BOSTON PUBLIC LIBRARY
3 9999 06317 515 0
OFFICE OF NATIONAL RECOVERY ADMINISTRATION
DIVISION OF REVIEW
ADMINISTRATIVE LAW AND PROCEDURE UNDER THE NIRA
Paul C. Aiken
WORK MATERIALS NO. 81
NRA ORGANIZATION STUDIES SECTION
MARCH. 1936
OFFICr or' TTATIOTIAL ^RSCO^.^HY ADMI'^ISTPJLTIO''
DIVISIO'T 07 EEVIEV;
ADMiriSTHATI^JE LA^T Aim P?.(jC"""iUIlE- TiraER TITE ITIRA
By
Psnl C. An-<=n
?'EA GRGAIIIZATIOF STTT3IT^S SICTIOH
IIARCH, 15o6
'Mj, J.^ji^lo^Ccr^Jp
-' 0 R E 7 0 R D
This study of Adrainistrativo La," and Pro'"=^r''ur<^ Tmd°r the FIRA
WPS ■Dr(=!-Dar'=d hy Hr. Paul C. AiVon of tii'^ 1"RA Or, f;pni 'Nation Studi«=s Sec-
tion, Mr. Willian W, B.-rdsley in chars';:"..
As thc> title in"!ic?tes th^ r'\^-tl:or hpp. nttermted a,n administrative
la^" stucly of the National Industrial Recovery Act rnd its administra-
tion hy NRA, He d^^med it ■5'^sirp'ble to include an introductory
discvcssion of adninistra.tiv^ theory. This is th° iDuroose of Part I,
in ^-^hich th-^ traditional theories are °xamin°d a.nd a. survey is then
mad" of '^hat th° <-ourts say th^v do and of -^hat the courts actually
do in the cases -nr-^sented to th'=m.
Th° reason :^or th° study lies in --hat i^IRA. did or failed to do as
a matter of "due xircess" of la". The sixbstance of the study, with
res-oect to KEA uro endure is to Lie lovn'- "lii»Part II in the considel'ftion
of -nrocedural and suhstantiv^ ■r.ro'bl'='ns in cor'=-nai-ing and code
administration, '-'hich miiS-ht have he^n suhject^d to adverse judicial
treatment had not the codes "b°en terminat'^d hy the Suiarene Court's
decision of ilay ^7, 1935.
The reader -'ho is iDrimarily int^r^sterl in th^ \-)ortions of the
study definitelv related to "-RA may therefore -^ish to turn at once
to Part II, hefi-inning "xt?i Chaoter V, although it is to "be observed
that this chat)ter "'as Titten merely a? a -cart of the author's
concept of the stuciy as a ^"hol'=>. It -^as not thons;ht of m-^rely as an
introductory cha-nt°r to Part II.
A third loart of th<= stud^'- treats "ith the constitutional xiowers
and their delegation involved in the "IRA and NPJi.. The lines of cases
and the theories necessarv to th^' -oo^ers purported to have "been graxited
"by th'=' HIEA are -outlined. Th°n, th° mann°r of th^ delegation of
th«=se TDOw°rs is considered, ^ith Tia.rticular ^mohasis given to the
remote and numerous rede] ^gations, as wp.h as to the ouestion of what
Tjersons could -oroperly ^xercis'^' th° -oo""=rs of the Act.
Lastly, in a desire to offer m'^re than a critical analysis, the
stud3'- -DOints out i?ossi"!ole m^ans of forestalling too close judicial
control.
It can hardly "b'^ denied th^t under the provisions of the
Recovery Act the T'l'RA t)rocesses of codo-mahing and code amendment
vere legislative in nature. Because of this it can "b" argued
reasona"bly that "due lorocess", in the xjrocedural sense of notice and
the development of facts throiigh hearings sufficient to justify the
aioproval of coc'°s and amendments, was not necessar^r in NRA code-
mai'ing to any greater degree to Anv ^rreat^r def^r^^e than it is
necessary in the legislative ncions of the Congress, In recognition
of this point of vie^ the ar.thor has included a discussion of it in
Chanter V, It is his int°nt that th^ stud;"- sliould convey the
imr)ression that the o'bservance of TjroceduraJ "due process"' on the
part of ^IRA in codo-maJ'ing ^'as d°sira"ble. "because of the ■DOssi"bility
9838 -i-
that thf> courts i'^ cns^s arisin.fi- in connection v^ith th" enforoen^nt
of codes would gi-i^e conGid-^rptiO" to th«^ fsct-f indin.f methods of NEA,
It is not his intent thnt the study should convey th° ir-ror^ssion that
th° o"bs°rve.nc° of Toroc^dural "due -Drocess" was a requirement of cod^-
makin^ in an absolute s^nse.
It is fully recognized that students of the suhject of this study,
TDarticularly as it f^nters into arjrifcts of ad'ninistrativ la.'w in ™hich
th'=^ courts liave. handed do'-m fe-' rlqcisions, nay ha.v= iDOints of view in-
consistent '"ith the author's, Th«=> study, of course, -oresents the
author's Doint of vie^^ and the coR'n<=nts and conclusions are his own
and not official utterances. In the addend.um will "be found a comment
"by one reviewer of th» rnanuscri-ot.
At the 'back of this re-oort will "be found a "brief state-nent of the
studies undertaken hv the Division of S^view,
L. C. liar shall
Director, Division of E-^viev
H^rch ?3, 1936
983?
TABLE Gi COITTEFTS
Page
Letter of Transmittal,
A G<~iieral Review
chapter; I
xicliiction
Part 1. An Administrativp Lav? }3ackgroand,
CHAPTER II
The Thecr,-^ -f Adr.inisti-ation
I. Separation of Governnental Peters 7
II. Growth of Administration and
Adnini strati ve Law 8
III. Delegation of Power a:id Finality in
its Exercise 8
CHAPTER III
Eevie-7 h-'- the Coiarts pjid Safeguards Ag'ainst Atuse
of Adininistrative Power
"ilatiiral " and "higher" la,w 13
"Due Process of Law" 14
Ultra rnd Intra Vires 15
Jurisdictional pnd Constitutional Fact 15
Questionsccf'Law 16
Discretionary and ministerial Action 16
ReOj^uirements of Evidence 17
Self-Limitation h;.- the Coui-ts - "Political
Questions" - Exhausting Available Administrative
Remedies 18
CHAPTER IV
Administrative Finality and the Cases. ...
I. Narrow Review 20
The Government and its Internal Affairs 21
The Gcvernruent extends a Privile.ge 22
The Government supplios a Service 24
II. Broad Review 25
The Interstate Corarae:-ce Coiimission 25
The Feder.al Trade Comnission 28
SuhstantivR Due Process and Priv.ate Property
"Eusiness Affected with a Rihlic Interest" 29
III. Jurisdictional Fact 32
Use to Circumvent Harrow Review 32
Recent Importa:rice 33
Avoiding the Tlieory 33
9833 -iii-
TABLE OF COiTTMTS - 2
Page
IV, G-eneral Procedural Requirements.
Ill-Defined 34
Reqidrements Vary - Within Field - With Fields 34
Usually Accepted Requireupnts - Kotice - Hearing 35
Part II. Protleins of Administration and Adrainistrative
Law in IIRA 37
CHAPTER V
The Sche:.:e. .... . .
Ler-i slation ty Scheme 38
Lefislation or Adjudication -The Tariff Connission 41
The Interstate Cornraerce Co.nmission - Hearing Require-
ment of the Act 43
Forcing Issuance or Restraint rf Codes 49
Conditional Approval 50
CHAPTER VI
The Adxiinistrative Approach ..... . . . ~
The Prohlem and tj:ie Technique 52
Position of Industry - Bargainin-?; with IIPJI - 52
Riile ty Majority Vote , 53
Position of ICRA - Haste aiid Confusion 54
ProcedLire - Personnel 54
Industr;'- Self-Governraent 56
CHAPTER VII
Jurisdiction and Jurisdiction.al Fact . .
Within Purposes of the Act 59
Rela,tion \iith other Governmental Agencies 59
Proponents' Representative Ch,ar.?,cter 60
CHAPTER VIII
The Procedural Scheme and tne Hearings.. ,. . , ._
The Act and Procedure 61
Controversy and Facts 62
Short and Inadequate Hearings 63
Argument and Opinion 53
Cross Examina.tion 64
Rebuttal Testimony and Conf ideritial Reports 65
Rel.ation to Witnesses - Subpoena ■ 66
Oath *. 67
Oral Hearings 67
9838
TABLE or COiMTEWTS - 3
CHAPTER IX
Page
Pinc.in^'S and the ^Record- . . ^
A<?-niissilDilit7 arid I7eir_-ht nf Evidence* 58
Contents of the Record 68
Pindings and the Factual En.sis - and Exa"nples 69
Tacit Approval Theor;^ 74
Burc'en of Proof. 74
PuDlication of Findings 77
CHAPTEE X
Probleas in Pub^^ication, llotice, and other Administrative
Action hy "uTla. , . .
I, Paolication of Adriiinir.trrtive P.egalations 79
II. ilotice and Participation in the InduGtries' 81
Activities
III. Other Formal Actions b:/ Lii:A 83
Interpretations 83
Ainendnents 84
E::einptions and Exceptions 84
Stays 35
IV. Speed.7 Determinations 35
V. Violations by KRA -pf Its 0'.7n Procedure 85
CHAPTER XI
Problems in Substantive Due Procesc, of Law — and
Ach.iinistratinn.
I. Reasonableness 87
II. A ProLlen in Administration 89
III, Half easance 94
CHAPTER XII
Conpliance gjid Enforcenent Activities.
The Problem of Enforcenent 97
Th-e Staff 97
Interpreta^tions as a Problem 97
Liethods of Enforcement - Limitation of Act - Boycott -
"Compliance" -Suits by Individuals - Enforcenent 97
Pro cedure 98
Ac'jiiini strative "Due Process" 102
Part III. PoTTers cf thf> N.I.R.A. and Their
Delegation 103
9838
TABLE or COIITEIITS - 4
CHAPTEH XIII
Pa^e
Po^Ters of the iT.I.n.A. .
Stoecif ic Powers 104
Implied and Incidental Po\7ers 104
The Co^nmerce Concept 105
The Concept of Unfair Competition 109
The Concept of "Business Affected v/ith a Public Interest". 109
Lr.bor Cases 110
Tlie "Emergencj''" Doctrine Ill
The Protilera of "Assessments" Ill
Chapter XIV
Delegation "by Congress.
History of the il.axim - "Delegata potestas non potest
delegari" 113
Delegation of Legal Theory 114
Delegation and Standards in the Cases 114
CHAPTEH XV
Delegation hy the President and II. E. A. ...
Delegation - A Characteristic cf Adiiinistration 117
Delegation by the President and Renote Eedelegation 117
Code Authorities as Private persons 119
Private Agencies in Administering Law 120
Public Character of Code Authority Activities 122
Code Authorities as Interested Persons 122
Conclusion on Legal St.atus of Code Authorities 124
Standards for the Exercise of Po'jer 126
Pov/ers Exercised by Code Authorities 127
Pa.rt IV. Conclusions aiiC Suggestions 131
CHAPTER XVI
Forestalling "Broad Revie\7" 132
CHAPTER XVII
Administrative Safeguards and the Challenge of
Ad:.:inistration 134
Table cf Cases 345
Table of Treatises, Briefs, Reports, et cetera 355
Table of Larr Review Articles, ilotes and Comment 359
Addendtim 3G4
S838
-1-
•'Th.'^. lyrrit'^r l/hr\s lone hp.d '^n int^rost in -otoTd] "^ms of =>dninistr8-
tiv° la'-' and ad'nijiistrntior. Soon pft^r ;-:° "bnop^^i--^ p iDPrt of th^ ^lEA
staff he r='aliz^-d tlifit h=^ hrid "u o-mortirnit-"- to o'br.'^rvo at -first hand
the operations- of one of th° -larf;'=s.t acSrairiistrptiv^ efforts °ver
undTtaVen tY our -G-overnjT^nt. As "■*"-A's^dn.inistrativ° history unfolded,
ho b^^cane' acutely- a-^'are that ,it -oresented nany -Drotlenis '"bii^h could te
yalunblj'- ap-oropched -f roni' the vie'-^oint of ad-'iinistrptive law. At the
time of the Scbechter decision (I'ay -?, 1935) he ha.d coll'^cted a
considerable amount of naterial to he used in a study ^rhich he intended
to make- independent of THA..
Th'^ intent of this stud^' has not alone ■b°°n to state rnorely the
"stahlished administrative la,T^ found in th^ cas'=s or losri'^-'lly de-
d.ucible, from th-^T:!. In th" eripirical stat-^ of administrative la^v
ther'= might be littl^ of valxi'^ in following such a narrow aioriroach.
?iather, it has liepn intend.ed to suggest '"hat la'' might r-^asonably
"b° as-suned from the siiggest ions made by. the courts in their oriinions,
or the future of .th° law indica,t'=>d by judicial trends. This study
is no't ' alcne limited to "due -orocess of lar-" in the limiti=d sense that
tjjere must be a. 'fell established rul^ based upon this concent before
a problem can- be. considered. It is felt that th^ courts have indicated
that, in -the main, good administrative oractic° '"ill nrovide good law.
The -administrative, nra'^.tice must be such th-^t it does not sacrifice by
efforts, to'^ard efficiency th^' afford.ing of full justice to every
individual, ' This does not m'^a'n the tying do'-Ti of a.dministrn.tion by petty
procedural requir<=ments, but it does m°an that the old procedural re-
quirements and any ne'- ones necessary to assure =qual justice to those
affected by a.dministration must be maint'^ined.
The first dut-'' of this study, sin^e probably the majority of its
readers will not b° tra.ined in admiristrative law, is to establish a
background in., that _ field. The legal, theory of the separation of '
goyernnental "DO'-"=>rs, the del^g.-^^tion of no'-^ers, is a necessary part of
such background. To understand our l^gal syst°m, judicial revie'T Y^ith
all its many a,s-r)ects must be considered. The administrative la^:-
created.-by our courts, sets forth two theories of j\idicial review, one
broad, the other na.rrow. The elements, historical, iDsycholofrical, and
analytica.l entering into- th°se theories of judicial r'=vie'7 are essential
to a,n understanding of how th° judicial mind misrht a-oproach th^
administrative iDroblem ■Dr^se'^-ted by ilHA.
The author's interest wp,s first di^Rnted to the auestion of the
finality of ad-rainistr-^tivR determinations '"hen as a. gra.duate
student at Princeton, Professor ^Jd'^ard. S. Corwin -oointed out the .
Toroblem to him as a subject for research. Other questions of
administrative law have .be^n suggested bv another former teacher,
Professor J, ^'prrester, Daviso'n' of th° G-eorp-^ 'Washington University
Law School, to whom . the author is es-n°cially indebted, as also he
is to Prof-'ssor Charles S. Collier, of C-eor,=:e Washington University
Law School, Dr. Henr^r Seining of Princeton University, Judge
P. W. Seward of the Federal Coramnjnications Commission and Mr,
^dm^jnd H, Worthy, an attorney for the Secixrities and ^Ixchange
Commission for their encouragement and assistance,
9838
The sutject matter of the UIRA involved matters of disputed economic
and social character. Sach problems when treated administratively have
been subject to the most careful scrutiny by the courts. Thereforb, it
would seem that IIEA should have foreseen the possibility of "broad review"
and attempted to have met it. The scheme underlying ths Act, both ad-
ministratively sxia procedurally, had little precedent, and none for the
extended use to trhich it was put. l^A should have reasonably e^cpected
procedural reauirements of the nature fouiid in the "broad review" field
to be imposed upon it. In fact, little thought seems to have been given
to the entire question of procedure until over a half year after the
passage of the Act.
As an illustrative agency, NRA was in a position considerably more
diff icuiLi to define than that of most administrative boards. As the
agent of the president, it may have been endowed with certain legal
attributes enjoyed by him. Obviously great difficulty lay in the fact
that the' position of final administrative authority v/as occupied by the
Presider.t.
A variety of technical problems in code maJ<:ing and code a,dministr8.-
tion provide the major portion of this study. There is little need to
fully state here all of these problems. A brief survey of the nature of
these problems, however, might serve to point the direction talcen by
this 'study. The administrative approach \Yas handicapped by hasty, in-
experienced personnel, and a failure to give early and thorough con-
sideration to possible problems of administrative law. Questions of jur-
isdictional fact srose. Some were unavoidable, others might have been
more carefully handled if a consideration of the possibility of judicial
review had been had.
IIEA hearings were in the main inadeqtiate. They often placed a
premium upon short duration, rather than, exhaustive development of a
factual basis. Rules against argument and opinion were abused and no
helpful result is seen in prohibiting them. The powers of subpoena and
punishment for perjury would have been useful instruments. "Notice of
opportunity to be heard" was as full as desirable in the sense of hearing,
notice, or an internal procedure within U.R.A.
Little attention '.vas paid to the ioroblem of admissibility of evi-
dence. The requirement that all evidence relied upon must be in the
record was not adh.ered to. The factual basis for findings was often
inadequate, substpiitial evidence not having been taken. The problem
of burden of proof was frequently ill-considered. The statement of
the basis for action was not always as complete as desirable. Pub-
lication of administrotive action was not complete or fully accessible.
Better legal draftsmanship would have been of material assistance to
IT.R.A. notice was usually given quite fully. The approach to the
problem failed to consider just what persons were absolutely entitled to
it, and to how much time should have reasonably elapsed between notice
and hearing. Other formal actions by H.R.A. such as interpretations,
amendments, exemptions and exceptions, eind stays were not given as full
safeguards procedurally as would have been desirable.
ComplipxLCB procedure as a natter of statutory and constitutional
law did not seem to "be in harmony with the courts' views of the proper
character of administrative enforcement.
Examples of malfeasance ty administrative officers are not xui-
knovTOi in the administration of NBA. NEA was responsible for the actions
of its officers and those of code authorities, There are a number of
incidents where KEA failed to properly control action by these persons.
NEA did not always follow its own procedure. Its substantive action
was not always buttressed by such an overwhelming factual basis that
it would have been impossible for the courts by use of the "due process
of law" concept to have controlled the administrative action.
A full consideration of constitutional povrers and the indications
of the cases is not found either in the drafting of the UIRjI or its
administration. The qxiestion of delegation did not apperj: to be im-
portant aside from the fact that extreme redelegations were indulged
in. The redelegation of power to interested persons and to private
persons not acting fis public officers was open to serious question.
A more careful consideration of these problems of administrative
and constittitional law might have gone fai' to have made II. E. A. a mode
acceptable to the courts. This would probably have entailed serious
procedural and substantive changes, although the same general objectives
might have existed.
9838
PART I
AW ADMINISTRATIVE
LAW BACKGEOUITD
9838
CHAFTEE I
IlIT^ODUCTIOi!
The first ofricir.l stt-.teuent iiiDon the IWRA (1) made tiy
the President (2) pointod the Adniinistm.tive -orohlen:
"It is, further , a challenge to adininistra-
tion. T/e are relaxing sone of the safeg-ua.rds of
the antitrust lavrs. The pulDlic must l)e pr6tected
against the ahuses that led to their enactment, and
to this end we are putting in place of old princi-
ples of unchec'ced coupetition sone new Government
controls. They must ahove all be impartial and
just. Their purpose is to free business - not to
shackle it « end. no man \7ho stands on the construc-
tive fornard-loohing side of his industry has any-
thing to fear fron them. To such men the opportun-
ities for individiipl initiative -jill be open more
amply than ever. Let me make it clear, however,
that the antitrust lar-s still stand f irnly against
monopolies that restrain trt-de and price fixing
T.-hich allows inordinate profits or unfairly high
prices."
Our econonic philosophy, T/ritten into our st-atutes (3)
was one of free competition, without coopera.tion which might lead to
restraints upon business and comnerce. Altho-ugh the Anti-Trust Acts
were never completely and energetically enforced>(4) , consent-decrees
and injunctions existed at the tine of the passage of the IIIHA cover-
ing many industries and trades (5) . These bear testimony to the fact
that certain industries and trades, at least, felt the ajiti-trust laws
inadequate. Before the depression there were many stiggestions that the
anti-trust laws vrere a Procrusteaji bed riiich ill afforded needed ind-
ividual treatment to special problems(6). During the wsj these laws
received slight attention. The drive was to produce (7). How this wa.s
done, or hoxr the products v/ere rao.rketed mattered little, the demand
being so great. TTlaen our markets contracted, it was natural to desire to
continue or commence cooperative action to check the frantic efforts of
individual plants to weather the storm (8), Many of the ills of the dep-
ression ?,nd its continuaxice were laid at the door of the rjiti-trust laws.
General Jolanson, more responsible for the KI2A than any other person,
has forcefiolly expressed his vie\7s on this subject (9).
The task that lEA set for itself vras to complete sjid admin-
ister a body of delegated legislation more voluninous and more import-
ant in subject matter and effect than eve:- before undertalcen by an ad-
ministrative body in this (or any other En^-lish speaJ:ing) country. It
involved the definition and acceptance of major philosophies of social
and economic import. To intelligentljr and reasonably state such import-
ant policies a gigantic problem of fact-finding was created. It involved
more than the discovery of primary facts. It involved
3838
the analysis and evaluation of sucli f.-^.cts. The im-nort-.^ce of this
f-unction, rncl the crying need for an r.dminirtrr-.tive a^-rency a,nd ex-
perts to -terforn it, rrther th'^n the cotii-ts or the iG-rislative "bodies,
improperl-;' ea\ir'^ped as tJiey E.Te to rdeourtel;- "nandle such proDlens,
was fully recoz-iized hy those in hi.-^h pl-j.ces in IT.-LA. (10). The adequacy
of the "body created and the statute attempting to authorize it, from
the vieupoints of adxainistrative and suostantial "due process of la^"
concepts \.-ill "be the scoae of this -og-oer.
9838
• CHAPTER II'
THE THEOHY OF ADMI!IIST]RATI01I
I. SEPARATION OF OOVERI^KElITAL POWERS (l)
Many of the difficulties wliich administration encounters
arise from the "separation of povirers" doctrine. Although not as spe-
cifically recognized in the Constitution as it is in the primary laws
of some of our States (2), it finds support in the three fold divi-
sion of the governmental structure set up "by the Constitution (3).
Whether the fraraers were consciously following Montesquieu, the
British Constitution or the Colonial governments, it is accepted
that Montesquieu (4) gave voice to the doctrine which became par-
triotic loiowledge to school children, and revered by our lawyers (5),
It was this very reverence that has created much of the difficulty(5:i),
Not content with treating it as a fiction our jurists have frequent-
ly employed the theory'' in ways that nave caused great limitations
upon the natural trend of government, or strange contortion to achieve
the needed or desired results (6). It seems well-established that in
actual practice there has always been an admixture of governmental
powers - that is, no one division of j-;ovemment has exercised all
the powers analytically belonging to it under- the' theoiy (7). Leg-
islatures have as a matter of historical practice done Judicial acts
such as granting divorces (8), setting aside a decree of probate
and ordering;- a new hearing with liberty of appeal (which had not
before existed) be granted (9), declaring a person quilty of treason
and inflicting penalties cuid confiscation of property of persons de-
clared g-uilty (10), and confirming a doubtful title to land (11).
Although courts pretend to apply the doctrine to themselves (12),
they make rules for their ovm procedure (13) a matter conferred
upon Congress by the Constitution (14); they grant certificates of
naturalization (15), a function that seems administrative and one
not involving a "case" of "controversy" (16) as those terms have
been cons'trued by the courts (17). Tlie examples of Executive exer-
cise of both legislative and judicial powers are so numerous and will
appear so often an this paper that t.iey need no comment here. The
evidence indicates that the doctrine has never been realized in prac-
tice (18) in the iia.tional and state governments (19) •• Each depart-
ment inherently demands enough power whatever Its nature (20) to
carry out functions essential to the' preservation of its own integrity.
There has always been in our legal literature a recognition of this
admixture of powers and the political doctrine or legal fiction nature
of the theory (21). More recently there has been considerable criti-
cism directed at the reverence given Montesquieu's fiction (22) as
being unscientific (23), ir.Tpractical (24) and a mere political doc-
trine (25). It can be seen by study that the development of the
doctrine in this country has been strongly flavored by judicial re-
view; that it could have just as well developed along the lines of
the "political question" notions (26) as it has in other governments
(27). The burden of this theory in relation to the growth of Admin-
istration and Administrative Law will be considered shortly.
9838
II. GROWTH OF ADMIPISTRATIOE AND ADMINISTRATIVE LAW.
The use of the adninistrative technique has had a phenomenal
growth in the last half century (28). Up until then the
growth had lieen steady. With the recognition of the existence of
adninistrative law (29) came increased demands "by the problem of
modem society (30) for the use of administrative machinery (31).
Even when there has been frank hostility to this growth it has gone
on relentlessly (32). At present both in this country and England
this situation presents a major battleground for opposing political
forces (33).
The opponents of this phenomenon rally to their support
both the doctrinei of judicial review (34) and "separation of powers. "
It is urged that each division of government must exercise the powers
entrusted, to it aaid that this exercise can not be delegated (delegata
potestas non potest delegari) (35). Necessity has rebutted these
arguments by pointing to the practical advantages of adrainistrative
action (36). The saving of the legislature's tine is probably the
chief value (37). But there are other pressing reasons for resort
to the administrative device, such as the contributions which can be
made by the expert (38), the fact that the legislature is not in con-
tinuous session and its slow procedure, when in existence, which will
not meet many of the demands for sumr.naryor prompt action (39), and
the peculiar adaptability of administrative action to promote and pro-
tect individual and public interests (40). The result of these advan-
tages is a great mass of delegated legislation (41) having the full
force and effect of law (42).
Administration has grown up without benefit of Constitutional
recognition. It lias, therefore, been forced to follow a
pattern which made no place for it. Certain fonnulae and fictions
are employed to circunvent the doctrinaire difficulties. Adminis-
trative offices and many students feel it would be highly desirable
that administrative action in its proper spheres be free from judi-
cial interfcrenco. More respect and greater prominence would inure
to administration, and there would be a greater fruition of adminis-
tration as a useful public agency. Administrative finality must rest
upon one of two views, either that judicial review should not be had
of a fourth and equal division of government (43), or that government
is corrprised of tv/o functions: 1. representing the public will and
2. giving effect to the expressed will. Upon such theories it may
be reasoned that the judiciary should be no more powerful than the
executive or administrative.
III. DELEGATION OE POWER AND PINALITY IN ITS EXERCISE.
Despite the liampering effect of governmental form and theo-
ries already discussed, administrative legislation and adjudication
continue to grow paying lip service to constitutional doctrine.
The legislature can not delegate its legislative power but it can
cmplcy agents to find facts. It is in this f-unction of fact-finder,
that courts first consciously recognized administration (44). The
legislature declares the policy and the administration finds the
-s./,.io-
facts upon which the policy tioes into effect or to which tne policy
shall be applied, so runs the ti'aditional statement (^-5). If the
"details" to be filled in or the basis for deteriuinin^; whether the
statute shall apply are important enough there is really a delegation
of legislative power though it may be so trivial as to not excite the
court. In fact, the courts recognize tne delegation. They further
recognized that legislative or judicial powers softened by a "quasi"
may be involved (46). The delegation may be analogous to the power
the court exercises in cases before it, of statutory interpretation
which frequently may decide that the literal application of a statute
was not intended in certain instances or wnere the sts.tute does not
cover certain problems s'oecif ically that it does so by implication.
Either the advantages of tne administrative technioue or dissatisfac-
tion with judicial approach {'^17) must have led to the attempt to
use administrative agencies.
Tlie next step after the frank recognition of delegated power to
administrative agencies is to see what mea.sure of the finality desired
by these agencies is extended to their actions by the courts. The
traditional statement is that the adminiGtiative bodies being proper
fact-finders, their findings of fact will rot be reviewed by the courts,
or the courts will not substitute its jud^nent upon "nuestions of
facts" for that of the entrusted fact-finder (48) wita certain ex-
ceptions later to be noted (49). "Questions of law" have long been
the peculiar province of tne court (50), but as time v/snt on adjninis-
trative bodies decided questions of law before tlie problems reached
the courts. Often these questions were decided in a way that pleased
the courts. Tliere developed the notion that adiiunistrative deter-
mination of "questions of law ' vifotxld be "persu^isive" upon the courts
(51) - that is, the court would not dis^-urb t'le .-^.dministrative de-
cision as long as it accorded with the court's cv/n feelings. A
further complication appears. There is no clear cut distinction be-
tween "questions of law" and "questions of fact" (52). Often a pro-
blem, which at one time is a "question of law" to the court, will be-
come a "question of fact" to the same court at anot'ier time (53).
In questionable problems of tals character the court might trea.t them
as "questions of la,w," a thing auite easy to do; if it did not desire
to review or to change the deturmination of the aiiministrative body
these problems raiglit be termed "mixed questions of law and fact" (5".-)
and extended tae finality of "questions of law." This latter practice
is frequently resorted to if an allegation of frn-ud or mistalce is not
so clear that the court feels it shou-ld interfere (55).
Tlie sta,tement just made is couclied in the court' s terms and
approached with a view to what the Court says. Administrative law
is so new that we con not expect to find it an orderly system perfect-
ly described by the courts (55). 7/e must look at wiiat the courts do
in each field. This will be done later. First we must see upon v/hat
theories the courts review.
c:iaps;r hi
"' SEVIEW 3Y THE COURTS AlIZ SiJEC-U.;vIIIS AGAIiTST
A3USE OP ADI.:ii.TIST?:ATIVE TGii'ER
One of the doctrines of Znclisli lav.', most distinguishing it from
other systems, was long thought to afford rdequote protection to indivi-
dual rights. This was "the rule of law" (l). Its protection has heen
found inadequate. If an administrative official hy sumnary action does
$40,000 (or even $4,000) of damage a judgment may he forthcoming readily
enough, hut its collection will prove far more troublesome. It is urged
that Congress or the legislatures should reviev^ administrative action,
since it has given the mandate it should judge the desirability of its
administration. The practice, hnv/ever, has.heen otherwise (2). Some-
times the legislature delegates this check s-oecifically to the courts
(3), more frequently, this is not done (4). There are even statutory
indications that it is not desired (5). In England, where such statutory
statements are more corm-.on (6), this has "been a strongly contested field.
Alihoughx checks are desirable this does not iDOsit that administrative
iDOwer is greatly abused (?) .
It would be well to briefly survey the existing checks other than
those exercised by the Courts.
Aside from control 'oy the courts, there should be checks upon ad-
ministration from other directions. In as far as the chief executive
must acce-ot responsibility for the actions of administrative bodies he
should have a general control over their policy. Until the Humphrey's
decision (7a) it was thought that the removal power might afford such
control (7b). It maybe that the President does not have to acceTjt
responsibility for the actions of all adi.ai.iistrative 'jjoards. The Congress
must, however, be responsible for the poli^y of all administrative agen-
cies which it authorizes, if not their administration. Therefore, it
would seem that the legislature nrast deal v/'ith the problem of f.afe.gij'x.iXiS
assisted by the executive who, it is hoped, will be in harmony with it
(7c).
In England Parliamentary control over delegated legislation has gone
somev/hat farther than the control exercised by legislatures in this
country (7d) . There is the procedure iC.ovni at;, laying aji administrative
rule upon the table. Such rules and regulations Ic-id upon the table be-
fore Parliament may be disa.pproved by either house within a. certain period
(usually not over forty days of any session) . If not disapproved they
have the full force of law. Other tjrpes of ruler, and regulations require
a definite Parliamentary approval, by either or both houses, within a
certain number of legislative days. A provision that either h^use can
make suggestions to the body creating the rules is often attached to both
methods of control. Parthor than this, provision are frequently inserted
in statutes allowing rules to have fxill force until Parliament acts upon
thsm. Even if parlinent acts negativel;^ regarding a rule, any enforce-
ment of such a rule previous to the Parliamentary action is legal. Tliis
system has raised a storm of criticism by English lav/.yers who urge that
approval is made a mere formality, while allowing the stamp of Parliamen-
tary authority to rest upon the- regulation and so preclude control by the
courts. It is the contention of these men that there is no practical
9838
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responsibility. The merit of their ar^-uments is not a s-object for con-
sideratinn here. It is merely intended to ^oint out that there should
"be simple, efficient safeguards to -preclude ahuse-s of --^ower.
Other controls lie in the .mblication of rule- and the control over
budgets and r,jnropric.tions. One of the most effective moans seems to he
the system of "interpellation" of lainisters to v/hich -j.-reat resort is had.
Pointed questions unon possible shady practices or questionable adminis-
tration, brini^jing with them the britght li;:;ht of publicity, vail £0 far
to remedy abuses of pov/er.
In most English spcaicing countrie-:; the historic controls of legis-
lative power over apprODriations , legislative -oov/er over personnel exer-
cised through imoeacliment process and the ri.^ht to confirm appointments,
and the pov.'er of investigation are in most common use. The first tifo
methods are unwieldy and ineffective as against i.iinor abuses of power.
The process of investigation is analogous to the English system of
"interpellation", but is resorted to only snasmod.ically, and then usually
only in the most odious cases.
Aside from these controls, little has been done in the United States
to r)rovide safe.Taards against admiiiistrative abuses of power. Some five
years ago llorth Carolina established a Director of Local Government,
"v/hose duties v/ill be to standardize and supervise the business methods
of counties, cities and towns." (7e) This is not precisely in point as
a matter of control of administrative action, bvit it is referred to since
there is a great analogy between activities of mimicinal cor^io rat ions
and those of administrative bodies.
New York has a great amomt of delegated legislation, but no control
over it (7f ) . The State Legislative Reference Librarian states regarding
this -problem, "As I ijnderstand it, the enforce;.ient of rules or orders
made in any state department is left wholly to the adimnistrative officer
of such department, end the Legislature and Executive appear not to in-
terfere in siich enforcement, after the authority has been once granted to the
fjtate DcprTtnlont." Recently, in Hew York it has even been proposed
to clothe administrative bodies with greater rule malcing powers Y/ithout
any snecific legislative check over the exercise of these powers.
In I/Iassachusetts all departments, boards, commissions or officials
making general rules or regudations must file copies with the Secretary
of State, and rmist secure the approval of the Governor and his council
(7g). The Secretary of State i-rust file and index such rules and regula-
tions, and make them generally available. There is an appeal open to
citizens to the Governor and his council on questions of authority and
jurisdiction which does not preclude other legal redress. Annual reports
must be iiiade to the Goveraor or to the General Court {7h). In most cases
such reports are made to the latter. Further than this, I.iassachusetts has
not gone, although the problem has been given serious consideration.
With the exception of Wisconsin, other reg:ulations of administrative
law making are unimportant. The most widespread agitation in any strte
for safeguards qDpears to have existed in Wisconsin. Wisconsin has a
system of "interpellation" modeled upon the foreign systems (7i). This
statute, however, has only been used three times, once in 1935 when the
9838
-13-
Legislature, neeting in Joint session, called "before it the members of
the Board of Control, T.-hich administers all laws relatin^^- to the state
charitable and penal institutions. So Liach time wns sioent in controversy
over rules that no extensive 'iiuostioning v.-as had. The statute was la'^st
used before this in 1935, so it can be seen that escoerience under it does
not testify ac- to its possible value. A statute -massed in 1931 created
an Executive Council of the Governor. This body was authori2;ed to in-
vestigate the activities of quasi legislative agencies, and ueizo reports
to the Legislatm-e. This seems to be, ho:7ever, only one of the minor
functions of this council. The nre.-ent Governor and his predecessor ".ii'ive
not appointed all the members provided by the statute. The council it-
self has not yet been called upon to perform the f-cuictions for which it
v/as created.
. This review indicates that little has been done in this country
along the line of developing safeguards aiid controls in the field of ad-
ministration despite the fact that there seems to be a vital need for
action uoon this problem.
Although the legislature may choose between conflicting theories
(8), the courts are reluctant to allow such -^ov/ers to administration
apart from the supervising check of jtxdicial review (s). In the ;!3ast
courts have usually allowed Adrainistratlve bodies to .exercise such power.
Recently, this has been objected to, if the range of choice is too large
or involves subject matter of too great imoortance (lO). Judicial review
in this country extends to statutes; in Sngland it extends only to admin-
istrative action or by-laws (H). It is not clear that it alv/ays extends
that far (12). From a -oosition of coiiparative inferiority to the legis-
lature (13) our courts have risen until they no\y exercise review of legis-
lative and administrative action uiader a nuiaber of theories.
