or a total of $3,448,035. In addition to this there has been included the sum of $173,000 in a general deficiency bill resulting from congressional passage of Public Law 900, Eightieth Congress, the Federal Employees Pay Raise Act, making the total funds available for the Federal Trade Commission during the fiscal year 1949, $3,621,035. For the fiscal year 1950 the House appropriation bill allows the Federal Trade Commission only $3,450,000 which is $171,035 less than the total funds available for the use of this agency during the fiscal year 1949, instead of an increase of $1,965 as stated in the House report. The budget estimates approved by the Bureau of the Budget for the fiscal year 1950 provide no money for additional employees in the Federal Trade Commission. A total of $117,965 more than the $3,621,035 available during the 1949 fiscal year will be required to carry for a full year those authorized employees hired intermittently during the fiscal year 1949 and to provide for necessary printing and supplies.

The report of the Appropriations Committee mentions two places at which the proposed reduction of $289,000 is to be applied, namely administration, which is to be reduced substantially, and the Bureau of Industrial Economics, which is to be reduced to some extent. The report states clearly that antimonopoly funds are not to be reduced and contains an ambiguous statement which can be interpreted to mean that the funds for trade-practice conference and Wool Act administration are also to remain unchanged. Nothing is said about false and misleading advertising and the administration of the Webb and Lanham Acts. This proposed reduction, if made in strict conformity with the House report, Would require the immediate dismissal of from 70 to 87 employees in the Federal Trade Commission, depending upon the allocation of the reductions in the various programs other than antimonopoly. This would practically eliminate the increase allowed by Congress for accelerated programs during the fiscal year 1949. It would be impossible to effect such a drastic reduction without severely curtailing our antimonopoly program as well as the other programs in which the Federal Trade Commission is engaged. It is stated that the intent of Congress is not to reduce the effectiveness of the Federal Trade Commission, but this is inevitable if this reduction is effected. We therefore request the restoration of $289,000 to our appropriations for the fiscal year 1950. The effect of such reductions are discussed in detail in the following sections.

Your courtesy in extending an opportunity to submit this request for change in the House bill, together with our reasons therefor, is sincerely appreciated, and we shall await your pleasure concerning our making an appearance before your subcommittee.

By direction of the Commission.

With kind personal regards, I am

Sincerely yours,

EWIN L. DAVIS.
Acting Chairman.

PART I. ADMINISTRATIVE DIVISIONS

FEDERAL TRADE COMMISSION ADMINISTRATIVE EXPENSES AS COMPARED WITH OTHER INDEPENDENT AGENCIES

Examination of the budget estimates of comparable independent agencies included in the President's budget to Congress reveals an average of from 8 to 10 percent for administrative-salary expenses. The Federal Trade Commission in its estimate submitted to Congress provides for only 8.12 percent of the total for the administrative pay roll.

The budget estimates as submitted by the Federal Trade Commission to Congress reflect salary costs of the 187 employees included in the Bureau of Administration to be $583,945. By deducting the cost of 99 employees (67 in the stenographic pool and 32 in the Division of Legal Records) which are not properly chargeable to administration, the cost of the remaining 88 employees for the fiscal year 1950 is $303,580 which is only 8.12 percent of the total funds requested. It will be seen that this compares extremely favorably with other comparable independent agencies.

OPERATIONAL EMPLOYEES ARBITRARILY REPORTED IN ADMINISTRATION

The recommendations that such reductions be made in the administrative divisions indicate a lack of understanding of the functions of the employees carried in the Bureau of Administration in the Federal Trade Commission. It should be noted that 99 of the 187 positions in the Bureau of Administration are carried under that heading purely for fiscal and supervisory convenience and that these employees are engaged solely in servicing the operating divisions. These employees are in the stenographic pool and in the Division of Legal Records.

