Mr. DAVIS. Which does not employ a great many people. And, as you gentlemen know, we always try to play safely and go to the end of the year without a deficit.

Here is another thing: The recent legislation which compels payment for overtime work, Secretary Johnson says will not only consume that $66,000, but it will consume $94,000; so we would be running $28,000 behind.

ENFORCEMENT OF FOOD AND DRUGS ACT

PERIODICAL AND RADIO ADVERTISING

Mr. DIRKSEN. I have a question to ask about the enforcement of the Food and Drugs Act, particularly with reference to periodical and radio advertising. To whom will I address that?

Mr. DAVIS. Mr. Morehouse.

Mr. DIRKSEN. First, I want to know whether or not the quantitative formula on labels is required by law.

Mr. MOREHOUSE. No.

Mr. DIRKSEN. Is there any legal authority for it?

Mr. MOREHOUSE. No, not so far as my division is concerned. There was an article came out of a report and interview with Dr. Cullen, who represents the proprietary association, some time ago, to which my attention was invited, and which I thought was a very unfair statement, in which he complained of the very matter about which you ask.

The facts are that when we initiate an inquiry based upon advertising which appears to warrant an inquiry, to determine whether corrective action should be had-in order to avoid taking two bites at the cherry-we ask the advertiser for all of his advertising for a reasonable period back, say 6 months, which is to be considered with the advertising we have already observed in the course of our normal survey. Also, to save time, we ask him if he will send us the quantitative formula and sample. Quite frequently, he comes back either by letter or interview and says he would rather not. And on every such occasion I personally advise him he is not required to furnish it; that, if he does not choose to do so, he does not have to, and we will be glad to go out on the open market and purchase a sample, have it analyzed and proceed to obtain our scientific opinions as to the therapeutic properties upon that basis. I also advise him if his formula was submitted to us, it is confidential; that it becomes a part of the confidential files of the Commission.

A large majority of the advertisers have seen fit to give us the quantitative formula to save time, but that is entirely up to them or up to their board of directors, as they see fit. Quite frequently they do not, and there has never been any criticism on my part, or on the part of the Commission that I know of, for their having so refused. The most of them give it gladly. Sometimes-once in a while we have a case where they hesitate to give us the quantitative formula, but will give us the qualitative formula, or a sufficient statement as to the principal active ingredients upon which they base particular claims which we want to inquire into, and very often that

will serve.

In other words, it is entirely on a cooperative basis and for anybody to say that we demand unauthoritatively the quantitative formula

of the advertiser in the absence of any statement of charges, or any legal proceeding, to my mind is a most unfair and misleading statement of the matter.

Mr. DIRKSEN. Is there a case pending in court now involving that matter? Does the Miles case involve that issue?

Mr. MOREHOUSE. The Miles case does not involve that matter. As I understand the Miles case, that was a suit brought by the Miles Co. against the Commission to obtain a declaratory judgment. They had been tendered a stipulation which required placing in the advertising the disclosure of certain material facts relating to possible injury. They were given their choice in this draft of stipulation as to whether they would put in the advertising a disclosure of those material facts as authorized by the Wheeler-Lea Act, or if they preferred to put the necessary warning on the label instead, they could say in the advertising, simply--"Caution: Use only as directed." They did not want to sign the stipulation and went to court in a suit for a declaratory judgment and to have their rights adjudicated in advance of the Commission's proceeding. And in that suit it is my understanding they allege the Commission was proceeding without authority in requiring them to place certain matter on their label; which, in my opinion, the Commission never intended to do, or demanded, or ever sought to do in any case. They are always given the foregoing alternative. But that allegation had to be put in in order to make a prima facie case, and it is one way to look at it. They are entitled to their opinion, and Mr. Kelley can tell you more about it, but it is my opinion, as a lawyer, there is no question but what the court will entertain a motion to dismiss and that the motion will be granted. Mr. DIRKSEN. To whom do you refer scientific questions referring to drugs, as to the quantitative and qualitative analysis, therapeutic value, etc.?

Mr. MOREHOUSE. The present practice of the Commission is, I am under instructions, wherever it involves a food, drug, device, or cosmetic, as defined by the Wheeler-Lea Act, to refer it to the medical advisory division of the Commission. In case it relates to a matter with which they are not directly familiar as experts, such as a veterinary matter, or maybe a stock food supplement, they collate scientific opinions from other sources, inquire of the various agricultural colleges, the Department of Agriculture, and the experimental farms, and send it back to me for analysis and review and report to the Commission.

On all other matters, we investigate by correspondence with what appears to us to be the most appropriate source of information, usually the various Departments of the Government or the various agricultural colleges and experiment stations, schools-anywhere where we think they ought to know. In other words, we are seeking light.

PERSONNEL OF MEDICAL ADVISORY DIVISION

Mr. DIRKSEN. How many are there in the medical advisory division? Mr. DAVIS. Three doctors, one chemist, and two clerks or stenographers.