The "natural" or "higher law" bases of review are of the greatest
antiquity (l4) .of any of the courts' auoroaches. In early English law
Bracton declared that the barons must T>ut "the bridle of law" upon a ruler
acting outside the law's Tsreceiots (15); again there is a reference in
Magna Cliarta to higher law (lo) ; and there is the well Imov/n attempt of
Lord Coke (1?) to establish judicial review. The doctrine finds its first
utterance in the Supreme Coiu-t in the opinion by ilr. Chief Justice Chase
in C alder v. Bull in 1798 (18) . The doctrine grew and ripened into an
accepted basis upon which to limit the poY/cr of government (19). It has
meant that common law precedents may be employed (20), or that the court
wou.ld rely upon its own feeling of what, it felt was tmiversally considered
just or "honest" action (2l). It is in this latter aspect that the doc-
trine has been most severely criticised. (.32)
"Natural law" theory has grown into, and has been greatly absorbed
by, the "due process of law" concept (23). ?or a considerable time after
our constitution was written "diie r>rocess" of law had little significance
save procedural (24). This vfas true until as late as 1870 (25). From
humble origin (26) ,- administrative procedure (27) - due process has be-
come an instrument v/hereby statutes and adiriinistrative action are over-
ruled as having no proper constitutional basis or unreasonableness (28),
The doctrine received- a casual reference in 2red_Scp.tt v. ^ndford (39) ;
it next was broadened in the Le^al .Tender C.ase_s (30). Despite later use -_
of the doctrine of "natural law" (31) the due process concept is now
9838
-14-
regarded as firmly estalDlished (32) even "by these disa-o-'-iroving of its
extent.
That the relationship hetv/een the t\70 is close is apparent from the
reference "by judges to the doctrines as "being identical (33). Due pro*-
cess of law nov; gives the courts power to introduce limiting principles
of taxation, formerly one of the chief problems of "natural law" (34),
to conderan rate schedules as unreasonahle (35), and to condemn other
social and economic legislation upon the same "basis. This great growth
has "been the cause of much heated de"bate. The late Justice Holmes ex-
pressed his views upon this su"bject strongly and often. Dissenting in
Baldwin v. Kissouri (35) he said:
"I have not yet adequately expressed the more than anxiety that I
feel at the ever increasing scope given to the Fourteenth Amendment in
cutting do\7n what I "believe to "be the Constituional rights of the States.
As the decisions now stand, I see hardly any limit "but the sky to the
invalidating of those rights if they haiopen to strike a majority of this
Court as for any reason undesira"ble. I cannot "believe that the Amend-
ment was intended to give us carte "blanche to era'body our economic or moral
"beliefs in its prohi"biticns. "
Many persons have felt that the concept is an agency to maintain
property interests (37).
That this type of judicial control is the common tendency of courts
can "be seen from the fact, that, although England is said not to have
judicial review, and certainly no "due process of law" concept such as
■is known to us (33), still English courts have a. strong disposition to
review administrative action, even T/hen clothed "by statute vdth finality,
upon any of several theories (39). Of course, the English courts do not
go nearly so far as ourt and at times exercise no check (40);. The signi-
ficant thing is that there is in existence as a characteristic of courts
a disposition to control administrative or legislative action. As we
shall see due process of lav'T has two pro"blems: 1. Can power "be exercised?
2. Has it "been exercised properly? These two questions to test adminis-
trative action have "broad pov/ers to shape our course of government (4l),
Without either. of the two theories discussed, the coixrts have a
check in the interoretation of statutes and the doctrine of ultra and
intra, vires. Courts in the exercise of their normal duties are called
upon to avply sta.tutes or other law to the cases "before them. Wherever
there is aiibigaity or conflict as to m«3.aning, and this is the stuff of
which lawsuits are made, the courts must intemret the law (42). Although,
there is no express Constitutional prohi"bition to the giving of finality
in the determination of certain disputes, to other agencies than to courts,
this has not "been done without the courts' approval. Questions of law
'and the interpretation of statutes the courts have successfully maintained
are their exclusive "bailiv/ick. This newer of interpretation has "been
'often used to achieve results, not desired "by the legislature (43). It:
is o"bvious that the power of interpretation is tremendous. The likeli-
hood that the exercise of such power \;ill be collored by the personal
philosophies of those who have it, is even more apparent.
9838
-15-
This doctrine of "interpretrtinn" is mother of the Ultra and intra
vires concepts. A 10i:;;ical phase of str.tutory interpretation is that of
"determining the limits of authority and jurisdiction conferred "by parti-
cular statutes. This action ■becomes a lii.ltation upon "both legislative
and administrative action (44). As a nuostion of -.-lov.'ers and of delegar-
tion of --.owers either "ondcr a written or unwritten Constitution the
necessity of interpretation places great influence and control in the
hands of the courts. That there should be such a restraint upon the
partis;m desire of the Administration to enlarge its ovrn pov/ers is ad-
mitted "by students and advocates of administrative action (45). TOiere
the proper (under our accepted viev/s on "judicial review") limits of the
courts restraining power end, and tl>e -oositive injection of the coiirts'
oval views hegin is a d.ebated -orohlem that looms large in the administra-
tive field (46)..
In the United States the ultra yive^ doctrine is hound up with the
prohlem of jurisdictional fact (47); it is in England that the phrase
Tiltra vi^eg. has "been most considered (48). A hrief glance at the English
prohlem will point the consideration of jurisdictional fact. The so-
called "Henry Till clauses" (named from a hroad statute of similar
character In the reig-n of that monarch) provide in effect that r"ales
putting the statute into effect "shall not he questioned in any legal
proceeding." Stated differently, the rules shall "have effect as if
enacted in the Act" (49). Without the assistaaice of the open doctrine
of "judicial review", in vogue in this country, the English courts faced
a ticklish ^irohlem v;hen the first cacer; under such a statute arose. The
first and a leading case is Institute of Patent A^-ents v. Lo.clavood (50).
Lord Herschell, L. C. is plainly trouDled. The most difficult situation
he envisages is that of the administrative rule under the statute being
contrary in effect to the statute. ?.'o-ald this mean that the adininistra-
tive i-ule having the effect of a latter statute would override the sta-
tute? As the case did not involve the point, whatever might he said
concerning it was dict-ajn. As such, it is far from lucid. Lord Ilorris
(51) exoressed the o-oinion that the cohort shorJd test for ultra vlres^
This latter view seems to have ^Drevadled. ITlicn it became obvious that
a statute might be grossly contorted the courts have felt a test of
ultra vires to be desirable (52). This test was used in "Ex parte" Yaffg.
(53) virith the indication that an English judicial review, more limited
than our ovm, now rests established upon the theory ixiteriTretation ajnd
the right to test for ultra - intr.a vire.s (54).
The problem of jurisdiction is merely another form of ultra - intra
vires... And as the Constitution is merely a' I'higher statute," it can be
seen that once judicial review and the pov;er of interpretation is estab-
lished the Courts feel they can review to see if either the statute or
the Constitution provide a basis for the powers attempted to be exercised
(55). Should this test of jurisdiction be limited to the Courts' de-
clared province "questions of law?" The indications are that' the Courts
will not be thus restricted. The facts upon which jurisdiction is as-
sumed - the "jurisdictional facts" - will in proper instajices be deter-
mined by the Courts. This may be because jurisdictional fact often is
used "in the sense of the meaning of the v/ord or terms into which those
circumstances (proved circuiiistances which are another sense of the term,
"fact") are summed i\p for the purpose of attaching legal consequence to
them" (56), It is this dual sense of the word "fact" that provokes much
9838
of the controversy. Pro "bat I7, the most satisfactory soliition vrould he
to allow the adi-ninistrative agencies to determine the "proved circiimstances"
and allow the legal consequences to be decided hy the Courts (in those
fields where they invoke the doctrine) either administrative or judicial.
This would he only a compromise and subject to much attacl: as such. The
problem looms so large as a device of judicial review of administrative action
that its use will be further examined (57),
A closelry related doctrine is that of "questions of law" which, as has
already been indicated, the Courts have staked out as their pecu].iar pro-
vince (5S). The ambiguity (59) of the terms "law" and "fact" are such that
great confusion eiiists (60). It is evident that there is -great overlapping
that the same question may variously present "law" or "fact" to different
courts, or even to the same Court (61) . The difficult'/ is illustrated by
the Gratz case (61a). It has been variously urged that the question of
whether a. tying contract is an unfair method of competition is one of
"law" and that it is one of "fact". The courts, in mails'- fields, are reluc-
tant to forego the final word on problems such as interpretation (62) so
they actually determine raariy questions of ultimate fact (63). It is doubt-
ful if any workable distinction or separation could be found (54), so we
may errpect the Court will have open this readj.' a-venue of approach. The
ease with which the Courts utilize this approach is seen in fields of dis-
puted social policy (65) or '.fhere the statute uses such an indefinite stan-
dard s.s "unfair competition" (36). Like use has been made of the concept,
as a colleague to "jurisdictional fact," to check the harshness of alien
determinations (67). Prom this eniimeration the usefulness of the concept
is apparent.
An early doctrine, in use before the phenomenon of great administra-
tive action was observed, is that of discretionary powers and ministerial
duties. It is well stated in the early care of Decatur v. Paulding (68),
decided in 1840. The Court held that the refusal of a pension to the widow
of Ste-ohen Decatur involved the exercise of discretion upon the part of the
Secretary'' of the Navy. The basis for the decision seems to be the feeling,
that a choice in the judicial sense was involved, and that such a choice
made in good faith, should not be disturbed. It should be pointed out that
the Court expressed a willingness to overriile the Secretary' s decision if a
wrong decision of law had been made. The exercise of discretion will not be
disturbed by injunction or mandamus. A failure to act may represent the
conscious choice not to act (69); while mandamus will lie to force the per-
formance of ministerial duties (70). Need of choice and freedom from judic-
ial review in the fields of "narrow review" (71) still exists (72) althotigh
the doctrine is little mentioned and has become dwarfed by other forms of
judicial control.
A new and subtle means of review lies in the Court's treatment of
questions of evidence. It may be that the court is attempting to under-
stand the administrative problems (73). The judicial technique, in so
trying to appreciate the administration's position, calls for a full consid-
eration of the evidence. The next step, and one often talcen, is for the
Court itself to evaluate the evidence (74). In a large percentage of cases
v/here adjninistrative orders are upheld, the Court does so, only after full
consideration of the evidence (75). It is of course natural to the judicial
techniq^ue to so consider evidence, but sometimes the purpose may be definitely
to limit administrative action by resort to a statutory implication (76) or by
-17-
sorae notion of the Court 'r, so a-.-j. to ','liat evidence ou{;ht to be control! ins.
Altliour;h in some of the earlier cases, especially those involving
the discretionary concept, there \;as often no evidentiary requirement, it
might he said that evidence is usually required to support any positive
administration action (77). The er^^lanation of the "discretion" cases
lies in the fact that some extraordinary legal remedy was sou^Thf which
the co^u-ts \7ere reluctant to give, coupled \7ith a feeling that the act
was judicial. Where a reasonable choice could he made the courts hesita-
ted to use the injunction; and where action raifrht result in' leaving the
applic?-it in the same position, the courts saw no advantage and Dnly a
waste CI effort and prestige in using mandamus. Where the statute re-
quires a hearing: an order wholly unsupported hy evidence is of no effect
(78). Certainly, where there is no basis .dn evidence the action will be
closely scrutinized, and upon a proper showing an attacking party may
have it reversed (79). In a recent case decided' in 1933 (80), where a
Virginir. statute authorized an administrative official to order grade cross-
ings eliuinated, when in his opinion, it became necessary, but providing
only for a. hearing if the railwa;^' was dissatisfied with the order, there
was held to be a denial of due process of law. The court apparently re-
lied upon the' necessity' that adrinistrative findings be supported by evi-
dence (81). The requirement as to the amount of evidentiary support varies.
The statements of the court are differently phrased in terms of "some evi-
dence" (82) "evidence" (85), and ."substantial evidence" (84) as- being neces-
sary to support an order. Usually, where there is "substajitial evidence"
to siroport the order, or it is not mcjiifestly against the weight of the
evidence, it will not be molested (85). .Statutory requirements as to evi-
dence vary from where the sta,tutes is silent to vrhere it may detail wha^t
evidence should be present. This seems to have little effect upon the
courts. It is doubted if a statutory statement that there need be no evi-
dentiary basis would meet judicial requirements of "due process of law."
In cases where the evidence is abundant coui'ts do not care to review.
In cases where there is none or tlie interferences are absurd there is little
problem in the courts' review. It is in those doubtful cases where the
evidence is "meager or unsatisfactory" that the difficult;;- arises (86).
Strictly speaZring, what basis of judicial review of evidence exists other
than the residuary "due process" concept is hard to determine. Why final-
ity as to fact, even as to the weirht to be given evidence, ca.n ajad should
not be determined by sji administrative body is difficult to see. It vrould
be unfortunate to redu.ce our "adiiinistrative- tribunals to mere magistra.cies
for the condr>.ct of hearings prelirdnary to judicial consideration" (87).
On the other hand, arbitrary and capricious failure to act upon evidence
or actin^3 contrar-^ to the obvious signif icaaice of the evidence, should be
as fully subject to check as is any administrative procedure.
Jurists feel that a ."-^rave responsibility is intrusted to administra-
tive agencies (88). By teraper and teciinique these agencies ma^'- not be as
considerate of individual rights as the courts. In the requirement that
there he a basis in evidence for the action taJien iii the courts merely hold
another check. The requirement will vary depending upon such influence as,
whether the subject matter is considered governmental or involves inter-
ference \rith individual rights, the historical nature of the field, the
care used by adjninistrative agencies in gathering and analyzing facts, as
well as rianjr other factors.
In addition to these theories '.jherety revievr is had by the Courts,
it should he considered that there are certain restraints im-oosed unon the
courts either by themselves deliberately'- as a matter of 'oolicjr or through
the force of circumstances. There is the doctrine that an administrative
remedy must be exhausted before a-ot)lication is had to the courts for re-
lief (89) • This is said to a-o-oly in some cases to aoolications for a
rehearing or a modification (90) or an original hearing (91). It is
esTDBcially an'olicable to requests for the issuance of extraordinary
legal remedies, where any reasonable administrative remedy remains
available.
The doctrine of "political questions" furnishes another self-
limitation uoon the courts (92) which is of long standing (93) • It
has TDarticular significance in international relations (9^). questions
of grave executive ^jolicy, and the nroblem of whether a State is
maintaining a "re-oublican form of government*^ (95)- Another limi-
tation lies in the constitutional s'^ecif ication that "the judicial
■DOwer shall extend to all cases - - - /and/- - - - controversies" (96).
It is under this clause that the courts may decline administrative
functions (9?) and refuse to give declaratory judgments (98). .Taile
so limiting themselves the courts .do not hesitate to review action
taken under formulae already considered.
liThat is the value of this nrocess of judicial checks uoon a
field otherwise greatly inde-oendent? There are many advocates of the
administrative technique, who see no advantages, and feel that un-
sym-oathetic courts are merely sabotaging a rival. But, it is wise
to remember the extreme youth of the extensive use of administrative
government. It is quite "orobable that there are as many inconsist-
encies a.nd injustices in the a.dministrative -orocess as there are in
the courts' review. True, administrative law is contradictory, un-
systematized and bewildering (99). Administration is also new. It
is without the experience of the courts in safeguarding individual
rights. Policy often dominates so that administration may overlook
individual injustices and its own acts of unfa.irness (lOO). And, al-
though, many of the courts' restraints are highly desirable, guiding
and tempering administrative action into its highest utility, the
courts' very technique often unfits them to exercise the great control
they do. The answer to the inadequacies of administration does not
lie alone in the courts (lOl). Yet in this country by subtle means
and often means most obvious the courts do f-shion and guide adminis-
trative procedure and nolicy (l02). New methods and devices are
needed to meet new situations. The use of specialized courts is grow-
ing (103); there is too, a growing demand for declaratory judgments
(lOU). Des'jite this need, we must not forget the value of a re-^sonable
judicial check. Such a check brings the legisla.ture and administration
closer together (IO5). An understanding of the peculiar problems of
the other is of extreme value to each. The judicial process has been
a powerful arencv in giving substance to the administrative technique;
it has made the development of this new instrument of government a
more orderly growth, a more useful and resoected form of government (106).
This review has not been made for the purpose of praising or de-
nouncing judicial review of administrative action. There has been,
however, an attempt to carefully point out both the advantages and dis-
advantages. The purpose of this consideration has been to point the
problem — to show the gantlet of oossible judicial reviews (as stated
983s
by the court?) that the action of a ne\'' administr- tive arency must run,
A strteraent of these formalpe of reviev ir, not enough to give
a loro-oer TDers-oective. It is necessary to see ho-7 the courts aToly
their review to the vprious fields of -^dministr-tive action, to ob-
serve vrhat circumstances seem to influence the -i^ction of the courtSi
That will be the burden of the next cha'^ter.
9S3S
CHiPTEH IV
ADIJIi'IISTR.'LTIVS FIUALITY AID THE CASE[
I. IIAPJ.O^ r^VIE7 (1)
Administrative activity in the "business of government has
"been variously classified. One of the most useful classif ic?.ctions
for Q-ijtx purposes is that of Professor Dickinson (2) dividing it into
three classes: 1. The individual seeks o. privilege; 2. The govern-
ment performs a "business; 3. The governinent performs a necessary funct-
ion. There are other classes of adxiinistrative activity. A quite import-
ant one - the governraent seeks to regulate private "business - iTill "be
considered in a follOT;ing section. It is this class, possi'bly coupled
with a new one - •'-.'here the government cooperates uith industry in its
self-regulation - \7hich is most important in this study.
TThen the government is engaged in a function inherently'- and
historically necessary, the courts are reluctpjit to distur"b adminis-
trative action (3). For efficiency, a"bsolute control by the government
of its officials and employees is necessary (4) . Salaries may "be re-
duced "by Congress without question (5), except those of judges of
"Constitutional Courts" (6). The removal and appointive power, until
recently (7), has heen free of judicial restrictions, even where an
employee was dismissed so that a political de"bt could "be paid (8), or
where the statute (9) only specifies removal "for catises prescri"bed "by
law" slter notice and hearing, and the President removes without hear-
ing or specification of grounds (10). The narrow review rule is close-
ly followed in this field upon such questions p.s inefficiency, incompet-
ency, and interdepETtmental disputes (ll). That t"he courts are willing
to give great finality to the removal power 'over a subordinate officer
as necessary to the efficient adjninistration of government was indicated
"by the Oregon Postmaster Case (12). An even more significant case is
the recent 'Humphreys decision (13), refusing to extend the doctrine
to approve the president's removal of a mem"ber of an independent "board-
the Federal Trade Commission. Whether the Commission is a legislative
agency or, an executive one "because of its administrative duties is not
clear. The court in the Humphreys case pro"ba"bly operated upon the "basis
of the former concept. The suggestion is o"bviou3 that there is a limit
to executive necessity, despite its recognized supremacy in internal
matters.
In the administrative affairs and deter:.iination of the War
and Navy Departments great finality is also extended, it "being felt "by
the courts that "any other view might tend seriously to em'barrass the
work of raising an army." (14)
The same line of decisions found in the removal power cases
is followed in regard to officers of the military or naval service (15),
9838
the courts explaining tlir.t there is no verjtcd interest in, or contract
right to office (16). Lil-ev/iae, revie-:/ cL" nilitp.ry lav/ -under the "due
process" concept is si:.iilarl7 nariOT7.(l7)
U.S.\'. Crimaud (18) indicates the gre.-'.t extent of delegation
of power and administrative finality allowed the government in making
rules and regixt, tions to protect its own property. The making of rules
and regulations vmder a vague statutory r.ts3ida.rd was not thought impro-
per, nor did the fact that a viola, tion of such rules and reguJa. tions
was made a penal offense oy Congress cha^n^e the situation. The language
of the case is "broad. Limited to its peculiar facts, it is merely a
precedent for such action in the limited field of the government reg-
ulating its inteD:-nal affairs, or its own property.
Another essential function is tlia.t of taxation. Here the
government comes moi^e closely in contact with its citizens than in any
other field of administrative action considered in this section. The
leading case in this field, and protahly the leading case for the narrow
review theory is Iiiurray's Lessee v. Ho"boken Land a,nd Improvement Company
(19). Here it was held that the issuance of a distress warrant involv-
ing a sumireary proceeding, under statutory aiithority, hy the Treasury
aga.inst a delinquent collector, wa.s not a deniaJ. of due process of law.
The court "based its decision upon the historical fact that such pro-
cedure was used inlEngland in tare matters and had "been used in the
Colonies (20) . Axs- additional fa-ct that must have veighed heavily upon
the court was the then recent scandal of a large embezzlement "by a col-
lector of the Port of New York. In addition, the practical needs of
government for revenue are such that it wcijld he highly impracticaJ to
stop this life-hlood of government, merely to give the taxpai.yer a right
to protest. A hearing can he afforded later. Interests must he halanced.
Here, the government's far oiit-weighs the i-.dividual ' s interest (20a).
The case, also, is famous for the classic statement of pro-
cedural diie process requirements in the nrri-ow reviev; field;
"For thoUfgh, 'due process, of la'^' generally im-
plies g,ctor, reus, judex, regular allegations, oppor-
tunity to answer, and e. trial according to some settled
course of judicial proceedings, yet, this- is nPt
imiversally true." (21)
The doctrine of narrow review is applicable to procedure and
to the exercise of discretion in construing a statute. In the early
decisions and some of the present cases (22) the discretion of a high
official, such as the Secretar;'- of the Trea,sury, in tax matters was
not questioned. Ilore recently'- where decisions by, such an official in-
volve substaJitive principles of general importance the courts have
exercise a considerable mea.sure of control (23). This control is ex-
ercised in terms of interpretation, and not of "due process of law"
which in this field is restricted to procedure. It is not used to the
same degree that review is in other fields of social and economic policy,
9838
-22-
nor is it fo-und in cases vrhich. ua;' adve:"sely ajffect individuals "but do
not lay dorm statutory interpretations of such great importance in-
volving de'bata'ble f isca,l policy (24) . ilarrov/ review in this field
seens to uean tho.t only arbitrary, fraudtilent, or capricious action
i.7ill te questioned, nith the exception of certain important questions
of general and substantial character r/hich nay oe considered as proh-
lejQS in statutory interpretation.
Customs deteruinations are s. particular class of tax matters.
They involve private property/, often of substantial value. In addition
to .the tax character, the government's continuing policy of dis-
couraging importing has prohahly heen of considerahle force in es-
tablishing narroT,7 revie^"' here (25) . Erroert knoifledge is also invoked in
the evaluation of goods. (26). The courts have no desire to involve
officials in "inextricahle confiision" (27) "by intrusion into this field.
Despite the narroi? review generally/ accorded to the customs decisions,
customs officers are not allowed to classify articles under their
statutory heads. This the court hcas done itself in some cases, while
in others the question has heen given to a jury (28) . ■ The courts have
kept open the door of possihle review li'- such qiialifying statements as-: ;
"TJiiile the general rule is that the valuation
is conclusive \ipon all parties, nevertheless
the appraisement is svihject to he impeached \7here
the appraiser has proceeded on the wrong prin-
ciple, contrary to Is.w or has transcended the
powers conferred hy statute." (29)
Tiie courts are hesitant to use sucii "bases unless the equity of the
situa.tion clearly demands it.
Procedural reqtiireiients p.:.-e quite lax. "Carelessness or ir-
regularitj''" "by officers will not open the way for judicial revie^-' (30) .
The procedure descrihed in Auffmordt v. Heddin (31) illustrates the
informality' and laxity of jproper procedure in this, field. 1. The
importer or his p^-ent r/ere excluded from the rea,ppraisement . 2. There
was no opportunity for the importer to support his oath or entrj-, or
to confront opposing witnesses "b;^ testimon^r in his own "behalf. 3. No
opoort^onitj'' was availa'ble to sift the evidence openly or secretly heard
in opposition to the importer. 4. The iijporter was not permitted the
aid of counsel. The co-uj.-t did not condemn these practices. "The pro-
ceedings for appraisal must necessr.rily he, to so .le extent, of e,
summary character," it said (32).
^ere the government extends a privilege (35) it does not meet so
msjiy citizens. Usually, property interests are smaller, "Private
rights" are little affected. The demand for review is, consequently,
not great. Ilarro^' review is the esta"blished doctrine in the field of
land, office determinations (34) . I'andamxts and injunctive remedies are
greatly restricted (35) . Even an interpretation as to what is "vacant
land open to settlement" given "by the department while it had control
over the su"bject matter, i.7as made final, \7hen "brotight up in a pro-
ceeding for mandajnus (36). Here, too, procedural requirements are
lax. In Buri-ie v. Southern Pacific RR Co., (37) the court said that a
decision of the Land Department made without investigation or hearing
9838
as to lands knovm pu'blicly to "be of a inine-;-?,.! character is irre^lar,
"■but as it is the act of a lejalij- constituted trilDiuial and is done
cithin its j-urisdiction, it is not void vnC. therefore passes title."
Great finality is f^iven to finC.inf'vs of fact (08). It is interesting
that facts suo^-osedl^'- finally deterrained are open to direct attack "by
the government, \7hic]i ccn sue to cancel a patent issued "by it (39),
altho'ogh aji attempted cancellation, "by action witliin the department
without resort to the courts, is of no effect. (4-0). In addition to
reviei' upon the department's application, a rovicu is sometimes given on
groimds of such mistake or fraud as to prevent a full presentation of
one's case - the latter lieing really a proced-aral safeguard (41). Such
revier: can not 'be had in collateral proceedings such as ejectment.
Determinations are a^osolutely final against such attack (42).. An
improper applice.tion or a misconstruction of t?ie la^T are grounds for
review (43) . The courts determine jtirisdiction if an attempt is made
to patent land, having certain disahilities making it not patentable,
and rill hreaic the force of the patent (44). If two authorities corjflict
as to jurisdiction the court 'ill determine the natter (45). The in-
dications are that the courts will allow much lee^Tay to officials upon
such questions unless there is substantial dovht. Heath v. Wallace (46)
illustrates this. Here, althoi\_;;;h the courts upheld an administrative
finding as to the jurisdictional fact of whether lands "subject to
periodic overflow" v/d'e "swamp r,nd ove""floifed, " it c!-id so beca,use it
felt the question resolved "itself into one of definition of r-ords or
terms, more than one of interpretation of a statute," said for the more
significant reason thrt it thoiyfiit the ; interpretation issued \7as a
proper one .
There is little need for extended review of cases in analogous
fields. It is enoug;i to point out that n:a-row reviev^ exists in fact
in such fields, althof "ih the courts by their lajiguage nlxiays reserve
an avenue b;/ which relief may be extended to chosen cases. In the
pensions field, we lipye already considered the ea,rly case of Decatur v.
Paulding (47). The field of patents is also one of narrow review (48).
The same seems tr'ae of the regulation of radio broadcasting, despite
the fact thrt iv2.1 statutory review is provided, where a grant is to be
made (49) . This does not seem the case wliere an existing license is to
be cancelled (50). Other cases involve such problems as granting liquor
licenses (51) and allowing the tise of a trade-n,-uie iinder the Meat In-
spection Act. (52) .
The im:'-igration ca.ses (So) are an important field and the unusual
treatment the^r have been accorded demands some consideration. There is
involved a delicate problem of internati-n relations, a field which the
courts have often been reluctpjit to touch (54). Tearing that they
would be sv/amped by a flood of alien cases, the courts extended finality
even to the administrative determination of the jurisdictional fact of
citizenship, in the \/idely discussed -Ju Toy case (55). Finality as to
decisions of other facts was -onquestioned in the early cases (56). An
analysis indicates some subtle distinction between exclusion and ex-
pulsion. In the latter the courts have been more prone to interfere (57),
This same basis has been used to avoid the Ju Toy decision in the case
of a person arrested -'ithin the territory of the United States (58) .
As time has gone on the courts hs.ve overcome their first skittishness
and have found more reasons to demand th'^ir intervention. Alien
9838
procedure vas h.c.rsh and open to unf avorclDle criticism (59) . The pro-
ceduroJ. due process claaise vra.s iiore closely interpreted (50) . The re-
quirements of evidence have "been tightened (51), and questions which
might he said to involve questions of either lavf or fact a.re treated
as questio IS :-)f law for the court's interpretation (52).
Governinent is supplying puhlic services is t3Jcin;r on a nevr t3'pe
of duties. The extension of governnent into such functions has heen
continuous (63) . Our postal service (once carried on as a private
"business), until recentlj'' furnished one of the fe\7 exsmples of such
activitj'' on the part of . the federal government. The inportance of
administrative orders (64) to the efficient conduct of the "business is
so great that the courts are hesitaint to interfere in most cases (65).
Decisions "b;' the acljninistra^tive officer of questions of fact and "even
upon mixed questiois of law and fact, or of law alone "v.dll not or-
dinarily "be revievred" (55). The court in the case, from which this
language is quoted, sxiggested that it had the power to review, "and
will occasionall;/ exercise the right of so doing." Here as in other
fields, cases involving almost identical questions will "be treated
differently. The determination that "faith healing" claims were fraud-
ulent, the court held to "be a matter of opinion not supporta"ble "by
evidence (67) (although if medical questions are presented to the court
it will allow a jury to decide on expert testincny), while a claimed
panacea may "be declared fraudulent upon evidence thought "by the court to
"be su"bstantial (68).
The "basis for most of the early cases and a criticism has "been
voiced "by Llr. Justice Holmes;
"The decisions thus far have gone largely, if not
v/holly, on the ground that if the government chose
to offer a means of tr.ansportation which it v/as not
bound to offer, it could choose what it would trans-
port; r-thich is well enoiagh when neither law nor the
habit that the government's action has generated has
made tiaat means the only one . But when ha'bit and law
com"bine to exclude every other, it seems to me that
the 1st Amendment in terms forbids such control of the
-QOst as was exercised here." (69)
In cases clearly involving a valuable p„nd substantial privilege
such \s the second class mailing privilege, the courts in normal times
(70) "/ill probably exercise a more careful scrutiny (71) of adjninis-
trative action than in routine matters (72).
This surve" shows that narrow review is no precise doctrine,
easily stated and completely followed in any field, Ea.ther it repre-
sents an r.poroach talcen by the courts depending upon facts peculiar to
narrow revie^■ fields generally, to some particular field, or even an
individu£:l class of cases. Rules for the exercise of adjninistrative
povrer may lihewise vary (73). In narrow reviev/ fields there exist such
statements by the courts, that the]- could, if desired, exercise as
effective a check as they do in the broad review fields. The important
fact is, they onl-- upon rare occasions of individual hardship is such
exercise had,
9838
-25-
II. BHOAD ?j;VIEl,7
itecontly,. government hr-s pushed nore r,nd more into the regulation
of private "business. An entirely nexj prohlen hai; "been presented to the
courts. Before any reasons are -offered fo:. the courts' attitude as
shown hy the c^.ses, the tv/o most important federal fields should he
considered. Such re^^rlation presents unxij difficult prohlems in
administration. He:;ulation should not wipe o-at private profits, if
State regulation,- not State ovnn.ership, is the desired aim of the
statute (74) . Balanced against this must he the puhlic interest he-
hind the statute. Out prohlem is not one of powere, hat rather, of
such fairnees, as tne courts -.'ill aj^prove . Wlien administrations have
failed to meet the end desired hy the legislature, or have causes in-
dividual injustices in effecting the purpose of the statute, the co-arts
feel that tnere is cau.se to intervene (75). The prohlem of such regu-
lation in fields of disputed social and economic policy reauire de-
cisions upon questions of fact not susceptihle to precise determination.
The adequac;'- of service, the reaconahleness of a rate, the unfairness
of a trade practice, involve opinions nhich may vary as the social and
economic philosophies of these entrusted -ivith their determination vary.-
Such prohiems mi~ht he called "nixed qtiestions of larr and fact," hut
this rrould he -of little help, for this category seems to have heen
created for such prohlens ^ihich the courts do not care to handle (76).
The early history of the I:aterstate Commerce Conuission is one of
heing cheched and hr?jnpored hy the courts (77). The courts' full review
was soon distasteful to Congress. The Ilephurn Act, attempting to c-orh
the courts res^^lted (73). Hov, great finality is given to the Commission's
determinations (79) . The coarts even cite narrow review decisions from
fields involving the government's o-'n property (SO). There are few
cases upon procedural form such as ' the Alien Cases hring up, for the
Cominission follows a fairly com.plete procedure. It is tlu-oiigh the
evidence reauireinent that the coiirts e3:ercise their greatest control.
The courts have no desire to redr.ce the CoHiaission to "a mere instrument
for the purpose of taking testimony to he suhmitted to the co-arts for
their -ultimate action". Althoi-^^h, great finality is claimed for the
Com^aission, this may appear only hecsuse the coxu-t is not so displeased
with individur>.l determi-nations a;i to review theu. Certainly, the court
has stated in some cases a hrordhasis of review. In Interstate Commerce
Commission v. Union Pacific 11. Co. (82) the court stated the traditional
formula of -x-evie': to test ConBtitutional ^nd statutory intra vires, and
mistakes of law:
"Questions of fact iiay he involved in the determination
of questions of la.w, so that a'n order reg-olar on its face,
:.iay he set aside if it a:p:oears that the rate is so
low as to he confiscatory in violation of the Constitutional
prohihition against talking property, without due process of
law, if the Commission acted so aroitrarily or unjustly as
to fix rates contrary to evidence, or without evidence to
support it; or if the authority therein involved has heen
exercised unreasonahly."
This case ignored a long line of precedents urged hy co-ansel upon
the court (83). To save itself the h-orden of complete judicial review,
9838
the court st£,tec. that it "noulc. not exai.iine f-.cts farther than to de-
termine 'Whether there nas substantial evidence to sustain the order" (84).
More in line with this latter statement , "but staunchly demanding an
evidentiary requirement - that the finding he not contrary to the
"indisputahle character of the evideiice" - was Interstate Commerce
Commission v. Louisville and ITashville P.. Co. (85) . ?.eauirenents of
evidence vary further \7ith the sta-tement that an order may not he
issued "without any evidence whatever" to support it (86) .
We have seen in this field a disuosition, e.t first, to carefully
review the Commission's findings of fact. V/ith a new statute this
attitude was relaxed, hut the court has kept a grip upon the findings,
hy its occasional requirements of substantial or some evidence. The
real prohlem has heen practices rather than rates, although the courts
from time to time have tried their hand at valuation (87). On the
whole it may he said that after a had stai't the commission has hecome
a renarkahly efficient instance of ax^jninistrative action, in the field
of regulation of private business (88). The Commission's orders have
received a finality approaching narrow review, though effective checks
rest in the courts, which they will not hesitate to exercise upon
occasion (89) . llo one .ansv/er is readily ovailahle to the question,
why has this Comnrssion achieved so imich finality. Lluch credit must he
given to the fact that Congress intended a national system, and that
this need -.'as rp .:>reciated hy the court (90) . The prohlem had developed
to such acute pro'oortions tlia,t ercistin",' la-v.' '/as phviously inadeqt-iate .
It was not a situation of fitting pieces into ,?.n eriistinT pattern, hut,
rather, the demand v^as for aji entirely ne'7 picture (91). Congress,
in fact, was most persistent in forcing upon the court the Comnission's
continued demands for power end. finality in its exercise. ffiien, "too',- '
the'-le-^.s-::.v-.-;_se '"f fti^r't.rt ■.y-ill 'ir.'HC.itfd queati-oi;.': iio t readily cl'^rr ^
iiO. th^- cp\a'ti3. In such situ..-.tio:\s, the most coiivenient solution wrs
t« refuse review (92).
The Federal Trade Commission has not yet achieved the desirahle
status which the Interstate Conuerce Commission enjoys with the courts.
Mainly, 'the Commission has heen limited to false advertising (93), and
to standards of unfair practice loiown to the common law in which it has
heen ouite successful (94) . The attempts to develop new concepts and
new standards laave until recently heen uniformly disastrous. Its pov/ers
of investigr.tion have heen limited (95). ^len it seeks to enforce an
order, the proceeding is such that the coui:'ts may readily substitute
their own views as to the conclusions to he dravm from the facts (95) .
Such cases as the C-ratz Case (97) and the Curtis piihlishing Company Case
(98), to mention hut two of the hetter known cases, struck heavy hlows
at the early usefulness and even raison d'etre of the Commission (99).