Stenographic pool

Because of the lack of appropriations and the shortage of competent stenographers the Federal Trade Commission has found it expedient to furnish stenographic services to the operating divisions from a stenographic pool rather than the individual assignment of stenographers to legal operations. In this manner 67 stenographers and typists handle all of the dictation and typing of approximately 400 professional and technical employees stationed in Washington. The only other stenographers in the Federal Trade Commission are assigned to the bureau directors and the division chiefs. In this manner of operation stenographers are scheduled to the professional and technical staff as assignments are completed, thus assuring maximum utilization of stenographic services.

The reduction of funds contemplated by the House would necessarily require the immediate reduction of approximately 30 positions in the stenographic pool. If the House recommendation that the antimonopoly program remain undisturbed is adhered to, 28 of the remaining 37 stenographers and typists would be assigned only to antimonopoly work which would leave only 9 to service all other programs of the Commission. Such requirement would be most impractical. At the present time a stenographer is available to the professional and technical staff in the operating divisions within approximately 4 hours after the time of the request. The proposed reduction of 30 positions in the pool would increase this waiting period from 7 to 10 days or more as was our experience during the war when services were materially reduced by a shortage of personnel. Regardless of how the reduction is made it is obvious that such delays would seriously hamper the enforcement of the Wool Products Labeling Act, Antimonopoly, False and Misleading Advertising, Trade Practice Conferences, Webb-Pomerene, Lanham Act, and other programs of the Federal Trade Commission.

The records of the Federal Trade Commission reflect that for the 3 months ended March 31, 1949, the work load of the stenographic pool was as follows: Transcription of shorthand notes and dictaphone records_. Plain copy –

Rough-draft copy-.

Unmeasured work, including tabulation____

folios 47, 241 _do____ 33, 868 _do_ -hours

3, 663

4, 813

In addition, the employees of the pool worked 850 hours overtime during the same period, the results of which are not included in the above figures. Division of Legal Records

The reduction of funds as proposed by the House committee would reduce the staff of the Division of Legal Records from the present total of 32 employees to 18,

or a reduction of 14 employees. If the committee recommendations were followed none of the remaining employees would be available for assignment to other than antimonopoly cases.

The work performed in the Division of Legal Records is peculiar to quasi judicial and judicial organizations. It is exactly comparable to the office of the clerk in a Federal or State court. It is the center through which flows all documents, records, information, and services related to the legal work of the Commission. This Division is also charged with the responsibility of service of all formal pleadings. The demands upon this Division are always for immediate services.

During and subsequent to the war years this division was seriously understaffed and large backlogs of work accumulated. As a result of additional employees and almost continuous overtime during this fiscal year, a 4-month backlog amounting to nearly 500 cases has been eliminated and for the first time since before the war the work is being maintained on a current basis.

The Informal Docket Section of this Division now processes and forwards all applications for complaint on a current basis; in the year 1939 there were 13,983 docketed applications for complaint to be serviced as compared with 22,797 such applications today; and in the year 1939 there was an average of 1,269 cases in active transit as compared with 1,697 today.

The present Division staff of 32 is able to keep the work current only by working overtime. Any reduction in personnel would seriously impair the legal work of the Commission, and a reduction in force of 14 employees, however distributed among the sections of this Division, would create an insurmountable bottleneck in the handling and flow of cases throughout the Commission. During the fiscal year 1948 the planning council of the Federal Trade Commission made a survey of work load in the various divisions, and as a result particularly recommended additional employees to alleviate the backlog in this Division as it was materially obstructing the operations of all programs in the agency.

ADMINISTRATIVE AND HOUSEKEEPING FUNCTIONS

Eliminating the 99 employees previously discussed, the Federal Trade Commission has only 88 employees engaged in regularly recognized administrative or "housekeeping" duties as shown as follows:

The first column, totaling 88 employees, reflects those authorized for the fiscal year 1949; the second column, totaling 37 employees, reflects the number of employees it would be necessary to dismiss in order to comply with the recommendations of the House committee; and the third column, totaling 51 employees, shows those employees who would be left to carry on the administrative work of the Commission.

