Mr. FITZPATRICK. That is what I was trying to bring out. The consumer in my State, for instance, pays a certain price. Now, they extend their lines over into Pennsylvania, New Jersey, or Connecticut, and the consumer pays a less rate. Mr. WOODRUM. Is not that a case for the New York commission to act on and say "You are selling it over there for less; therefore you ought to sell to our people for less?" Mr. FITZPATRICK. I agree with you on that, but I would like to know if the Commission Mr. WOODRUM. These people cannot do it. Mr. FITZPATRICK. I know, but sometimes a statement might help. Some years ago your Chairman made a statement which was responsible for a little reduction up there. Mr. WOODRUM. In other words, you are trying to get a statement to help you out? Gentlemen, I am sorry we were not able to hear from all of you, but we would be glad to have Mr. Manly or Mr. Smith or any of you gentlemen put a statement in the record, and we study this record. You may think that we never see it again, but the committee has this record before it when the bill comes on the floor, and we would like to have you put in anything you want. Mr. MANLY. We have seen evidence, Mr. Chairman, that the committee does study the record. Mr. WOODRUM. Thank you, gentlemen. WEDNESDAY, JANUARY 20, 1943. FEDERAL TRADE COMMISSION STATEMENTS OF GARLAND S. FERGUSON, CHAIRMAN; CHARLES H. MARCH, EWIN L. DAVIS, WILLIAM A. AYRES, AND ROBERT E. FREER, MEMBERS; OTIS B. JOHNSON, SECRETARY; ANDREW N. ROSS, BUDGET OFFICER; WILLIAM T. KELLEY, CHIEF COUNSEL; JAMES A. HORTON, CHIEF EXAMINER; PGAD B. MOREHOUSE, DIRECTOR, RADIO AND PERIODICAL DIVISION; HENRY MILLER, DIRECTOR, TRADE PRACTICE CONFERENCES; WILLIAM H. ENGLAND, CHIEF ECONOMIST Mr. WOODRUM. Mr. Ferguson, the committee has examined with a great deal of interest and satisfaction the very thorough and complete statement of the activities and financial needs of the Federal Trade Commission. They seem to be very fully covered, showing in detail what work you are doing and what your problems are. That statement will go in the record. (The statement referred to is as follow:) JUSTIFICATION OF ESTIMATES OF APPROPRIATIONS This statement is respectfully submitted to the chairman and members of the House Committee on Appropriations for Independent Offices in explanation and justification of the estimate of appropriations of the Federal Trade Commission for the fiscal year July 1, 1943, to June 30, 1944. Statutory authority.—The Federal Trade Commission, an administrative agency, created by the act of September 26, 1914, is charged with the enforcement of the Federal Trade Commission Act, as amended by the Wheeler-Lea Act, approved March 21, 1938 (52 Stat. 111-117); section 2 of the Clayton Act, as amended by the Robinson-Patman Act, approved June 19, 1936 (49 Stat. 1526); and sections 3, 7, and 8 of the Clayton Act of October 15, 1914 (38 Stat. 730); the Export Trade Act, approved April 10, 1918 (40 Stat. 516); and the Wool Products Labeling Act of 1939, approved October 14, 1940 (54 Stat. 1128). Duties. The principal duties of the Commission under the above-mentioned statutes are: (1) The Federal Trade Commission Act.-Under this act the Commission is charged with (a) the prevention of unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce; (b) the conduct of investigations relating to (1) alleged violations of the antitrust acts, (2) the manner in which decrees in antitrust suits brought by the United States have been carried out, and (3) the organization, business, conduct, practices, and management of corporations engaged in commerce (with certain statutory exemptions and their relation to other enterprises; (c) the making of reports and recommendations to the Congress with respect to legislation; and (d) the conduct of trade conferences of industries for the elimination of unlawful and unethical business practices. (2) Clayton Act.-Under the Clayton Act, as amended by the RobinsonPatman Act, which greatly enlarged and increased the jurisdiction and duties of the Commission in respect to unlawful price discriminations, the Commission is charged with the prevention of certain specific practices; that is, unlawful price and related discriminations, tying contracts, stock acquisitions, and interlocking directorates. (3) Export Trade Act.-Under the Export Trade Act the Commission supervises the registration and operations of associations engaged solely in export trade, which for this purpose are exempt from the provisions of the antitrust acts, provided neither trade within the United States nor export trade of domestic exporters is restrained thereby. (4) Wool Products Labeling Act of 1939.-Under this statute the manufacture for introduction into commerce, or the introduction, sale, transportation, or distribution, in commerce, of misbranded wool products, is unlawful and constitutes an unfair method of competition and an unfair and deceptive act and practice under the Federal Trade Commission Act. The Commission is authorized to make inspections, analyses, tests, and examinations of all wool products subject to the act and to make such rules and regulations as may be necessary and proper for the administration and enforcement of the act. In addition, the Commission is also empowered under the statute to prevent the movement of misbranded wool products in commerce by injunction and to proceed by libel action in certain cases for condemnation of such products. (5) War work. Since the Presidential declaration of a national emergency in 1941. the Commission has been