In the latter case, the court employed the substantial evidence re-
quirement in conjunction with its asserted authority, to rule whether
in law the fr,cts constituted an unfair method of competition. Although,
recognizing tl-i;\t the us\val procedure where the evidence was inadequate
would he to remojid the case to the fact-finding agency, the court saw
here a situr.tion where "in the interests of justice, the controversy
should he decided without f\trther delay" (lOO) . This it -oroceeded to
do.
At the time Carl ilcFarland (lOl) wrote his careful study the state
9838
of the cr.ses was svlcIi tlif.t he co^ild hitterly say, "Even juries nay
accept or i^ejoct evidence and drav inferences, hut the Federal Trade
Coranission may do neither" (102) . This study descrihes the different
positions of the Federal Trade Goimnission r-nd the Interstate Coranerce
Con-nission (lOo). 1. The co!U"t?. reconsider the entire record as a
"basis for the orders of the Federr^,! Trade Connission, while the orders
of the Interstate Coumorce Commission are challenged only from the
approaches of ultra vires rjid evidently sixfficiency (104). 2. The
treatment of the evidence is tei.ipered by the judicial attitude toward
the legislation involved, its subject natter, and its administration (105),
3. The court has accepted the oolicy developed hy the Interstate
Commerce COFjais-sion, hut has refused that developed hy the Trade
Commission.
Llr. LlcParland next offers ;m orplanation for these reported
differences. He suggests that the suoje'ct matter is fundejnen tally
different. The Interstate Comiiierce Commission treats A-^ith puhlic
utilities. The courts are used to their regulation hy the government.
On the other hand, the nercantilo "orld of the past has "oeen relatively
free from reg\ila,tion. The cotirts, therefore, n,re reluctant to allow
innovations in this field. (105). 1. It is suggested tlir^t the
personnel of the Interstate Gomi.ierce Gon?:iis3ion hr.s e::emplified the
hest use of the erpert and thrt it is superior to the personnel of the
Tra,de Commission. Coupled with the dishaimony ojid lack of tact xcoon
the part of the Trade Comnisnion in the conduct of its internal a.nd
external affaira, ilr. IIcFarl-'jid sees in this situation a hasis for some
of the Trade Comnission's difficulty (107). 2. He suggests that the
Trade Commission's procedure has hSen open to more unfavorahle comment
than that of the Interstate Coi^inerce Commission. 3. Of particular
importance pje the opinions .•"■^^veii h" the two Commissions. There is an
indication th;-'t the Tr.ade Conuiss ion's have heen hasty, ill drawn and
hased upon insufficient evidence. The Interstate Commerce Commission,
on the otiier hand, has much more carefully followed the judicial
technique J drawing its opinions carefully rnd fully considering the
evidentiary ho^sis for its action. I.!r. I.IcFarland concludes that the
opinion hy such Coiiinissions should state facts cjid the reasons for the
conclusions drawn. The suggestion is ohvious, that the more juciicial
the opinion, the more likel;?- it is to he clothed vrith finality (108) .
4. The courts offer nji e—planation for the different treatment hased
upon the statutory language. It'. McFarland thinks this is of little
importance as an errolanation. 5. The doctrine of review if hased
upon the formula of "questions of law" and "questions of fact."
6. The different enforcement procedures provided invite the treatment
that has heen accorded the two Coranissions. The orders of the Inter-
state Commerce Commission hecome effective in a specified time unless
set aside h.j the courts uv.on ppolication of parties affected. The
Trade ComLiission, on the other hand, must apply to the courts to secure
enforcement of its orders. 7. The standcjrds set up for the Interstate
Commerce Comiiiission to follow, althou:;h couched in as hroad language
as those as the Trade Commission uses, refer to more particular situa-
tions (109) . The writer has sijggested ahove in addition to this that a
greater amoimt of expert laiowledge of a kind not readily digested hy the
court, is required in the functioning of the Interstate Comr;ierce
Commission (llO) .
9838
-28-
8. The more satisfactory the experiment in administration, the more
authority will flow from the legislature. And it might he added that
the more pleased the court, the greater the finality the legislation
will he given.
1,'fuch of the difficulty of the early Trade Commission mat he
attrihuted to the lax standards of the Act (ill) which amounted to a
hroad statutory grant to work out the law in a certain field, within
the limits of the term competition. It was the very laxity of the
delegation that must have made the courts feel that their careful
supervision was needed.. (llP) . Confidence in the administrative
hody's ahility to meet the problems presented to it in a capable ajid
not too visionary manner, comes hut slowly to the coiirt (113). This
confidence is essential to any real ac'jninistrative fina,lity (114).
i.IcFarland expressed the need for legislative and administrative
reforms if real good was to cone fror. the Trade Commission (115).
Without awaiting new legislation, almost as a contradiction of
1. xcParland * s thesis csae a series of favorable decisions. But instead
of being a contradiction, these cases furnished further evidence to
substantiate the thesis which had been advajiced, for they represent
more careful treatment by the Conmission. The opinions were handed down
at a time when economic forces indicated a greater need for trade
regulation. The Royal Hilling Go . Case (116) merely involved an tmfair
advertising problem, a field in v/hich the Com.jission had been com-
paratively successful. The judicial note struck in the opinion was new.
Where the order of the Gomiiission is supported by evidence it will be
upheld. The Alagoma Lumber Com;oany Case (117) used almost idential
language. The facts and the language of the Keppel C^se (118) are most
revealing of the courts' new attitx\de. An order of the Commission had
been directed against the distribution of package candy by the "brealc
and talce" method. This the Commission had found to be unfair com-
petition. The court denied that the Commission's jurisdiction was limited
to practices tli3,t have been foi.md unfair by the court (119). It frankly
recognized the gradual process of judicial inclusion and exclusion (120).
The language of the court best illustrates its more ready attitude to
give some finality to the Commission:
"While this Court has declared it is for the
Courts to determine what practices or methods of
competition are to be deemed unfair - - - -, in
passing on that question the determination of the
. Commission is of weight. It was created with the
avowed purpose to it in "a body specially competent
to deal with then by reason of information, ex-
perience and careful study of the business and
economic conditions of the industry affected, ' and
it was organized in such a manner, with respect to
the length and expiration of the terms of office of
its members, a.s "ould 'give to them en opportunity
to acquire the erqiertness in dealing with these
special questions concerning the industry that comes
from experience.' Report on Senate Committee on
Interstate Commerce, llo . 597, June 13, 1914, 63rd
Cong. 2 Sess., pp. 9, 11,. See Federal Trade
9838
Comniission v. Beech-Hut Pac'cing Co., supra, at 453;
compare Illinois Central H. Co. v. Interstate Commerce
Commission, 206 U. S. 44-1, 454, If the point vrere
more doubtful thrji ne thiiitc it, \'e should hesitate to
reject the conclusion of the co:nmission, based as it
is upon clear, specific aiad comprehensive findings
sup-oorted by evidence." (l2l)
This comparative siirvey has been extended to the length necessa,ry
to show. 1. the reluctr?jLce of the courts to give finality at first and
2. how much finality may be joined as the coiirts' confidence in the
administrative body increases. The cases c?.lso indicate that substantial
means of review are open to the courts, gjid that they will be used v/hen
the courts deem them necesssjrir.
ffliere property interests are involved the courts are ouite cau-
tious in extending administrative finality. Of coiorse, property in-
terests are involved in taxation, but for many reasons, thought good
by the courts, the government's need of narrow review is felt to far
outweigh the interests of the individiml ta.xpayer. Professor Dickinson
has suggested "that the readiness of the courts to review tends to
vary strongly with the size of the property interests at stalce" (122).
The courts themselves have given weight to this viev/. Summary action
has been held proper as to items of little worth, such as fish nets
valued at fifteen dollars each. The court, recognizing the difficultu
of drawing the line, consciousl-'- adopted the value test (123) . Large sum
sums of money involved in litigation will cause the court to give much
more comTorehensive treatment to a legal point already res adjudicata
(124).
The regulation of radio con:iunication is an apt illustration of
the forces at work in 'such fields. If an application for nevr time or
increased power is made, the courts, tho-j^:?;h given a statutory review,
are reluctant to upset the administrative findings , (125) , The courts
have a wide charter of review; the hearing must be adequate and not mani-
festly unfair; the findings must not be contrary to the indisputable
character of the evidence; a,nd the facts must, as a matter of law,
support the order (126) . This charter will be resorted to where sub-
stantial money has beeii invented in good faith and the Commission is
jeopardizing this investment without compelling reasons (127) .
The reg-alation of common callings or "business affected with a
public interest" because of the large property interests have received
particular treatment by the cou;-ts (128). The ftmction is regarded as
"delicate and dangerous, exul ought to be exercised with a keen sense of
justice on the part of the reguls,ting bodj'-, - The Courts ought not
to bear the whole burden- of saving property from conf isca-tion, th ugh
they will not be found wanting where the proof is clear (129) . The
responsibility of the regulatory agency is even more gree.t than tha.t
of an agency operating a gover;iment owned business, for the question of
profits and the denial of property withoxit due process of la.w are not
similarly presented (130).
The courts' interest in social and economic facts has already been
9838
-30-
otserved. In fields of disputed social policy the judicial technique
usually involves an extended analysis of the facts. The temptation is
strong for the court to suhstitute its own conslusions.
This judicial attitude has crystallized into the vrell-known concept
of "iDusiness affected with a puhlic interest" (131) . Other "business,
it is held, can not he suhjected to certain tyoes of regulation, par-
ticularly price-fixing. The prhlic interest concept sees the fixing
of prices as a guaranteed pajnnent for the dedication of "business to the
puhlic, and the limitations upon the free use of property there"by en-
genered. A mm'ber of the federal courts expressed this reluctance to
approve price regulation, in cases involving WiA codes (132). In a
case (133) involving the same statute, concerning VThen the ITeh"bia case
(134) so li"berally construed the concept of "business affected v/ith a
pu"blic interest, "the same coui't shov/ed a disposition to he apprised of
all the operative facts in the case before giving any relief. This
interest in previous profits and "spread", hoth hefore and since the
issuance of the order questioned, shows a constant interest, in
economic questions and possi"ble injustices, properly presented to the
court (135), The conclusion must he had that private husiness not, in
the courts' opinion, sui'f iciently affected hy a puhlic interest is pro-
tected hy a hroad review exercised hy the cotirts. This protection
talces the form of forbiddipg certain regulations proposed hy the
legislature, and a fortiori hy an adninistrative agency. This might
even he called "judicial legislation" to distinguish it from the hroad
revieYiT which virill he seen to exist in cases of hL\siness affected with
a puhlic interest. The point that this consideration has meant to
emphasize is the keen interest the courts evince in any positive regu-
lation of husiness, and their disposition to fully review the hasic
economic facts, and to substitute their own views for legislative (or
administrative) declarations of policy.
In cases of State regulation, the Supreme Court has long shown a
disposition to fully consider the facts involved. This does not mean
'that the court has overruled the administrative decisions, hut it does
show an early interest that some facts he present upon which a "fair-
minded hoard" could determine the conclusion reached (135) . The in-
terest of the court, also, has long heen extended to the confiscatory
nature of rates. Although the court will not make rates itself (137),
a judicial determination has heen declared essential (138) . The court
has not hesitated to declare its theories of valuation (139), nor to
maJce demands overruling the opinion of a "fair-minded hoard" (140).
All this control could he exercised hy the court, while leaving the
primary fact-finding final and undistxirhed in the administrative hands.
That is, a review hj/- the courts to see if there were proper evidence
present could furnish a sufficient check. The really upsetting notion
is that injected hy the Ben Avon case (141). The indications of this
case are that the courts vfill allow a trial de novo hy the lovrer
federal courts, hoth of the facts and the law. (142) . The Sxiprerae Court
of Pennsylvania referred to the review of the valuation order of the
Puhlic Service Commission hy the Superior Court as "merely the sub-
stitution of the -(court's) judgment for that of the Cormiiission" (143).
The Supreme Court of the "United States sustained the action of the
lower Pennsylvania Court;
9838
"lookin.^ at the entire opinion r-h'' are compelled
to conclude that the Supi-eme Com-t interpreted the
statute as T/itliholding from the courts power to
determine the question of confiscation recording
to their ovm independent judgnont \7]\en the action
of the Commission cones to "be considered on appeal.
"In all such cases, if the owner claims confiscation
of his property- will result, the state m.ust provide a
fair opportunity for suhmitting that issue to a
judicial trih-onal for determination upon its ovm
independent judgment as to "both law ajid facts; other-
wise the order is void hecause in conflict \7ith the
due process clause." (14-4)
Brord review of regulation of business affected with a, puhlic
interest, and judicial interference with reg-alation of private
"business are estahlished facts. The Ben Avon case is still the law,
although not every allegation of "confiscation" .''lerits such complete
review (145). The courts' interest in the siibstantive nature of
social and economic regfJ.atio:is i.mst he accepterl. as en operative fact
in considering the scheme ujiderlying the IIIEA.
9838
-32"
III. JURISDICTIOHA.L FACT
The courts' use of jurisdiction and jurisdictional fact question as
a method of review? has "been observed (146). The lorecise character of its
use in the cases demands some attention. The iDrohlem itself, is not new
hut it has gained recent importance in adininistrative la^ with such de-
cisions as Crowell Tr. Benson (147) and I-Jig: Fun.a; Ho v. \?nite (l48). An
early English case (149) ooints out the problem. Did a charter giving a
college of physicians authority to r)\mish mal;or3,ctice give them jurisdic-
tion over all practice? Lord Holt, answering the question, held that the
authority was not limited to those -ons'-cilled in fact, hut extended to
allow an inquiry into any administration of "-^hysick" to determine if it
were unskillful.
The question of jurisdiction over a defined subject matter, since it
clearly demands statutory inter-oretation, is a question of law (150).
Again, the baffling problem of trying to distinguish questions of law
from questions of fact arises. It is seemingly an unsolvable penumbra.
The difficult situation is where jurisdiction rests uoon the determination
that the evidence is susceptible of more than one conclusion as to what
are the "Facts" (151 ). Another problem is the attempt to limit the ad-
ministrative body, not to a general subject or field such as the practice
of medicine or the injury of an employee, but to the precise question the
administrative body is called ui3on to decide, malpractice or accidental
injury (152). If the court so restricts the administrative body it does
away with much of its usefulness. The ca.ses are simply twice adjudicated,
and the administrative board is placed in the position of master for the
taking of evidence for the court. 'Then the entire function of an admin-
strative body rests u^on the determination of a fact, held by the court
to be coextensive with its jurisdiction, and so also determinable by the
court, it is no longer clothed with the independent -oo^-'ers, ^^hich it
would seem should be its -oroper s-^ahere if its action is not judicial.
The courts have frequently taJcen over the determination of such questions
as whether a com^anv is insolvent (153), a horse has glanders (154), or
a railway has oaid in ten oer cent of its capital stock (155). The court
frequently finds that its opinion pgrees with that of the administrative
body. This attitude is foijnd where the court carefully examines the
evidence, but concludes that the determination made was loro^er (156 ).
These cases have not stirred wo the criticism, as have the co.ses where
the coiu-t disagrees with the administrative determination. Nevertheless,
the technique is identical.
In U. S. V. Ju Toy (15?) the assertion that a claim of citizenship,
by a 'oerson of Chinese descent seeking to enter the United States, went
to the jurisdiction of the administrative officer was denied. The Dis-
trict Court had entertained new evidence and found. Ju Toy to be a citizen.
The court sneaking through ilr. Justice Holmes was apparently a-oprehensive
of a flood of co.ses, whatever the justice of the -oarticular case, iluch
criticism was directed at the court (158). i.ore as a matter of individ-
ual lOJifairness than as a problem of proioer law. i 'uch of this criticism
finds a basis in the fact that alien Torocedure has been none too con-
siderate of individuals under its j-orisdiction (l59). Seventeen years
later, an almost identical question was presented to the co\irt in
Ng Frnife- Ho V. Uhite (160). The court reversed its former -oosition. The
9838
-33-
only important actual difference in the two cases lay in the fact that in
the latter case the petitioners were ^ifithin the territorial hounds of the
United States, iThen the immigration officers claimed jurisdiction over
thera. These persons had once beon seekinf?: entry which had heen allowed.
By this, they seemed to have p.-.ssed into a fovored class. It is thought
that today, upon the authority of this latter case the Ju Toy case might
"be reversed, and in a ha'bea.s cor )us proceeding;, after administrative
remedies are exhausted, a trial de novo in a federal court might he se-
cured on the fact of citizenshio. If it were not, it could only he, he-
cause some special significance is attached to presence within the country,
even though through illegal entr^r. The courts have long exercised a con-
trol over questions of law which often appear to he very close, to, if not,
of a jurisdictional nature (161).
In connection with "hroad review," the Ben Avon case (162) has alrea(3y
heen fully treated (163). That case rested upon the proposition that the
pi'O^oer allegation of "confiscation" raises a constitutional question going
to the final jurisdiction of the administrative hody. This is called
"Constitutional fact," which means jurisdictional fact in those cases where
the Constitution furnishes the limitation (164). It means that the case
demands an independent judicial hearing to determine if the administrative
hody had jurisdiction, or had jurisdiction to make the decision it did
(165). Before this case, the Supreme Court was content to acce-ot conclu-
sions of the State administrative hodies, having some reasonable basis
(166), The broadest review, and an ability to substitute an independent
judgment, whenever the administrative action does not accord with the
courts' views are the real implications of the doctrine (167). The recent
case of Crowell v. Benson (168) takes the doctrine one step farther, and
applies it to findings of federal administrative boards (169). The Supreme
Court allowed the District Court to make independent findings on entirely
new evidence as to the jurisdictional questions, whether, 1. There was
injury upon the navigable waters of the United States, and 2. Whether the
"master and servant relation" existed. Said Mr. Chief Justice Hughes,
speaking for the court :
"In cases brought to enforce constitutional rights, the
judicial power of the United States necessarily extends to the
independent determination of all questions, both of fact and
law, necessary to the performance of that supreme function.
The case of confiscation is illustrative, the ultimate conclu-
sion almost invariably depending upon the decisions of questions
of fact. This court had held the owner to be entitled to 'a
fair opportunity, for submitting that issue to a judicial tribunal
for determination unon its own independent judgment as to both
law and facts. '" (170)
Mr. Justice Brandeis, in a vigorous dissent, pointed out that this
view had not been adot)ted in cases involving the Federal Trade Commission,
the Interstate Commerce Commission, or the Packers and Stockyards Act
(171). The majority opinion does not specifically refer to the Fifth
Amendment, but that must have furnished a basis (172). It has been sug-
gested that the case may be limited to the admiralty power of the coiirt
and a holding that Congress may not cut this down by making the findings
of an administrative board final (173). It is probably true that Crowell
V. Benson was merely an outcropping of a somewhat obscured theory of
review which has long' existed. The courts can not hope to review de novo
the facts in such cases. The task would be overwhelming. On the other
hand, administrative bodies cannot hope to always escape this potential
review, without the exercise of extreme care and fairness.
-o4-
It is quite 1003311)10 that the exerrciae of this theory by the courts
T,\?.y- be grer^.tly reduced Oy -'.dministr-'^.tive -^-ction. Questions likely to be
C".llec. " jurisdictionp.l f cts" should be treated ^.s questions of fact
alone. A': overwhelming record to su----ort the aclrainistrative determination
should be pr.ins takingly built. It ini^^at even be well to throvr out some
doubtful cases, until sui: icient Judici■^l sanction for decidinf;; such
problems had gradua.lly accreted. The St'^ce courts have been reluct-nt to
revie?/ questions of "jurisdictional fret" where the administr-.tive deter-
mination was su;-\iorted by subst-nti .1 evidence (174). The judici".l teclinique
is such thv.t if the court a£;r3'=s v/ith the ac'jninistrative indin/v;, even
though aJl the facts are most carofuliy reviev/ed, the decision may be iDut
in terms of giving finality to the oa rainistrativc decision (175). It vrould
seem that by t,-Jri.ng cr.re , to near all pertinent evidence, and taking
jurisdiction only in cle.'.r cases, the administrative agencies co'dd demand
a respect f-.^oir: the courts, reflected i;i an increasing freedom from review
by the " jm-isdictional fact" means.
IV. G":"ErjlL FHOCEdU.UL PCqUIR^; TTJTS
There is considerable confiision -s to'-'lir.t procedurr.l requirements
actually can be said to exist (176). Tlie problem has been said to present
"a, Tdldernessof single insta^nces, "urhig-jity and inconsistency of principles"
with "r vdde difference in the scope of judicial review in different fields
of administrative regulation" (177).
Procedural requirements are not v/ell-defined. Most attorneys think
of administrative due process as notice and hearing. Of co-urse, it can not
be expected th;',t in generr.l the reOj^uiremcnts of judicial procedure must be
followed. Administration is more informal. The procedure of the coiirts
is not the procedure of --.drainist ration, F-.irness in the p-rticular case and
the particular field must be the touchstone mainl' relied upon,
Procedui-al requirements va: y with the field. They are more lax in
those fields studied in con.iection with narro'.7 rcviev;. Police power th-t
reqx-'.ircs sximriary -ction c vn not be hindered by requircmerts such as notice
and hearing before action (178). Professional nr-ctice over a period of
time, or the peculiar social history of a problem ma-- have the deepest in-
fluence U'lon the requirements of procedure in handling stich problems (179),
In the S-cld of customs a"'-<j r" isals (18j) the procedural requirements arc
light. The social history of this field, involving as it does our tariff
policies, a,nc' the cstablish.icnt of this field when the cotixts were much less
prone to inquire into ex^.cutive action, goes far to explain the lax require-
ments. Here, it has been held th.\t .-proceedings m-.y be secret v;ithout the
right to cross-examine vdtncsses being afforded; that a.ll evidence need not
be disclosed to the importer, if he h;\s v. right to st".te his viev/s and
suggest questions to be asked witne-sos (ISl). Li3::e'.7ise , in the field of
tax collections, cimii^.ry action involving distress and sciz''.ire of property,
v/ithout notice, hearing or op ortimitA'' to confront and cross-examine
opposing v/itnesses, is proper wher" -, k^.ter judicial or administrative
hearing is .^.fiorded (led.).
Alien procedure has ma.ny questionable features (183). The hearings are
held before local immigration inspectors v/ho act -.s justices and prosecutors.
Usu5,lly the alien Ivs no co^juisel :vnd the hearing is priv.te. Evidence is
9838
-35-
-informal. The tri?,l in the Depo.rtraent is n paper one, and the statutes
do n.-it oven require that a le,5rJly tr-.ined or experienced person preside.
All this is done under the justificat. on of speed, eyiDcrtize, and economy.
Of these, Dean Van Vie ck says: 1, Speed is not neccsL-ary; 2. The oT^icial
is not an c::pert; 5. Economy may "be a justification (184). In the early
cases, the courts seemed quite content vdth such procedure. That an a.lien
did not underst-.nd a iiroceeding was "being held "occause of ignorance of the
English lan^iu-^ge , and the lac]:: of assistance of co\uisel or friends was not
a"bhorrent to the courts, despite a high sounding statement "Oy it a'bout due
process of law (lS5). Recently the court "nr.s evinced a more -rtrict attitude,
The hearing must "he more tkan a. mere sem"blance; the right to produce evidence
must not "be denied (lo6). A lower federal court has held that where an
alien does not understand testimony it i:iust 'be explained to her; there '
must "be rf .Lorded the privilege to cross-exrmine which the cotirt referred
to as a "Constitutional right" (187). Couiisel may not "be denied access to
the hearing; and it is fundamental thft procedure set up "by the agency's
OY/ji rules must "be ndhered to (183) i
In t'ne governnient 's post •.! oper"tions, the :nost strict proced-oral
requirements ^risG v.'here the mailing privilege is involved. Even in such
cases a he^-^ing need not he or-.l, nor must the deciding oificia.l state
the reasons for his decision (189).
Procedural renuircment-- "becone more strict in fields design?.ted as
receiving broad review. The control hy tho "suhstanti\l evidence"
requirement of Interstate Cor.iraerco Comnission determinations hros "been
observed, Frequently, Congress maj" 'by statute define certain reo^uire-
ments a,s in the case of the Federal Comx^.uiicr.tions Cornaiss:'-on (190) and
its predecessor the Federal Radio Corj;dssion (191). Where an order "by
the latter Cominission cnanging a. station's frequency w s to "become effec-
tive i^ril 30, the hearing being cal.'.ed for June 17, this was such error
th^t the order was declared void (19^). The recent case, involving a
Virginia statute empowering the State Highway COiUnissioncr to order the
elimination of grade crossings, and failing to provide for notice .'hearing,
or reviev/ of the officer's axtion v/as held bad despite decisions of the
highest Virginia court affording a reviev if the action was arbitrary (193).
In addition to varying with the fields, procedural req^uirenents mo,y
va.ry within a field. This does- not inean merely that, chronologically,
they become les? or more strict (as in the alien co.sos). It means tlia.t
they raay vary v/ith difierent jurisdictions or even in the spjne court depend-
ing upon the pa.rticulars of each case. Particularly in t-.x ca.ses involv-
ing valuation and assessment, the cases vary as to notice a^nd hearing
requirements. The only rationale, seemingly obvious, is that notice and
hearing are required unless the a.dministrative bods'- has such an extended
jurisdiction tha.t it renders such requirements impractical (194).
Requirements if notice vary. A notice may be given by statute (195).
If so given the meeting must be held in the place and a.t the time specified
by the statute (196), It ha.s been held that where a. party, v/ho conrplained
of failure to meet, s'howed no disposition to attend the meeting, he could
not successfully urge lack of notice (197). The predominr.nt rule, hov/ever,
is to demand a strict statutory compliance (193). llotice requirement in
tax cases, as alre.dy pointed out, vary (199). If a subsequent notice
9838
p.nd lie-",rin£; is to be Ix.d in t.-x m^tners, notice of tlie former proceecUn;-s
is not requr-ed (200). ]?.',il\n-3 to qIyc notice i\e-;.cnas upon the pr-.cbic-.lity
of :hc sicur/tion. In such Cfo? :^,c? -, t-^,:"-. oody - ith entcndec. jurisdiction
or where ?. stm- ..v^y exo-'-ci^c "f ;iolice poorer to protect "^ublic he-^Jth is
deino/ndec. riid. the repj.l^'^-tions to be iiTr^osod vil"'. bo tou onerorts notice
requirements .^re li^ht (201),
Require: lentp of notice ".re ?f co'curse hec-vicst in fields of disputed
social rnc. economic -oolicy he^~-vil." ?.f j cctin-; individur-.l property interests
(2X).
In pr:ctic\ll3" L",n^ cse th-:-,t requires notice, r. hearing; is n.lso
required. The former v/ithout the 1-tter rrould ustir.lly be a b:irren pro-
tection (205). The right to bo horxl, if dGi:r^ndecL, is generally considered
vit;,l to r.ll adininistrative ^ctiQn, with the exce-otion of ^. few inst nces
where the indivifuil would ::"in little by the reqi.iireraent , or the public
would be too gretly inconvenienced (,204). He -.rinQ' hov;evcr does not inroly,
in most inst -nces -". for",-'l ;-i-.-ocedure (05), nor is more thn rae he-.ring
usual--y nccess-^-ry (o06). The best st-,te. -.ent is, tn-',t in each case, the
hearing must b'e fair (207). As ::r. Justice Cardozo nas said:
"The 'he".ring' that .... •co;rlss..ons are to
give must be adapted to the cinsequcncos that are to
follow, to the attac!; •'■"/' the revic/ to which their
orders rill be subject." (208)
The procedur^l safeoaarr's nost us\iu.ly donandecl are notice and
hearing, or, as it has b^-cn otncrwise termed, -^n opportunity to defend
(209), '-aiereevcr f-irncs-^ dc--r-vic's. If there is -^jiy s tatutory suggestion
indicating an intention th;t siich safegur^rds be provided, or that evidence
be reopirrcd, notice -^:\C. he ■'■ing are absolute essentials (210). Other re-
quirements '-re inr.dc , .s s-oeciiic "ch .. gcs (really an aspect of notice),
cross-examine ,tion (a ouesti"..a : ,s t;o the^ dequa.ci, of the hearing), and the
right to argue the law and i cts (.Iso a --e ring problem) (211). Just
wha.t t::-:.e of notice -nd acaring arc sufficient v I'ics (212). 7/here a full
judicial reviev? or trial de novo is present th,;, administr-.tive requirements
are not so ner-.vy (213). Tho n.in test probabl:" is the ade qu. ,cy ;ind fairness
of the proceedings. Althoug-h notice and ne-ring mry have disadvantages
such as e:q?ense and delay (213a) their desirability should demand their full
utilization a.s me ,ns of "orotccting the nrblic,
Therr- are r mmbe: of adiamist native agencies which function as
courts closely foi:" owing judicial procedure (214). On the v/hole, the
bencn -.nd the b,.r -ave both shown a disposition to accord such courts a
higher pla. cc than given to .iost other administrative adjudicatory agencies
(215), The implication is th't the more judicial or more fair in r.ppearance
an administr-tive -'dju.dic^'.tion seer.s , the greater the finality it will.be
extended, other factors bei' ■_, equal,
A new administrative agency dealing vi*h fields of disputed economic
and social policy is under the closest scrutiny of the courts. Its .ctions,
procedur^.lly and substantively, must be most circumspect and its progress
most careful, if it is desired to Leap judicial control at the minimum.
Even these precautions offer no guarantee, if the courts are heenly enough
interested.' It is, hovrever, a step in the right direction, the direction
indicated by the c.ses,
9838
PART II
P R C E L E M S OF A D M I KI I S T R A T I 0
AND AD M I "w I S T R A T I V £ LAW
I N N R A
9838
CHAPTER V
THE SCHEME
One ox" the foremost advanta|5:es offered by the administrative
device is flexibility. It would be, indeed, unwise to attempt to
crystallize into forma,! nnd absolutely binding concepts administrative
action as it stands today. It is a new f echnique , offerin,^ many varia
tions to meet the new and constantly arising- problems of society and
government. As the common law developed into a body of more or less ■ ,.
frozen concepts, and as equity has tended to do the same, so ma.y admin-
istration. Any attempt to hasten this would be undesirable. The very
value of administration lies in its empirical state, in its easy adapta-
bility to the demands made upon it. This is fa,r from indicating that
every new administrative device should be welcomed, unquestioned, as a
contribution to government. Cn tiie contrary it should be carefully
tested, not only by its apparent ability to meet the problem, but by
the precedents of other administrative forms and the circumstances
surrounding their use. Such a test is the first necessary step when the
MRA is to be observed.
It was obvious with the passage of the NIP.A that powers more vast
than those ever before delegated (except in war time) were delegated
to administration (l). It is Probably that some of the persons respon-
sible in drafting the -aAct and in its first administration realized that
here was an agency sui generis. (2) Others, outside :of NRA, later
expressed such recognition (3). The Act itself was q\iite indefinite as
to what plan or plans if any it had sought to copy. It was equally
indefinite as to \vhat actual form, as a matter of plan and procedure
the administration of the Act would take. It was most apparent that
the plan providing for application liy private members of industry for
aporoval by the President of a scheme of law proposed by these individu-
als would be followed. As the Act was developed this Proved to be the
As shall be seen, there were few precedents in American government
for such a plan. The most analoguous system is one found in England.
This method of administrative la,w-maK:ing has been called "procedure by
scheme" (4). As history is long ^nd interesting and today it repre-
sents one of the major administrative devices used in English govern-
ment (5). The procedure consists of a proposal by a group of interested
persons. Ajl investigation by government inspectors follows; next a '
local hearing is held. The hearing allows counsel to be heard and to
examine and cross-examine witnesses. The inspector (much like an NBA
Deputy Administrator, or an examiner for the Federal Communications
Commission) then submits a full report, analyzing the facts and setting
forth his recommendations to the aporopriate Minister (o). The pro-
cedure of proposal, inspection (the activities of Research and Planning
were analogous), hearing and recommendation to a superior for his ap-
proval, is quite analogous to MA procedure.
The subject matter of this administrative form was, in its early
history, almost always limited to local projects of little general
interest. This eiigjlains the reference to it as "private bill legisla-
tion by a department" (7). It was used, for instance, in connection ^^ith
9838
slura clearance projects (3). After the >/orld Jar the use was 'broadened
to include wider raeastires' of socialization. Such a need can be seen
in -lingland not divided as is this countr;^/' into territorial States
eacn with consideraole local le^,-islative oower. Groups reioresenting
special interests or areas may anoly for ap oroval of schemes. An
example of the substantive problems no''? dealt with is the amalgamation
of mines in a district by agreer.ient of a majority of the owners and
aporoved by the proper minister, altnough a minority of the o-raers re-
fuse to cooperate. (9) The development in England has been slow. It
has been subject to the Courts' test for ultra vires (10).
The MA as a procedural scheme was not the result of anv such
gradual growth or general development. Few examples can be found of
power delegated to administrative officers or agencies to aoorove pri-
vately proposed schemes. Upon application of groups the Federal Trade
Commission has arioroved rules of unfair competition solely as a co-
operative program for group members. These nad no binding- effect upon
members of the group or non-members (11) although they might serve as
the oasis for a cease and desist order. In the Procedure under the
Flexible Tariff Act (12) there is an analogy. There, interested
domestic producers could anpl5^ to the President for a levelling out of
costs of production, by increasing the tariff upon competing foreign
manufactured articles. There were precedents aplenty for governmental
regulation of business (13), but there were lora.ctically none suggesting
that the individual industries fr.am.e their o?ni laws (other than .the
fact tnat nearly any pressure group can secare introduction of a bill
embodying its own views. This, of course, does not involve administra-
tive ap]7roval).
As many have suggested (14) the Act was indefinite as to the form
of the administrative agency (15). But since it was recognizpd by the
Act there would be an agency or agencies this created no legal diffi-
culty for the use by the President of such assistance was contemplated
in specific terms (16). It was agreed that the Act intended some mea-
sure of cooperatisa action between government and members- or groups of
industry (17). IJo provision can be found for the steps in code-making
that became established (18) or for the administrative set-up and in-
ternal plan of procedure that developed (19). The NRA as developed
creates a difficult problem in classification in terms of the estab-
lished forms. Here was an agency giving away its cowers freely, often
lavishly. This presented a question of powers, but an unusual one
of hovi much power could be so delegated rather than the usual one of
how much the administrative agency could gather to itself under its
charter (20). Here too, was an agency exercising powers partaking of
the legislative, the administrative, and tne judicial nature (21). The
most important power exercised' was the approval of codes and the inci-
dents of that power. The pro Diem of compliance had a separate charac-
ter and will be considered later (22).
The iffiA Legal Division proceeded upon the basis that code-making
and aporoving was a lepiislative function governed mainly by the court's
attitude in the Norwegian Nitrogen Case (23). Procedure, the Legal
Division seemed tc feel, might be lax (24). In the case so strongly
relied upon the so-called Flexible Tarriff Act was the basis of the
-40-,
procedure there questioned (25). The Act was a "delegation - - - - of
the legislative process" (26) to the President, who could adjust the
tariff schedules to meet lower costs of oroduction abroad. The specific
points involved went to the adequacy of the hearin'^. The Tariff Commis-
sion, whicn by the Act had oeen given power to conduct investig-ations
to assist the President (27), refused to give information to the inter-
ested importer ?s to the costs of urodaction of a local factory (that
owned by the applicant). Counsel for the importer wrote a letter de-
manding to see "every particle of evidence" gathered by the Commission
and that he be allowed to examine all ^^itnesses including the inspectors.
The data had been gathered with the understanding it would be held con-
fidential. The court, speaking through Mr. Justice Cardoza, denied that
counsel's demands must be met to afford due process of law. It based
its decision upon the following oointers inter alia: 1. The history of
tariff procedure, both legislatively and administratively (28); 2. The
Commission's activities being distinguished from limiting -oowers of
public service companies (3S); 3. The Commission being merely an adviser
to the President, who was not bound by its advice. (It was not "an arbi-
ter between adverse parties" so its procedure might be built to fit the
problem in absence of more stringent statutory requirements (30); 4. It
being unreasonable here to force the Commission to disclose such infor-
mation, or treat each person affected as an individual litigant (31).
The next inquiry must be the value of this decision as authority
for MA practice.
The IJorwegian Nitrogen Case proceeded upon a broad statutory
grant in the case of orccednre. This wa3 positive reccgniticn by Con-
gress that the Commission should be free Lc develop its oTm procedure.
The NIRA, on the other hand, made no p.rovision for procedure. It can
not be said with equal force that' Congress positively felt that the pro-
cedure adopted would be the best when it did not even know what agen-
cies would be used or the exact character of the problems. That the
WIEA failed to provide procedure did not authorize arbitrary action.