During the fiscal year 1949, backlogs of work which had accumulated since 1942 were eliminated as a result of additional personnel and considerable overtime. Until the fiscal year 1949 it was impossible to fill many vacancies in these divisions because of a lack of funds, the comparative low salary classifications, and the scarcity of competent administrative employees. Should this reduction of 37 employees be required the resulting backlogs of work would again create serious obstacles to the prosecution of all Federal Trade Commission programs. Section 111. Appropriation bill (personnel employees)

Section 111 of the appropriation bill providing a ratio of 1 personnel employee to each 125 employees of the agency is considered to be unduly restrictive. Such a limitation would require a reduction of 4 employees in the Personnel Division, leaving only 5 employees available to carry on the work required of the Division.

This would be wholly inadequate to comply with the civil-service requirements. The Civil Service Commission is constantly delegating additional duties to agency personnel offices and thereby requiring additional periodical reports. Most of the operations in personnel work are painstaking and time consuming in accordance with detailed regulations laid down by the Civil Service Commission. Errors and omissions, which naturally result from heavy backlogs and delays, may have serious implications affecting the agency as well as the individual employees.

PART II. INDUSTRIAL ECONOMICS

It is estimated that the reduction applicable to the Bureau of Industrial Economics is about $39,000. Since no specific reductions were recommended for activities other than administration and economic work, if the reduction is applied to these activities the principal cuts will still be in the fields specifically mentioned by the committee. Consequently, the reduction for the Bureau of Industrial Economics will still be about $30,000. Since the report indicates that antimonopoly funds are not to be cut, this reduction of from $30,000 to $39,000 must come from the other activities of the Bureau for which the Bureau of the Budget had provided $179,000.

The proposal to reduce the funds for the Bureau of Industrial Economics was supported by the Appropriations Committee of the House of Representatives in debate on the floor by the statement that this Bureau has 51 economists. This statement is incorrect. Including the Chief Economist and the Assistant Chief Economist, the staff authorized for the Bureau for fiscal year 1949 contains 17 economists and one statistician. Exactly the same number would be provided for the fiscal year 1950 if the Congress were to appropriate the funds recommended by the Bureau of the Budget. The rest of the Bureau's staff consists of accountants, the majority of whom are engaged upon antimonopoly-case work, and of clerks, most of whom are engaged in tabulating figures for the Commission's quarterly financial reports.

The work of the Bureau of Industrial Economics is carried on by three divisions. The Division of Accounting is engaged entirely in work upon the Commission's antimonopoly cases.

The Division of Financial Reports has a budget of $100,000 with which it obtains quarterly financial reports from a large sample of American corporations and develops quarterly estimates of the aggregate sales and profits of American manufacturing enterprises. Within the last 2 years, in an effort to release funds for other purposes, the Commission has systematically explored the possibilities of economy in this Division and has reduced the expenditure there very substantially. The reduction within the last year has been more than 10 percent. Since all discoverable leeway has now been eliminated, further reductions in this division would make it necessary to reduce the corporation sample substantially, with the result that the figures would cease to be reliable and the whole project would need to be abandoned. Abandonment of this work would not only deprive the Government of its most reliable source of financial statistics and of its only source of information about the sales and profits of small business, but also deprive the Commission of the basic data which it is now using to prepare an index of the degree of concentration of control over manufacturing.