Mr. DIRKSEN. Are they paid out of your funds?

Mr. DAVIS. Yes.

Mr. DIRKSEN. Will you insert in the record as a part of your remarks the personnel of the medical advisory division?

Mr. MOREHOUSE. I am not familiar with that; that is not in my bailiwick.

Mr. JOHNSON. I do not have the individual names, but will insert them :

(The information requested is as follows:)

Dr. James J. Durrett, medical director; Dr. E. Mead Hudson, senior medical officer; Dr. W. Alan Wright, senior medical officer; Mr. Frederick W. Irish, senior chemist; Miss Doris I. Goodhope, clerk-stenographer; and Miss Mary E. Smith, senior stenographer.

Mr. DIRKSEN. Has there been any court review of your requirement for a stipulation?

Mr. MOREHOUSE. No; I would say, because we do not require a stipulation in the strict sense of the word. In other words, we offer them, in an appropriate case, the opportunity to settle by a stipulation, if they want to, and we are very careful to advise them of the fact that they do not have to settle that way if they do not want to.

I will say, however, as far as our advertising cases are concerned, that approximately 85 percent of them which, after investigation, do appear to warrant any corrective action whatever, are settled by a voluntary stipulation on the part of the advertiser, without any further expense, or without any expense at all, of litigation. And it is settled entirely informally by an over-the-desk conference with me and my associates, and we make our recommendations to the Commission for the acceptance or rejection of it. And I will say that in approximately 98 percent of the cases, roughly, the Commission accepts the stipulation as a satisfactory disposition of those cases.

Mr. DAVIS. We do not accept stipulations, if they are signed under any protest. In other words, if a man will sign the stipulation and say "Well, this is not right" or "I do not think it states the facts," if there is any protest of that kind, it is returned to him with the advice that the Commission will not accept the stipulation unless it is voluntarily signed by the respondent as a correct statement of the facts.

Mr. DIRKSEN. I think that is all, gentlemen.
Mr. WIGGLESWORTH. Thank you very much.

TUESDAY, JANUARY 18, 1943.

UNITED STATES MARITIME COMMISSION

STATEMENTS OF REAR ADMIRAL EMORY S. LAND, CHAIRMAN; WILLIAM U. KIRSCH, BUDGET OFFICER

ESTIMATES FOR CONSTRUCTION FUND

Mr. WOODRUM. Admiral, we have before us the item to increase the construction fund established by the Merchant Marine Act of 1936, $1,289,780,000. It reads as follows:

To increase the construction fund established by the Merchant Marine Act, 1936, $1,289.780,000: Provided, That during the fiscal year 1944: (1) not to exceed $19,350,000 shall be available for administrative expenses of the United States

Maritime Commission, including personal services in the District of Columbia: expenses of attendance, when specifically authorized by the Chairman of the Commission, at meetings concerned with the work of the Commission; printing and binding; lawbooks and books of reference; periodicals and newspapers (not to exceed $6,000); teletype services; purchase, maintenance, repair, and operation of passenger-carrying automobiles; compensation as authorized by the Act of August 4, 1939, for officers of the Army, Navy, Marine Corps, or Coast Guard, detailed to the Commission; allowances for living quarters, including heat, fuel, and light, as authorized by the Act of June 26, 1930; and the employment by contract or otherwise of persons, firms, or corporations for the performance of legal and other special services, without regard to section 3709 of the Revised Statutes; (2) not to exceed $3,650,000 shall be available for administrative expenses of such offices, divisions, or sections of the Commission designated from time to time by the War Shipping Administrator as a joint service organization for the Commission and the War Shipping "Administration, including the objects hereinabove specified; and (3) transfers between amount limitations above may be made upon approval of the Director of the Bureau of the Budget.

JUSTIFICATION OF ESTIMATES

Admiral LAND. The following justification is offered for the record.

JUSTIFICATION OF ESTIMATES, FISCAL YEAR 1944

The ship and facilities construction program of the United States Maritime Commission may, with respect to appropriations and authority to contract, be divided into four categories, as follows:

1. General construction program.-Includes the long-range program carried out under the general authority of the Merchant Marine Act, 1936, as amended, and the augmented program specifically authorized by Congress in the First Supplemental National Defense Appropriation Act, 1942 (Public Law 247), approved August 25, 1941, and the Fifth Supplemental National Defense Appropriation Act, 1942 (Public Law 474), approved March 5, 1942. While the Commission has authority to contract beyond the current appropriations, funds required for this general program are provided on a fiscal-year basis and these estimates include obligations for which disbursements will have to be made during the fiscal year ending June 30, 1944.

2. Emergency ship program.—Authorized and appropriated for by Public Law 5, approved February 6, 1941. Public Law 247 authorized the Commission to transfer funds from the construction fund to the emergency ship construction fund in such amounts as may be needed for the completion of the program. These estimates do not include request for additional funds.