The due process requirement demanded that orocedure be reasonable to the
end sought. There is some evidence indicating a reasonable comparison,
some indicating a reasonable distinction. The touchstone must be in
tne subject matter dealt with and the end sought.
Historically, the government has long exercised great powers in
the tariff and taxation fields (32). Our political policy has favored
the imposition of tariff. On the other hand, government regulation of
or cooperation with business is relatively new and far from being so
widely approved. It may be said that the policy behind the tariff is
fairly well settled while in the field of business the economic and
social oolicies are most hotly disputed.
Besides this historical difference, tariff collection and regula-
tion are closely related to taxation. Despite the economic significance
of tariffs, they are fundamentally taxes. The tax field is one accorded
narrow review, with slight procedural requirements. Business regulation
on the other hand is a field subject to the closest judicial control,
where procedural requirements have been relatively high (32a).
9838
-41-
The court in tap tariff field vbs inflaenced by a judicial
attitude that had grown up when the courts wpre exercising much less
control of administrative action. Although the court is not subject
to any strict res ad judicata notion of being bound by its own decisions,
they have a strong influence upon the court unless there is compelling
reason to abandon the established views. A mere reference to
Aoffmordt v. Heddin (3^) brings back the vision of quite lax adminis-
trative procedure in this field bearing the approval of the courts.
Of course, in this case the legislative aspects were practically miss-
ing, being outweighed by the adjudication given. This merely places
the legislative procedure in the IMorwegian Nitrogen Case in a, stronger
position for it is generally conceded that administrative adjudication
requires higher standards of orocedure than administrative legislation.
The economic sanctions should be observed. A major portion of our
wealth is represented by our industries. Importers, however, are a
small class. Although large sums of money and substantial property
interests are often involved in the tariff questions the courts are much
more keenly aware of the interests of private business within the coun-
try. The voice of business booms; tnat of the imoorters is seldom heard.
Mr. Justice Cardoza specifically stated that the case was not like lim-
iting public service companies in the transaction of their business (34),
A most significant distinction lies in the fact that by the
statute the Tariff Commission was mr-^de, an advisory agency purely, whose
recommendations did not bind the President. The NIRA authorized the
delegation of any functions and powers, given to the President (under
Title l) (35), This meant that th<=. President could make the agency
MA more than advisory. This he did 'specifically in the case of indus-
tries employing less than fifty thousand employees (36), It would be
improperly technical to stop here. If the President in fact bound him-
self by the findings of the agency he created, without exercising indepen-
dent action of his .own, it would seem improper to say that the agency
was merely advisory. Especially is this true if it is apgued that, when
such a fact is formally recognized by the President the agency is no
longer merely advisory. To say that MA was merely advisory would be a
fiction as absurd as those often found in the common law. The indica-
tions are that when a statute is silent (except to allow the agencies
used to exercise all power given by the Act) and final power is, in fact
given to an agency the court will recognize this. Our courts are not
known to bo hampered by such a Gordian knot of legal reasoning as this one
suggesting the agency to be merely advisory.
The last and a dominant consideration suggested by this case must
be: were the approach and problems of MA so predominantly legislative
as to exclude other considerations or were there sufficient adjudicatory
aspects present to demand the procedure required by such problems? The
courts have recognized that the fixing of customs duties is more than
fact-finding (57). It involves "the kind of discretion to operate an
intelligent legislative plan" (38. The problem presented to the admin-
istrfition is not in tne nature of litigation (39). The policy stated;
the government is merely using this machinery to effectuate that policy
against one group - the foreign competitors, , Legislative action by an
administrative agency though required to hold a few formalities is,
9838
compensatingly, given much less .power procedurally. The Interstate
Commerce Commission and the Federal Trade Commission are preatly limited
in subpoenaing witnesses and forcing them to testify (40). This feeling
toward" administrative legislation may be colored by the fact that a hear-
ing is not a prerequisite to the validity of either public or private
bills in this country and the doubtful value of opinions usually at such
hearings when held (41). Even being able to call NBA hearings legisla-
tive would have orovided no cure-all. The frequency with which courts
have refused to accept findings by legislatures is all too well known(42).
IThile some writers have thought that the rate-making power is legis-
lative because of its enormous consequences on the future (43), others
more discerning have seen another problem (44), This other problem is
the conflict of interests between competitors and the adjudication of
this conflict based upon the administration's interpretation of what the
law requires in the partipular case. Fixing a rate may be legislative
as to a shipper, but when the hearing iresolves itself into a contest be-
tween competing roads it assumes a judicial nature. le think of legis-
lation as involving a group rule for future conduct. Bat rate regula-
tion may involve the judicial determination that in the past one road's
rates were unfair or discriminatory and result in the administrative
acti-on of declaring a future rate. So in iTRA the problems presented often
had this judicial aspect in large quantities. Few hearings •., there were
that did not become sharp contests between opoosing competitors each ad-
vocating a standard of conduct as being proper or improper. To have
listened to one of these hearings would have been enough to suggest the
definite nature of the dual contests that so frequently arose. The dis-
tinction is not clear, but a general rule interpreting a statute so
drawn as to hit particularly at a small group or an individual, that is,
competing with the group advocating the interpretation, partakes more of
the nature of a judicial contest than legislation. This fact has been
recognized by one of the leading minds in the field of administrative
law (John Dickinson) (45). An order applying to an individual or a
few individuals, as against a regulation applying to a class is said to
require, constitutionally, notice and hearing (46).
The evidence most strongly indicating legislative character was the
product. These codes of fair competition were drawn up in form of
broad rules of prohibitions or positive action. On their faces they were
as legislative as any statute for a class. It is when this mask is torn
aside, and the creation of these codes is understood to include rulings
making the course of one competitor proper under the legal standard
given, and the course of another competitor unlawful by the same stand-
ard tnat the judicial character of the contest becomes apparent. Cer-
tainly, here there existed often a most bitter and personalized contest.
As the Act was framed, ujiless the courts had ruled these rules involve
questions of law for our determination (47) (in which case NHA would
have been made equally impotent with the Trade Commission), the only
question upon which there would have been necessarily due process of
law procedurally, would have been whether there was a violation of a
code rule. Although legislatures need not give such guarantees, admin-
istrative agencies usually are not allowed such freedom of action.
Patterning i\IRA after t^e Tariff Commission would have availed little,
if the Courts felt that its subject matter was more of the type handled
oy other commissions and its contests more personalized.
9838
Lv.o strong" evidenci^'. (48). 1 aql^ing to supoort the' contention that
NRA problems were so Judicial' a-s; to require oroceclural saf e-g-aards
existing in the Interstate ComTuerce ComTnission cases is the fact that
the Act did not snecif ically require a hearing: in the section relied
upon in NBA activity (4S) with ce:-tnin excf^-pt.ions. However, failure of
a statute to require a hearin.i^ does not mean, that one' may be dispensed
with. The due nrocess requirement is one of fairness. If fairness
demands a hearing, one must be had. And the hearing must be just as
complete as needed to Eatisfj"- the tests of fairness.
Although' the Act made no general hearing requirement, it made a
limited one of most significance. Section 3 (a) affords the only sug-
gestions to be made 'a basis- for the Code process. Congress placed two
definite limitations upon this process. The first one, directed against
"monopolies or monopolistic practices", is well known. Less publicized
was the Congressional proviso reading, "That where such code or codes
affect tne services and welfare of persons engaged in other steps of the
economic process, nothing in this section shall deprive such -oersons of
the right to be heard prior to approval by the President of such code
or codes." This requirement would appear to be of the utmost determi-
native value. Few codes were ever approved that did not affecf'the
services -and welfare" of other not immediately within the industry. At
least, the Congress contemplated a hearing in such situations. It might
be argued that Congress;, failing to provide for hearings upon purely
internal problems while providing for hearings upon external matters,
did not contemplate a hearing in the former situations. If the courts
had accepted this argument, there remained the constitutional "due pro-
cess" argument that such matters require a hearing. Coupled with the
recently evinced attitude of the court's holding administrative bodies
to high standards of action (50) it is highly probable that the courts
would have said HRA procedure must embrace a full hearing. An attempt
was made to further meet this statutory requirement by an executive
order providing for hearing and automatic stay until determination of
the issues raised in the case of persons outside an industry showing
that they had not particioated in establishing or consenting to a code
(50a).
■yfhether legislative (51) or judicial the problems of KRA in form
and substance were much more closely related to the rule and rate mak-
ing power of the Interstate Commerce Commission than to the duties of
the Tariff Commission under the Flexible Tariff Act (52). It must be
understood that the use of concepts of legislation and adjudication can,
at best, be only suggestive. All three of the usually classified powers
of government may be present in one administrative agency (53). They
may be so arranged that any attempt to classify them will be hopeless
(54). This was certainly true in I\[RA (55). It would be unwise to be
deluded oy concepts. The "legislative," "judicial" classification is
often more text book than case book. There has been a recent disposition
by the Supreme Court to demand higher standards of administrative fair-
ness (56). Administration is not legislation by legislatures, which h^ive
historically a position jiot b.o sasidy questioned l by the /c6urte'.> ir^he - i-
Chicago Junction Case (57) suggests that where a monopol.y is given there
sufficient basis for a legal interest in a competitor to challenge the
order. This indicates a feeling on the part of the court that such
directly affected interests -we importrint and must be considered. It
has been suggested above that i^TlA' s position differed from that of the
Interstate Commerce Commission in the instant case (58) inasmuch as a
hearing was required by the statute there involved while the NIRA re-
quired no puch hearing. However, the President contemplated that hear-
ings be held (59). • Jast what weight would be put on this is difficult
to say. As MA purposed to afford a hearing the courts would probably
not aporove a hearing which it deemed unfair or inadequate.
It must be admitted that the evidence is contradictory. The
strongest and most abundant evidence suggests that the courts probably
would nave held NEA to a rather high standard of procedure. In face of
the evidence it was impractical tc assume ot lerwise. The higher the
standard adopted the better the ch-'mces that the courts would have ap-
proved the procedure.
9838
Should it 'oe admitted that the code-ma]-ing "orocess was administrative
legislation what effect would c^iis have unou its status in the Courts? That
the question of "due orocess" in code-'naldng could come up can not easily
he denied. True, the President it not subject to extraordinary legal re-
medies as has been su^c^^iesed in this chc'iter (DSa). This creates legal dif-
ficulties, hut not for a miirate sVi'Uld it he t>oa^;ht tl:at they are insur-
mountable. Legislation itself is barren until it is enforced. So too the
codes until they were enforced had little effect upon -oroperty and indivi-
dual rights, except tiis.t b<?rs of the anti-trust laws were let down to sug-
gest combinations which might be directed against these rights. A most
circumspect enforcement process which Y/ould give every desirable procedural
safeguard it is urged, by those who feel "due process concepts should not
be ap-ilied to code-raa]cing, would preclude the due -process question being
raised (59b). This argument means thrt no matter how arbitraty, capri-
cious or unreasonable the procedure of code-mai:ing, since wc dub it "legis-
lative" it escapes judicial control. By neat language and classification
this view has produced a judicial miracle. It has extended to an admin-
istrative process dealing substantially with private industry and busi-
ness, a more narrow review than can be found in the alien or land patent
cases. The proponents of this view have not gone so far as to argue that
code-making would not be tested by substantive due process. Legislation
by Consiress and State legislatures is subject to this control. A fortiori
administrative legislation must be subject to a review on this basis.
The result of the argument is this: the procedure may be haphazard or
eminently unfair; the result, however, must me^t tests of legal fairness.
Thus a complete divorceuient between .;orocedui'e a.nd substiince is had. The
patent difficulty and the one ignored is that unjust -orocedure is a great
persuasive force unon the courts to determine tha.t results are unfair.
Fair procedure and fair results can not be so blandly divorced. To know
v^hether results are ftdr it must be determined whether all the pertinent
facts are likely to be before the administrative bodj^ and to be considered
by it in arriving at its decision.
Certain specific evider.ces indicate tlis.t the courts would not re-
lir-Auiih control over administrative "legislation" merely because it is
analogous to action, by a coordinate division of t^overnment. As a matter
of logic and analysis if the tripartite division of government is treated
as more than a helpful division it could be argued that the judiciary
should have no control over administrative application of the law. Admin-
istrative agencies perform functions delegated to them by the legislature.
Frequently they are responsible to the exectuive branch of the government.
So it might be argued control -of adjrlnistration shculd rest either in the
legislative or executive or in both, llo matter what the desirability or
the logic of such a contention, the judiciary in our system inlays a much
more vital role. The first nart of this study has been devoted to point-
ing out that the judiciary having acquiesced in the delegation of power
to administration has nevertheless maintained a strong control over the
manner in which power has been exercised through a variety of concepts.
(59c) It is well recognized thai at the beginning of our government,
once judicial review had been established, the courts could have applied
the doctrine of delegata. uotestas non riptest delegari to umny acts of
Congress. Wliether from wealrness of position or genuine desire to aid
in the orderly development of needed governmental forms, delegation was
allowed. Later as administration became more vital the courts quietly
developed "broad review" doctrine (59d). It must be remembered that the
-46-
first declaration upon this problem was one of "narrow review". (59e)
But let it not be forgotten that a review \ie.s indicated. That is iraportant.
llow v.'hat is "adinini strati ve legislation?"" 'Yhose term is it and
what are the iniplications of it? Dr. F. F. Blachly, co-a!uthor of a treat-
ise entitled "Administrative Legislation and Adjudication, " states that the
term "administrative legislation"' is used both in France and C-ermanj'-.
He believes, however, ths.t the real basis for the terra's use in this
country is the frequent reference by En.^lish writers to adj.dni strati ve
rules and regulations as "delceated legislation" and other related ' t'^:.'ns.
(59f) If this be true, those v/ho believe the name "let,i slat ion" works
such miraculous changes in our administrative law have failed to consider
that as the teria is used in En;,:land it embraces both "legislation" in
the sense of class rules and "adjudication" in the sense of orders directed
at loarticular individuals. (5Sg) Perhaps, legislation is being distorted
from its true meaning T/hen it is looliod upon as a class rule. The, great
mass of legislation has aXnays been private bills, and too, classification
can be easily extended to the jilace where a rule r.ay af:'ect only one
individual. In fact, it is extremely difficult to find any tenable dis-
tinction between "administrative legislation" and "administrative adjudi-
cation." Professor Dickinson offers the following:
"What distinguished legislation from adjudication
is that the former affects the rights of individuals in
the abstract and must be ap^^lied in a further proceeding
before the legal position of any particular individual
will be definitely touched by it; while a,djudi cation op-
erates concretely upon individuals in their individual
capacity." (59h)
Professor Dickinson does not contend for any hard and fast distinc-
tion with entirels'- different legal consequences flowing from each class.
In fact he speaks of the futility of trying to classify a particular ex-
ercise of administrative power as cither wholly legislative or wholly
judicial (59i). If pushed to its' logical extrevne and to a use Professor
Dickinson never intended, it v/ould indicate that the "cease and desist"
procedure was not adjudicatory merely because enforcement against a stub-
born party could be secured only by recourse to the courts. (59j)
Wha.t the test given amounts to is that: Wherever the enforcement
machinery lies in the control of the administration, its act in using
that machinery ag-ainst any individual with the result that his property
or his person is affected is "adjudication." The instances vriiere this
is true are not iriany. They exist, particularly, in "broad review"
fields. Tax collectors mey distrain pro-ierty or alien inspectors arrest
an alien. If the test-, is not based upon the actual enforcer.icnt of rules
or orders uiade it must refer to classes as opposed to individuals. This
has already been considered.
The difficulty of creating cny air-tight distinction within the
field of administration is abvious. It iirosents an even greater problem
than creating such distinction in the general field of government. It
ignores any accepted classification of government. If re treat admin-
istration as a fourth division of governivient , this view says administra-
tion is not different from the legislative in certain sogregable parts
nor from the courts in others. Thus, the raison d' otrc (a flexible
'jQZ8 new governmental form) for a separate adraini strati ve division falls from
-47-
the Fei.^ht of clssfificritior.. If ^.ovemp-'.ent is voiwed as polic^r making
anji .policy euforciiiti, atliaiiiistration which "belongE to the latter func-
tion is so classified as to partake of bo bh. Here the difficulty pro-
hahly lies in tha.t delegations have /riven adrainistration such policy
control in the past tha.t .t!ip rcr.l function of ad/dnistering a stated
legislative policy ]-£:s oeen over;:.oo':ed, YTnen this is considered the
value of classiiications such as "lei^islption" raid "adjudication" to
bind. the courts and our minds must Ijc seriously questioned.
"Legislation" a,nd "adjudica,tion" are merely convenient analogies.
Merely because an administrative body is m':i'nja general rule in con-
formity with a policy stated does not mean that this action should be
outside the courts* control while the enforcement of that rule is care-
fully checked as to --.rocedure. If the courts adopted this view they
:;u.ght well be "swallowing a camel" for questionable actions could be put
in legislative form while the enforcement gave the most elaborate proced-
ural guarantees.
It is a well-established leg.^1 principle that the legislative judg-
ment is not to be questioned as long as it operates in the ambit of its
constitutional powers. Yet rafiny public men and students of public law
have repeatedly charged our aighest court with substituting its judgment
for that of tiie legislature. A legislature does not need to hold hearings
upon a bill althou&i it usually does. It is presumed to know the facts
u:oon which it bases its judgment. Faenever a court steps in and says
those facts are inadequate, it also says in effect either the legislature
had an improper factiial basis or it did net follow a view which could
be reasonably sustained by the facts. Either of these views amounts to
a higlier procedural requirement being placed upon the legislature.
That the courts do not step in -:-vd place limits upon the parlia-
mentary conduct of either house of Congress as a deliberative body does
not mean that the magic of the word "legislative" covers any action taken
under its mantle with an invincible armor of propriety, or sanctifies all
procedure branded with its name. On the contrary, where the Congress
delegates the legislative function of investigati:n for the purpose of
legislation (59k), the courts have erected some rather stiff procedural
requirements and limitations (591). If the Federal Trade Commission in
its investigatory capacity be either an administrative body or a legis-
lative agency, it would seem that the fact that limitations were imposed
by tlie CQ-urts stands as authority for the proposition tiiat the courts will
under proper circumstances limit the procedure of administrative bodies
acting legislatively.
It could hardly be expected that by terming administrative action
"legislati-n" it would be clothed with the same dignity in the eyes of tlae
court as the action of a coordinate branch of government. The courts have
not been prone to classify administration in any final form. They reco-
gnize tiiat all acbninistrative action is not alike (59m). Mr. Justice
^lolmes pointed out that these actions migiit be "legislative, judicial and
executive in nature." (59n) Treatment does not depend so much upon the
types of administrative action but upon the particular questions that
may come as to operation in relation to the individual. Much is made of
the Uorwegiaja^ Nitrogen case, which has already been fully distinguished
from the NBA -nroblem in this cliapter. That ca e must be limited to the
fact tliat the attorney of those affected "by tie Tariff Commission's re-
commendaticn demrjided to see all the evidence before the Commission, even
that which it had accepted as ccnf idential. 'Here the term "legislation"
presented a convenient analogy to sug^ijest as in the tax assessment field
not all tie proced'aral guarantees of "a tpi,vn meeting" or a Judicial trial
need he afforded to protect the individual. Proper administration is a
balancing of administrative efficiency and fairness to the individual.
The Flexible Tariff Act sets up certain procedural requirements, partic-
ularly notice and aearing (59o). Although the courts have enforced these,
other questions cf this character hc?.vo not arisen except the limited pro-
blem already suggested (59p). The status ox the law upon this act is so
indefinite that it can be safely said that tliere seems to be no really
strong authority existing for the "le;?;islative view."
Tlie Panama and Schechter cases have been pointed to as lending
credence to the "legislative" approach. In the latter case the court
used the term "legislation" to strike dovm the delegation, not as an an-
alogy upon which to limit its ovm pctvcrs of judicial review. Legislative |
power except within certain limits can not be delegated, said the court.
This was no indication that vfaere properly delegated the courts would ignore
their control exercised in the past over use ;:f d'3legated power. In the
Panama case rmich tht? same situation i-3 true. Tliere is, however, an addi-
tional and valuable evidence. Alternative grounds upon which to strike
down the governnronAts case were offered. Ot.er tian tlie impropriety of
the delegation the court said an execative order imist have associated witli
it some possible factual basis upon wliich an official may act. This is
significant. . Tlic ordor issued was just ar, broad and general as an NBA
code. Its character as legislative sooms identical. Yet the court in-
dicated a willingnpss to control tno technical procedural question indicat-
ed. Further, the court indica,tod that it still conceives of administrative
action in tonas of fact-finding as op jysod to the traditionally stated con-
cept of legislation.
The dissent of Hr. Justice Cardozo has been pointed to as setting
forth proper legal theory as to the nature of the President's action. It
is suggested that tie dissent says the President's order is "legislative"
and not subject to procedural require;,ionts. It 'is to be expected tliat the
Justice who wrote tie opinion in the ITorweiL:ian. Nitrogen case would use
similar concepts i\erei -No matter hov; much one approves tie philosophy of
dissenters in desiring freedom from judicial review, it shculd not be for-
gotten that law is still to be found in majority opinions.
There is a recent case which gives Mr. Justice Brandeis an opportunity
to offer his views, writing for a 'onanirnous. court. (59q) Here he attaches
some of the ciaracter of legislative action to administration. It is to be
carefully observed that this raises no conclusive presumption but merely
raises a prima facie presumption of validity (59r). Pains were talcen to
point out that the fact fiat tie action was called "legislative" did not
make it binding upon the court, Tliis is m h.arrnony with the language found
in the dissent by Mr. Justice Cardozo m the Pang-irna case.
The attempt in tiiis study is to point out the state of the law
and possible judicial trends in thi:s ailministrative law problem. Proper
weight must, of course, be given to all the pertinent facts and analogies
9838
-49-
in any particular situati:n. The realitios -.if judicial control can not
"b J i_,n rod. It i ■ i t/ -:■ v<>y!: ■ f t. .; writer that there is little hope to
avoid tiern in a field such a VliA by neat definition and classification,
or by adding a step (iCi^lslati.n) to the ; .drain istrative process which
by its nature indicate-3 tJ.e dele^^atJon .f :^roator powers to administration
and can not hope to find inimecliato favor in tiie judicial eye.
"Ho one would deny that tiie .delei;ation struck down in the Schechter
case was declared bad because tiiere was rm attempt to delegate great legis-
lative power. As such tlie wjiole code-making procedure was illegal. The
only thing this study can hope to do is, considering the powers granted
existed constitutionally and that the delegation was curably by setting
narrower limits upon actijn and setting more well-defined standards, treat
the problems as ordinary problems in administration. If tlie delegation
had been cured it is highly improbably that the powers exercised by NEA
T;&uld aave been of such a policy nature to have made the word "legislation"
such a bogey. The probability is that KRA would xiave been such a fact-
finding agency that procedural requirements would have unquestionably at-
tached. Problems in N3A administration are treated (in the chapters that
follo\Y) individually as a matter of good administration and justice in
the particular circumstances surroxmding it. Each problem is viewed in
relation to law and practice in related administrative fields with a part-
icular consideration of whether NRA problems demanded such procedure. It
is not intended to split hairs ^oy attempting to point out the legal limits
of undesirable adjTiunistrative practice. Bather it is hoped to suggest, by
viev/ing tlie precedents and the circuiiistances, what practice would have been
so eminetly fair and just that it would escape question upon grounds of
administrative law.
Tlaat tiie President was given power by the Act to approve proposed
Codes raises some interesting considerations. 'Jould mandamus or injunction
lie against him either to force tlie issuance of codes or to prevent their
approval? Prcm his position as head of an equal branch of the Government,
the President ujider the sepai-ation of powers theory derives immunity from
judicial process (60). .Ano trier basis has in the tmalogy between the Pre-
sident's position, as head of the government to sovereign authorities in
other governments. Still a further and compelling basis rests on expediency.
Althougli his actions in approving a Code may not be enjoined, the courts
could achieve the same result by declaring the President lacking in power
(6i), or the approved Code arbitrary and unfair in substance or in procedure.
It would seem that the President could have been arbitrary or capricious in
refusing to approve Codes v/ithout affording aggrieved persons a judicial
remedy, no matter how closely their proposals were in accord with the require-
ment's of the Act. Since the drive was to approve codes it was not probable
that t?ais question would arise. It does indicate, however, a difficulty
that may arise from giving such power to the President.
As to an Administrative Board or officer both mandamus and in.1unction
will lie in proper circuiiistances. '.T.iere' any discretion involved has been
exercised and all that remains is a ministerial duty mandamus may lie (62)
or where jurisdiction is refused by an a'lministrative board mandamus will
lie (63). So mandamus might have properly laid where NHA refused to consid-
er the proposal of an industry, or miere an official refused to forward cer-
tain papers w.iich he should nave forwarded under the procedure as set up
9838
-50-
(64). If a shewing were made tliat tlie mere approval of a Code ty the Pre-
sident would have caused irreparalDle injury, it mit-,ht have been urged that
the forwarding of tlie Code by the NKA to tne President could be enjoined.
Such an argument would have been of doubtful merit (65). Tlie effect would
have been enjoined the President. It is not contended here that wiiere the
courts might view ITHA as acting as an agent of the President in a narrow
sense that extraordinary legal remedy v7ould issue. Tliere has been too
little time to fully consider this problem. Instances where injunction
miglit properly lie can be envisaged alth-ugh the courts are extremely re-
luctant to issue extraordinary legal rewedies. Tliis is especially true
of mandamus. Hius , a premium is placed Li"3cn inaction (66). TLiis mciy be
only an incident of the courts feeling, the attitude having arisen from
the reluctance of courts to give relief requiring positive action by those
it can not easily control. [This discussion has been intended to sl:iow that
the introduction of tne President as the final adjainistrative authority
complicates the situation as far as tie application of extraordinary legal
remedies because of the dignity of his position both analytically and his-
torically. Unless there was some compelling reason it would seem desir-
able to have such final authority rest in sirae other person or body than
the President.
The N.I.R.A. makes specific provision for conditional orders of ap-
proval (*). There are a. few cases involving the use of such orders making
requirements not specifically included in a statute (67). The few cases
seem to allow regulations reasonably consistent with the statute and its
purposes (68). Professor Freund has suggested that "in the absence of ex-
press statutory provision the power of administrative authorities to annex
conditions to licenses should be denied". (69). This seems correct where
the adinini strati on tries to gain ends it could not reasonably reach under
its statutory power. It would not seem to be so compelling where the con-
ditional order was harmonious, with the statute and made to remedy a defect
in a proposed scheme. Also considerable merit can be seen in the use of
a conditional order as a protection to the public (70). The Act provided:
"Tlie President may, as a condition of his approval of any such
code, impose such crnditicns (including requirements for the making
of reports and the keeping of accounts) for the protection of
consumers, competitors, employees, and others, and in furtlierance
of the public interest as the President in his dis-
cretion deems necessary to effectuate the policy herein declared."
were
Tlie reasonableness of tlie use that tie President's conditional orders
put to would seem to have buen the tost.
The Act was couched in broad terms.. The procedures to be used were
not specified. The dominant scheme of industry written codes, apo)roved by
the President, was a new governmental form. Its main precedent, the English
(*) Secti n ;5(a)
9838
procedure by scheme, had n^jver been rmt to such large uses. The pro-
codural precedents that ai'.eiat be ai';)]. i.ed by the courts are difficult
of ascertainment althcUijli the evidence indicates that the Interstate
Corainerce Coramissicn supilied the closoist ,'iiialogy. Eie subject matter,
although not the ..lanner c.i tr.;atr;v-.nt, was inore cloiely related to that
dealt with by the Federal TruC.i Corknis-jicn. The making of Codes appears
to have been both lei^islativc niid. adjudicat iry. Placing final power in
the President created a legal difficulty, in that there ir? no recaarse by
extraordinary legal process a^ains^t his acti-in or inaction, as did the
failure to specify the conditional order of approval as a proper device.
An additional problem lay in the administrative approach.
9838
GHftPTER VI
THE iiDhlNISTRATIVE aJ-TRGaCH
The i-TISA wps d.esi,.rAed tr meet not one nrolDlen but a number cf these
presented by the "Depression". For this verj reason the so-called theories
of the Act were too mmei-ous (l) to furnish any really useful guidance to
most persons interested in the Act (3). The nio-iular name of the statute
indicated that it ^vas enacted to do a job - start recovery. This is fur-
ther shovm by the self-devised nf^rae "f the Administration. In addition to
the li-ait.-ition of the Act in the creation of the scheme there were limi-
tations in the circumstances existin:r at the time cf the Act's passage.
A state of near panic i-'as becoming ai^narent. Action was the essence
demanded. The advantages of svrift efficient administrative action r;ere
needed if the imT^etus cf recovery -..'as to be felt at once. (3) It w^s
this initial impetus •7hich it was thought would be the momentum necessary
to bring recovery.
WuL started from scratch. There was little oolicy and no organization.
The latter fact lias caused sone adverse comment (4). It is doubtful if
this covi.ient is well taken for the intention v/as every^^here a~Tnarent to
effect an organization as sr^rn as rjossiole. There was the su^r;.p■estion that
the President could nullify tha whole A.ct by doing nothing (5). Shore are
many lai;-s which he could make inoperative by failure to act. The imiiortant
facts are what is done or can reasonably be ernected, not the weird
■Dossibilities. KRA had enough difficult -nroblems to face without conjuring
up improbable "straw men".
The situation was such that speed was ^referred to slow painsta':ing
survey/-. This was the case because a consensus of action by industry \vas
desired: and the latter method was not in -riarticular favor in an.y event
with the then MA Ad.ministration (c). The demand for celerity of action
required a certain measure of industry croT)eration. It '^-ould have been
impossible to have created the codes that were made without such aid. Of
cotirse it might have been possible to have licensed some of the larger
industries but this procedure was not desired. It smacked too much of the
hated concept of "government in business".
General Jolinson has described MA' s position;
"All other agencies had billicns to loan or give away.
ITrA gave nothing. It took. It imiirsed sacrifices. Everybody
likes Santa Glaus. ITobody favors Simon Legree. C'-'nsequently,
ITILa made powerful enemies".
This could only mean that cooperation of industry could be secured by
offering concessions, showing positive advantages to be gained or by
threatening to use the license power. The former two methods were chosen
although l^fflA was not sure how successful thoy would be (8). A number of
industries offered codes becaiuse it was being (Lone by other industries,
because it was the popular thing to do. This vras in part a result of a
tremend'-us sales effort on the -part of NEA which might be more unlcindly
called "ballyhoo". A number of industries possibly more keen to their
9838
cm intnreBts, rirssibly "il'li i"; t<~ stand a-7;pinst the Adjninistration had
to 'be rfiered orsitive incentives. (:.'). Anon,;:; the incentives offered
were freedom from the Anti-T'ruKt la' s, and a positive sanction in enforcing
approved industry agreemer.ts -d'ocn recpl'jitrpnt members of industry.
ICLA. MPS dominantly inter'.^r.ted in Qi'-.curia^ iDetter conditions for lator,
hL^^her \T>3;^es and a spreading of the vvork. This was done to raise the pxir-
cha.sin£; jc^er of the masses sno' erasn unera-plojTaent (10). Industrj'- nas
seelrin^; V)C sitive 'advantages through favorable trade practices for its
sacrifices (11). The result was usually a bargaining 'by industry -aith
goverittier.t (lla). This v;as recognized by a number of i\!IlA. officials,
fevierpl Johnson described the situation as "olain horse trading and bare-
faced ;ir".vr playing" (12). Other high officials less robustly called it
p "cr.id -jro quo " ( 13 ) or "partial compensation for increased labor costs"
(14). The nc ticn became so pouular v/ith administrative officials that
the-;-- svugges'ted it to industries, -nerhsps thinking the industries iTere not
suificientlj'- avrare of the possibilities (15). Codes grew up and \7ere
ariproved, not bec?.'use 'SUA thought there was evidence to support the pro~
visions, but because they contained the best provisions HEIA. thought it
coi.ild rbtain fx'ora industry (16). It must be remembered that NBA was not
an i-prrtial judge. It was a proponent of certain ends (17).
iiji'-ther re sill t cf the code technique was to place agreement and
majrrity vote at a ■'u-emiura. Often this became the only guide to the
propriety of code nroposals. Shis was true both as a res'ilt of the
dixficuJ.tv of securing necessary economic data tc form a basis and the
viev/s of presiding officers. Even '-'here a presiding officer preferred
to collect evidence he was handicanped by the pressure to get codes
amiroved. After the excitement of those hearings following the first
few large ones presiding officers as a "hole tried to get some explanation
of the purpose of code proi:iosals. T-'O things probably prompted this:
1. A desire to avoid later intemretative difficulties and 2. The
insistence of the Legal Division on the need of "building a record" (18).
Often there was a feeling that negotiation should take place in the con-
ferences, and that industry agreement was the only essential other than
the officer's own often naive view that the provisions be legal (I?).
This latter view usually meant a Clearance by the Legal Division, members
of which often were swept along by the haste everywhere surrounding them
to conclusions none too carefijllj'- considered. Provisions for control cf
substantial economic problems by majority vote was written into codes (20).
This discussion of majority vote as a substantive test is not offered
critically, although it is felt that such guidance is not always the most
wise in p-p. econoiTiy so intricate as ours. It is offered to afford a back-
ground for the procedure followed in NRA. Majority agreement procedurally
see^.s tc be a poor substitute for careful explanation of means and ends
set forth in a record which may be preserved to offer to the court;s as
"justification" for action taken or aiDnroval given.
As a result of the serious administrative problems and the relatively
com::snding position of industry, the Administration's position offered
many difficulties. Haste in s^^me matters, delay in others, and confusion
in nocrly all existed. There was r,ressure from all sides (21), by industry,
by political forces, and special labor and consumer groups (22).
Business came to KRA more quickly than was anticipated. NEA had no si-uf-
ficient organization to handle the iTroblems presented (23). Coupled rrith
the -oressure to get codes "throui^h the mill" it can "be easily seen how
errors would creep in, provisions would -not he fully understood and well-
reascned judgments not always given. Of this, all KElA directing officials
must ha.ve heen fully conscious (24). In the "balancing of disadvantages
they prchahly consciously chose the course follo'-.-ed - haste in approving
codes.
Haste in securing personnel was easily arjpa rent (25). No systenatic
scheme or necessary qualifications for any responsihle positions were even
announced.
One of NRA' s most important functions should have heen fact-finding.
HHA v:as meant to deal more realistically with "business problems, than could
the courts or the legislature (26). In this there was such haste that it
was alhicst impossible for h"HA tf^. properly perform this function. The. con-
fusion (27) and pressure were so great that responsible officials could
not stand the pace physicall;'- (28). With nerves unstrung and body tired
careful fact finding became a distant dream (if it viere even remembered).
KRA' s own procedure demanded such haste that a busy T)residing officer or
adviser could not hope to even learn, let alone analj'-ze the basic facts
of en important industry in the time allotted (2S).
In the drive to get codes approved specific policy was ignored at
first (30). \Ihen policy was issued it often proved so broad and sweeping
that numerous exceptions were required (31).
Haste had a powerful effect upon procedure. Hearings were necessar;-
evils to be dispensed v;ith as readily as -oossible v^henever there was a
demand to put a code or a prevision through (32). The work could- be more
quickly 6.one in the conferences. That the record failed to contain
these often valijable evidentiary discussions mattered little. The quickest
most convenient administrative means are not always the best, especially
if there is -oossible judicial review (33). The difficulties that might
resiilt from questionable proced^ore seems not to have been recognized.
There was no planning that a search villi disclose other than the "goldJl
fish bowl" and "controversy" ideas (34). The res-ocnsibility of the Legal
Division should have been of a most grfive cteracter. Recognizing tliat
man-y presiding officers had no legal training the legal adviser should
have liad considerable hand in sliaping the course of hearings. Even where
the presiding officer may have had legal training there was no assurance
that he had a proper appreciation of the Tjrocedural requirements of ad-
ministrative law. The same holds good for legal advisers. The Legal
Division as n unit seems to have paid little attention to the problem of
procedure, A careful check of instructions given to legal advisers dis-
closes onlj;- fifteen memoranda with any bearing on the problems of this
studj'- (33). Of these only a very few toxiched on procedure (36), Their
dates indicate that they came in the form of a rationalization of existing
procedure rather than a careful recom.aendation upon which -nrocedure should
have been built. In a resume of cases upon the UIRA published b-/ the
Legal Division there is no division dedicated to t)rocedure desoite the
fact that some of the cases suggested the problem (37).
