background of the principles of economies and business upon which the law rests. These difficulties will be increased by the stricter construction which obtains in the criminal courts and the presumption of innocence and the strict rules of evidence which govern in criminal cases. Moreover, since the cases will be criminal, few, if any, of them can reach the Supreme Court for the purpose of reconciling inconsistencies between the decisions of the circuit courts and correcting errors of construction. The transformation of the attitude of the law toward this class of cases from the preventive and civil jurisdiction of the Federal Trade Commission to the remedial and criminal jurisdiction of the courts will bring about a result which, if there were no other argument present, should give reason for pause. The Federal Trade Commission has, through the practice known as "trade practice submittal,' evolved a process of conference between an industry and the Federal Trade Commission in which the industry proceeds to crystallize in the form of a statement its own concepts of unfair competition which thereafter the industry endeavors to regulate by pressure from within, aided by the processes of the Federal Trade Commission where necessary. This can only be done through an administrative agency working on the civil side. Its value is being more and more clearly recognized and the possibility of service through this one agency alone in the future would warrant the continuance of a civil rather than a criminal treatment of this phase of business practices. The effect of the adoption of the criminal statute governing interstate commerce is to put an end to the possibility of an internal development by a business group in which the Government agencies serve the development merely by the policing of such cases as the business group is not able to reach. The criminal law separates government and business inevitably, On the other hand, the civil remedy and the administrative agency with a power merely to enter an injunctive order subject to court review, provides a medium for a direct contact through which the business group may express its concept of the methods and practices of the industry and permits a uniform construction and development of the law by a continuous interpretation originating through one source. Each successive case is thus dealt with in the light of all those cases and those industrial conferences which have proceeded it whereby the law is adapted to various industries and to the innumerable circumstances and conditions which present themselves in the administration of a statute which requires constant application of fundamental principles to divergent states and conditions of fact. If the law be administered in this manner the great mass of cases will be settled by an administrative order, only an occasional case reaching the courts. Such an administration will, in the long run, be more effective than an enforcement through criminal prosecution. In short, it is the opinion of the Federal Trade Commission that the enactment of either of these two bills would not work out any permanent benefit but would seriously endanger those results which have already been accomplished and prevent the accomplishment of still greater results under the existing Federal Trade Commission Act. By direction of the Commission. Cordially yours, Hon. SAMUEL E. WINSLOW, HUSTON THOMPSON. Chairman Cemmittee on Interstate and Foreign Commerce, FEDERAL TRADE COMMISSION, MY DEAR Mr. CHAIRMAN. The commission duly received your letters of December 18, inclosing copies of H. R. 732, H. R. 739, and H. R. 4141, for report and suggestions. The purposes of the measures are practically identical, viz: To require branding of fabrics which purport to contain wool in such manner as to indicate the percentage of virgin wool, shoddy, cotton and silk contained in the fabric. The suggestions made in the commission's letter of even date with respect to the advantages of civil procedure over criminal prosecution and of centralizing the administration of the law in the misbranding measures (H. R. 16 and H. R. 3225) apply to these bills also. The policy embodied in these bills is apparently an entirely new departure from that heretofore pursued not only by the Federal Government but by the States and apparently by other English speaking countries. Should any of these bills become law, the task of enforcing them will be very much more difficult than that of enforcing the proposed misbranding measure. There are at this time, undoubtedly, vast quantities of goods containing some wool which are not branded at all. Indeed, brands on ready-made clothing showing the materials of which they are composed, are, perhaps, quite rare. The ultimate purchaser ordinarily depends upon the experience and honesty of the retail dealer to ascertain the composition of the material in such garments. The effect of the measures, should they become laws, will, of course, compel marking. of all goods of the classes covered, and the task of ascertaining whether such goods are falsely marked will be very great. There would appear to be some question whether it is the part of wisdom at this time to go farther than to prohibit misrepresentation or misleading statements with respect to the materials of which goods are composed, such as is proposed by H. R. 16 and H. R. 3225, including misrepresentations not only through brands and advertising, but through the use of trade marks, trade names and corporate or firm names. If legislation at this time were limited to these forms of misrepresentation, experience in the administration of that law would disclose whether further legislation is required and the exact form which that legislation should take. If the administration of such misbranding law as is. passed were centralized, as suggested in the commission's letter and report on H. R. 16 and H. R. 3225, the