Washington, D.C. The committee this day met, pursuant to adjournment, at 10 o'clock a.m., in the caucus room, Senate Office Building, Senator Hubert D. Stephens presiding.

Present: Senators Stephens (chairman), McNary, Caraway, Clark, Overton, Hebert, Vandenberg, Brown, Nye, and Copeland.

The CHAIRMAN. Mr. Charles Wesley Dunn will be heard at this time.

Senator COPELAND. Mr. Chairman, is it possible for us to get through with this bill this morning?

The CHAIRMAN. I am hurrying the matter along just as much as I can, Senator, and I would be glad to get through with it at the earliest moment.

Senator COPELAND. I haven't done anything else since last Thanksgiving.

The CHAIRMAN. I haven't either.

Senator COPELAND. I would like to attend to some other very important business. I would like to say, Mr. Chairman, we have heard evidence on every line of the bill, and if it is humanly possible to wind up today, I would like to do it.

The CHAIRMAN. I hope we can do it, with the exception that I referred to a while ago.

Senator COPELAND. Yes; that particular matter.
The CHAIRMAN. Because I told the gentleman he could come.

Senator COPELAND. I want to make that appeal to my friends down here. You have had endless conversations with me personally. Almost every phase of this bill has been presented, and if we could shorten the hearing, not to cut anybody off; I have no disposition to do that; but I am so sick and tired of this bill that I never want to hear of it again.

The CHAIRMAN. Well, of course, in the hearing there has been much duplication.

Senator COPELAND. Yes.

The CHAIRMAN. But to every person his matter is the most important in the world.

Senator COPELAND. That is right. I realize that.

The CHAIRMAN. I do not think we ought to keep anyone who is really interested from having his opportunity of having his say.

Senator COPELAND. I have no disposition to do that, but I am just appealing to these good people to hurry up as much as possible.

The CHAIRMAN. I hope they will respond to that appeal as far as they can. Proceed, Mr. Dunn.



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Mr. DUNN. Mr. Chairman, and members of the committee: I have been requested to testify upon this bill again, with respect of its application to advertising, and one or two other important matters.

As I previously testified, the food, pharmaceutical, and cosmetic interests I represent favor the revision of this act to effectually prohibit false advertising, and the group I represent includes the leading food advertisers in the country. I desire to say, first, a few words in comment upon

the testimony of Judge Davis, for the Federal Trade Commission. He advocated, in effect, that the control of false advertising of foods, drugs, and cosmetics be left with the commission, which is now empowered to control it, and is exercising that power. We stand with Senator Copeland upon the proposition that the Food and Drug Act should be revised to include the false advertising of those products, and therefore to empower the Department of Agriculture to prevent it, for these reasons:

In the first place, it is logical and sound, and the better public policy, to place the control of the labeling and advertising of these products in the same administrative agencies. To have one agency control the label and another control the related advertisement of the same product, is neither logical nor sound policy.

In the second place, the Department of Agriculture is better positioned to effectively administer a false-advertising law, as to these products, than the Federal Trade Commission. It has the expert organization for food, drug, and cosmetic control which has been operating and has been developed for more than 25 years, whereas the Federal Trade Commission has no scientific organization what

In enforcing the Commission Act against food and drug misbranding and advertising today, the Commission must principally rely upon the expert advice of the Department of Agriculture in doing so. Therefore, that Department is now indirectly administrating the Federal Trade Commission Act, to this extent.

In the third place, the public policy of the Federal Trade Commission Act is not the public policy upon the basis of which to make and enforce a false advertising law as to foods, drugs, and cosmetics, because it is unduly limited in the circumstances. The public policy of the Federal Trade Commission Act is to protect competitors, whereas the public policy of a false advertising law is to protect consumers, and in the Rotterdam or Marmola case, to which the reference was made yesterday, the Supreme Court severely limited the power of the Commission to control false advertising, by holding, in effect, that the Commission can only do so where such advertising is proven to be injurious to competitors of the advertiser. That proof may be and is difficult to establish, upon occasion.

In the fourth place, a duplication of law and its administration upon the same subject, is not sound public policy, although both the Federal Trade Commission and the Department of Agriculture, as


now acting, could control food and drug adulteration and misbranding, and hereafter also could control their advertising, and further to regulate cosmetics is not a proper state of the law. That state of the law is a simple, effective law, in a single and the best available administrative agency, and that agency is plainly the Department of Agriculture, as the situation now stands. Hence, we believe that the revised Food and Drugs Act should contain a provision concentrating the law and its administration with respect to food, drugs, and cosmetics, in the hands of the Department of Agriculture.