9838
It is difficult to place the resiicnsi"bility cf the lack of thought
l;1v j: pi- Cv.o;.;re ...i'O ■.:' : .. - I- c-rv:; fcions vrere given ornlly. The Legal
Division Tras.a'Tare of the 'iri'ble^a ns indicated by its memoranda even if
the awareness cnme as ,?n nfter-thou^^ht, Thc! •res-')onsihility probahl./ vpiries
fron Cfse to case. More re£5iiov;sib]a t'v.f^t-i .•-■'ny '»orsrnal failings must have
been the drive tc produce c-.'ss, Cjiick -irrduction d^^es not mean per-
manence or stability. Propv;r -Mrrcedure oould lifive gone far to have in-
sured this had the Act been held constitutional,
luien the need .for policy \ir->s. recoj-nized tiiere -ras a tendency toward
tor great ri^^idity. G-ove rni.ie nt has devised no soiinder methcd of dealing
with -Qrcbleras of economic ancT social import than the case method. The
diff iciilt-- found in the A:iti-trust laws, it was claiued, lay in their
policy of trying to fit all industries, to one mould. WAA in its latter
days developed in this direction (28). There were situations T^^here policy
v/as not a tiUfficient answer to the economic facts. A poliCy that might
allow one industry, because cf its organization unusual liberties might
be distinctly unfair tc another. The form of such trouble lay in allow-
ing too great freedom to an industry b e cause -nolicy requirements had been
met cr in the desire of Det)uties to adhere to policy desnite industrj^'s
well-vrounded reouest. . Periiaps the difficulty lay not so much in the
policy aniicunced, but in its ferns. - Standards of action, standards cf
means and end,- coupled iwith intelligent administration may be far more
Toroductivs than absolute rigidity of. detail. Of course, the latter is
desii-a-ble as a matter cf uniformity where no other outweighing considera-
tions e;:ist.
It nay have been that, s\ich policy grew up because of apprehension of
higher adiiiinistrative officials toward the administration of those
officials nost closely in contact 'dth individual industries. (38a) Id .'■.k'x'itl?
tc the haste v/ith which personnel v:as selected there were other pressing
probleiis -presented by personnel, -jarticularly from Division Administrate rs
do\7n tc and including Assistant Deputy Aay.iinistrators, NilA' s personnel
prrb]e:..s can not be assigned t^:- po'J.itical patronage fct it is common
knowledge that the vast mpjcrit3r cf those in responsible positions
(and many not in such positions) were brought into the . organization
thrcugii personal connections with those already in KIA. The immediate
nucleus of officials were trusted friends of General Johnson or business
associates. There were som.B labor leaders. On the whole they or their
friends seldom furnished the important iDresiding officers. People there
were aplenty desiring to work for MRA. There may have been a sufficient
number cf ca-oable administrators with a -oublic viewpoint, but this is
doubtful. One thing is certain. Many presiding officials had no con-
ce-ntion of the proper character of an administrative hearing or its ;'7ur-
pose. Even worse is the suggestion that presidir:g officers may have
often h'-'d -.^r at the time had substantial interests in the ind.ustries
coLiing under them although this was probably contrary to MA policy (3S),
There v/ere a number of cases where MA officials were graduated into
the ranlcs rf industry a t comparatively princely salaries (40). This
does not mean that there was dishonesty upon the part of such persons.
It i;-dicptes, however, such an akiness of spirit that the public interest
as apart from industry's internist or personal interests might have been
soiietij-.es slighted (41). The principle is well stated in the judicial
9838
field that no man shall he a judge in his otoi cause (42). There is little
reascn ^"hy it should not ai:)ply in the administrative field. It is sc
recognized in England (43). The rule is a protection to all interested
persons ano. to the judge. Wo matter the honesty of the presiding officer,
it is uise to avoid the a opearance of possihle evil. The cry often
raised nps the need for trained men. a man v/ho knows the prohlems cf an
industr]'- too intimately because he has once lahored with it may he so
hiased as not to he an irapartial judge. It is possible to understand the
prohleiis rf an industry withoiit having n'orked for it.
Perhaps in light of the circumstances HRA could have done no "better.
It r/culd have he^n impossible to have called upon the Civil Service. The
job nas too large for it (44). The Brookings study well states the
situation:
"a prcblem in nublic personnel administration more
difficult than that of sec\xring industrial specialists
for code drafting and code enforceinent can scarcely be
inagined. To secure at once persons well versed in the
intricacies of the industry and yet free from bias and
questionable interests ijas a diiiic\ilty of the first
iiiag-nitude. Many persons would have had more confidence
in the selections if eligibility for appointiaent had been
determined more in the open by an inde-oendent personnel
agency using a sj'-stem in which the facts of education,
experience, and interests were passed upon by a special
ccnmittee of cora-oetent examiners of high standing, and one
which left a reasonably complete record". (45)
This element cf bias sO:ietines showed itself as ins\iff icient aware-
ness cf any public interest. Hesponsible officials made promises which
could net always reasonably be kept. ?or examTDle , a resoonsible official
made a prmise that an approved code provision would not be touched until
the iiidustry agreed to the changes (46) yet the Act indicates a desire
tliat the President modify or cancel any enprcved code provision inhere he
deevaed such action necessary (47).
Ail additional difficulty lay in the fact that presiding officers
did not always get along well with their advisers. Advisers like hearings
were sometiiaes looked upon as a needless nuisance (48). Much of this
feeling resulted from the idea that hearings were to be forums of contro-
versy opposed by orders to rush the code-making process. Controversy
delayed hearings. Long hearings delayed "putting codes through".
The theory of industry self-government provided a strong limitation
upon adji.inistration. Many felt that •jith adequate industrial information
much cf the solution of the depression \/ould come from industry (49).
Many industrial leaders and some 'MA officials followed the theory tliat
whatever a representative group in any industry thought best for that
industr- should be accepted as prima facie in the public interest (50).
After crdes were approved this ^-as extended tc the place that MA rfficials
often discouraged the sending cf pertinent information to the Administra-
tion (51), Indifference to the public interest as such further colors
9838
seme rf the difficulties to Tae foitjid in the «dninistrative aijoroach.
Any ccnsideration of the orocedural orobleras must "be made only pfter
an understanding is had cf the inherent limitntions cf the scheme and the
ad'iinistrative approach. Industry's ability tc Dargain, the trust placed
ty MA in industry self governiaent and the value of majority vote, the
haste and confusion surroundinp; the v^hcle undertaking, the failure tc
recognize the importance and difficulty cf procedure, and the limitations
of the personnel all had important influences upon due process of Ian,
■both procedurally and substantively, and the lack of it in MIA.
"5S-
CHAPTEIl VII
JURISDICTION ni3 JU^ISMCTIQTAL FACT
HEA assumes a ride range of jurisdiction. Whether this was always
properly assumed is a preliminary consideration to the propriety of pro-
cedure. The revievT exercised "bj the courts over administrative action
through ouestions of jurisdiction and jurisdictional fact has already
"been ooserved(l) as has the recent iraportance of the latter question in
the field of aojninistrative lav (2)0 Jurisdiction has a close relatio:i
to questions of la'" and it is quite possible that a number of the broad
terms in iiie Act mifht have been subjected to judicial definition. This
it has been observed hs.Dpened to many of the problems of the Federal Trade
Comnission (o). A more tellinr revie^?' "ould have been for the courts to
have detenained vhether the actual f;;cts supporting jurisdiction existed,
A number of questions that i-ould hpve furnished both problems in
jurisdiction and jurisdictional fact appear in the Act. The codes were
to be 8;pplicable to an industry or trade or subdivision thereof (4),
"hiat is nroperly an industry or trade? Did the Jsbricated Iv.etals Code
(5) cove:: :aore than one industry? The code for the G-raphic Arts Indust-
ries (5) paiiooted to cover anyone who might perform the "act or process
of printin,';,', impressing, stamping, or transferring upon paper or pape]>-
like substoiices, of any ink, color, pigment, including any and all par-
tial processes aJid services used in prinfe:ing". The code by its title
covered more than one industry/ although the Act did not specifically^
authorize such coverage (7), It seems, of course, that subdivisions of
an industr"" might be split up. Even this might be carried to such extreme
ends that courts T-'ould interfere (8) if they felt that such actions had
been carried unreasonablj'- fr r. The problems mentioned are illustrated
by the titles of such codes as the Lumber and Timber Products Code (9)
and the Mop Stick Code (lO), Could a verticle code be said to properly
cover Oil industry? The resale price maintenance plaji of the Tobacco Codes
were in effect a verticle code (ll). It wss often possible to "freeze"
a distributive system with such a code. It is quite possible vith the
courts' laiorm antipathy to this tyne of action that the courts might
have said on industry was not raecnt to refer to such separable activities
as maiiufac ture and sale not generally carried on by the sam.e persons or
firms. Imoroper classification of firms as belonging to an industry
where there was good evidence to show they did not is another possibilits'-
(12). The suggestion is that the court might have tried its hand at
classification. Overlapping codes furnish still a further problem. It
co-old be easilj'- thought that it is imreasonable to require a firm to pay
tribute to more than one Code Authority while performing only one opera-
tion (13) or to be in the dark as to '-hich set of fair trade practices
it must operate ■under. The Baking end Restaur:aat Codes illustrate the
situation (14). Large restaurant chains operating bakeries for use in
connection with their resta.ur^nts or separately, were covered by the
Bakin'^' Code (15). Overlap.oing codes might mean that a small group vrould
be compelled to abide by a particulr'r obnoxious provision (16). It is
quite poEsible that when code st 1-1:1.0 turcs became unreasonable the Court
would have said there was no jurisdiction under the NIRA. to approve such
9838
a code or that the grourp codified '-as not in ff.ct an inaustry m tne
me;.uiin of the Act.
Other problems aside from code stracture raise the question whether
co6.es were within the pui^poses of the Act. Could a code properly cover
persons eraploying no lahor? It has "been thought not. Yet, this is pre-
cisely what the Fur Trapping Contractors Code did (17), The Act says
"trcde or industr:/", not employers of labor. Hoirever, the entire structure
of the Act indicates that the latter was intended (18). In the instant
Code the proponents were Louisiana trappers of muskrat ■ r-ho le.-. sed the
trapping privileges on large bodies of s^-ai'ip prying a percentage of the
catch. Some trappers were actual employees of lond-owners or intermed-
iate iMid-lessors. Both the trcppers and the land-owners and middle-men
who leased from- the land-O'-'ners and to the trappers desired large percent-
ages of the catch. Colonel Conkling, the Deputy Administrator, felt that
the lojid-owners had the upper hand and that the trappers were in need of
relief. This he determined to give them through the medium of a code.
At first all the advisers including the legal adviser (19), expressed
the opinion tha,t this group could not oroperly be given a Code. Finally
Colonel Conkling prevailed aJid-the Code -as named Fur Trapxdng Contract-
ors Code instead of Fur Trappers Code. The ma-ic rord "contractors"
with a grouTi of dummy labor 'provisions -cam oufl&ged the situation so that
a code wa,s issued (20). In-such a situation a court might be eroected
to say there is no reasonable relation here rith codes contemplated in
the Act ar-d the Aojuinistration h-r s no jvirisdiction to approve such a code,
■,hen definitions '"ere hastily and loo'sely drawn serious questions
of juriscMction often arose. Probably the best means of settling these
contests ^Tould have been to review the' representati-ve character of pro-
ponents and assenters. This method was frequently ignored. In its place
interpretation was resorted to. An interpretation upon -the basis of words
used in the definition might extend the code' s jurisdiction far beyond
that which it could claim as a matter of representation (2l). If a group
were brought under a code as a result oi^ such a procedure it would have
an excellent ccse on '^•hich to challenge the code's jurisdiction.
Jurisdictional problems bet^- een governments and between their agencies
frequently arise (22). A number of jurisdictional problems 1". y in the
wide reference of the Act to trades or industries, while other agencies
exj-sted -.-ith a measure of industrial control. The Federal Trade Commis-
sion and the Department of Justice had long been active in the field of
industrial relations. Consent decrees and injunctions secured by
these agencies provide the largest problem. There was an effort made to
clear with the Department of Justice, and many codes were delayed because
of this (23), Although some decrees r-ere formally modified many were
not, yet code provisions Tjermitted actions in violation of court orders
(24), Ail unusu ,1 sit-oation would have arisen had the courts -ounished as
contempt such actions, l-o such action by the courts has been brought
to the v;riter' s attention,
A nujnber of proposed ajid approved codes involved or interested
other federal agencies. The Agricultural Adjustment Administration, the
Petroleum Administration and the Federal Alcohol Control Administration
9838
-6C-
each exercising po^er delegated under the Act rere interested in a niimber
of codes (25). In the codes interesting;; the latter the Treasury Depart-
ment had a grave, interest; as the licensing agency (26). Then too, the
relationship with the various labor agencies was not clearly defined (27),
The public utilities -jroposed codes eech. involved a relationship '-ith
other gov3rnmental agencies. The Telegraphic Communications Industry
was substantially related to the pcjers of the federal Communications
Cohfission (28). The Natural G-as Industrjr ra.s of interest to the Petro-
levn Board (29). Of more interest and causing considerable dissention
was the Electric Light and po-'er Industry (30), Altho-ogh NBA' s relations
were nainly of the most cordial nature in. a cane like that last referred
to had NRiV persisted in, codifying the industry there might probably have
been pre.ented a jurisdictional problem for the courte.
An ijiipbrtant problem of ultra vires is presented by code legisle.tion
rhich undertook to govern persons outside of the industry making the code
(31), There vere many refinerients of this problem. . Some codes accomplished
the desired result by providing members could not sell to or a.eal with
firms engaged in certain practices (32). The effect Yfas usually sujst:m-
tial. To remove a source of supply or a market may be as substantied in
results as legislation in '-'ords, .The Legal Division recognized the serious
nature of this problem (33), Despite this, examples v.'ere frequent.
It vas generally conceded that as to the desire to have a code pro-
ponentr,. iiust have been representative. The exact tests which should have
been applied were- in dispute. Of course, ,a representation. of as high a
percentage bj-.each test, and of over fifty, percent by .all tests -'Ould
have been desirable. Economic data was sc scarce that it was possible •
to misrepresent represent?ation in many instances either through ignorance
or design (54), ' The problem of actual representative character is cer-
tainly one of jurisdictional f.act. There was a possibility that the
courts would imdertake to determine this question themselves if they felt
that HHA had. found incorrectly. IJEA's drive to approve codes m.ay have
often caused responsible officials to accei.)t less evidence than would be
desirable upon this problem. Upon the whole, however, this was one of
the points most scrupulously checked by the Administration, particiilarly
the Legal Division. , ' ,
Aside from the code as a. "'hole another question presents itself.
Was it necessary that there be a majority. of assenters to each code pro-
vision? Certainly, a majority of the industry by some, test must be as""
senters, Dir' it matter that their a'-''sent was. gained, despite strong cuid
even violent objections to certriin code provisions? Cases can be imagined
where this might have been important. Of course,, many of the more erpei— ,
ienced inctistry members refused to r.srent uritil assured of their desires
(35).
This brief survej' shows that HPA' s jurisdiction -^'as open to maaiy
questions. The facts upon which jurisdiction was thought to rest 'fere
not ali.-ayo reduced to absolute certainties. In both these questions of
representative character there existed a pregnant possibility of judicial
check, ITEA often s.voided possible difficulty by refusing to act. • l.iany
questions could not be avoided. The '-'ise course and the one usually fol-
lowed '-as a strict requirement that industry groups be as representative
as r;ossible,
9338
Cm'^TER VIII
THE PROCEDURAL S'CHSLviE AHD THE HEARINGS
Afv.ii::.istrative "Trocedure is not the forinal -:ircced"are of tlie couirts
(l). If it -jere nucli of tlie value of the ac'iviinistrative techniqiie itovlIc-
he .'estroyed. ""o gener^'^.l rtiles- or foras can he erroectec^-. Froce-.n-re is
xisi'll:- htiilt to aeet the neecs of t he "oarticular field ( ^) .
Statutes estahlishhi': afh-iinistrative agencies vary as to the fetail
T/itl: if-'-ich they set forth the jroce.farre to he folloi^ed. Some statutes
ignore the -orohle.:v (h); ot"iers say little; still others outline the -pro-
cedure rather definitely (h). There 'las heen a recent tendency to in-
clu'e a reouirenent for a hearing in sts,tutes ( 'J) . If no -Trocediare is
s-^eciiies tie agency ina.;'- use any rcasonahle ^^rocecnire it heinc loresivaed
that due ---rocess of la'7 is inten.'ed (6).
Tlie Act contained le^-r references to -procedure (7). Th-re "ms a ta-
riff ad.just:aent -orocecva-e ('^0. "otice one" l.earin-; ^?ere s-oecified in the
licensing: 'orovision (9) and in s-^ecial instances in the code r)roce''iu^e
(10). Oth.er thpn that the Act ^«rps silent.
The Schec":ter's hrief (ll) \7ent at ::reat length to -ooint oiit tl'ds
feature of the statute. S'Tecif icrll;- it -oointe;' out t.iere r-ere no -pro-
visions for notice, the tahinj; of evidence, and the scarcitj^ of the find-
ing re^r.ireaents. It also su-T::estef that the President's ar)"oroval -na3''
he utterl-"- arhitrar3/ anc" capricious. As had already oeen s\\-r2ested,
there is a judicial chech t'^rotig'- ultra vires u-oon tlie 'President in 3,11
cases, e"ce-ot a refiasel to act (^-'hich voijI'' not he involve''^ in the hrief 's
su;--estion anj^-ray) (13).
T"'.e fact tha.t no -^roce'.uire ^^as stated in the Act is not unconnon.
"any acts c'elei^^'-'tino; ad ninistrative oo^'er- fohiot state a -rrocerure, h\it
alloiT th.e administrative hod-" to set vn its cri ■oroce:u''-re. Of course,
vrhetl.'sr this ^JroceTuvre provides oue procetis of la-' for i-i-ividuals af-
fected is ulti.a-tely to he deter. lined ''o:/ the Coiirt. 'h/ the Court's ovrn
-ecisions it is certr-iu thpt an Act ~vj -orovidinj -oroce'^ure s-^ecif ically
does not esca-oe the -oroce^uvral reoi.iire;.Taets of the Pif tli A lend.nent. The
Sch.ec '.ter Comoration's hrief continued its attrcl: uion tl:e Act ''oy sa;--
in- tla.t Pederal Trace Co.ii.aission procednire prociued oue -process of Irn
'•'hile the -procedure of the hecovery Act c^ii' not {I'j). Pe^errl Trade -^ro-
cer'ure ha,d never heen severely -uestione:''. There was little need to as
judicial revie^'Y "as so readily av-ulahle. Still the Pederal Trade Co.n-
.nission. Act (1-6) was far fro..! estahlishin: ;'• ny full -rrodedure. Counsel's
arvu.ient -proceeded V-iTon t/e fallccy tl-a,t e.d ninistrative "ue ^irocess must
he estad'lished oy the statute. It trpnscends the statute. The renuhre-
nent is .nrd.e ^oj the Constiti\tion. It nay he scvo-^lied p-irrt from stat\i-
tory lirection or in accordance ^7ith it. It must in any event he afforded
hy tl e Ad ministration or the courts ^-'ill offer it when a -iroTer case cones
hefore tlie... Counsel elahorated xv^on tils aryu.ient (15). TiWiether the ar-
;;;;u.ient referred to the enforcement procedure or the code-nal-inc urocedure
is not clear, "''owever, it is onl}"- in enforcement tlia^t there is a close
analo;,:/ ii; t:. e -^ro'Dle.i of x-)rocoCv.re to i:l:.e_re\err.l Trrle Gon.dssicn.
Cdxisel ^.::':Vl.e^ tlT.t tlie .-'■.ct ^^ts ' oit' sinc'fe-rt "irescri^oe" no consti tutionr.l
.net.io!'. or ■iroce.-r.re for r.scert;^! '.i v^ ^i.t ; ;-e r^-.x'- !:■:• ;aetho'"s of corn-ieti-
tion, rr/ in tliis res'iect totally 'if-'ers fro.-', tic ^cuerrl Trr.c^e Co.ins-
sion Act. It is ;:ene:"all7 concealed tj.at t'".e TiT'-'e Co.xnission Act ■'oes
not esta'olisn. ■'orocei'v.--e ••'it;i ?nij' degree of o::acti tucle, su.cli as tne I:".te:--
state Co-Lierce Co;:! lission Act coes. ! o'Tevcr, counsel fin^s very elaoo-:-te
-oroce'"r.re estaolisne'" jy t^ie Trac'e Con .ission Act in tn^ fac't timt five
in-oartial Coin.nissioners -'ere to oe a->-^.oint&>" by t.":e ^resioent '-it^- t'-.e
advice of tne Senate, and that t'^e Co.n .ission if it oelieve^" an^' -Terscn
r'a.s u.sinv an imfair net'nod of co.:netitio;. in connerce or tliat a. oroceed-
in^ 'Toi-'.ld 'je in tne -rablic interest, coinl" serve fc^^:lal co-nlaint on the
-Terson accused settin.;; forth tne char yes. The comlrint .mst contain a
notice of the hearing frivini"; a "a'cR ; n:" statiny the Tlace. Hhe person
served !:,ad thLe ri^ht to ar)near ^n<'' sho"' ca.use ■ hy the Comnission sr.oul^
not enter a cease and desist or e'". Testiriony -'^.s recuire;" '-'hid: nust he
reduced to vrriting. Tne Co.n.h'^.Gion '■'• ? rc^tiired to nahe findirys of fact.
!hat it is to he re nembered that the "^-A ado'-^ted all this -7roce'-''ure sneci-
fically '-'ithin its own hod.y rs r-, )lyi;::._: to itself or tne ?lte"nate -)roce-
dure of injunction -iroceedinys oeinre t...e Courts. Th.ere is force to t .e
suggestion that the Trade Cor.inission ■■>roced-are -)l;.-.ce:" no corn-ralsion to
force ooedience to its orders until tl:.ere 'vas ;'.n ;'-Tilication to the Cou'^ts
to enforce its or''"ers. In '~'A, on the other han'-' , a novel harassment in
the form of con-olirnce ^roceedinys '"as in voyuo (15). "'ven if t'lis latter
"iTroce'ivre '"'as had it could hace 'jes-.'-i :''ecl''red hpJ, still leaviny as ':ooC
the code-ria,hiny -nrocedu.re, assu...!iny thrit it other'-'ise net due -irocess of
law recui:i"enents.
The :.ip.in -irocedural idea to he fou.nd in early "^A vp.s to hear all i::-
terested -lerties (17). ';PA as ";-^ foriun of controversy" it vras thou,yht
'.70uld furnish a means "to .^et the tru.th" (lO). Tn.e intention of tne Pre-
sident '-rr.s to afford a hearing (19). This, '-'as reflected in the attitude
of the Administrator (.20). Despite this '-'e have seen tlia,t hi£^h IPJl offi-
cials did not feel that the usual imnlications of a statutory hearing re-
quire.nent need be follo'ved (31). Statu.tes ■vrovidi.ng for hearings a.re
construed to mean that there is a ->rivileye to introdu.ce evidence and a
duty to decide in accordemce nit'i tlie evidence (■3'0. Tb.e "ise course if
the exigencies allowed it 'vas to "rovide the fullest '-io?.r,ible heariny.
Courts "orefer such a hearing (23) and it is the whole gemut of judicial
review that administrative action ..mst .f.ace.
Controversy not fact-f indin;; '"as t'le first stated touchstone to w!.iat
an h3A hearing was designed to be (2h) In order that one might be hea.rd
r)roce'u.re -orovified for p. reotiest to be .lade -orior to t.ie hea.ring "dth a
sta.tement as to person's desires in testifying, tl'.at is, t'le deletion,
amend.nent, addition to or su-^hort of a 'Oroposed -orovision (25). In fair-
ness to x~A it shotild be stated that there was alnost no adh.erence to tn.e
requirement tliat one desiring to oe a witness ask in advance to ati-oear.
I'HA -oresiding officers freely extended th.e ■^rivilege of testifying to any
person recuesting to ar)'iear either iiuiediately before or during a hearing.
Otlicr t^i^n t -e rhlic statements unon controversy little guide is
offered by '.TLA. as to the character its h.enrings were to talce. '"ea-rings
were a-rtiarently not even considered as i.m:iortant as "a good -TOolicity
story" (26). Later, "TFIA expressed a slightly nore detailed statement of
-6r,-
t-io --rccetv-re tc "oe use:"- ciwrin^ ■. -aiolic ::e:^Ti^i^ (-7). T/.i^ -■•t-te nent re-
owirr^' --iresidin^ officers to s^ek "to elicit I'rcts fro.-i tuo o-i -lonents --.nC'
-oroTO -.e.-.ts of s-oecific -orovisinns of the xcoioosed code for tlie -Tdroose of
ori:-..i:i:. cv.t tie /lecescity, oenefit or detrinent of siac".! "provisions" { I"') .
Tliis state-.-:snt in.'^ic-i.tes t;irt controversy alovie '.iju' -irove'3 inat>a;aate.
'"srcL., r feeling, ^far mi-nifest f-'.at nrcsi'-'in;-; officers aust tc .'•■: aeasv.re act
as -A e:r.iincr conductia. n :-e- rx:!;-; in z'.. n sa.ne ,j^n:;er f^iib.iect to ""jro-f
revie-'". ?er]:.i.T)s '"'eneral Johnscn's n'tio:! of controvercy co-i-ire''.e.i''ed
t..i-.t ■-, -7f^-^iCiar; officer -o aid oc ncre tlir.vi ;. ;;;lorified referee. Ce--tain-
ly, G r- C-eneral when acting as a •oresi-'i-i-^L- ofificer ^"as an ac-rl'e ---.nd often
■ocrristent or.estioner {2?). Mnny Dresi'-in^; o-ficers did not ■■gt: o- S'-i-cn
a J.' Gip.. A:i ii^ortrot .^-A. official '::.cr, c'escrJl-'ed a hoarin^: .-.?. "a series
of sb''t.e-.ents hy interested --arties <?onrti:nes bacho'? ■-ith conridrra'jle le-
gal -i' statiptic-J. .-atn,, 30.:--ti ;:es i^j.;S"T:oorted 'by '■n-'tl-.in:, e.:ce-it senti-
nent y/ seir-eviaent st;:te .lentr^. " (■3').
51 crt ard inac'emzrte licarin-'^! cyn he dre-'u'^ntl;^ found, "'len the "ire-
sic'in" officer infde no att8.:nt to -''•icit fact?, it i"ps riiite no^-ihle t..at
the recorc "0\?.ld he harrev- as tc - t :• tic ■J..'--'ly iOTort?nt nrovi sion. ^..is
ni:ht he tr^ie -^-ae to a v-^riety of rc^ to : even -dien advisers '7ere yiven fnll
rein tc cn-estion. The ; fviser .:\av .^^-v^ .■:'.' ^o i.;f o -rA- tx c-: c^ to tie in-
(?ustr--'s -'ast -practices or t'e -o-di': of '■■" e -■^ovisic^n^ Ti;'y hrve a-T-eared
innocent. S:-?il] cametite-G ire~ a- ;t.].-- -r e too "^oo?^ ;;,e oo:::" to ""asldnq-
ton, 01- the- na, hrvR -ece^v.-^ a- _.-h;icr.' :-.— .-.o--. v. o: iroviri jns , naive
as tc le-rl rvdcs, r^-^ ;;e 'hn'-r, - ■v^^e'" -.';h to voice ohioctionr; 1."; o.earinyr;
w.v^-.e::' 'a 0 ^rjar-.:;:? hi-': b;.ei;'- o;hcctionf -'cal;' he conside\-e'' ':n- nattors
"iron.:h ovt" io the ^onf r'a:oo.:>r . Ta.e -o^'ef;n-\re to yet co^jes p-orovod ^vfp
sufficient ird-ice ..pnt , to so.Me i>roEi''iny of.rice;.'s, to Oesire not contro-
versy hut agreeoient. ''Tjien t eve -je a— 'ee- .,ent .learinys '7ere -• ortened.
A{;re&nent h- .o-:hei's of .n in nt^ta;- ' oos not aefoj tn~t the ::)vhlic inter-
est or even tn- iah:olr:''? \:itene--i- ■ oal ho "oll served. These factors
co.jvnlec' -ith inocti-- oo the v :.-t rl' reoi^in officers server to nrod-i-ce
.:io.ny i:.:aeeup.te recorc:s (31). S.iort ^earin^.s alone ^ere not t:)<= only re-
cords thrt co\irts coMld have consi ■" - :-e^ ino "e n.ats. Thej'' do serve to il-
lastv.te '-hpt soinetin^es han-iened. An o.itiro transcri-nt of one hearin;
exclo.sive of the -eorod'O-ction of the co.'e con "be re-orchicec" or less tnan
one no-intec v^ie {o2) . There, are ? nvu.iher of other eaarroles (oh). In
tiie c: se of ler;re ?n.' lore in?ort'not inrhnstries h.earin;:s ^T'.rs often erhte
lony CO noratively (''4).
"hA ej-->ressed a desire to have no aro'aient or ooinion at ..e- rio:^s
(To). T:.e nan^fest i^rroosRihilit"' of fccvirotely ois fcin;^uishin ■jet'-'een
fact anr" o-^inion oi arrxnent ' n ■:'' e;--'l"nFtion or inter^oretation of fact
r)-ovn-..te" the fulfillncnt of t i-., oesire. T • e oest hnovm means of dis-
tinonis'"ino fact froa o'.iinion lies ho the r'oles of evirence {Z"'). It
is honhtec if this means was e-;er roro^te^ to in 'hi. So the r O.e that
there sh.o\ilf oe no oninion tes tioion-- '.■eco- -e of :io ..ol-n to the A'ninistra-
ticn. lo.stee-", it "'as suhject bo r'xox:^ ':■:/ -iresioin,- officers. The -.asr.al
nractice ^r s to allovr a '-itness to r'oh-'le or oTach as he ■-'ishod erooressing
p.ny thonht thr.t car.e in his herd, /o- -n" then the I'^ole a~ainst o.roai-
ment or o-^inian n-as invoiced a.yoinst a r)a-:-ticiilarly '■" is tasteful hit of
testi.'.o-.y (o6).
T'\ere are other aryLinents for a different rrJe in addition to the
nossihility of ahuso oy nresi-'in,;; officers. Q-oinion testimony is often
neces=;rrv to oeci':''e issues in co-arts. 7' -ir. is ever .lore tm^e in the fielJ
of tr."/'e r.r'^ i-v~\istry iricre f-'.cts "^-e often v.selesj: or non-e"istent Jn r.o-
sence of o"iinion to ;:ive tJie.:! color or snostr-nce. If o-^i'iicn evidence is
.p.d.iis3i:lr? in coiirts it "oulc'. seen tn.rt it chor.lf jb ?j' i.is-iole - fortiori
in ac'.-iinistrF.tive "irocee-li'i'js '"'1. ic"" ".re '"'ir' 'Osec^ to je ..luc-i nore Ta:: in
their renmrenents as to the p/, ds^ihility of evi'"'ence. It "las 'oeen sti"-
Seste"" t':at it is c.ani'erov.s to consioer o-oinion evi-'ence ("?). "Sr.t -'"•'en
or)inio"n fxijrnishes the cnl:"' cine to the tvv.e sitruition in an in^'ustry it
aust he acce-nteo if tnere is to he any evi;" entiai-y oasis, for action.
Ar.vir^ent as to inte--"-)ret':tion. to he ->ut inon the f.-.cts and the con-
clusions to he c'raiyn "'oulo. seen to he ''"n r^iC to "iresic'in^ officers. Sel-
don v'ere -^residing officers so intir.-.- tel ■ connecter" i;ith an industry that
a hare strteaent of statistical i-;foMrtion .-id si./nile facts vmuld stiff ice
to afford a ■:)ro")er hasis for tlieir findin .n. Ar;_u.".ent of the f^cts ten-'s
to -joint to the critical isivae;. "'.?:'■ ''ov.lc' se<r:.\ ':.o he ;.n eniially heTi-
fti.l a'' itien to f-h?re introduction of facts. ere too, the comon -nrac-
tice -'as to allo^-' arjaaent tho-L\jd-, in t..eor ■ it -: ■-. h^nned. The distinc-
tion hct-'een sta.tint facts and inter-iretin ; r,i nl-^^ !'■ cts into conclusions
of fact is so suhtle that.it wag lost to •-.-•.:. t ^-fodJding officers. A hear-
ing in the "('ue "orocess" sense is vts-i:! h th'-i h.t to includie s\xch reason-
able ar;^itnent of the facts as is "V_',iir- ,;- n i v..:rGste'" -oarty to noint
out -lis -oosition (3S). This is tr-Lic . e"v-=n i.. h.r restricted nrocedure of
custons 'eterninatiens (o9). "'I.ere suhst nti,-^ 1 nro-)erty interests or ner'
Questions of econciic si.ynif icance .^re involve^"' it see.ns highly desirahle
to allOTY a full ar-,av.ient of the f.-^cts. It coailetes tl'.e inte7.-ested -irrties
privilege of heinj; heard. It also affords hel-oful direction to the ^^-e-
sidinj officer.
Ar-:^i-'.;.ie-nt as to the la-' -presents a ..lore difficult e-i.iestion. Ad.iinis-
trative a^-encies in urdcing ;'ecisio.ns mast kee-o rn e.ye to the ^lecisions of
co-arts in th.e field of its activities, '"^lere a statute uses such terms
as "fair practice," "u:ifair conetitive -^r^'ctices, " an-^ "interstate or
forei:;n co;n..ierce" it c.-n he e:-iectc.- th-t i .-^ve ouestions of law noiild a-
rise. Aryunent of co-'jr.sel u-^on sue'-, '..lostio-is sdio\\ld he "■.el^^ful to the
Ad.ninistration. It -'ould .furfier in'ic '.tc tc th.e courts that the Adninis-
tration \7as a^.^are of the ley 1 i nolic: tions .^'n-' had fully considered t"ie.-.i
es-oecirllj'- -d^ere the Ad:-ninistratiye dicision i'-ivolved chanj^es in the e."is-
tia^ state of the law. ;'^"~A foidjade lerjal argument (<V0). It adhered nuite
closely tc its rule. "or ^-'as evidence -a-oon such le-_:al -noints so-ught or
'Telconed (41) •
Little disadvanta^-e can he seen i'l allowing argument exce-ot the tirae
consu'-ied. Positive need for ar.-xuient of the facts is evident. Argument
of the lev -'ould indicate to the courts a desire to he ahsolutely fair
and to --iroceed u-Ton a fully reasoned course. h^A allo^yed argument u-non
the frets hut refused to recognize this in its stated nrocedure. It n'ould
see.-.i advcantageotis to liave .no.d.e stated r)rocedure and T^racticed iiirocedtire
accord. Fersua.sivc reasons existed '7hy arjir.ient of th.e 1,-vr and introdrtc-
tion of -'pertinent evidence sho'ald ha,vc heen encouraged.
Should the ■-■rivilege of cross-exrrnination have heen ;\f forded hy '"iA?
The stated :7RA -nrocefaire refused -parties such -irivilege (4?). All neces-
sary ouestions it was thovght could he -mt oy the tjresidiag officer or his
advisers. Cross-e:'.a.nination is freouentlv said to be an essentia] of a
fair ad.-.iinistrative h.earing (43). This is 'nrobahly nore true where a sta-
9333
tutie "cr-wires p. l-.e^rivj ■■i" in orop..' revie-- xiel'/s. l.T V\p i.eprin-; tel^iss
0:1 r.:i ,-s-iect of a c6ntest "jet-zeen -np/i-ties, cross-er-uv.iinp.tion is -'esirable.