experience in inforcing these laws would be readily available. By direction of the commission. Cordially yours, Hon. SAMUEL E. WINSLOW, HUSTON THOMPSON, Chairman. Chairman Committee on Interstate and Foreign Commerce, Hon. SAMUEL E. WINSLOW, Chairman DEPARTMENT OF AGRICULTURE, Committee on Interstate and Foreign Commerce, DEAR MR. WINSLOW: Replying further to your communications of December 18 regarding H. R. 732 and H. R. 739, these bills have received consideration by the specialists in this department who are most familiar with the subject matter of the bills. The prime purpose of both these bills is to require truthful labeling of woolen fabrics. We are strongly of the opinion that some sort of sound textile legislation which will serve to protect the interests of the consumer is most desirable and necessary. We recognize this to be the principal object of the bills under discussion but do not feel that these bills will wholly accomplish this end. To the public the name "shoddy" signifies a practically worthless fiber or fabric, whereas there are some good grades of shoddy which would make a cloth superior to one made of poor quality coarse virgin wool. In fact, we have as yet found no analytical method capable of distinguishing such shoddy from virgin wool beyond the shadow of doubt. Moreover, the method for estimating, quantitatively, the amount of virgin wool and shoddy in a given fabric is wholly inadequate. Therefore, it is as yet impossible to determine by an objective examination of a given fabric whether or not in all cases it contains shoddy, and since it is as yet impossible, in the majority of cases, to determine by an objective examination of a given fabric how much shoddy it contains, it is suggested that the only effective way of accomplishing the end aimed at by the bills under consideration is to amplify and extend the section that gives to the Secretary of the Treasury, the Secretary of Agriculture, and the Secretary of Commerce, power to inspect the plant, raw materials, methods and books of all manufacturers of such goods who have secured a registration number. If this section were expanded so as to resemble corresponding sections of the Federal meat inspection act administered by the Bureau of Animal Industry, and if penalties for its violation were provided, and if the power were given to the three secretaries to close the channels of interstate commerce to any manufacturer refusing to permit inspection of his establishment, or to furnish the information, or to keep the books required, then it would be possible effectively to achieve the end aimed at by the bills. I recognize fully that such legislation would be exceedingly drastic, and I recognize further that unlike the meat inspection act, it is not based upon vital effects upon public health. However, if the Congress decides to enact legislation to make it impossible for the manufacturer or dealer to palm off shoddy in the place of new wool, then it will be necessary for Congress to take this course. The experts of the department have been unable to think of any other method which will be effective, in view of the fact that the ordinary methods of chemical and microscopi cal analysis are incapable of determining accurately whether shoddy be present, and, if so, how much. I have the greatest sympathy with the object of the bills in requiring full labeling of fabrics or garments for the information of the consumer. However, the question has been raised whether the labeling required is truly fully informing. The form of labeling proposed does not take into account the weight per area of a fabric. A hundred per cent light-weight fabric of virgin wool might be much inferior in wearing quality to a heavier cloth containing a certain percentage of shoddy and might not contain a larger amount of virgin wool. However, the statement on the label of a certain percentage of shoddy in its composition would probably condemn it in the eyes of the public. The fineness of the fiber is also another important consideration. After all, is not the real test of a fabric or garment its wearing quality? Apropos of this, we are inclosing herewith a photostat copy of a part of Dr. C. L. Alsberg's remarks at a hearing before the Committee on Interstate and Foreign Commerce in the Sixty-sixth Congress, second session, on bills similar to these now under consideration, in which is suggested a system of grading cloth based on service tests. Doctor Alsberg was formerly Chief of the Bureau of Chemistry. It may also be advisable to consider the proposition of including in a textile bill other textile fibers as well as wool. In reference to the administrative features of the bills it is noted that the Treasury Department is designated as the department for the enforcement of the import provisions and the Department of Commerce is exclusively required to receive and handle registration. The Secretaries of these two departments and the Secretary of Agriculture are designated as a board for the formulation of rules and regulations and for the determination of whether samples shall be examined in the Bureau of Chemistry or the Bureau of Standards. In my opinion, the administrative responsibility for the enforcement of legislation along the line of these bills should be centered in one department and in the case of bills covering woolen fabrics, the Department of Agriculture is the appropriate department. The Department of Agriculture has for years been studying wool, both from the production end and from the marketing end. The investigation of fabrics as to their content of cotton, silk, wool, linen, shoddy, etc., resolves itself largely into determining the character of the original fiber by microscopical or chemical means and this being purely agricultural chemical work, can best be handled in the Bureau of Chemistry. The Deprtament of Agriculture is equipped for law enforcement work, being