Senator VANDENBERG. Is that the situation in this substitute, this McCarran bill?

Mr. Dunn. Yes, sir; except to this extent, that the McCarranJenckes bill does not contain a provision which we believe it should, placing the power of control here exclusively in the Department of Agriculture. Without a specific provision of that kind, the dual and overlapping administration will remain.

Senator VANDENBERG. You think the McCarran bill should be amended ?

Mr. Dunx. Yes. Now, there is abundant precedent, Senator Vandenberg, for this situation, because when the Packers and Stockyards Act was enacted, that act practically duplicated the provisions of the Federal Trade Commission Act, and it is stated in that act, in effect, that the administration of that part of the Federal Trade Commission Act which is now written into the Packers and Stockyards Act shall be exclusively administered by the Department of Agriculture, so as to eliminate the duplication of administration. It is rather an anomalous situation to have, now, the Federal Trade Commission proceeding independently on these questions of adulteration, false labeling, and misbranding, and misadvertising, when the whole thing should be concentrated into one department.

Now, to proceed quickly, because my time is limited, my next point with respect to the advertising part of this bill is this: I stated, the other day, in my testimony, that the exemption of disseminators of advertisers should be a general exemption, and I will stand now upon the reiteration of that recommendation.

Secondly, section 17 (d) of S. 2800 provides: That any publisher, advertising agency, or radio broadcast licensee who, on reasonable request of the Secretary's representatives, willfully refuses to furnish the name and post-office address of the person who caused him to disseminate a false advertisement shall be guilty of a misdemeanor and subject to a penalty of a fine up to $3,000 or imprisonment up to 2 years or both. This provision is subject to two objections:

The first is that it is not in due form as to its appropriate application. The provision should be that if any commercial disseminator of an advertisement for another willfully refuses or neglects to disclose the name and post-office address of the party who caused him to disseminate any advertisement, subject to due investigation under this act, upon official request, he shall be guilty of a misdemeanor, and so forth.

Second, the objection is that the penalty is excessive. A penalty of a maximum fine of $500 for each offense is sufficient here, and the McCarran-Jenckes bill is drawn along the lines I have stated in section 21 (a).

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Now, further, with reference to the definition of advertisement in S. 2800, section 2 (i), defines the term “advertisement” as used in

j this act to include all representations of fact or opinion, disseminated in any manner or by any means, other than by labeling. We respectfully object to this definition upon the ground that it is not confined to advertisements in their practical application. It is so broad, for example, as to include correspondence between a manufacturer and his scientific experts in the development of a product, because it includes any representation of fact or opinion made in any way outside of the label.

The definition in section 2 (j) of the McCarran-Jenckes bill is the definition we recommend, and the proper one, obviously, in the circumstances. By it advertisement is defined to mean vertisement, made through any medium or by any means, and includes all written, printed and graphic matter accompanying a food, drug or cosmetic, in its sale, or separately distributed in furtherance of its sale."

That makes the act apply to all advertisements, as we know them in trade, without exception, but it confines the definition to such advertisements, and not to other things.

Senator COPELAND. Where is that?

Mr. Dunn. That is in section 2 (j) of the McCarran-Jenckes bill, on the third page, I believe.

Now, we come to the question of the definition of " false advertisement” in section 9 (a) of S. 2800. The definition is that an advertisement of a food, drug, or cosmetic shall be deemed false “if it is false or misleading in any particular relevant to the purposes

of this act regarding such food, drug, or cosmetic "_" false or mislead

' ing."

So far as food or cosmetics are concerned, there is no additional provision. On the other hand, section 6 of the McCarran-Jenckes bill defines a food advertisement as false if it is false in any material particular relevant to the purpose of this act, or if, while not false, it is actually and injuriously misleading to the purchasing public in any such particular.

Then, the section in the McCarran-Jenckes bill goes on to provide that

No advertisement of a food shall be deemed to be false because of any representation regarding its value or effect, if such representation is supported by substantial scientific opinion or by demonstrable scientific facts, as the case may be.

Now, I discussed the addition of that provision the other day and made the point that Senator Copeland has included a parallel provision relating to drugs, to the effect that a drug shall be deemed to be falsely advertised if an advertisement bears any representation which is not supported by substantial medical opinion or by demonstrable scientific facts. "Now, there is the same reason, in public policy, and there is the same reason in equity, why there should be a similar interpretative provision relating to cosmetics and to foods, and that is what we ask.

As to the definition of “false advertising”, our definition differs only from the definition proposed by S. 2800 in this, that in the case of and advertisement which is not false but which is said to be mis


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