engaged upon emergency work for the war agencies. To the extent necessary to perform this emergency work the Commission has delayed or suspended certain of its regular work. A more complete account of the war work is given throughout this statement. At present the Commission is engaged upon work for the Office of Economic Stabilization, the War Production Board, the Office of Price Administration, and other agencies. For the Office of Economic Stabilization the Commission has just completed a survey of the bread and flour milling industries, and within the last few days has undertaken an additional study for this office. For the Office of Price Administration the Commission has used its accounting staff to ascertain cost, price, and profit data for most of the important industries and for use by that Administration in fixing ceiling prices; for the War Production Board the legal staff has completed thousands of reports in respect of alleged violations of priority orders concerning essential materials issued by the War Production Board; and in connection with its regular survey of radio, newspaper, and periodical advertising, the Commission has furnished the Office of Censorship and other agencies with advertising material relating to war subjects. A primary concern of the Commission is to prevent restraints of trade and to protect the public health against false and misleading advertisements of food, drugs, and therapeutic devices. The preservation of price competition and the prevention of practices which destroy it are valuable aids in the difficult task of forestalling and avoiding price inflation. If prices can by force of competition be kept below the ceiling, a powerful corrective is thereby provided for relieving pressure against the ceiling. It is also of paramount importance that the cost of war materials and supplies to the Government be not substantially enhanced through price-fixing combinations. Conservation and protection of the public health during the war period is also of paramount importance. Since many of our people will be compelled to rely more and more upon self-medication because of the removal to the armed services of a great number of the medical profession, the Commission must do its utmost to halt the dissemination of false and misleading advertisements of food and medicinal products. Similarly, since wool is an essential war material, the enforcement of the Wool Products Labeling Act is most important to the practical operation of the program of wartime controls of wool for meeting the needs of the armed forces and to insure an equitable distribution of essential civilian supply and to protect the purchasing public and the Government against shoddy, worthless, or semiworthless substitutes. APPROPRIATIONS AND ESTIMATES Appropriations, 1943.—The total appropriations for all purposes, except printing and binding, for the fiscal year 1943 amount to $2,000,000; for printing and binding, 1943, $50,250; a grand total of $2,050,250. Estimates for 1944.-For all purposes, except printing and binding, the estimates for the fiscal year 1944, amount to $2,000,000 and provide for the projects listed below in the amounts specified; for printing and binding for 1944, $43,000; a grand total of $2,043,000. Net decrease for 1944.-The estimates represent the same amount for salaries and expenses as provided by the 1943 appropriations. For printing and binding the estimate for 1944 represents a decrease under the appropriation for 1943 of $7,250. These estimates, together with estimated expenditures for 1943 and actual expenditures for 1942, are set forth in the following table: JUSTIFICATION OF ESTIMATES BY PROJECTS Project No. 1-Offices of Commissioners and secretary This project covers the salaries and expenses of the Commissioners and secretary and the present staff of their offices. No increase over 1943. Project No. 2—Accounting, statistical, and economic investigations The estimates for 1944 represent a base decrease of $91,000. Regular appropriation, 1943 act____. Decrease for 1944: Corporation reports_--- Assistance in law enforcement- $141, 000 $76,000 91, 000 50,000 Total estimate for 1944 (assistance in law enforcement) Assistance in law enforcement (accounting and economic service to Legal Division). The sum of $50,000 for this work represents a decrease of $15,000 under the amount provided for the fiscal year 1943. Many complaints brought by the Commission under the several statutes which it administers involve economic and accounting questions. For the investigation and prosecution of such complaints, the assistance of the Commission's economic, accounting, and statistical staffs is required. Some members of these staffs are continuously engaged upon work of this nature, while others are assigned to particular cases from time to time. Under the RobinsonPatman Act, because of the frequent necessity for elaborate cost accounting studies, whereby justification for price differentials is determined on the basis of cost differences, accounting assistance becomes indispensable. This accounting assistance may be given in the examination of cost data submitted by the respondent in a preliminary investigation, in advising the Commission as to the adequacy of such data, and in appearing, where necessary, as a witness in the case. Accounting, statistical, and economic investigations are made in pursuance of section 6 of the Federal Trade Commission Act under which the Commission is given power to require financial and other data from corporations engaged in interstate