The Division of Economics is engaged partly upon antimonopoly work and partly upon preparation of general economic reports; but these two types of work have been so organized that they use the same basic data and, in considerable part, the same analyses of economic relationships. Therefore, it would be very difficult to curtail the economic reporting work of this Division without substantially impairing its antimonopoly work. The Dvision's present budget is based upon organization in four sections, each of which is responsible for keeping abreast of monopoly problems that develop in a particular segment of the economy. It is the duty of each section to make surveys of monopolistic practices, on the basis of which the Bureau formulates a tentative program of antimonopoly cases for consideration by the Commission's Planning Council. The Commission has delegated to these sections the basic work necessary to the planning of its antimonopoly program. Each section also collects and analyzes economic evidence for antimonopoly cases; provides expert witnesses; and prepares economic reports the subject matter of which falls within the section's industrial field. These tasks are not performed separately by different persons. For example, one section is now completing a statistical and economic memorandum which is expected to be the basis of an important antimonopoly case

and also to become the basis of an economic report that will show the sig nificance of the case and the extent to which the problem raised by the case is encountered in the business activity of other companies and industries.

With the work thus organized, most of the investigation and analysis carried on by the Division of Economics contributes simultaneously to antimonopoly cases and economic reports. Of the five economic reports which the Commission has contemplated for 1950 on the basis of the funds provided by the Budget Bureau, one was intended to summarize economic information which the Bureau had obtained for and used in the steel case and three were intended to provide background information for antimonopoly cases which it is expected the Commission will bring in the near future. Only one-analysis of the effect of concentrated control of investment banking upon the concentration of economic power in the industries whose securities are underwritten-does not grow out of an antimonopoly case, and even this report has obvious relevance to the Commission's long-run antimonopoly program.

This means that although the Division's investigatory expense is allocated between antimonopoly case work and economic reporting, the allocation is useful only for cost accounting purposes and does not mean that the expense upon either function can be eliminated without reducing the performance of the other function. It would be possible without impairing antimonopoly case work to eliminate the relatively minor expenditures for the actual writing of reports after investigation is completed. But to eliminate the larger part of the charge for economic reports which consists of expenses of investigation would make it necessary either to charge these expenses entirely to the antimonopoly cases or else to reduce the amount of work on antimonopoly cases.

The Bureau of the Budget provided about $128,000 for the Division of Economics. Of this sum about $50,000 is charged directly to antimonopoly case work. If the reduction of from $30,000 to $39,000 were taken from the remaining $78,000, the simple budgetary result would be to cut the economic reporting work in half. However, since a large part of the $78,000 is an allocated expense of investigations which could not be abandoned if the antimonopoly case work were to remain untouched, the practical result would be to cut the preparation of economic reports by substantially more than half. The Commission's economic reporting program would become so small that it could not furnish significant material for policy making by the Commission or the Congress.

At best, there probably would be some impairment of the antimonopoly work. Since none of the four sections in the division has more than four professional persons, the effect would be either to skeletonize these professional staffs to the point where they could not effectively handle peak loads in their antimonopoly work or else to deprive them of all clerical assistance and thus slow them down. It would not be possible to adopt the alternative technique of eliminating one or more of the four sections without depriving the Commission of expert economic service in antimonopoly cases that fall within the industrial field in which the section specializes. The textile section, for example, could not provide expert economic advice for the Commission on petroleum matters.

In summary, a reduction of from $30,000 to $39,000 which did not reduce the antimonopoly expenditures of the bureau would require either that the Commission's economic reporting expenditures be reduced by about half, with a more than corresponding reduction of the output of reports, and with an impairment of economic work upon antimonopoly cases, or else that the Commission's financial reporting work be wholly abandoned.

PART III. PRINTING AND BINDING

The last sentence of the House report on the Federal Trade Commission (p. 12) states as follows:

"In connection with the request for $47,000 for printing and binding, the committee has allowed a total of $25,000."

It is requested that the imposed limitation be raised to at least $47,000, the amount authorized by the Bureau of the Budget.

Testimony in the House hearings indicated that this agency estimated the cost of necessary economic, legal, administrative, and trade practice conference printing for the fiscal year 1950 to be $89,750 of which the Bureau of the Budget authorized $47,000.

The limitation of $25,000 placed by the House committee eliminates all printing and binding except volumes 47 and 48 of the Federal Trade Commission statutes and decisions at an estimated cost of $12,000 per volume. This leaves