"pny "?J. ?.:.er.ri;x;s vrer^^e of sue"?, a nr tiire. I;^. t~.:ese '■learint'js cross-exa.iination
mijjft'it'ha'^j'e' of ten,, been, helpful . It c^".!'", of co\irse, "je so usecl as to'oe
rn m.'esir'^.ole neans of ' elryir;;;.; "'e?rinvs. 'ere tlie "ores iv in,: officer
.-.vast er.ercise Giscretion liniti:'i . it ■■'-vr.re it serves no reel -luroose. In
an r' dniptrptive -"^roce'v-rR cross-ex..;.ii:-;f ticn lijnt oe li-.nitec". to use
^''Ae:r^: r rer-,1 contest of iater^str, eristec',. Cross-exanination is an inr-.-
trn..ie::t of real value i:i' co-^ii:; '-'it': jeresay evidence (oi). Its use in
suc'.\ "- -To-yriate 'Tlaces as -'"'eie a lefrin^- ^ ap "'jcco.'.e in. fact a contest
oet-eeii ■ lii.iiteo. n\v.ijer cf -parties ir^nn -larticular is?i-.es ^no-cl,"'. see.i
lii ; J.-/ c'esiraole. ;
"elateO. nroole.ns ^re fovinc" i:.- reouttf/.L testi...Gn.y (.5) ano confiden-
tial -.-e-TOrts. 'S:SA officiaif^ often st^tr^c t:.at rVjvttM. ■-..-s net. to 05 al-
love". ■.■'-■:e;^t lc;:ity in cnforcin', t"-:c rule e^'ists;'. Al-.^ost i'-;varia')lj'
after ..■ia.:in.': a state. .lent vrc,-:: ■■. ^ro-ic?0'.- co'e nrovision tne nro-'onents
'-ere ^-.llore'" to r.r're an ^np-'erin;; '^ttt-iient to .'■■r- criticif:n 'irecte'" 07
o-TTon'-.ntr. fron tlm floor or 'jj r.i'yi^.evs. "eouttal -'as not li..:ite." to 'iro-
nonents. Sonetiaes a nresir'in;.- off ice-^ so lo:"^.t control of p ; e-^rin^- tliat
a crosp-fire cf sti'te-ients 'n,' a,r jv..-.'?nts >:/ Tro-iorents .^n." o-y^onents en-
susc.. '" ^e\z fieri oilit3- of ■)roce"v;.re tarns into en- op a certain ri;:ir:it7
of a-y^roacn •-C-..I1:' siT.r::,est its'lf as ir^i'eri'^le. T.e orc^er of ->roce-ia.re
of a t-. irl ■.Mial'.t not liave "5een ertirel'- out of ^lace. Prononents (li'tc
a nlaintiff) conla have nrosente^ t:eir c^.pe; tVen tre o-inonents; an:^ t" en
a clo^in; ^j:; tlie nro-^cnonts. jIaIs conic'' nrve 'oc^-:. liiite'" to i'"ivi^nal
nro'^os^ls or to t'.ie cof^e nro^^oerl as ? '-''nols. A.. 'I31A -iroce'v.re re'-r it
^7as .r.ct rj.ico.x.!on for t.iis very or.'er as to inoivic^ual -y:- riosalr to 'be rset".
:~nen OT^onents v^ere ;_:iven tlie nrivile, e to snea'c after t'leir onnonents
■ tliey '-ere in fact jriven a re-onttal on -'Ortui^-ity alonv '-'itr. a c'l-pnce to state
the sujst-ntive c^ -^racte" of t'-eir c-se. It "oulr "j.- itrifrir not to alio-'
nrononents f^ re'^:nttal 0 yortunity. ^'ds ^; s fu"t:.er inricate:' h^^ tne ev-
olution of -irocc.'ure into this co.rss. A franl: recognition in :™A'p. st-.tec
nroce'ure -'oulr" rave hepn '"erdraljle.
"ZA .never nac'e a f or lal ' str tp.-.icnit tl • t it ever rcte" in re -aro to
cor.e -iro--osals tinon evi-ence not intrcfuce'" -t a /i.e"ri;._:. It i? cnite
nrohahle thrt reliance ■-•■- s "i1."cp ' in ..ore t'n- n O'^e case nnon snch evi-'.ence.
Tr.e nrohlev.! ■^resente:''' hy ? f-'ilnre to ...ave r 'jasis in the recor':" for •ac-
tion i= t- e eujject of treat. lent at- :-noi-.hcr olace (ro). "'::e:i reliance is
had xr-on r. "confidential renort" ':>:/ r n 0 .ent or inf orn'^tion fro.i a secret
witness there is raised the cuestion '"njtlLnr a nroner ..■.parinrj; h.\s 'oeeii
accor' e.' interested narties. T'^n "confidential renort" nrohle..; ''as nre-
sente.'' to t"^.e "^n'.-lish. courts in the :h~ ucns case of Local Tovevi- .ent ',"ioard
V. Arlid.ve (47). Alth.onjdi th;- "onpe of Lor^s decifed td.rt tlieva nas no
rij:ht to see t".ie insnector's renort, it created a stor.n centei in ~.n-lish-
adninist-:'ative la-" (';.-3). 'I'he recent henort 01 the Gc.n.uttee on dnister's
Po^-ers (-.'.-9) has recon.jien"ed that t'/ie nfictices of .::ahin; confide iti'l re-
norts he avoided. T'.ds ^--ould cert":.r-lv see.-i the fairer rule i^nd tne one
to "be -foil 01.76 d unless ;:r".ye con,= i-.'e:.y tions of n-ahlic nolic;-- intervened.
The United States cases indicate tdyt t.^e rule of tne Arlidye cose is not
Ian ir thds coi.mtry (53). It c.-n he readily seen t'-:at frdlure to intro-
du.ce a m-^ort into t'le eviJence ..lay heen a nart-/ in irnorance of '-hat ev-
idence is desired oy the adninistrative hoard. It na?/ he 'that the renort
hap not "jeen carefully dra-'n and th,-t evi'ence oy t':e na.rties miyht ouich-
ly estrhlisd. this fact (5l). ' hich tne pa.ae line of ar^'^nent holds for the
9^33
-66"
fsilv.rn tc -^lace all testi oiiy of ••itr.essfjs An t'e recor'-^ of t>.e -iea-':"i:iv
(53). Tl.ere is not o--)"iort-'.:-iit-' to r. :c p-^ecific ans-vers (5r) -hen notice
of t"-9 evidence to oe relie" v:io:~. is Ir.chin-. ]13j\ coalcl Aa.ve "olaceri it-
self i:-. t ,e clear in re.'.:'" to F.ecret •.-itneseos anc", confidential re-oorts
if it "r " stated t'lat it "o-il;" :,ot rel' vnon such evidence erce-ot, of
course, '-v-.en .;_Tave "oujlic -lolic^" r.i;-..:t othe-'.'ir.e decree.
do -ooi-'er of sii'br)oena 'vas ~iven h:; t-ie Act. This ine-nt that "d?J\. nust.
content itself -.'ith the -.Titnesses desirin:: to testify. I'd.e Fe'?eral dra-'e
Co.a.iissior. (54-) and the Tariff Cc.i.iission (."^5) ha,ve the ■-O'-'er of suVToenr .
As the President aicht call "a^'oon these cOi.aissions to vise their lorocedures
(55) the suTooena. -TO'Ter va.s a^oroved h:/ the Act ?lthoU:^-h not viven to ITTiA.
The co"arts have heen relacta:-'.t to .i:iv3 achninistrative hoc ies too great
r)0-7er of tliis cdia,racter. One a.-Tirove' "t oc-.5v''Ure involves an issuance of
a suo-ooena 07 the administrative ood}/. If o/e ;oarty towrrd ivhich it is
directef' t?hes no heed the administrative hod:/ can a:rnlj to the courts to
co.rjel CO. reliance vdth the sah:ioe;i? (37). The theory is fiat the ad..iinis-
trative oody can not itself iruniis-i the non-comliance 'vith its r)rocess as
this .".ia:y c'e-irive an inc'ividuaJ of d.is liherty --itliout a trial. "To .nore
tria.l is lia.d, honever, ^-^here a coar't -.lunishes a -oerson for refusal to 0-
"oey its "locess. The federal Trade Co 1 ission (d)7:^) .nust a.-\T,ly, and ^uh-
:Tiit necessary facts, to the Attorney-'ieneral to institute r)roceedin::s to
co:n-oel a-:>-iearance anc! testi.nony. Tde Attorney-deneral 'la.s t>-e discretion
to refuse to act (3"").
Th.ere rrere nunerous occasions in ITIA. ^-rh.ere the "oo'.7er to subiooena
i-'itnesses an"! records v,'oald have "been of considerahle value. Persons s.n-
pearinj "oefore 'J?A vrere fraiilr to a.n -OJiusuf 1 I'e.Tree. There "'ere tines
when sxTch franhness I'/ould have heen fptal. Then in ^reference to testi-
fyin:; it often was thou-:ht oest to pay nothin--;, or to fail to .■^-riear (3^).
In s"ach cases, es-necially ••diere '."^.A 'vas inoviirin ■ into the manner in which
code -orovisions ha.d oeen ad.'dnistered, the suh'ooena Trould "ir.ve heen a
usefrd civice.
As p^n alternative .leans to t'le suh-joenain,-; of ^.-'itnesses the investi-
jja.tion of hooks c-rn"? records :riay he resorted to in an a.ttenrot to huild a
fact-LLal hasis for action. This loo-'er of investi^-ation is considered le-
gislative i-'-ere the facts are re-)orted to Congress, hut vdiere the facts
furnish a hasis for adninistr.--tive action :-.ii£;ht not he so treated.
"-eneral fishin e::r3editions into tlie affairs of a stranj,'er for the
cliance that something discreditahle vd/rht show'u.r) a.re tmiforiTily condemned
(60). As Conf^ress can not r)xmish contempt if its investigation is not
legislative (6I) lihe\7ise general inquisitorial poi7ers in the hands of
an administrative hody are severely f roamed u-non (63). The courts have
expressed ^rave douhts "-jhether (Congress) could delegate the oower (to
emoo.rlc on general inouiries) if it loossesses it - - -" (63). "Tnile 3hA
had no -oover to coa-^el oral testi;.iony in a,hsence of express statutory
po'ver (66) it exercised an analogous oovrer in reouiring that certain
iDoohs and records he her)t and re-oorts v.iade to it (65). Such information
could he reouired as a condition to a-Tiroval, and -thic necessity to period-
ically su'o-nly information was exTjressly sanctioned hy the statutory lang-
^x^.ze (56). This did not mean such information need not he judiciously
Imndles. ! any codes recognizin.v: this renuired that information he he^t
confioontial (67).
-67-
IIHA. did not requ.ire witnesses to take an oath. JTeither did the
Agricultural Adjustment Act although in the administration of that Act
r.n oath ^as required (60). The oath is not thought to no\7 have the
dissuasive poner it once did to prevent perjury, Desnite this, it has
"been suggested that the courtsraay require it in administrative procSed-
in.^s if one party demands it (69). Adninistering an oath no ^o^er to
punish perjury is quite "barren. I.iost witnesses r'ero usually frank in
testifying. Their candor often approached the roint of self-incrimination.
Occasionally if a point could he gained a witness might try to leave an
impression not in accordance uith the facts, For these sit\-!.ations, a
statutory requirement that witnesses testify under oath and a statutory
provision for, -punishing perjurj'' should have hcen welcomed dev'.ces. It
might he said that si.ich provisions -would have defeated the cooperative
spitit ITHA sought to create. Host- honest witnesses might, however, have
preferred this protection fron those less scrupulous that they.
Another question raised in connection with hearings is tlmt of the
iise of written hriefs. Does due process of law require oral hearings?
When the problem has been discussed the answer ha.s usually been, no (70).
The problem arose in two vfiys iii IIEA. A presiding officer desiring to
save time, keep the record free from controversy or for other reasons,
might ask a witness to -ju.t his testli.iony in the form of a brief (71),
Just ■'.'hat consideration was given these briefs can not be said. It
probably varied considerably, IThere no consideration was given, it was
iikely that little more was accorded to the heardng itself. To many
presiding officers the record was not imroortant. The dominant consider-
ation was toat provisions certain persons Y'ould agree to. The problem
of oral hsaring could arise where it "as sought to amend a code by
"notice of opportunity to be hoard." :T3A here set up a test of
"likelihood that a substantial minority or group will object - - ~" (72),
Another test that is suggested frow, our survey of broad review is the
substantial effect upon property that the proposed rcgalation might l>ave
had, A more comprehensive test v.'as stated by the Legal Division for the
guidance of its staff (73), It seems to nore nearly approximate the
attitude the courts would probably adopt. The use of the device of
"op-Dortunit]/ to be heard" rested upon the feeling that it is an admin-
istrative impossibility to give a separate hearing upon every proposal
or to do all acts in "to'.m meeting" (74). Despite these sound consider-
ations full oral presentation is usually felt to be more clef'rly a '
guarantee of due process of lav;. If the subject natter is im^'ortant
a hearing '.'ill be held. If the subject matter is not so irroor.'tantr it
would seen that the matter could wait imtil the nezt hearing woiild be
held. This dilemma suggests thrt the device probatly sho^^ld have been
more limited in its ap-jlication, that is to such matters without consid-'
erations of policy involved to -.-'hich all interested parties could
readily ^gree.
Certain shortcomings have been discovered in the hearings afforded,
possible impi-ovements have been discussed. Such a view of hearings as
has been had is designed to sho':.' the formal gaa.rantees that should have
been extended to interested parties to have insured that thej woald be
fully hisard.
9833
-65-
C^TAPTER IX
FIl;I)i:'GS A:ID TSL IlSGOSD
The basis for %\\q afu.iinistr-tive determination is of the uti.iost
ImportEJice. It involves jriuiarily (aiestio;"-3 of acliTiissibility of
eviL.ence, wei ;ht to he liven evicence', the record made, ana the
deterrainctions ^'hich may properly be made.
Students of administrative lay; have loni' contented themselves
with the generality that adi-flinistrative bodies are not held to the
technical rules of evic.ence of the courts, th,?t one of the prime
functions of administration is to be freed of such nandicaps (l).
Recently Judge Stephens has made a. careful study of this problem
(2). ^ He conducted a survey of just how and 'to 'vhat extent adminis-
trative bodies apply, the rales of evit.ence (3). Although the answers
did not show any carefiil attenot ';enerr'.ly to follow the rules of
evidence it shoi"'ed that they v;ere often useiul (4). A&ninir.trf tive
boo.ies like courts take jiidicial notice of facts. The courts v/ill
not always uphold fincan'.;s mad.e on s-.-ch a basis ( ?) .
Hules restrictin.-- admissibility of evicence which is deserving
of some consideration often come in for much criticism (6). The
remedy lies not in abandonment, but in a fully considered relaxation
(?). There is certainly the vl lue of a '■ori'aole test bein':^ available
when evidenpe is conf sin-;ly conflicting. The chief use in such cases
could be in titie weight j;iven evicence. "!Ioi"ever, there is an a.dvanta;;e
in having the ru.les convenient as a raeans to restrict evicence of a
highly inferior .sort.
Administr'^tive bories ^u-ve' probably given little thought to the
■use to be made of ro.les of tvidence (3). '/si'ally ouite a measure of
informality prevails as to the actaissibility of evicence (9). Little
help is given by the statutes or n.. lea -of jractice of sach bocies .as
the Interstate Co^.hiercJ'e Ooramission or the Federal Trade Cominiusion
(10). The latter Cori.iiT-ion iTsually admits evd( ence but will listen
to objections curing final ar ^auuent on the merits of the case (ll).
In fielc.s where problems of econo..;ic ei-uect arise, it is cesirable to
allow a consicerable Pleasure of frcec-om to witnesses, it bein;; so
difficult to cetermine what, are fa cts '( !'-)'• Such testimony probably
can be considered as ex )ert. The ac'ministrative bodies are not free,
however, to follow vrhatever rules they' ..as ire. Decisions of the courts
refusing to uphold adninistr-- tive c'eterminations have the effect of
esta.blishing evicentiary retiuireiae/its (13).
Hearsay evidence: is generally admissible (14). In John Bene
& Sons, Tj>c. V. Federal Trade CoiTu-ussion (15) a person whose usual
occupation was running a "beauty parlor" testified as to the use of
"Da>:ol" and peroxic.e. Though not "dth the coupany at the time to
wnich her testiinony referred she was allowed, to testify. As she
sta.ted, her lariovdedge came from. the fact that "at the time they
incorporated, the whole case was explained, and I have all the
papers concerning the case. " Other examples of hearsay appeared in
the course of the .proceedings. Te'-timony is admissible said the Court,
9838
"if" of the kinc. th^t usi'.ally sffectr, fair-mim ed men in the conuiict
of their drily and more im,jortrnt affairs." It "shoiili he received
rnd conr.idered; but it jho.dd be fcirly cone" (16). In this: case the
CQurt itself .npOe the tini'.in 's (17). If liniliov ia desirei. it vould
seem sdvisFDle to receive hearsay at Itast soaie'vhat r-ifrir-jly, pnd
subject it to the testin.s; of cross- exDiuina.ti on (18) ii thr ^..clxit be
substantial. ISELA. never refused te'^tiiriony offered 1. 1 he^rinjf. on the
■-round it v-as her'rs-<.y. Upon s,b:t uti,?l uoi,tt=;ted problems there
would seem merit in procec-'Ling cautio-jyly j.u rcie itin;^ such testimony
elthouajh as a ^,-enerai 'aatter it conic oroofbly oe accepted freely.
The "best eviclence"- r.-ile, liksv/ise, '/o'j.id not ■:;ei-.-. to lie a rule
to be strictly applied. rndoubbeoly , it wes not followed by ITHA.
There seems little repson why it -ohoulci be li.nlesc fui-irit-i 'itial interests
T7cr3 involved and it could b-,; s.icxi thet fpilure to adhere to th_e ii^le
ml£:ht prejudice the position of an interested pnrty. Affidavits and
letters could also oe freely accepted suo.ject to the s.-me liiai tations.
IJRA. made free use of such evidence. The practice in absence of objection
(is) seems perfectly proper.
Interested ijrrties sometimes r;:ise in coxirts the fret that evidence
was improperly pdnitted. One course to allay the pos':-,ibility of such
action chellenging ITSA hearin-:s' mi -at have been to have allo'^ed the
takin^T of exceptions to the -d : l-hi 'lility of evidence. The ar?r-r:ient on
these exceptions could have oeen he= rd later by a s^jecial board of
qualified persons. This rould ji-ve indicated to the courts that NHA
was p.CLitely avare of the ijroblein ox fvicence anc' had no desire to
prejudice anyone by acceotin'^ evidence to ■which proper objection had
oeen taken. Objection, probably, w?,?, not taken i^n I'RA proceedings
because of the great informality that prevailed.
As we shall see ¥Rk often acted witho''-:t r:^y apparent factual
basis (20). Heliance -.793 frenueiitly hac' .v.-on briefs never incor;iorated
in the record, informal conferences, snc co'uversations. Ass"'Jiiiina: that
there were, few ca'-^es' of bad faith action by res lonsible officials there
'ffas often little, evic ence available for a court to cetermine the
adequacy of the fc-ctual basis or t/ie rea'^onableness of the action.
Preliminary conferences (21) r^nc poot-xiearin ^; conferences (22) were a
re-viilai^ part of ":'2A proceduire. It is remarkable ho'5 .riany ill-rea.soned
and ia.i'.licic i^ro'^OGfls ■ivere cuk oat by these conf e l ences. Often,
tiiou/h, thbse conferences served as a basis of C(jm:iromise (2o) or
justification for provisions which on their face mi dit not appear to
be fully in the public interefit. In such instances vliere substantiaJ
action rested upon conference a r^aoro. should have been icept. Another
analogous practice was the "off the record" discussions. Th^ese discus-
sions often contained extremely frank and vaKia.ble evidence which might
have gone far to sustain or even condemn ITRA determinations. 3y falling
to include this material in the record it probe.bly lost its evidentiary value,
no matter hov; persu.asive it mi.^ht have been ui'jon the indiviciiaal administrator.
There have been statements that administrative action need not rest upon
the eviccnce in the record (24). Anc an nccaL-.ional ce::e ina.y be found in
fields other than those demanding s"..u:nai'y action in the exercise of the
police power (25). In fields related to KliA (as intersta.te commerce
reg-JLlation) as well as others (26) it has been generally held that
administrative action must have a basis in the record (27), The require-
ment is simple. It is intended to give notice to the parties and afford
9838
-70-
a basis ujon vhich a cor.rt revie""inj the case may act (28). The case
of U. S. V. Abilene c" Sovihern ir; Co. (29) shows the court ' s attitude.
The ouestion involved 'vr;s Lhe ^).ro_:)riety of ujin ; certain annual reports
in the hrnds of the Interstate Coia.ierce Co.Vii^sion referred to by the
examiner ot the hearin,-, as follows, "no do\.bt it will be necessary to
refer to the annual reports of all the carriers" (30). The Com.iission
contended thr-t fjiis v.'as notice to the j^s,rtit:S unaer its Hules of
Practice then in force (prior to Leceraber 10, 1323). These rules
provided that cp'oiea of all material other t.ij=n th;; t on file with the
Commission must be offered into the recora. Material on file could
be used if specifically referred tc. After referring to the fact that
these v/ere adversary proceedin-,s in subst'^nce I.Ir. Justice Ersndeis
spealong for the Court said:
"The objection to the use of the data contained
in the annual reports is mt 1: ch of rathenticity or
untr:.stworthiness. It is th^-t the c-rriers were left
without notice of the evidence v/ith >"':-iich_ they were,
in fact, confronted, as later dii-clo^ed by the finding
made. The requirement that in an adversarj.^ proceeding
specific reference be made, is t.s/.ential to tae sub-
stantial rir^hts of the parties" { Zl) .
A legislature is not held to anj^ f;uch requirement. This has caused
many to think that an adninistr-- tive body, in fact le.xislating, should
not be. Tjiis ini;-;ht not be the vie>" v/hich will be followed by the courts.
Courts, at preseht, have a stron/;?; feelin^ that certain defined limits to
administrative action shovild be established and enforced (32). .To insure
against judicial reviev; scmipu.lous care should be had to build a careful
record su.bstantiatiu" --^1 action'^ taken. ERA. fell far s'lort of the
desirable standard. In the later d; ys of its ac.ministration, hov/ever,
more thoUii^dit was ;',lveu to this' orobleni.
Tincinais by administrative booies reqilre a factual basis. The
courts have made this i.iore important by tlieir reqi\irements of some
evidence anci substantial evidence ( -'.S) . Alt'iou;;h there was no hea.ring
requirement in the statute to compel at:ci;-,ion in accordance with the
evidence (34-) there are stron- cor'ri. Cx'ationt; indicatin;-;' that URA would
have probably been held to such a requirement (o£). The courts manifest
an intense interest in the evidentiary basis of regulations by
administrative hoc ies affecting oroolems of industry (36). A recent
illustration appears in 293 U. S. (37), An order of the Interstate
Commerce Commission ■under the Boiler Inspection Act required that
certain equipment be used. In diRC'-.ssina; this order the court said:
"The orimary question of fact presentee" for determination
was, as the rcoort of the Commission states, whether the use
of locomotives equipped with hand reverse gear, g,s compared
with power reverse gear, causes unnecessary peril to life and
limb. The report discusses a.t some length the alleged ad-
vantages and disadvantages of the two clas'-ies of reverse gear
'and the expense v/hich the proposed change would entail, and
concludes with 'findin5;3' that to a certain extent '.the change
should be made. Bat whether the use of any or all types of
9838
-71-
steam locomotives ' eqi.iiooec'.. V'itr: hrnC. reverse "rear as
com:)pred with jo\^er reverse .;ef-r cruses ■laiinecessnrj'"
peril to life ;,^nd lihib' is left . entirely to inference.
This complete aosence of 'the oesic or ej;r,exiticl find-
iu',:s reqi'-irec. to siooort the 0 oni.vl ;-;■,?! on ' s order'
renders it void." (33)
It is not intern, ed to su?.est tli?t there iimst be a, reli-nce
merely upon evidence offered bv intere-ted parties. There i:i no
reason vfhy the ^;^overninent sl'Oti.ld lio c inve^iti^ate ano, find evidence
(39). It should, of course, be introGuced into the record to re-
ceive treatment ay evidence (40). To eF^ca^e bro.-d reviev/ tliere
!.rast be reasonable evidence in the record to r.ust-in the rcrainis-
trrtive findin^cs. JTor instance typical evidence .r.a.y bo considered
a 'ro::'er basis for action (4l), 'hile nere c'::;:;re;".te results "as
a substitute for t^uical evidence is inaaequ-te. " (42).
'£3A frequently treated the jrobleiQ of securing a full factual
basis cavalierly. (42s) The j3rooj:in\s' st\u.y has coninented ujjon
this. Tv'o thini?:s, it says, were outstr^nciing, 1. "the rsritj'' of
orderly and convincing presentrtion of fr?ctual eyit'ence," ?nd 2.
"the casual way in vdiich intricate code previsioiis were passed over
without analysis or clprification. " (--3). Soth Adninistrption
employees and applicant :TroT->-ps >-'ere resvon-^hble for this. Contro-
versy could plvays iroduce a f-j.l recorc of i-cts. T..hs was
especially' tiue' where ;=;reat ■.mity a-jjeared on the. ■)f:-rt of the members
of the applicant industry. This seems to have been the situation
with the luuber industry Fnd its co^.'e {■'-.4). A :-;ii,iilar weahness was .
the subject of reference in the brief, for the oc-ecliter Corp. (4JJ).
The Crovernment called a- witness in tne trial in the lo^-'er court who
testified as to the evil of "selective hillin ;". The ".diness in the
testimony referred to certainl;;, • ■ va.i":ced no coi.: jclliii ;■ repson or
facts against the practice. 'Then a srhstaiti?! trpde prpctice
requirement is bpsed on such flimsy or ill-ex jres^;ea testiiAony it
may oe readily conclueed th.: t the courts would he hiesitfnt to accept
it as a sufficient basis. This is not referreo. to because exjomoles
are iiot available in I-hiA, bu.t to show now astiite cciuisel can bring such
v/ealrnesses to the .i-ttention of a court.
This problem is of such imjortrnce that a fev/ ezaraples of fa.ct-
finding and the fact"aal basis for determinations should be observed.
(45a,) The Fi"'-r Dressing and Iv.t Dyeing Coi.e (46) jrovioed for the
establishment of minimum service Cj.>arges (-.7). Various c'ivisions
of the industry aj^plied for au jroval of nhninrLm service charge
schedules. These v.-ere all approveo. vdth some changes. The case
of the Eog and Long T-Iair Division is illustrative. This division
probably prsLonted the best cost data, and askeo for service charges
closer to the cost indica.ted. by the dpta than any other division (4S).
FigLires from ten firms of an industry having from tv?enty to thirty
firms were offered. Of course 'the character of the industry with
■ its small firms juauping in and out of business made for this. It was
these- small firms that jrobable could hpve furnished the lowest
costs had firgures been kept. (43). So it' is seen not even "t;;rpical"
evidence was offered. Six items on the schedule a iproved (50) had
no basis at all. Figures were not even offered as to the cost of
-72-
processin \ these items. At least six other items oroba'bly had little
basis in the lij^ires siib..-:itted (Zl). A f>.--rther coi.v.-ilication was the
f?ct that processes uifier (52) end tyjes of work v?ry wicely t55)t
This schedule, like those of the other divisions, became the sabject
of frequent violction anc. soon fell into c.isuse.
The story of uniform cost accountin- systems is also interesting.
At hearings there was usually a brief reference made to the desira-
bility of such systems, thou-r^h it is doubted if this was always done.
Plans were submitted to the Administration. Sometimes hearings were
held upon these plans. A21 illvudinetin;?; instance is the hearing (54)
for the plan of the lire Extinguisher Manufacturing Industry (55).
The plan was su.bmitted (56), but no testimony wa.s offered to justify
it. No questions were asked by the representatives of the Division
of Research and Planning, v/hich division was usually charged with the
responsibility of approving siich plans. The plan was later approved
upon this evidentiary basis (57).
Fact-finding was not always relied upon. The Administration
sometimes plainly acmitted that spirovel of im.rjortsn t provisions was
based upon agreement within the ranks of industi-y (58). The basis of
agreement between labor and industry wa.s, probably, the one most
commonly resorted to in all labor 'questions (59). Congress made some ■
statements that mi'^ht be constni.ed as standards for the labor problems
(60). Perhaps, Congress thought that the agreement of labor and inr-
dustry would be adequate. The writer has foiind no evidence on this
Tjoint. It remains that agreement wa.s the primary basis. The Research
and Planning Division did study labor conditions in the various in-
dustries. These stxidies v/ere sometimes the basis for administrative
action. Often the facts merely served as an aid to the Labor Advisory
Board and labor in carrying on tlieir barggining.
A most unusual case is that of machine limitation in the Cotton
Carded Yarn Industry. An administrative order vjps iss\ied, peculiarly
enough, signed authoritativel:/ by the ^oce Authority and concurred in
by government officials (61). Tiiere is no testimony in the transcript
of hearing for the Cotton Textile Inf.ustry (62), nor has any record of
any independent hoax"ing been found. • Undoubtedly, strong evidence was
submitted to the Administration. otill aii order of such important economic
effect woon business enterprir;es should, have been fu.lly justified by a
hearing at v/hich a full record, was made, while affording any opposition
an opportunity to completely set forth its case. Perh;?ps, emergency
action may require a temporary restrainin": order. Certainly, a hearing
should have been held at the first o jportujiity.
Happily, NRA was not given to such action in its L? ter di.ays. Much
damage had been done by then, hovever. Once the impression is afield
that administrative action is hurried, not fully reasoned and grounded
in the facts before the Administration, the public as v/ell as courts
start viewing the action most critically. Especially should tliis have
been remembered in dealing with the field that comprised KRA's province
(63). Too often NRA seemed to accept industries' judgment that anything
was "unfair" which was annoying or disruptive of established methods.
9838
At the public hearing for the Zlectric Li'/nt end. Power Indtistry,
the -jenerel covmsel ' of NSA, ?.Ir. -^onald Sichber^:, stated:
"It has never been re/^rrded o.s an rppro:'riate
objection to the ;)resentr.tion of a code by those
tnily representative of ' any indiistry to present
eviaence concerning actual, or slle.^ed derelictions
in the orivate or public conduct of the sponsors of
a code - - - - The iTiOral ga,riuer.ts of those sponsoring
or T;)posing a, code may be as black a..z midnight or
as v.'hite as snow. But th.e process of code makin-;;
is not to be confused with the operation of a, clean-
ing and dyeing establi sh.iuent. " (54)
Courts in crirumal prosecution do not •■^llov evideijce -^s to the past
ciiaracter of the defendant, ur.less he puts his cha.racter into evidence.
NHA hearings were not criminal px^osecutions, but r-ither hearings to gain facts
upon which an economic ..olicy could be devised for an industry. To be
legally sustalnaole the f'T.'neral policy and standards for fraiiiing the de-
tails should have existed. Hod they existed the work of filling in de-
tails might have been so obviouslj p(..iiinir.tr.-tive ''s to avoid the use of
the difficult analogy to le::islE:tion. In j^erforn.ing this function of
policy mailing for industry the past history or irerient attitude of an
in(?XLstry, a trade association, or an i.ic'untr,,- a'oui might be a;i-ite
pertinent to the issue of how much oo-'er or ■••fh?t type trade ir'-ictice
provisions should be given aai indir'jtry. Sucii evidence aopears to have
been valuable in the cppe of the pro josed Cottonseed Oil Refining Co6.e.
Past abuse of an open-orice filin-;- system indicated the dis. position of
the industry toward reoorted infoririPtion ;nd the use to •■hich it might
be ptxt (G5). Y\o one 'f/oulr h-ve wished to clo'e his eyes to such
obvious facts as the spcnsorshi -j of the rro )osed Corn Lry killing
Industry by the '".Taeat -'''lour killin-'; '-'ode Autliority to come under the
code of the latter (65). Without coninenting upon the character of
that coG.e autliority or its direction it is apparent that its acknin-
istration was apropos to tliis problem.
The Fur Man'afacturing Industry Code contained a nujnoer of
restrictive trade oractice provisions (G7). 'The attitude of leading
spokesmen for the industry as stated at a public hearing (68) indicated
little s^Tgpathy for the conswaer (69). Such evidence of attitude shoxild
have been qiiite relevant to what powers of self-government should have been
extended.
¥RA did nttempt to establish a. fa.ct\5.al basis in many instances.
Legal Advisers seemed most av/are of the desirability of such action.
Advisers of other boards or divisions engaged in the effort only when
they opposed a proposal or knev/ nothing abotit it. These advisers were
often able to develop many angles which had little concern to the
presiding officer or had not been bro^ight to his attention. In this
advisers were early handicapped by a rule that all questions had to
be directed through the presiding officer (70). Presiding officers
who desired to limit controversy often refused to repeat the questions
or so changed them as to nullify their effect (71). In later -oractice
questioning by advisers vi^as freely allowed and did much to develop
more complete transcripts. The ad.equ.acy of the questioning de >ended
greatly upon the individual advi'ier. I\iany advisers preferred to remain
silent at the hearing. Others, ho-wever, made very substantial contributions
9838
toward developin ■;' £1, record. The ¥:BA role despite the contrary practice
was never clja3'i,;ed
Another handicap Ipy in the theory of t.vcit aj^roval relied upon
by many indti.stry ..';rov.ps. A code orovision ,ni,\,ht provide for stuc'-y of a
subject or a proposal to be made in pccorornce with certain principle
or certain problems (72). Tiiese provisions were usually in the form
of an erqaressed ri.^-ht to petition. It is doubted if this conferred
anything not already had. Ini.ustry frenucntly ur -ed that NRA had
tacitly approved, a provision of the character set forth in the charter
of study. If NRA. has not done this vhat was the purpose of the provi-
sion industry mi'-jl^-t ask. Freotiently NFA. would accejt the argument
and approve the oroposal without further hef;rin-^'. The factual basis in
such Cases was usually .a'O'jsly inpdequate for at the hearing the provi-
sion would be passed off as merel;,' allowin,'- a study to be made. Many
persons in KRA were aware of this sxibtle i,iej:nn of obtaining provisions
vdtho\it subjecting them to such a ju'-,tiiicrtioh as might be necessary
if presented without this prelimin;-ry step (73).
Burden of proof is usually thought. to lie on those persons applying
for action to be taken to show viliy what they desire shovild be done (74).
In ITRA procedure the burden of proof should have rested upon the
proponents groups as far as there was to be such a. b\\rden. Almost
withoiAt realizing it the biirden was somt-times shifted to opoonents of
the proposed orovision (75). The attitude of oresiding officers toward
advisers was frequently similar. "The ind>i.str\ wants the provision.
\'Thy shouldn't it have it", the adviser would be asked in effect? The
proper procedure 'touIc have been to have olaced the burden squarely
ux3on the proponents or realizing that the biircen could not be met
provide for a temporary "period of experiment;;l operation" (76).
Proposals by the Ac^jninistration bring Vio the same ,.roblem. Should
there have been a outy upon the Administration to prove that its pro-
posal was desirable? Certainly, \"here the effect was to nullify provi-
sions granted inc'ustry this would seem to hyve been the proper procetnire.
Mere details would need no sucl^ tr&at;;ie..t , bi>t ■•rrovisions of a, substazitive
character shoulc- be establishec. a.s in harnon;/ with the requirements of
the Act.
Until the opinion in the case of Panaina Refining CiOmpany v. Ryan
(77) was written there had never been a clear statement in our law
concerning the nature of an administrative finding from the standpoint
of puolishing the basis for a.ction. Cases exir'ted indicating that there
need be no s,uch stptement (78). Su.ch exoressions were made in cases where
an evidentiary basis was not bein;-; too strou^jly required. The courts in
their early history were reltictant to interfere with executive action (79).
Cases then decided fall into what has been called the field of narrow
review. V/here there ha.ve been statutory renuire.uients (80) or where an
administrative appeal on the record is to be had (81) the cases have re-
quired a statement of the basis of action. But in situations where the
finding was the last aoministra.tive one and was not enjoined by sta.tute
to express its basis there h.ad never been any requirement for such ex-
pression until January 7, 1935. In England it is considered to be a
principle of natural jnstice t lat a party be informed of the basis for
an administrative action (81a).
9838
The Prnama case created a new rule of Ipw (8 •'-.). One of the
£?lternative grounds of the deci'-:ion wr-s that the .'-.xeci..tive Order
failed to F.tate the finc'in ;3 v/hereon it was based. Said j.ir. Chief
Jv.stice 'h;;l;es spepj-in.; for the covurt:
"There is another objection to the vali' ity
of the prohibition laid down bj^ the Lxecutive Order
under Section 9(c). The hxeci:.tive Order contri ns
no finding, no gtrtement of the _:rovaic.'; of t'le
Presic.ent's a.ction in enactin^, the /jrolLioitlon.