commerce. For this work a small trained staff has been maintained for many years, primarily to conduct inquiries for the President and for the Congress. In many instances new legislation has been based upon reports of these studies, that is Export Trade Act; Robinson-Patman Anti-Price Discrimination Act; Wheeler-Lea Act, amending Federal Trade Commission Act; Securities Act of 1933; Public Utility Holding Company Act of 1935; Federal Power Act; Natural Gas Act, 1938; Federal Communications Act of 1934; Packers and Stockyards Act, 1921; Grain Futures Act, 1921; Perishable Agricultural Commodities Act of 1930. As was pointed out in the Temporary National Economic Committee hearings made pursuant to Public Resolution No. 113 of the Seventy-fifth Congress, remedial action frequently has been voluntarily taken by industry to correct uneconomic or unfair trade practices disclosed by the Commission's inquiries. For example, in June 1933, the Commission made a report to the Congress concerning the farm implement and machinery industry, in which it was disclosed that some of the larger companies in the industry were using competitive methods which made it very difficult for small farm-machinery manufacturers to find suitable outlets for their products. Soon after the Commission's report was published, the leading companies informed the Commission, which information was corroborated by certain other smaller companies, that the sales organizations of the large companies had been given strict orders not to resort to the practices criticized by the Commission. The Commission also found that there had been a "swift rebound of farmmachinery prices after the three severe years of depression, 1931, 1932, and 1933, to levels exceeding those of 1929." This was the situation that had caused a widespread complaint upon the part of farmers who called attention to the wide disparity between prices for their products and those for farm implements. This prompted the Congress to direct the Commission to make the inquiry. Although the year 1937 had been a more prosperous year for farm-implement manufacturers than any other year following 1929, farm-implement prices were advanced for the 1938 season. The Commission's report was transmitted to Congress in manuscript form on June 6, 1938, and the leading manufacturers had typewritten copies made of it for their use soon thereafter, and on June 28, price reductions were made on 10 types of tractors, ranging in amount from $75 to $245 each. In the fall of 1938 price reductions on upward of 40 implements ranged from a minimum of 2.6 percent for a No. 2-12-B ensilage cutter which was reduced from $285 to $275.50, to a maximum of 18.2 percent for a No. 60 harvester-thresher which was reduced in price from $680 to $556. Price reductions were made on tractors, 6-foot grain binders, harvester-threshers, standard-tread tractors, cream separators, etc. It is estimated that these reductions saved American farmers not less than $10,000,000. On June 5, 1939, the Commission made a report to the Congress, in response to a joint congressional resolution, on the motor vehicle industry. In this inquiry the Commission found many practices which were burdensome to the dealers and to the consuming public, among them being the practice of padding new car prices and packing finance charges, charging the consumer for transportation in excess of the amount paid and inequities in the terms of dealer contracts. Following the publication of this report, the leading companies in the industry voluntarily adopted many of the recommendations made by the Commission, including the requirement that a detailed invoice setting forth spe cifically all charges added to the f. o. b. factory price of motor vehicles be furnished the purchaser. Special inquiries for war agencies-At the time of the Presidential declaration of a national emergency on May 27, 1941, an immediate and urgent demand arose, especially in the emergency agencies, for the services of accountants in connection with fixation of price ceilings and for corporate financial data. Inasmuch as the Federal Trade Commission was at that time in possession of extensive financial corporate data and was one agency of only a few in the Government in possession of a trained staff of expert accountants available for such work, and was the one agency to which Congress had given broad investigatory powers in respect of corporations engaged in interstate commerce, the staff and the data of the Commission were immediately utilized by emergency agencies. Beginning July 1, 1941, this part of the Commission's staff has been employed almost entirely upon defense and war work. It is expected that it will be so engaged during the fiscal years 1913 and 1944. As typical of this work, inquiries have been made and reports submitted to emergency agencies for industries as follows: A. Cost and profit inquiries: 1. Bread baking. 2. Household furniture. 3. Mixed fertilizers. 4. Nit ates. 5. Paperboard. 6. Phosphate rock mining. 7. Plywood and veneers. 8. Superphosphates. 9. Wheat-flour milling. The above studies were made for the Office of Economic Stabilization and the Office of Price Administration. Floor-coverings industry-wool carpet and rug manufacturers. Flour milling companies. Household electric appliance industry. Lumber industry. Wholesale meat packing industry. Men's and boys' clothing industry. Men's and boys' shirt and collar manufacturers. Packaged cereal manufacturers. Paint and varnish manufacturers. Petroleum industry. Rubber tire and tube industry. |