3. Defense aid (lend-lease) construction.-Authorized and financed by allocations made by the Lend-Lease Administrator from appropriations provided by the Defense Aid Supplemental Act, 1941 (Public Law 23), approved March 27, 1941, the Second Supplemental National Defense Appropriation Act, 1942 (Public Law 282) approved October 28, 1941, and the Fifth Supplemental National Defense Appropriation Act, 1942 (Public Law 474), approved March 5, 1942. Since this category is provided for by the lend-lease appropriations, no provision therefor is included in the present estimates.

4. Vessels under construction for the Navy and War Departments.-This construction is provided for from funds transferred to the Commission by the departments concerned and maintained in special "working funds" in the Treasury; accordingly, no provision therefor is included in the present estimates. Caption (1) Funds that are now requested relate only to liquidation of contract authority heretofore granted by the Congress.

As at July 1, 1942, the Commission had completed 254 vessels. By October 31, actual completions and deliveries advanced to 440 ships. The present program includes 1,802 ships for which contracts and awards have been made, the construction of which is proceeding at an accelerated pace. In addition the Commission contemplates awarding contracts for the construction of 2,161 ships before the close of the fiscal year 1943, contract authority and funds for which will be submitted shortly in a supplemental estimate for the fiscal year 1943. A number of new shipyards have been constructed, existing yards expanded, plant facilities for engine and machinery construction have been expanded, and transportation facilities and housing provided for.

Under caption (2): The emergency ship program-the Commission contracted for the construction of 200 emergency type cargo ships and the necessary facilities therefor. As at October 31, 1942, there have been 109 of these Liberty ships completed and delivered; the remaining 91 are under various stages of construction. It is expected that the entire group will have been completed by December 31, 1943.

Under caption (3): Shipway facilities and 1,146 cargo vessels, tankers, tugs and small craft have been contracted for as at October 31, 1942. Funds have been allocated to the Commission by the Lend-Lease Administrator from appropriations provided under the Lend-Lease Act. A total of 798 small craft and 34 of the larger type vessels have been completed to October 31. Under construction as of that date are 229 cargo vessels and tankers and 20 harbor tugs, and 65 other small craft.

Under caption (4): As at October 31, 1942, there were 105 ships of various designs and types under construction for account of the Navy and War Departments. Prior to that date the Commission had delivered to those departments 42 ships, 2 tugs and 2 other small craft constructed in whole or part for their account. Funds for all of this construction have been made available to the Commission and are maintained in special “working funds” in the Treasury.

Details of the shipbuilding and facilities programs for long range, emergency ship, defense aid and construction for other Government departments, are contained in the following special exhibits which are appended to these justifications for the confidential use of the Appropriations Committee:

Special Exhibit No. 1. Shipbuilding program as at October 31, 1942.

Special Exhibit No. 2. Contracts for shipways and other facilities as at October 31, 1942.

Special Exhibit No. 3. Completions-shipbuilding program-estimates as at October 31, 1942.

Special Exhibit No. 4. Shipyards showing number of ships and shipways completed, under construction and awards, and estimated costs as at October 31, 1942. The goal of 8,000,000 deadweight tons for the calendar year 1942 has been attained. During the calendar year 1943 the Commission has scheduled for delivery (subject to approval of Congress to the Commission's request for additional contract authority and funds to be submitted in the 1943 supplemental referred to above) anjective of 20,000,000 deadweight tons. It may be assumed that our shipbuilding program will con inue at maximum capacity as long as the war lasts. The capacity for merchant ship construction continues to increase as a direct result of decreased construction time. The proposed program laid out through the fiscal year 1944 is based primarily upon the expected availability of materials, principally steel.

The acceleration of completions of ship construction may best be described by the following tabulation of deliveries, exclusive of tugs and other small craft, in the United States shipyards as follows:

It will be noted that deliveries during September 1942 exceeded the rate of three per day. The decrease in deliveries during October and November was due directly to the necessity of diverting a number of the shipways to special types of ships requested by the Navy for immediate delivery. For the month of December 1942 ship deliveries averaged four per day.

Schedule 2 (a) of these estimates indicates 254 ships delivered to June 30, 1942, and 1,745 under construction as of that date. Between July 1 and October 31, contracts had been awarded for the construction of 243 additional ships. The funds required to meet the obligations incurred are set forth in the schedule.

Contract authorizations for ship and facilities construction under the longrange program, as augmented, heretofore granted the Commission, total $5,976,650,000. As at October 31, 1942, our estimate of costs for the total of 2,242 ships (440 completed and 1,802 under construction) is $5,614,075,207. Facilities, transportation and housing authorized by the Commission to October 31, is estimated to cost $337,221,087. The total committed for both ships and facilities to October 31, is $5,951,296,294. It will be seen therefore that the unobligated contract authority is $25,353,706.

(The ship-construction program through the fiscal year 1944 provides for a total of 4,403 ships (of which, as at October 31, 1942, there had been completed