already charged with the enforcement of a number of regulatory statutes. The bills under consideration are similar in many of their provisions to the Federal food and drugs act which is enforced by the Department of Agriculture. Very truly yours, HENRY C. WALLACE, Secretary. Referred to the Bureau of the Budget, pursuant to Circular 49 of that bureau, and returned to the Department of Agriculture with the advice that the foregoing is not in conflict with the financial program of the President. The CHAIRMAN. We should be glad to hear your views. Doctor ALSBERG. It may be presenting a view which may have been presented here before; as to that I do not know, but it has an essential bearing on the principle on which this bill H. R. 13136, the Rogers bill, is based. I can possibly explain what I mean by going back to my personal experience in the enforcement of the food and drugs act, and taking a specific example, that of flour. Flour is an article which is now generally made by what is known as the roller process. That is where the name "Patent Flour" for the better grades of flour comes from. Now, there are a great many variations in the details of the manufacture of flour and, technically, any flour made by the roller process might be regarded as patent flour. The trade, however, has established certain usages which restrict the term patent flour to the best of the flour that can be gotten out of a given kind of grain. Now, as grain varies a great deal and as the methods of milling vary a great deal the term "patent flour" will have a different significence according to the kind of grain that is used and according to the skill of the miller and the excellence of his equipment. One mill which is equipped in the best manner and has skillful operators can obtain more flour from the same kind of wheat that would be of patent quality than another mill which is old-fashioned or unskillfully run. Hence, inasmuch as the designations of the grades of the flour is based on the process rather than the kind of flour a man gets out of the wheat, the term "patent flour" may vary to a very considerable range in its application, and you may have flours of very considerably different quality; yet they each are called and are entitled to be called "patent flour". The patent flour of one mill may be of a different grade from the patent flour of another mill, owing to the difference in wheat and the difference in the skill of the milling. Now, it all comes back to this, that the grading of flour, being based on the materials and the process of manufacture, is in a very unsatisfactory condition. It is not based on the inherent intrinsic qualities of the flour that is produced. The consumer is interested not in what kind of wheat the flour is produced from, he is interested not in the process by which the flour is produced, he is interested solely in what kind of a loaf of bread that particular sample of flour will bake, and that is all he is interested in. Inasmuch as the food value of the average run of flour and of various wheats is about the same nutritional value is not a factor. Now, if we had a grading system of flour which was based on the performance of that flour in baking, we would have a rational basis which would put all manufacturers on the same basis and which would enable the skillful miller to capitalize his skill to greater advantage than he is in position to do at present. With this thought, I think that one of the difficulties in the plans that are proposed in this textile bill here becomes clear. It is that it is based on considerations of the raw materials out of which the cloth is made, on considerations of the history of those raw materials, and on the consideration of the process of manufacture. Now, in these things the consumer is not really fundamentally interested. I think the interests of the consumer in a cloth, or a garment made from the cloth, or a blanket, can be classified under three general heads-one is an aesthetic consideration, the appearance, which is not covered in this bill, and which is not a fit subject for consideration in the bill; it is a matter of taste, whether a man likes the appearance or not. The other two considerations are, the service which the cloth or garment will give, how it will wear; and the protection that it will afford from the weather. Those are the two things in which the consumer is interested, how it will wear and the protection it will afford from the weather. The two things, of course, are closely interrelated. He is not so much interested in knowing how the manufacturer achieves a certain result in producing a cloth that will have a certain wearing quality; he is not interested in knowing how the manufacturer achieves a result in producing a cloth that will give him protection against cold. What he is after is a certain wearing quality, and the power to protect him from cold in the garment or the blanket, as the case may be. Now, whether that end is achieved by the manufacturer through one process or another, by the use of one material or another, is a thing that the consumer is really not specially interested in. I am again basing it on my experiences with reference to foods, for which we have legislation similar to that here proposed. Now, it seems to me that the great difficulties that arise in the administration of an act like this textile act are due to the fact that you are trying to reconcile the processes of manufacture, which are fundamentally technical and which very few people know anything about, with giving the consumer information that will protect him. Now, if you tell the average consumer all about a given cloth, how it is made and what it is made from, it will mean very little to him. He does not understand it, he is not a textile expert. It may even be misleading, because it may be possible to make a superior cloth from materials which, according to the common