----If it could be ssid' thrt from the four
corners of the stat'n.te any possible inference
cou.ld oe Csami ',f particular circu..^'.tances' or con-
ditions ^''hich were to .govern the exercise of the
aV'thoritj^ conferred, the -^resident coulc' not act
validly v/ithont havin;-!; regard to t'lose circii.ipt-nces
and. conc^ition". AhlI findin-js by hirn as to the
existence of the revpireO h.'sis of ]ii t a.ction wo^ild
be necessary to sii:'~tnin t.iat action, for otherwise
the case wou.ld still be one of =^r. "d'f^^torod dis-
cretion as the qu.rlific,- tion of jjathoritj vould be
ineffectual. - - - -
"¥c are not de'^-lin 'hth ^ctioi-. hich,- :-;o iro-
priately belon-'in-- to the erx-cv.tive vovince, is
not the suJcject of jv-i/icial review, or i-ith the nre^
sr^-iTiptions attachin-;- to t":ec:tive action. To re )eat,
we are concerned with, the que:;tion of the delr ;-tion
of le;-islative power. If th.^: cii;i:'bn i? to oe -linished
for the crime of violatin ; a ].■.- isl--:tive or.Ler of a.n
execLitive officer, or of a ooar.^ of co ..hssio::, due
process of lav/ reouires thft it r.hall fijy.iear that the .
order is within the autliority of the officer, board or
coimTiission, and, if that autsiority deoends on o.eter-
minations of fa.ct, those detrv-rinination.: must be shown."
(t3)
ivir. Ju.stice Cardoza, dissenting, too]'; exception to this portion
of the Chief Justice's o jinion (34). This new rule is not necessarily
universal. It may be that it will be lirnitet to oroad review fields
rcTfuiring choice bet-'een imoortant policies, or where criminal penalties
are involved (35). ,
In an o .anion (86) Vianded f o'.'n by hr. Justice 3rrndeis the
ei:^hteenth cf this month (iToveinber, 193r;) there is an ijidication
that the court has quietly qii.alified the second point of the Panama
Case (8?). The case involves a challenged order of the Department
of Agriculture of the State of Cre-^on prescribin;; certain fru.it and
vegetables containers as the standard type to be used. It was urged
upon the court that no -.u-esruantion e.xists that facts v.'ere properly
present to .justify the a canini strati ve action. 5aio. the cou.rt:
"The contention is vitliout siipport in authority
or reason, and rests Ujpon iiiisconception. ------
The q-uestion of la.?; may, of course, alv/ays be raised
whether the legislature hpc. pov.-er to delegate the
authority exercised. " (88)
Por this proposition the cou.rt cited the Pani'ma and Schechter cases
(89). The court continued in laiigtiage thrt does mxxch to put the law
upon this subject back to its state in 1934:
"Wliere the re.^^ulation is --/ithin the scope of
authority le.53lly dele?:ated, the pref-n.^nption of the
existence of facts justiiyin;^ its specific exercise
attaches alike to statutes, to municipal orc-inances,
and to orders of acuninistrative bodies. ------
Here there is added reason for applyinT the ore-
sixmption of validity; for the re ;,\i.lation nov- chal-
lenged was adopted after notice and public hea.ring
as the statute required. It is contended that the
order is void because the auninistrative body macie no
special findings of fact. But the statute diu not re-
quire special findings - - - -. Compare V/ichita Rail-
road and Light Comioany v. Public Vtilities CoiTii:..is'jion,
260 U. S. 4G, 58-39; Maliler v. ILby, 254 U. o. 32, 44;
Southern Zy. Co. v. Virginia, 290 U. 3. 190, 193, 194"
(90).
Mr. Justice orandeis either i^;nores the second point of the
Panaina case or else he definitely overrides it, citing as he does
the "7ichita Railroad a Light Company v. Public T'til i ties Commission
(91), and I.iahler v. Eby (92) for the prooosition they ri '-htfiilly
stand for that a statutory requirement of f incin ^s must be cou.plied
with. Mr. Chief Justice Mughes had cited tliese cases a„s authority
for the second point in the Panama caise des jite the fact that th^ey were
based upon statutory requ-irements not present in the Panama case. The
citing of Southern Ey. Co. v. Vir-.i^iia (93) deads the v/eight to be
^iven to Mr. Justice Brandeis' stat.-Mct uion the point, a.s this case
does not stand for the seme proposition tn- t the others do. In spirit
it is much more rigid than the otherr- requiring as it doec certain
procecural safe<-;;ij.grds in absence of any statutor;;' provision.
It seems too early no''^ to try to evaluate the Pacific States Box
and Basket Company v. ^Vliite case (9:). The fields seem to be properly
analogoii.s. In the Pansjna case there was no attei:ipt to state a factual
basis for the executive order while in' the Pacific P)0.k case a hearing
had been held. VJhen there has been a hearing a cotxrt may presume tha.t
the administrative action is predicated u.pon the hearing. The situation
becomes more difficult for the court where it is not evident whether the
administrative action is based upon any facts. Of co'arse, all such
administrative action does not require a hearing, but if none is held
the requirement that the basis of the action taken be set forth seems
reasonable. Certainly, the safest practice would be to fully state a
basis in findings for any adninistrative action taken in a field of
9838
soci,-?! or econoiiiic ■OGllr.y. rot on L^' is it s -isf eruarv. .^ -rin'-.t jijdicial
attack it is ■;ood fK"a:.iniratr?ti ve Lechaiqwe to sho"; th,-'t the aoproach
h;''S ceen v;G].l-cor.sit."erecl. If not legally recesspry as a. matter of
nrt-.j.rFl justice this ^jTrctice v.'otild seeivi cerirable.
I'RA stcternent of JinCin;;;r^. v-s usu-'Hy iiiarkea by their foruiality
(95). rindn.jE "'ere often luac.e in the lr:,L.'X!.a,y.e of the ststute or in
certr.in stock phrases (&6). This practice >l,vs not been favored by
the courts (97). It would seem a better jractice not to i^se "stilted
legal /uraseology" b\i.t rather to tell the rtoi-y of the econor.dc
situation involved (98). FflA practice v.t -.■ not -^ided by any str'tevient
of policy in this re^jard. ihc type of fin liiii;s to be uadie was never
incdcated. The only stateiaent was that there vi-oi^^l'.'' be a finding?;
stFted in each letter oi transmittal (99).
hany of the early codes vera based uoon more full findin-^'s than
those approved later when the pressiire becjane aiuch .greater. These
early codes usually contained, a statement from the TRA. and one by the
President. Later prj.ctice vp^iedi. In codes not req'. iriiv"; the
President's approval only a staterient ''o;/ the TEA. v.-ill be foimd.
The first code, that of the Cotton Textile Indu;5try, was accoiupaxied
by a twelve page stateiuent by the Au:.:inisti'^ tor (iJO). The Li^mber and
Timber Products Ind.j.stry Go<' e vos ?.T.?:-;orted oy a sixteen page
memorandujn of tran:?.iiit t".l (1)1). T -;i -. letter -"ps one of the best
of the type written; but vnxen t::€ .; yit;.. e of the industry end the
great problems with vfhich the co.':e de-It are considered this
memorandujn seems r-Tossly I'l-r teriaete (l.'i^'-. 3v the ti.ne the eighth
code was reached the findin>-s had dro vjrd tn lic'de over a :;jaf s
(103). Code !^^o. 13 did not even include r- f L.c in : of fact except
for a brief and. hasty reierence to hi rrir. -: ;-ni. lin'. injvs in the
executive order (104). In t"-:-. ^^t-t^:.\e:it rl: fin-in-n for the leather
Industry Cod.e not one -ord is ^aid -ibo'o.t tiie trade practice pro-
visions (105). '-I'liis is cpiifce t, jic-jl of what frequently hr'.:p':'ened.
These inadeqi^ate I'in- i:\^s vere yrp-'ested to the court in the brief
for the Sc:iec.:ter C jr. oration (l''d). It orobably woulc. h.f.:ve been
desirrble for the President to have stated the basic for his finding
in something; more than a ritualistic manner. The ar.5:>.u-itnt of the
brief thet neither the ord.er of the President nor flie letters of the
Secretary of Agriculture or the Administrator conteiiis an^'' reasonr-
able showing tha.t "strsi^jht killing" was sai luifair method of coiipe-
tition is entitled to careful consideration. It must be remembered
tnrt records were made wliich in many instances wo'uld have substsn-
tiated the action t-hen - or in effect, th.e findings mad^e though
not stated.
h'inusight in this problem is better than foresighit. hEA
had little g-aidjince in the cases when its first findin-;s were made.
Prudence and an attentiveness might have suggested that along with
a full record, a full statement of the of:sis for action should have
been made. Such care could hardly hr-ve been ezpectea from early ISRk.
A future administrative body v.dt.i a similar task v/ill be wise to
frame its finddngs along the style of a jadicial opinion, and to
be careful to have resdy for the courts a fully reasoned and com-
plete statement of its findings properly groiuided on recorded
evidence.
9338
-7?
Another oi-oolein oi findir. :s rented in the accept,aiice by
MA of fincanc? faroe by other <•: -siiCit.G. As t.hs also involved the
question of the ji- ri.t- of the .ele ^tion it -/ill be discussed in
a cho-ijter uealin;, \- h t; ;,.ele "aoion (].■ V;.
9838
CFJ\PTSR X
PHOBLEl/iS IN PUBLICATION, NOTICE, AND OTHER ADMINISTRATIVE
ACTIONS BY NTIA
I. PUBLICATION OF ADMINISTHATITE REGULATIONS AH) DRAETSivIANSHIP
When the famous legal fiction that everj' man is presumed to knoTT
the law (l) ripened there was no mass of administrative legislation
with T/hich to cope. Every man mav he present in Parliament hy h.is
representative, hut one ro'old hardly sa,y he is present at the proceed-
ings (or the case ma^y he action rrithout proceedings) of every adminis-
trative hoard. The mass of adiiiinistrative rules (2) only more acutely
present the sane protlens that the English scholar Bentham so clearly
sarz: 1. It is contrary to our morals to punish a man for disohedi-
ence to a law of which he had no notice (3) and 2. Fablication alone
is not enough. Putlication may only tend. to hewilder (4) if the orders
are not easily accesgihle and clearly drawn.
The prohlem has heen most acute in the United States. Often only
a small percentage of the rulings of an important hureau will he puh-
lished (5). Escecutive orders (since 1905) may he found in the Depart-
ment of State and the Lihrary of Congress. This malt&s them far from
accessihle to the puhlic (6). The state of puhlication is one of
ahsolute confusion. (7) in a field where ten times as much law as
Congress malces exists (8).
NRA only .served to complicate the prohlem (9). The great mass of
industrial legislation resulting from it was hrought to the court's
attention in the Schechter case (10). 1^4.' s code record section does
not even have a record of all the purported administrative action (ll).
The m.ost puhlicized example was not the responB.ihility of NRA hut
the Petroleum Administration. In connection with the argument hefore
the Supreme Court in the Panama case (12) it was found that there had
heen s.n indictment for the violation of a non-existent provision.
Another interesting example lay in the National Lahor Board
created Au^^st 5, 1933 apparently hy a press release (13). A formal
order hy the President was not issued until more than four months
later (14).
The sane difficulty was faced in England (15) , until the passage
of the Rtdes Puhlication Act in 1893 (16). This act solved the diffi-
culties of the situation there. The more important niles are f'ally
puhlished while only a reference is made to the local and less im-
portant rules (17). Certain it is, that some such legislation has
long heen sadly needed in the United States (18) .
The prohlem demanded NRA' s hest consideration. Code Record was
an offered solution. Code Record failed only where Deputies and others
were negligent or wilfully failed to cooperate. Confusion was such
that IIRA regulations and codes could not have heen expected to have
9838
always 'been clear. Explicit instractions- should have teen given and
emphasized that only those doc-uments filed with Code Record had any
forcp.. Efforts shculd have "been made to discourage the numerous
drafts of "codes" vfhich circulated often as genuine.
Almost as confusing as the mass of delegated legislation and the
difficulty of securing access to it was- the variety of administrative
forms and the differing uses to which each were put. One dt5lving into
the mysteries of KRA sut-legislation must vfrestlc with executive
orders, administrative orders, office orders, office memoranda, an
office manual, and ICIA hulletins. The use to v;hich those forms were
put varies. It would S'^rve little purpose to point out the precise
history of each. It mucthe hcrne in mind that these are forms of ad-
ministrative action. If it said that executive and administrative
orders were generally legislative this merely means they affected in-
dividuals through a class or group. Likewise as affecting individuals
as a matter of direct intention under some legislative power such or-
ders might te adjudicatory. So it is hpst to say where a direct effect
was had upon the interests of individuals or classes executive and ad-
ministrative orders were employed. They were also employed to dele-
gate power and set up administrative organization and procedure under
the Act.
ThR other frrms entmeratod were in the most part for internal use
within WEA. Approved "by the Administrator or his d-^logate they carried
the force of .an administrative order. Sometimes, their effect upon
code provisions or their requirements upon members of industry wore
such that it might he said that the interests of individuals or classes
were affected. Individualized action was taken hy the various lahor
agencies set up under the N. I.R.A. , the Industrial Appeals Board, and
ty the Compliance Division in Blue Eagle removals. The latter were
sent cut hy telegram. It would seem that they should have had at least
the dignity of an administrative order, since the effect on property
might he so vital. General instructions as to procedure may he found in
compliance field letters.
It is olDviouG that to one not experienced in -thf* intricacies of
ITEA administrative forms the mass of orders and the variety of forms
in which they might appear coxild well present a hopeless labyrinth.
No precise procedure can he outlined. As in England all orders of
general character and importance should he generc.lly puhlished. In-
dividual orders would not require the same distrihution, hut copies
should he sent to all interested parties and kept available in speci-
fied well-known puhlic depositories. An effort should "be made to
classify administrative action in such categories as would indicate
clearly procedure, powers, responsihility, policy, general rules or
requirements upon industry, and special or individual rules and re-
quirements. It is not hoped to solve the problem here, hut merely to
suggest the vital necessity of giving full thought to it. A recent
federal statute has taken a step toward the solution of this problem.
It provides for a Federal Register which v/ill be analogous to the
English rules publication system (l8a).
9838
Draftsmanship was like-.'dse an iranortant problem. Cloudy language
was sometimes sought hy industries hoping t'^ "better their position by
interpretation later. The Legal Division gave its staff warning of
the vital nature of draftsmanship (19). In the latter days of MA a
study of the problem was made by a member of the Legal Division. It
is difficult to lay a finger upon any of the ills arising from this
source. Ambiguity was the chief difficulty and this was reflected
when questions of interpretation arose (20). If MA could have done
more it would have been only to have increased and emphasized its
warning. It might also have charged the Review Divisi.-'n or some other
agency mth- the supervision of draft smanr-hip.
II. N0TIC3 AlTD FAETICIPATION IN C^HS INDUSTRIES' ACTIVITIES
The giving of reasonable notice is one of the first requirements
of administrative due process (21). The problem is often viewed as a
technical onrs since it seldom is brought up in a case (22). Require-
ments vary. In somo fields there need be no notice or only the barest
kind (23). In the field that NRA dealt vd th a full and reasonable
notice must be giv^n as to the matters to be considered. The form of a
notice must reasonably relate to the action to be taken (24). The time
given sho\3.1d allow a person to be present and to make some reasonable
efforts to prepare a case and secure evidence (25). Fnat persons are
entitled to notice? Mr. Justice Holmes has pointed out that it is im-
possible to give the full protection of a "town meeting" (26). Yet,
when substantial property rights are affected every reasonable pre-
caution should have been tacen that any person affected should have re-
ceived adequate notihe. If a person is entitled to an individual
notice he is allowed to maks a positive showing in the courts that he
received none (27).
Official stat^.ments never fully set forth the degree of notice
necessary. Statements were m^ado upon the form ajid procedure to be
followed and establishing an official bulletin board (28). Full notice
could hardly be found in publication upon a bulletin board. NBA was
concerned v.dth the manner of giving notice, that is how to get out
wide notice. It did not concern itself with the problem of just what
persons had to be given notice. This is no criticism of what was dane,
but rather a pointing out of the approach taken as distinguished from
the one courts v^ould probably use. Actually, ^IRA made serious efforts
to widely distribute notice. The regular course was'.tc send notices to
labor unions, the lab'^r prT?s'^, government officials, the press, trade
association publicati'^ns. State NRA offices. Resident Adjusters and
Regional Directox^ First Glass Post Offices, a special list, plus any
additional persons whom the Deputy Administrator suggested (29). The
Deputy Administrators, usually, tried to secure from th3 industry mem-
bers vdth whom they wsre negotiating as full a list as possible of all
kno^m members of the industry. Still, in some industries it is obvious
that it would be impossible to ever make a complete list of all members
(30). In such cases if every reasonable ff'-^rt were made to notify all
interested parties, if the industry group was properly representative,
and if a tj.'pical viewpoint and evidence were fully presented for each
economic interest the courts might consider that sufficient notice and
hearing (31) had been given. This is only spectilation as to what might
be called reasonable.
9838
The Legal Division gave some serious thou^^jht to this proljlem. It
isr-,ued a very sound guide h" January of the first year of IIRA (32).
There must he fair notice as to the subject matter to he heard, and a
reasonable relation to the subject matter actually acted upon. The other
thesis of the memorandum was: a hearing should be adjourned to keep open
the notice as to any modification made. Although' the writer has found no
Cases suggesting the need for this technicality no harm can be seen in it.
The important thing ^jould seem to be whether notice was given in regard
to any substantive regulations or provisions to be made. These could be
changed in form but not in' substance it would seem a.nd the notice would
still be good. Later the Legal Division sta.ted it would accept a notice
if it had been public property for seven days (33). This expression
cajne as the result of administrative pressure and not sound thought,
Seven days as public property might be far from adequate to allow a manu-
facturer on the Pacific Coast to gather some bits of evidence together
and arrive in 'Jashington in time for a, hearing. As to the persons who
should receive notice the Legal Division came to much the same conclusion
as the writer (34) - there shoidd be reasonable notice in every case
where it was practical , and that only convincing reasons should cause
relaxation of the requirement (35). The Legal Division' s expression
upon the statement of the subject matter contained in th«» notices is
ambiguous. It says that it need not be made "with completeness; but it
is necessary to state it in such manner as to show wh,?t subject matter
is under consideration." (36). It might be more cleer to say that the
statement mast be such thct one would reasonably erroect the subject
matter to be treated th^-t -^as considered (37).
It would not be ex-nected to find ma,ny objections of failure to re-
ceive notice in the transcriots for anyone attending a meeting must have
had notice, though its character might not be ouestionable. There must
ha.ve been instances even though not recorded. There are some instances
where notice was claimed to be short or inadequate. Such was the case in
one of the later NRAheprings (30) where it was claimed that notice of
the nature of the subject matter w?s received on the day before the hear-
ing although it had been known for ten days there would be a hearing. One
code, at least, made an attempt to define notice as a mater of law (39).
As a rule though, KRA matters were so widely discusP'^d and publicized
that there were probcbly few case? where failure to :.,et notice could be
raised.
The adeciuacy of the notice given in the procsxiure "notice of op-
portunity to be hesrd" was s,ometimes open to nuestion. There were two
types of printed notices for this procedure. One did not state the sub-
stance of the proposals; the other did. Where any substantive change
was made the first was clearly inadeauate. In connection with the Band
Instrument Manufacturing Industry Code there 'was a' proposal to change the
definition by including words which might broaden the scope of the code
considerably (40). It was not likely th?t -lersons affected would receive
notice. If they did, the proposal was so subtly worded that the intent
was far from clear (■l.-l). All in vail, the notice in this procedure should
have been more cle; r than it often was. The inadequacy of such notices
and the ease with which they could become inadequate ,-re another argument
against the use of the procedural device of "notice of opportunity to be
heard" unless greatly limited and improved over its- form in NRA.
9838
A problem in notice that also i.as a jurisdictional aspect (42) lies
in the question: were members of industry entitled to notice of and to
"be allowed to participete in the preliminary drafting of codes? The
Legal Division was concerned with the truly representative character of
proponents (-iS) . It inight \7ell "be argued thcit where a proposed code was
a -put-up job aimed at a particalar firm or class v;hich was not invited
to" participate' that the proT)onents were not truly representative (44).
Proponent groups sho^ild have "been careful to have given full notice to
industry members, invite full cooperation, and in all event? avoid any
appearance of unfairness.
III. OTHER FORMAL ACTIOaTS BY MA ■ '■
Interpretation provides -n Important means of law-making. Profes-
sor Gray thought it so importrnt t"nrt his jurisprudential concept of
law was that of the decisions of the courts in the individual cases (45).
In early RRA code authorities issued interpretations in which MA acqui-
esced (46). Later, NRA reali^.ed that the problem was one for administra-
tive action, and instructed against strained interpretations (47). Inter-
pretations were never required by stated procedure to go through the
usual internal channels (other than notice and hearing) required for
amendments or new codes. The Advisory Council recognizing the importance
of interpretations made strong recorrim.endations in this regard (48). The
Legal Division interested itself in interpretations. Interpretations
it felt should not be retroactive if onfairness would result (49). ^hen
rules regarding interpretations became more strict resort was had t 0
"opinions" in at least one instance with the intent that they be used by
the industry as interpretations (49a.).
Presiding officers sometimes evidenced disregard for fne legislative
nature of interpretations. It should have been KRA' s purpose to have
avoided as much interpretation as possible by Iticid draftsmanship, and to
have furnished a basis for as many angles of the problem as possi"i:'le in
the discussions at the public hearing. One instance is enlightening. An
interested member of an industry asked the meaning of a proposal at the
public hearing. The presiding officer answered, "Until a code is approved
by the President, no one can give you a def-inite interpretation of a
particular section, or any section" (50). The statement was probably true
if a binding interpretation was meant. That should not have precluded
full discussion and a general agreement as to intent.
An interesting problem in interpretation was presented by a section
of the Baking Industry Code prohibiting the giving of premiums or coupons
by members (51). This section was' extended hy interpretation several
tim.es to in^/iude subject matter not discussed at the hearing, but 1 ogi-
cally coming within the words and intent of the i^rovision (52). Later
(53), it was proposed to extend the provision tb prohibit a wholesale
balcer loaning bread racks to its customers bearing the wording "we re-
comm.end ( name ) bread." The transcript of hearing (54) contained
no testimony showing that suck use of the provision was ever contemnlated.
In fact the testimony throughout looked to premiums given to ultimate
consumers (55) while a later provision of the same code indicated that the
"distribution of articles commonly used for advertising" should not be
banned as "commercial bribery" (56). The proposed interpretation was
9838
stopped by the Revie'.? Division. Lster (57), it popped up again with the
only additional support of a code provision against subterfuge (58).
This proposal v/as finally v/ithdrawn (59).
Interpretations were sometimes used toenlarge a code's jurisdic-
tion. This was in effect an amendment. Naively it was thought that by
using interpretation the jurisdictional ouestion of representation once ■
passed upon could be ignored. Such was the case in the Steel Castings
Industry (60). The Cocie Authority first sought to act by commercial
resolution (61). Later, MA sought to issue an interpretation even
broader than that of the industry's (B'^) . Jurisdiction was hotly con -
tested. Many firms under other codes contended there was no, proper re-
presentation upon which to base such a proposal (63). The Schechter
decision cut the matter short so it will never be known how the matter
would have been decided (64).
Amendments more obviously are legislation (65). The same procedure
was resorted to for them as for proposed codes except the "notice of
opportunity to be heard" lorocedure WcF more freouently used in the case
of amendments. This exception crepted the greatest difficulty proced-
urally. The inadequacy of this procedure both as notice (66) and as
hearing (67) hps been discuss'-d. The lorocedure imploying favorable action
by the administration was usually resorted to before the advice of the
Advisory Boards was sought (63). This put the administration in the
position of giving a t-^cit ap~jroval without full consideration by its
own machinery.
Administration amendments were a. troublesome problem. HRA agencies
desiring to propose amendments were long kept in the dark as to procedure.
When the Deputy Administrator desired to amend the code full notice was
not always given to the industry. The Advisory Council made some ex-
cellent recommendations upon this (69). It also suggested tliat any ad-
ministration proposal should be made only at a public hearing (70). This
would seem desirable except lerhaps in matters of detail where the need
for the provision was urgent.. Public he&ring was the desirable procedure.
Exemptions and exceptions likewise involve both the legislative and
adjudicatory processes. Sometimes the effect of exemipti.ons was so broad
thct the operation of 'an entire code was delayed, or again the su.spension
might apply only to a particular provision of s. particular class. Ex-
ceptions were designed to apply to specific cases of individuals. Although
applying to classes or individuals they are analogous to private bill
legislation in regfrd to numbers affected. They provide a highly. de-
sirable means of alleviating the harsh effect of general policy if pro-
perly controlled by the statute (7l). The Legnl Division felt thiit
public hearings as a basis for such action was highly desirable (72) al-
though they were seldom held unless the problem involved was most imioort-
ant. HRA officially stated the need for a finding of fact upon which to
base such action (73). Despite this oeputies did not always furnish ad-
visers any factual basis upon which to act (74).
The value of exemptions and exceptions is indicated by their use by
the Industrial Appeals Board (75). These devices served to mitigate
harsh rules c^nd allow for an evolutionary procesf^ of becoming able to
9838
conroly- with code reauirements. The proper use ot these devices v/ps
not rlwpys understood, nnd sometimes c.tterapts vjere mcde to use them
to perform the task of amendments (76).
The j^overnment ht\s "been allo^ved to stay action taken that w^s
continuing, and did not, once and for all, vest right (77). W.A used
the procedure of stay. It had two aspects: 1. A temporary release
and 2. the force of an araendrr.ent cutting out a code provision (78).
In either case where vested interests were to he adversely affected a,
full factual hasis for action should have existed. If no interests
had yet vested the action would in effect he negative, pnd such a full
hasis would not be required though it would he desirahle.
IV. 3PESDY r^TiiliaKATIONS
The notion of a "speedy trial" is used in the sense of a criminal
prosecution (79). There viei'e instances in KRA of purposeful delays
that affected suhstsntial rights. From our study (o<^) , it would seem
if the delays '.vere in actinj^, uioon new matter, manoamr-s would not lie
to force consideration. 7here there were delays in performing formal
action following the making of decisions mandamus might..lie, presuming
that the courts did not exenrr.t !3A U)on the grounds it was an agent of
the President. Dilatory inaction doe? not meet the courts' auproval.
Cases can he envisaged where the courts would ret in nlace of the Ad-
ministration (Sl) or force it to act.
V. VIOLATIONS BY IIRA OF IT- CW PHGCSDI&E
Courts uniformly condemn the violation hy an agency of procedure
set up hy an administrative agency for its own guidance (82). The Ship-
building and Shiprepairing Ind.ustry Code (83) by amendment provided for
an industry committee compced of members from the industry and others
to be appointed by the President (84). This committee issued "Rules and
Regulations for the Administration of the Code of Fair Gomrietition and
Trade Practice for the Shipbuilding and Shiorepairing Industry in the
United States" (85). These rules made a number of substantive addi-
tions to the code (86). The charter of the committee gave it no auth-
ority to malce legislation (37). It ;-,a,ve only authority to recommend
provisions. MA never a'^^oroved these r^j.les. So it might be argued
both that MA did not violrto its own -procedure and that the procedure
was quite usual. The violation, however, lay in giving effect to these
rules by silent acquiescence. The rules s-'id "Approved and Effective,
October 2, 1953" (88). They were signed "approved" by ""illiam E. Davis,
as National Hecovery Ad;ninistration Representative and by tliree other
members appointed by the Co'-mittee by the President. !>IRA knew all these
facts yet for a considerable period it allowed the industry to operate
under these provisions as if they were approved by the President. Cert-
ainly, some of the actions in complia.nce with the "rules" were in viola-
tion of the Anti-Trust laws as no proper action had been taken under
the Act to suspent them. MA either violated its own procedure or know-
ingly allow the same effect to be secursd by others.
9838
MA procedure called for r-dvisers to write r^Morts ■apon the sime
drafts of codes unless there v/ere no material char.ge-s in the draft in
the individual adviser's hands and that transmitted hy the Deputy (89).
Discretion was given to the Deputy to determine if the changes were
material. This procedure was not alvrays followed, or rather there are
exajnples of abuse of discretion hy Deputies. One case involves the de-
letion of the word "secretly" out of an original "secret rebate" pro-
vision (90). Deputies were known to ask thet reports be delayed in
the meantime sending the code through for approval (9l). Other examples
there were of NRA violating its own procedure which shall be reviewed
(92). IIHA should have exercised relentless care and issued other ex-
plicit instructions igainst such action.
9838
-C7-
PHOBLEUS I:t SIP'STAITTIVE DUE PROCESS OE LA:J A"ID .ADKI'/ISTEATIOil
I. EEASOIIATLEI^ESS
The "due iDrocB'^s of lav7" conce-ot lips evohed the, greatest interest
in recent years vhen the courts have enploj^ed it to test substantive
ouestions. The procedural asi->ects he.ve Taeen d'jarfed. This does not
mean tiiat the;;- can oe disregarded. The "burden of this study has heen to
sh07 just the opposite. But, it is in the aspect of a rieans "by which
the courts have tested the proT^riety of social and econonic legislation,
"both by the States and the fedoraJ governuent , thp.t the "due process"
concept has hecoiie -joiDularl;- l:noT7n» The propriety of this use of the
concept is not .a oiiestion for consideration here, i.'any students and
la\7yers have \7ritten virorcusly upon both sides of the issue. Here, it
is orily to be recognized that the courts still j-iay e:^ercise such revieu
\7hether it be couched irj. due process of lavr terninolog"", in the sense of
poners granted, or anj'' other Irngaage, The judges have been accused of
substituting their judgnent for that of the legislator. This statement
may not be precise. Perhaps, the vie\7s of the j"adges coincide v;ith the
traditions, of society and its judfjnents \7hich the judges intend to a.pply.
Property and vested interests loom large as a favored -Dart of our
system (l). They provide an economic sanction which weighs heavily upon
the courts. There are grave considerations of policy a,gainst too qtspX-
ly disturbing settled relations (2),
The evidence indicates that ilElA. problems 'jould have provided a rich
field for employment of the substpjitive "due process" concept. Labor
regula.tions and trade, practices are inextricably tied up with the most
vital property interests. They are subjects of frequent uses of the
"due. process" concept. The case of ffillamette Valley Lumber Com-nany v.
"Jatzek (3) shows the t^noe of Droblen vrfiich cordd have been ex-oected to
arise. The VJillamette Valle;^ Luraber Compejiy, a/c.the tine of the aioproval
of the Lumber Code (4), had been o^oerating for about ten j'-ears; the
"Jestport Lumber Com/pany for about eighteen yerrs. These mills had for
some time operated upon a double shift basis. Less than seventy of the
seven hundred odd mills in the division had ever o-terated upon this
basis, ^ considerably fewer number were so operating in 1333 (5). These
two mills involved apperred to have developed the two shift operation to
such an efficient point that they competed with Canadian m.ills for the
China, trade, aji \musual thing for American mills. Lumber sentiment on
the Pacific Coast did not favor the double-shift mills. An order v.'as
made under the provisions of the Liunber Code (6) which had the effect
of cutting the oijerations of .single shift plants by twenty-five loercent
pjid double shift plan.ts b-^ more than sixty -oercent from the hoiirs operated
under the President's He-emploTnent Agreement, These nre the basic facts.
The situation vfas 'further complicated by sixch allegations as; the relation
between production and sv3.e of lumber ^inon which tiie order v/as based wps
ouestionable, price not being fully considered; that hostile business
interests dominated the code activity through prominent -oositions with the
Code Authority or its committees which put through the order and heard
the appeal; that obsolete, inoperative, inefficient mills were given the
same quota a,s efficientlj/- operating mills, with the consequent nev life
given the former; that substantial contracts involving the "Jillamette mill
9838
existed; that coupetitors "by r.ppl^ing for tine for uiioperr.ted nills vera
able to oper-^.te their j.iills on a. nore thaii single shift. "Jithotit as-
suming to '-^eigh the raerits of these allegf-tions the;- are each of a nost
vital nature, containing as the^ do elements of luif.-.irnesp and un-
reasonableness. District Judge llcZIar;;'' refused the contentions of the
Willfjnette Cor.ipany after tuo appeals to the adziinistrative agencies had
failed. The opinion of Judge lIcI^?.r;' emphasized that "ITot all inequalities
are regarded in la'j as arbitrary and discriminator-/, but su.ch onl:,'- as
are based on unjtist rjid inadequ.ate determining principles," The_ opinion
continues nith a careftil revietr of the problems of the industry (7), It
concludes that the re^^.•'.lation "does not, in the judgment of the court,
arbitrarily discriminate against a:x" Mill unit" (S), Perha"os, the court
did not see "confiscation" (9), The thing v.'hich is to be enphasi::ed is
the willingness of the judge in this si.tiiation to jiidge the arbitrary
and discriminatory character of the determining principles. The indi-
cation is strong that had the judge concluded differently as to the
charrcter of these basic princiolep, an injijxiction \-,'ould have issued.
Judge iicllary, though ^xoholdiug the ad/iinistration, r/as aiopl-'-ing the test
of substantive "due process of lav" .(lO),
The affectation of private contr-c'cf; by iJlA. action brings up the
propert;'' question in aiiother vital form, T"-ie Act mrde no provision
directly- covering th.e r'.robler.i of "forv'ard" contracts - contracts made
uith delivery to be had at a future date or artes. Some of thD_earl;'-
codes (11) contained statement r. iirging the adjustment of forr/ard con-
tracts. The major imoortr-ice of the ■iroblem './as given it "o/ the President':
Heemplojnnent Agreement, As ai ;ini strati ve legislation and as contracts
with the President the problem presents differences. The main con-
sideration of interference nith existing contracts is the sar.e from both
ajigles. As first presented the problem arose from the Pr^esident's earl^''
statement upon IIRA urging adjustment of "for'rard" contracts (l.*:). The
statement ua.3 included in the President's ?eer.plo--ient Aj^reoment (lo).
This seemed to furnish a wholesale excuse for persons to relieve them-
selves of onerous contracts, nnc. to t-l:e advantage of the rapid price
increases going on in the early days of /PA, Two questions arise. Did
this contract have any influence unon .? buyer who did not sign the
President's "".eenploijTnent Agreemont? The ansv-er wo-VLd seem to be "no".
Secondly, what effect if any did such contracts have upon signers in a
buyer-seller relation? There a-e tv/o approaches to this question, 1.
Can beneficiaries sue to enforce provisions of a contract to which they
are not a party? 2, '.'rs the contrp-Ct a group contract made in con-
sideration of the others i.7ith promises running to and from the other
signers? Unless there wa,s relief \ipon one of these bases there would
seem no recovery for failu,re to adjust contracts or no defense for a
breach of a forv/ard contract. As to non-signers pnd to all others if a
contract could not be spelled out there would seem to be no defense for
breach of a forward contrc-ct. '2liQ defense of impossibility is not
popu-lar with the courts (14); and ■•rars (15), strikes (15), -nd embargoes
(17) h?,ve been held to offer no excuse. The code provisions covering ad-
justment of forv.'ard contracts attevapting to cover persons not agreeing to
the change of the contract raises the due process of law cuestion. Here
the courts would hp.ve to decide if the provision was unreasonable and
confiscatory.
9838
Code Torovisions regjulrtinf^' "sales" ■•.7ere often nr.de vith the lajiaan
intent a,ttFi,ched to them of a ■"contract to sell" (18). The "orol^len pri-
marily v/as one in legal interpretation. Such provisions have rm in-
portant effect nhen interpreted in the strict legal sense of the '-.'ord
"sale". The effect raa;'- have heen to -lake void all contracts to sell at
a fixed price, if that "orice did not coincide v/ith the price ouoted ^7hen
deliver7 was nrde or conversion had in the strict legal sense (19). The
Legal Division recognized the possiiJilities of the situation (20), It,
ver" reasonably, suggested that the iDrovision he interpreted according
to the settled rules of interpretation. If the resulting interpretation
nas nanifestly ujijust -.n exerrotion to those inproperl'" af :'"scted was
suggested in the interim period iDefore an cUBendnont to reiiedy the
situation could he ha-d. If such a "orocedure vere not follov;ed due pro-
cess of lau cuestiono from hoth the substantive and procedtiral angles
TTOuld ?,rise. Improper interpreta,tion of r orovision uhich the trans-
cript of hearing shoves did not intend '±.s.t it vas interpreted to mean,
would present a -orocedura-l.;?.ro"blen. The unfairness and unreasonaoleness
of the substance of a regula,tion affecting the fixture contract price of
contracts to sell, either execixtod before the a-roroval of the code or
not, T'ould offer the courts a, o^uestion of "due process" in its broadest
sense.