notions of the consumer, are inferior materials. It also puts a handicap on the stimulus for the manufacturer to improve his methods to require a system of branding or labeling which will give the public all the details of information, because everything new is looked at askance, at least according to my experience with foods and drugs. The thought that I have is this, that it might be far better to establish a series of absolutely arbitrary grades of cloths-say United States standard grade A, United States standard grade B, or whatever name you wish to give them, and fix absolutely and arbitrarily that grade A cloth must have a certain wearing quality as determined by a rubbing test, we will say, and a folding test, which can be determined absolutely arbitrarily in consul tation with the representatives of the manufacturers and consumers, and that it must have a certain arbitrary power to prevent the passage of heat or cold. You then have done the two things the consumer is interested in. When you have told him that a given garment is made of grade A cloth you have given him very much more definite information of value to him than if you tell him it contains 10 per cent shoddy, 70 per cent new wool, and 20 per cent cotton. You have also established a set of conditions which make the enforcement of a law like this immensely simpler and immensely easier to administer, and you have not created a set of conditions which will handicap progress in the methods of the manufacturer. On the contrary, you have put up a mark for the manufac turer to aim at. He will endeavor to achieve the result which is represented by "Grade A cloth," by cheaper and better processes. Competition will then take care of the consumer as the benefit of that is ultimately passed to the consumer. That is my idea of a system of legislation for materials like textiles, a system that I think would be easier to enforce, would give greater protection to the consumer and be easier for the manufacturer to live under, than the system which is proposed in this particular bill. I would also suggest that at the same time such textile legislation be combined with provisions against misbranding so that the man who said that a garment was made of grade A cloth-assuming that that is what it was to be called-if he choose to say that it was new wool would be prosecuted if he lied in making the statement, and he stated that a garment contained no cotton he would be prosecuted if that was a lie. I am inclined to think that legislation of that type would give the consumer more protection than could be given in other ways that I have seen suggested. It would be easier, cheaper, and simpler for the Government to enforce and would give the manufacturer a stimulus to improve his methods and not sit still. My further thought on this legislation, Mr. Chairman, is that in such general misbranding legislation as is proposed in the Rogers Bill-I have been talking hitherto about legislation of the French bill type-there is a danger from the purely administrative standpoint. Who, or what departments of the Government have jurisdiction in the fields in which there is the possibility of confusion? I am thinking that the gradation from food, for example-taking my own field of work-to general merchandise, is not always entirely clear. Take canned goods-what goes into the can clearly comes under the jurisdiction of the food and drugs act; but if a man should use a can that is coated with an alloy of lead and tin, for example-it is not now being done-this lead will contaminate the food, and you get a double jurisdiction. The Bureau of Standards would have jurisdiction over tinplate according to this bill, but the Bureau of Chemistry has jurisdiction over food that was sold in cans. It seems to me it should be carefully considered by the committee whether it is wise to make sure beyond possibility of doubt that there will not be double jurisdiction over certain types of products. The Department of Agriculture, for instance, is interested in the production of hides and leather, these being agricultural products. This bill would give the Bureau of Standards jurisdiction over hides all the way down to the finished shoe or the leather bag. There are possibilities of duplication, and crossed and double jurisdiction there. The same thing, of course, applies to cotton. There is a law, the cotton grades act, that the Department of Agriculture administers. The same thing might apply to a number of other products. It might apply to products over which the Bureau of Mines at present has jurisdiction. I am thinking, for instance, of explosives, which are articles of commerce, on which the Bureau of Mines has done an immense amount of work. There is the possibility of confusion and double jurisdiction, and I would very strongly urge on your committee to consider very carefully the framing of these bills in such manner that each one of us who has certain specific functions to perform will know just exactly what he should do and what he should not do, in order to avoid having two or three organizations working on the same subject. There is another point in this bill of Mr. Rogers to which I wish to draw your attention. I have not had the time to study the bill as carefully as I would like. I only saw it this morning. The point to which I wish to call your attention has reference to the exemption from the act of goods that are exported. That exemption is entirely too general. According to that exemption, the article, as I read it, is quite free from any restriction--if it does not bear a false trade-mark or label or brand or device. This act, of course, is modeled on the food and drugs act, and the more I have to do with the food and drugs act the more I am convinced that it is an exceedingly wise and excellently drawn law. However, the provision under the food and drugs act for export differs somewhat from this |