Contracts have long ha.d a "sacred" character in oiir la'.7. On the
other side of the ledger is the iDracticaJ. necessity of sonetimes inter-
fering with contrPoCturl relrtionshios, Contra.cts can not he used to ■
prevent legislative changes reasonably necessa^ry (2l). The "orocess is
preeninently one of bala.ncing of these t^'o interests (22). The Suprene
Court has shor/n a strong feeling for the sanctity of individtial. contracts
(23), The due process of la\7 concept in these fields has been exioressed
in such notable cases as Allgeyer v, Louisiana (24), Adair v, U, S, (25),
and Coppa^'^'e v, ICajisas (26), At present there are indications that the
doctrine's strength nay be \7aning (27), Again the Legal Division clearly
recognized the probleia and offered a sbateuent uoon it to itsmenbers (28),
An interesting case to be considered is "lighland v, "xissell Cr.r c; Sno^-^
Flow Corrpa-ny (2S) rhich held that the Congress and the President nay
properly fix the na:cirju:a orice of coal^ if the return is just compensation
within the meaning of the j?ifth Amendment, where the pur"oose of the
statute (the Lever Act) v/as to fix a fair ^jrice --et one high enoiigh to
encourage the economic forces of su-.toI;- and demand, IIRA price control
took the opposite tash the stabilization of ninimuj.i iDrices, The reason-
ableness of such action when adversel:" r.fiectlng contra.cts ^7ori.ld seem to
be eciually a problem, that the courts wo-ad .n-esune to decirie,
II, A PHOBLEi: n: ad; :i;ii strati ou
So far in this "oaper the aporoach has been anal"'"ticall3'' divided in-
to individLial a.drainistra.tive lav? --robloms, A case of administration in
action mary serve to vr.oint the problems, showing how the;^ arose. That
the manner of administration bore a her.v;- relation to the legalit"- of the
Act wa.s early recognized -oublicly bj the 3-eneral Coioisel, He said:
"Coistitutional rights are not inva.ded b.y proclaJiiations, or
statements of public policy, or even by grajits of extraordinary
power to meet extraordinr^rsr needs. The" are invaded onl-f b"^ the
exercise of force to talje from a nan a liberty or a ;:roperty right
9838
-90-
of TTjiich he raa;'" not "be lawfully deprived. Let me say now and
emphatically that the National pLecovery Administrf tion e:qiects
to or)erate so far outside the "boundaries' of constitutional poner
that judicial determination, even of horderinf; cases, -'ill not
he necessary." (30)
The administration of the Ice Industr;^ Code (31) furnishes an ex-
cellent suhject for reviev? (52). The code contained certa,in provisions
(to he more fully discussed) of a cuestionahle character. The De-outy
Administrator (33) answered the objections to these provisions not hy
any positive finding of fact or statement of how he felt these provisions
would he administered. Piather he sought to avoid the hurden of the
official responsihle for the findings. He chose to rel^'- tipqn a special
memorandum hy the Legal Adviser (3'^--) statinj; that the proposals were not
objectionahle (35).
Article XI providing for a certificate of "public necessity and
convenience." to he issn.ed before any new or additional ice producing or
storage facilities be installed provided the main 'oroblem in administration.
Almost as soon as the code was approved applications for such certificates
came in to the KRA. ?or more than five months (36) the Deputy acted
informally in these matters. He did not consult with some of his in-
terested advisers, Ke did not in any way advise them of his activities
(37). His action upon the applications was not in conformity with 'S3A
procedure, sparse as it was. ' All the appli'cations were approved or
denied by letter. There is no record of disapprovals or approvals for
this neriod at the Code Record Section (3C) , nor were hearings had upon
an3'- of these a,pplications.
The Code Authorit;^ ^Droceeded to create certain local administrative
agencies under a pov/er to establish "Local Com.mittees. of Arbitration and
Appeal" (39), with authority "to interpret and malce apr)lication of ' the
code subject to the Administrator' s . approval" (40), ITo record exists
of the Administrator formally approving any of the interpretations or
rulings issued by these "committees." These actions ^-'ere talcen with the
knowledge of the Deputy who did not raise a voice against what was done.
The Deputy early adopted the procedurfe of turning the applications for
certificates over to the "Committees" through the Code Authority, or in-
forming the applicants to a.pply to the "Committees," There is no official
record of the number of such apiDlications readily available (41), The
Code Authority issued a bulletin proposing to establish the procedure for
handling applications (42), These committees were composed of industr;^
members, often prospective or then competitors of the ap-olicant. They
were instructed to make investigations and to give the a-oplicant a
hearing. The committee after a hearing made its recommendation. This
was forwarded to the P.egional Adviser of the Code Authority \7ho vrauld
add his recommendation, llext the accumulation came to the Code Authority
which added its recommendation ajid forv?.'-.rded it with the rest to the
Deputy,
The Deputy reviewed the material, on each case. He then wrote to
the Code Authority authorizing it to grant or deny the application.
9838
There is no record ol the mim'ber of a'ool.icrtions T.hich \'ere hraadled
so frenl-'-. The Code ""ecord Division hr.s no record, but fron other sources
the n-mnher cnn "be placed at ground two hundred (43). Prior to i.a'/, 1934
the action of the Demity estp.olishint'; or denyin;.' "hp.sic or nornal
rnr.r'.cetins rreas" (44) is tuil:no\7n.
TJith the resii'i'nr.tion of the De;?ut" and the appointment of a nen one
(45) a. need for oetter nrocedv.re mpv rrcogniKed, The ne'J DepTit'" called
in all his a.dvisers to discuss -oroccdure v/ith hin. The result '--as the
initiation of the practice of holding;- conferences with advisers to con-
sider all ■■■roolens reoMirin:2: rd-iinistrative action particularly the
s,ppli cat ions for neT' or incrcar.ed cs.oacit^-. The Depij.ty felt that
unanimity of the advisors TToiild r;o fp.r to cure -orocsdiiral defects. His
trainin- -'as not such that he vrauld feel the need for a. full record and
the £;ivin,j; of procedural safegaardp .to interested parties* Still, there
were no fornal records nade of action, .:>?ic. the Code Authoritj'^ denied or
granted a-or>lic:'tions uon the Doputy''-, advice, So-ie forty apolic tions
were so handled (46),
The first official attention pivo'-i tliis ^-.rcDlen '/'as in Jiuie, 1934
(47), Until this tine the Lr-;iticr, --ore :^ree to foru their OTvn "oro-
cedure suhject to due -orocess reruirerient", of '.'iiich the-" were xirohablj''
not aware r-iid certain , ;eneral '~JA re^-.imments such as the use of Code
Record to rire action an official cast, . Z.y Ad:iini::trative Order a pro-
cedure i.'R," - 'rovided:
(a) A^T.^lications s-iculd he filed with the aoprooriate Committee
of Arhitrntion r^Jid Ao'oeals,
("b) The Cormittee should hold a he;„riny on the application,
(c) li'ollowing the hearing, tne o.-olication, transcrrot of
hearin/^ and recom-iondation of the coraiittee should be sei-it
to the ?:e:pional Ad\'is'?r of the Code Axit'iority,
(d) The Regional Advis^n' should ■-ror;e:-,t the file, to-'-jnther with
his reconKienda,tion, to the Code Authority*
(e) The Code Authority- sho-il:"' aral-^ze the file, orocure any
additional i;ifornation it ,b:].ioved necer.sar;- aiid -present the
entire file to the Aojii.iistration with iti; recoimendcation,
(f) The AcLninistrator should con:;ider the care, rnd issue
appro-iriate instr'Actions to the .Code Authorit;" rs to what
should he done, (-l-B)
This orocedure war, in effect an official statenont of what v;a.s then
the practice oaitting nention of tne conference of- advisers. As a re-
sult of the official stai~rp piven the procedure a feeling that reoorts of
advisers would he desirable prevf up. The practice of suhnittinf- such
re-oorts was started contenporeaieousl]'" with the establishraent of the pro-
cedure. Two nonths l.:.vter the oractice of a, formal docket, including such
re-oorts, was established. In the sane nonthi the first formal order uoon
an a;oplication v/as urde (49)* The procedure used in Aupist i.as continued
for two more nonths until October, 1934,
9838
A'oplicrtions for the estatlislunent of ""basic or nornal nr'.rheting
areas" (50) T.'cre still handled "d" the "conference of advisers" iiethod.
Administrative orders vrere issued in thirtj'-one cases (5l) njid no action
was tal:en in six.
The great authority ^jiven to local comnittees of interested oersons
crused a serious "orol)len in fact-g-^.therin;'^. Pacts v.'erc s\ip-oressed,
others nisinteroreted, and still others nisre-oresented (5C). Cor.roetitors
of a successful applicant could not he e:cpected to have the impartial
Judicial nind (5o). One instance served to ingress this u-oon the Adminis-
tration, An a^oplication i7as made in Septemher, 1934 to ou.ild aji ice -olant
in Portlraid, Oregon, The loca,l conriittee recommended that the application
oe denied hasing this upon the so-ca,lled "facts" that there v:as a daily
productive capacity of si::-hundred tons, r^. dcail"^ consiimptip?i of less than
three-hundred tons, prices uere fair and reasonahle, there '7ere no
monopolies or agreements upon prices or production, and a nen plant '.puld
pra.ct leans'" ivreck the e::isting plaJits financially, Inte::ested puolic
minded persons sho'7ed, on the contrar-^, that there existed' an operating
productive ca;oacity of only three hundred t'jenty-eight tons; prices Trere
as much as douhle that in many other places; one company dominated the
area, controlling tvro hundred fifty-tuo tons productive capacity;
evidence of iionopoly existed; snd. that the ice -iroducers of Portland
vere in excellent financial position,
'.Tith the trmsfer of the Code to still a third Deputy in Octoher
the greatest changes too),: place. The procedure nor; hecajie one conducted
oy the government, g-iving due consideration to the industr"'^ memhers,
ratlier than one conducted and dominated "by the ind^^stry nemhers. The
Deput-y outlined a rather lengthy proc^du^c v/hich is stated in the form
of nineteen points (54), The essentials of the procedure are: appli-
cations uere to he sent to the Deputy Administra.tor for first action in-
stead of the local committee". The Code Authorit" next gave certain ad-
vice and information to the De-?uty, ",i'ith this as p, hasir; it might be
unnecessary to hold a hearing in ".'hich case the Advisor"- Doards nere
consulted. If a hearing ua.s necessary one vould he conducted h]^ the
Pield Assistant Depi\ty .\dninistrator assisted hy the "Local Committee of
Arbitration pjid Appeal," ' Pecorar.iendat ions, from the Co'u.iittee to the
Code Authority T.-ere next m-de. The Deputy then prepared a digest on each
ca-se vrhich he distributed to his a6.visers, ueetings of the Advisers r/ere
held and recommendations v-ere made individually by each Adviser in
memorandum form. The Code Authority again coi.ies into , the picture being
notified by the Deputy Administrator of /lis decision forty-eight hours
prior to it being officiall:,^ issued. If the Code Authority uas opposed
to the decision made b,y the Deputy Administrator one wee]: vp.s allov/ed in
^•hich it might file briefs or mfjce personal rp'3earrjice, '\!hen the order
v;as finally issued, the Deputy Aininistrator notified both the Code
Authority and the applicant.
There r/ere about one hundred old applications upon h;md. It v/as
felt that speed-"- considerr.tion \;as more needed than the full consideration
given b;;- the procedure outlined. These were handled upon the basis of
facts gathered by 'a, ruestionnaire drafted by the Division of Research
rnd Planning,
9338
The chan;;e of the control of ■irocec'ui-e iron the hpndr; of indust3^7
to those of the ^■ovor^rient did Mot i.ican thrt "due "oroceM" uould he
autoupticElly sup-'^lied« As h,?,s oeon seen the governmeut often friled to
provide proner procedure. Herrings failed to disclose nan;'" in-^ortant
amd vital facts. Local situations -.'ere such thp.t it -.tis alnost iv.i-
possible for a centralized as'5enc7 to discover the real local conditions.
Soraetirnes such fr,r-reachinf,- inforination v.'an uncovered that (n-eyo douhts
aa to tlie adefair.cv of the fact-finding orocess -'ere engendered (55).
Difficult?,- in estahlishing -procedure nia:^ he attrihuted in part to
the highlj technical nature of the '^rohlen ITLIA. sought to adninister.
The certificate of -■molic neccnsit^'- rnd convenience iinnediatel7 suggests
a utility coia'iisr.ion, rrith valration e:r.-erts, engineer?, of several kinds,
and attornevs -nartici-ctin. • u--cn toth sides. 'JPJ-. seeking to -deal iTith
a large industry covering the c.itire country '.;as not as r.'ell equipped a.s
the ordinary utility conrnission. Through accident nors than design
several e.ttorneys ?nd several "oersons with utility ezoerience -rrere used.
To intelligently deternine the issues oresented a, "ol'-nned course
T7as. necessary. In March, 1935 this fact nas suggested to the Acininis-
tration (55), Certain factors -jhich should he considei'ed veve "oointed
outl There must he deternined vrhether siifficient facilities exist in
the nrrticular locality. The follo-.ring questions are involved,
1, Eox! shall availahle ca^iacity he measured?
2. Hot' nuch iuportance should attach to availaole storage
facilities in measuring ca")a,city?
S. Hov: nsjr-^ reasonahly rj.tici-oated ootential denrnd he estimated?
4. KoTT much consid.eration should he given to the -productive :
capacity of --ilpnts in localities surrounding the one tuider
consideration? (5?)
The ne:;t step is to such major --irohlems rs m.onoioolies and
mono-oolistic practices, -jrice, service rjid ohsolescence {-<€,)» If it
is felt that new capacity is desirahle the prohlem of v'ho should furnish
it is -oresented (59), Pinallj', ITFJV had failed, in the case of this in-
dustry to adopt the icsu.al pat'oern of.puhlic utility regalrtion thought
necessary to safeguard the -oiihlic in return for vhich po^rers of a public
guaranteed nonopolj- are grpjited (SO), l^A had piit the ca.rt hefore the
horse. It then had forgotten the horse.
Later memoranda (51) suggested that im-oortant -provisions of the
Ice Code vers not grounded in a. oro-^er interiretrtion of the undisputed
economic fa,cts, hut v.ere, rp.ther, hased on theoretical assuLVotions and
fnllacious .arraiment.
If such allega.tions -.'ere mn,de to the court rith any convincing case
to hack then up, a great tem-otation T.-ould he -olaced upon the courts to
full:^ consider the facts independently. Aside from the substantive pro-
hlem the fore -o.-^rt of this study illustrates the many difficulties that
arise from an attem/ot to establish an adeouate ■orocedn.re. The immediate
-orohlem, and ths.t is the one usuall" pressing u.-oon the rchiinistrator
9S33
untrained in the i^rolDlems of loroceclure, is not alua^s the one mist
needful of attention. The ease of shifting;,' the harden to the Code
Authority did not nean fairness nor uas it designed to please judicial
reruirenents. The -oroToriety of delegation to the Code Authority and
its agencies as apa.rt fron procedure is the suhject of l.-.ter con-
sideration (63).
III. UAIB^EASAI^CE (53)
An acijaini stmt ion has a res'oonsihilit:/' to the -Duhlic rnd to those
nith vrhoin it has direct dealings for the honesty, shill and the negli-
gence of its agents and those to rrhon it entmsts Douer (64), In its
early days IIEA had little check over the activities of its Code
Authorities (65). This r;as 'orrtly due to haste in co!-r>;ileting an or-
ganization and the prevalence of tlie industr;'- self-government notion,
with its corollary that ilHA shoiild discourage the at)pea,rance of control
over code authorities. The full value that could have ooen had from
the device of administration members upon code authorities nas never
fv,lly realized (66). Supervision of code authority activity was de-
manded 'hy the vast powe-s of government redelegated to the code
authorities (67), That FHA recognized the need for. such a check is in-
dicated hy, the creation of the office of Code Administration Director
(68) and the issuance of orders to employees to he alert for aDu.ses of
"oower (69) .
A common form of ahuse Iry in code authority intei'pretations of
code provisions v/ithout LTilA approval (70), The anomalous oosition of
code authorities gave to these "inter-oretations" the force of lau in
the minds of most memhers. Illustrative are a series of code authority
rulings for the California Sardine Processing Industry (71), These
rulings attempt to do such things as establish uarehousing and other
charges (72) , give the code authority a control over the figuring of
cost for contracts (73), set up a. formiila to determine depreciation in
figuring cost (74), and "orevent publicity being given to price lists
(75). There r/as no basis in the code or approved cost-accotmting system
for the action attempted by these rulings (76),
Responsible IISA officials v/e're sometimes connected rrith such
activity. Usually interested officials Icneu what action had been taken
b;' the code authority. It was their "oartrcular responsibility to know.
Ilnovledge and quiet acr-uiescence or disinterest in what the code authority
did without actual knowledge are both o-pen to severe criticism. Even
more ouestionable was the action of officials purporting to approve
rulings or lending sanction by their -oresence at the time of action to
the authorities' activities when regular ITTiA "orocedure was not followed,
Hulings were made without authority, vfhen the Administrator had never
delegated the power to malte such rulings, or \7here procedure called for
consultation of advisers rnd publication through Code "'.ecord. The Wall
Paper Code (77) provides that the "failure to jiaintpdn ?n adequate
differential in selling prices to the wholesaler and retailer", is an
imfai^' method of com-oetition (73). In July, 1934 the E::ecutive Com-
;iittee of the Uall Pap.er Manufacturer's and Ubolesale Codes met. Two
IHA, officials were present (79). As a result of this conference a ruling
was 'made upon the question of an "adequate differential" to be "binding
98S8
upon the Indurtry and to be observed, by all maniifacturerG" (80). It
was not until nine months later that IIRA. acted \ipon this rulin:',-. It
then disapproved it (81). Tlie same industry issued other rulings upon
import,?jit raatters under similar conditions. (82). • ■
Other grave exces<^-es of po^er occurred. The Paper Napkin Industry
assumed to act as an independent subdivision of the Paper and Pulp Indust-
ry (83) although it had never been •^iven a divisional code by the ITEA
(84).
The Shipbuilding and' Shiprepairing Industry- (85) feeling that an
emergency labor situation existed in the fall of 1933 allovred members of
the industry to disregard the maximum hour provisions of the code (86),
The Be-mty for the industry was present at meetings of the Code Authority
and laiew that such action was taken (87). The industry never requested
an exem-otion or amendment to alio"' this practice, and it was not lontil
Januarjr 1935 that the Administr;;.tion evinced any interest in these open
violations, of the Code (88),
The Hen's Clothing Industry (oS) purpoted to issue "approved inter-
pretations" allovdng individual exceptions and class exemptions from code
provisions (30).
A provision against accepting return of ^-ornsni washed garments (9l)
in the Undergarment and Negli^Tee Code (92) vas made the basis for the
establislx^.ient by the Code Authority of a bureau to pass upon the nied
for adjustp.ent under the Code or garments returned (93). Similarly, the
fact that nembers of the Corset and Brassiere Industry (94) were not to
accept pa,yments of account where excess discounts were taken became the
basis for rn optional plan rhereby the Code Authority went into the col-
lection business (95). The "propriety of a trade association is not a
o/aesti.on here. The problem Tas that of an unauthorized assumption of
power by a code authority of rhich the NBA hed full lanowledge (96),
NSA was responsible for partial aclministration of pricing provisions.
In a nur-foer of, industries SLich provisions were not used, except to harass
members thou,ght to be "out of line" (97). Coercion by code authorities
to keep, prices up was all too common (93), ■" Suggestions" as to price,
though not of as serious a cnaracter -'ere not usually contemplated b;'- the
coda provisions in con-iection with ' hich they '-'ere made (99). All such
actions where the code authority acted in excess of its powers, since
they were not protected by any portion of the Act or a code mad-e 'pursuant
thereto, the code authority acting in excess of its powers, were in vi-
olation of the Anti-Trust Acts. As UKA had the responsibility for making
codes .. sTiLsp ending these laws and for the creation of code authorities it
should not have idly allowed such activities to po.ss unchallenged. This
was the attitude expressed by members of the Senate Finance Committee in
its hearings upon NRA (100); Price fixing -sjid price control were often
accomplished by "rulings" end. schedules issued by code authorities in
addition to the "suggestions" and coercion. This "as particularly true
of the codes in the graphic arts grour> (lOl). ii Division Administrator
even sought to issue as official a "Price Determination Schedule" based
upon the iirice lists -"hich had oeen procla-imed to the graphic arts in-
dustry (lOo) by its code authority as binding (lOS).
9338
-96-
Provisions stated in general language capable of mamerous intemre—
tations served as clubs to be held over the heads of reak or -onifonnod
industry menbers Trrho coul'd not -afford to have trouble by challenging the
code authority (104).
Officials of NRA in addition to the situation already pointed out
did not rlrays f-olly live up to the res-oonsibilities of their inositions.
One major problem bringing uo this poir'u Fas the system of "selectiv?
justice" iised by K3A in prosecuting violators (lOo). The usual theory
of jxi.stice is that '••hen viol?.tions are brought to the e.ttention of r
responsible administration they will be prosecuted. ¥.0 single officirl
or group of officials can be held to be remiss for this. This v/as I'lHA
policy for '-'hich the Administration as a whole was responsible.
NBA. officials kne^-'of a threat m^.de by persons associated with a
code authoritj'- to push old criminal charges against the execxitive sec-
retary of a rival code authority unless he resigned his position (105).
The e:;ecutive secretarj- refused to resign. He ^--as arrested, but the
charges were dropped as the facts indicated there had been no real crime
committed, ITEA never took any action to prevent such persons, es those
making the threats, from serving upon a code authority.
The most honestly conceived actions '-ere not al'Jays the most legrl.
The Consu^ners' Advisorj^ Board feprec the declaration of emergencies end.
the. res'ulting price-fixing. It, therefore, consented to allow one of its
advisers to go to Cincinnati as a representative of the Deputy Adminis-
trators ill chsj-ge of the Baking Code (107) and enter into negotiations
with local bakers there leading to agreements by those bakers with each
other establishing certain minimiom prices (lOC)*
. Such agreements were made and follo'^ed for a considerable period.
There ras no basis in the code for such action 'hich '/as of the type not
favored by the Anti-Trust La*-s.
The erzanples observed indicate instances of malfeasance. Reasons
may be offered why they occurred. Still, administration should earnestly
labor to avoid malfeaserce upon the part of its officers and delegates.
As the Act grew to its close serious efforts were made in this direction.
If the problem had been fully considered pt an eprlier date, perhaps,
even more co-aid have been done to -orevent m?,l.-ac!minist ration.
983C
CHAPTER XII
COI/rPLIAlTCE A^D EITOr^CEi'IlNT
ACTIVITIES
Th^ -orocedure \xs=id in this fi^lA '-^rg T^r=5 suhjeot to change than
that in tb^- codp.-rapkirg -nrorosr,. Th<^.T^for°, it is nor=! difficult to
givp an acc-arat«> descriiTtio?!. Certain inh^r^nt liraitftions should he
ohserved. The mass of administrative legislation wa? so tremendous that
v:lrr- o-'p-- • it contained r^ouire^ients ^hich nere hif?her than the common
practice enforcement ^^3 r-nuir'^d (l), ■:'.?.. A. consciously strove to
raiso hoth trade -oractice and lahor, -narticulaTly the latter, standards.
Therrpraendous amount of enforcement and educational activity necessary
to ma]ce the strv.cture ef-^ectiv^ can he anmr'^ciat-^d. As the v,a,triotism
of the initial driv--^ f;avp ^-rpy to e mc^re nrpctical vie^^ooint, and en-
forcement tecane the need, di^'"icu:t^^ develor,ed in that the increasing
army of ins-nectors did not ke^n oace ^^^ith the demc-nds made uoon it. A
comnliance division ^^as first organized over six months aft^r l^H.A.
was initiated. Hon- co^inliance had oy then hroken do-^m many codes (?) .
Even after the Comr..liance Division cpjne it long occutji'^d an irar>otpnt
"DOsition (3) .
Much Of K.R.A.'s -puroose could have "been a.ccomnlished ^-ithout the
terrific coranlia.nce orohlem. It '"^^s th° industries or tr-^d^s coraoosed
almost entirely of small units that presented such t«=r:,-ihle r^coras of
non-coimliance as to make a -ouhlic joke of U.R.A. cod^ r=>ouirement3 (4).
It ^as in the retail tr^^de, the r^t-iil food and grocery trade, the res-
taurant husiness, ^'utoraotive -oarts and enuinment retail trade, and the
hakery industry that great masses of violations arose through ignorance,
refusal to hear hardships, re siil ting fron unreasonahle code -orovisions,
or desire to gain advantr?-es through La.hor or ti-rde nractices to offset
advantages of hett°r organized com-o^titors (s). Situation '^here no in-
terstate commerce could he found also oresented haf+'ling -oroblems to
com-olisnce officers (s). Hfir?> thev '-'ere usually content to let veil
enough alone.
The inadequacy of the staff numerically "as vital. ITo matter ™hat
the training or ability of individuals tr^^ing to secure cornnlianc" "as,
there Trere not the nhysical ntunh^rs to co le "ith the major violations,
l=t alone the myriad c-^ -letty '-nes. Industries can he charged "ith a
gr^at de.?cree of resi^onsihility. Either failing to itnd.erstand the nature
of laT7 and administr^-tian or in their gr°ed to straight- jacket indus-
trial -oractice countless silly and unenforce-^hle iirovisions 'wr^ mad.e
la.". Our recent exoerience with national -ornhihition should ha.ve fiirn-
ished a "arning. It was heeded hy f°w. As a result th° violations were
so numerous that the federal district attorneys and th" Department of
Justice would have "b^^n swam.r)ed hy K.R.A. prosecutions alone had every
violation h^^n taken to court (?).
Kew Law creates new -orohlems of inter'oretation. It is dou,htful if
anyone conceived the vast numher of Questions this n°'-' law -would engen-
der. As field men could not issue inter-^r^tations the "hole "orocess
of enforcement r^^n into an administratis" oottle neck in that such mat-
ters had to clepr hacl-: through th- "Tpshington office (o). Likewise field
men were far from fully eauip-oed with mat°rial relating to the la" the-^r
9878
-9S-
i-'er'^ to =!nforce. It '-'as quite fr^au'^nt thr^t fi°ld ra°n did not evpn have
conies cf cod-^s they r-or° to heir) administer. The r)rohl'=m of the field
adjuster and his suneriors in the field '^as difficult enouf^h even had he
"been given all the assistance desiraole in the form of interDr^tatif^ns,
coijies of codes etc. (9). Thes^' Tnen had to "both find facts and armly the
laT7 to those facts.
The first activit" had to do '^ith P R.A. enforcement. A^pncies
loiovTi as "Local N.E.A. ComT^liance Boards" ^^er-^ en^-iloyed (lo) . Here the
aDDroach was one of ^^ducating employers to liv" U'o to the a.greement (ll).
This means -'as short-liv°d and ^-^as soon rer^laced hy the Comi^liance Di-
vision.
Th° charter for Cod'= CorQr)lia,nce is found in "I'anua.l for the Adjust-
ment of Com-r)laints"(l2). The rest of that title reads "hy State Direct-
ors .';nd Code Authorities". It a-oioears that adjustment "as to he secur-
ed not alone "by government officers "bu.t h^'- Code Authorities. In fact,
this T7as the clearly stated volin-r of the Administration (l?).
It is T^ell recognized thr t ad'iinistr-^tive pdjudic----ticn r^auirs a
much higher standard of -irocedaral due iirocess of la^-' than administra-
tive legislation (l4). ^-'>PA, hv its very scheme, faced the difficult
■orohlera of enforcing la" made hv a majority rTiii of the industry u-oon
a dissenting minority (l5). If the spniP, in-.^ had b'e'='n made h^ statute
there would have like'^is° "been this majority-minority snlit, hut the
feeling ■•orohahly "o:nd not hav^ "b^^n as intens° had Congress -oassed
th= la.'^ as in case '"here a. groun of cnnp^rititors msde th" la'-' h^ i^eti-
tion to :^TEA..
As 'has heen re-oer^tedlv -lointed out, the F.I.R.A.'s rjrocedural
scheme was entir^lv n"'-. Its enforcement "orocedure '^as no excerption.
The only crimes defined h^r the Act '"^re viola.tions of administrative
action - Code i^rovisions and rules and reg'O.ations -oro-Derly T^r^scrihed
by the President (I6). T'-'o methods of enforcement ■^rere -orovided: (l)
the regular -irocesses of the Federal Trade Commission, and (2) direct
•oroceedings hv federal district attorneys (l?) . ^^A set wd elaborate
■orocedures, but for a considerable r)oriod of time made little effort
to use the methods of enforcement provided in the Act (is). NRA pre-
sented the unusual sioecta.cle of an attem-it to enforce delegated lerisla-
tion by raedita.tion, concilia.tion, arbitration and --iractically all other
ways thean those s-oecified in the Act (l9) . Th^re was crept°d a vast
system of "comnliance" "'ith no s-Qecific statutory basis that long re-
placed the "enforcement" methods of the Act (?o). ""Hl-iforcement" '''as
not had against all ''oio'-'n violators of the Act. Instead Toressure,
threats, -oromises, E,nd c-'joler^r .-,ar° the common mea,ns. Only in the ox-
traorciinary case '"as resort hai? to enforcement, so that the svsterq
could be rightfully called one of "selective justice", (pi) '. Actual and
■oossible methods of "comoliance" ^resent themselves in be'-'ildering ar-
ra;'''. N?A codes we^-o from oiae as^oect licenses a'rented b""" the President
(or by NPA) . As such, they cotild hav^ b^^n sus-o°nded or revoked for
■ororjer cause {??) . One method '-'hich cou^ d have b^^n us^d to coerce
obedience from persons or firms benefiting from the codes -fould have
been to have suspended the code of the industry/". The i^eakness was that
this would not secure co.m-oliance from -lersons or firms not interested
in the code and not assenting to it, nor '-'enld it even secure conformity
9838
from int'=rest'='d' raom'bRr's of th^ inriiistry anri ar.s'^'ntRrs iml^iss the bplancR
of "benftfits to the ina.ustrv out^^^i^^h-^d th°. T3urd«^n c-^ th<=i action d'^sir^.d.
Of similar cha.ract'^r -ps th^ ^ithdrar'al of the "-olue ^r'flp.". Gen^^ral
Johnson was imbued '-ith the idea of makin;^ the "olue pp^le" the pymhol
of a great morrl crusade for "better conditions in industry anr" IrBor, so
that its i-'ithdrp'^al v,roul(^ "olace an unhear.^'hl^ stiffraa u^cn anyone losin;^
the right to display it. This mif:ht have circumvented sOTne of thp les:al
difficulty of -oowers (^3). Later, it --as s°°n that difficulties of a
more technical but just as serious nature could hav° cci-np out of this
method. After allowins; use "by industry, had th^ government a r)rot^ctahle
int°r°s.t in th-^ "larl-:, and if it did, "rns it on'= th^t could he c^-oricious-
ly exercised? From th= riorpl asnect the --"pthod seemed to enjoy -^arly
success, hut '^hen the same "hlue eagle" rrap, '-ithdra-Ti for netty trade
practice infractions in Trhich the -ouhlic sa--' no humane cause, it lost
much of its significance. Then too, as the fervor of the crusade wore
off, nany consumers did not c.-'r°fully inquire rrhsther the chep-opr of
lik° articles was made a.nd sold "onder the "hl^ie eagle". This discussion,
also, a-oplies to the use of NTIA. labels for "com-oliance" -nur-DOses.
More "oractical, but auite as uniisual ^^as "conriliance" by boycott.
Hpre the government refus^ri to l°t contracts to lo-^ bidc^ers '-^ho had not
signed a certificate of com-i-iliance (?a) . The Comptroller C-pneral's de-
cision UTjon this method wer° nev=-r conclusive. (25) . L^spi'tc this' it'iTo-ald
have only be^-n effective against industries and indivifiual comrianies who
would have seriously f"='lt the loss of governm=>nt business. The value 'of
this comoliance form will -orobably nev°r be i-no'-m (P5a) .
As ha.s 'b°^n suggested there wag cajolery, educ-ition, nersuasion,
threatening, and much loud tallr and bluster, des-oit^ the fact that it
was known that the courts did not look with favor uoon some of these
methods (?6).
There were efforts pt "comTDliance" that almost amoiuiteci to a.n at-
tempt by NEA to lift itself by its bootstraTjs. Provisions were placed
in codes that Code Authorities might sue to collect delinauent assess-
m-^nts (S7). This was del^^sgatpd legislation without th"- "delega.ted".
Here was an attempt to enforce sub-legislation by other and not author-
ized sub-legislation, unless th° enforcement methods of the Act wc>re not
intended to be exclixsiv". • Another such m-^ans used were the code lorovi-
sions allowing liquidatpd damaf:^ agreements by industry -iT=mb'=rs. Desriite
an or)inion by the Attomey-G-eneral condemning a. similar -oractice bv the
Federal Alcohol Control Administration as imauthori'^ed by th° Act (?8),
NEA actively «mr)loyed this method until th° snoring cf 1935.
"Comioliance", undoubtedly, can b° attributed in r)art to the inadeaua-
cy of the "enforcement"' mea,ns -Trovided bv the Act. The Federal Trade
Commission wps not r°ady to declare any coc'e violation an"unfair method
of coraT)etition" within the meaning of the Fodopal Trade Commission Act
(?9). Even had it be=n willing, it is doubtful if it would have afforded
a successful method (so). A srjecial administrptive c^urt might have be^n
a helnful enforcement agency (3l), but the eTTo^ri-^nce of th° short-lived
commerce court should not be forgotten iZP.) .
Attemots of the Administret ion to allow individuals to sue, or of
9838
-100-
individuals to sue, pnd in f not -rich "cora~olianc=i" ectivitv i.'morf^d p,
strong line of caros ^str^blish^d und°r the nnti-trust In'-'s (o'^') to the
effect thpt only the renedi'=s -provided in the Act "light he used (34).
Not only did such pctiviti^s if<nor° this line of cases', hut it amoarent-
ly ignored the same ririnci-ole stated hy the courts in reference to the
NBA r^s) . Those cps'^s 'orevented riqrsons fron suing to '=nforce the
statute; they did so on the announced -orincirile th-^t only the r^medi^s
of the Act i-'er^ pvpilphlp.
Finally the enphpsis ^p.s shifted to enforcement (r^S). This did
not immediately lift pll cloud from NBA activities in this field. Al-
though it hps he^n considei-°d Ip'-- thpt Congress mp^r make the violption
of an pdministrptiv° regulation a penal of^^ense (37), the use of dis-
cretion in the s'=lectiv= a-n-nlication of enforcement i-'ps still question-'
ahle (38) as '^er^ the continued use of methods not authori?;ed hy the
sta,tute. A s-oecified aid to ^'nforceinont - th° reauir^ment of reports
and ke^ioing of accounts - '^'ps "str'hlished "by th° Act (;^9), hut as has
he^n suggested its ,us° should hav^ he^n mad^ s-oaringl^- anri 'Tith an eye
to the decisions of the courts (40).
Comt)laints originated fron sources outsid° of N?A (41). Th^y ^ere
usually telerihoned in or s^nt in thi^ form '-'f a letter h^^ some int^r^sted
person. This -nerson might he an emDloyee who felt that he had he°n
■wronged, an inter°sted r^^rson d^sirin.^ to secvire justice for an emriloy-
ee, a comoetitor, or ey»n a meddler. I'^A itself made no ef^=■orts to se-
cure comiilaints luitil in its final sta,^°s it inaugurated drives of "mass
comroliance" Mier--=hT- pn industry ^-^a.s selected and insnectors iTer-^ assigned
to carefullj'' check the comr)lip,nce in thpt narticul^r industry, Com-
■olaints might also come from node authority ^,"-°nts ^^o had h^^n unahle
to adjust the comf^laint hv th^ ^orocer,s°s "ithin the cod° authority.
Houghly, comr)laints might he divided as 75'^' concerning lahor provisions
and the reiriainder concerning trpd<= -nrpctice -irovisions. In the case of
industries having no trpde "orpctice con-olaints committers, com-olaints
■"'ere referred to th" Administr^-^ti^n dir='ctl^'-. In addition, if the com-
plainant or th° r=>s^nondent felt the natter Tvnnld not receive -oro-oer
attention at the hands of th° cod^ Puthority, he could al-^^a^s demand
that officers of the Coin-olianc° Division handle the matter.
Aft=r the comnlaints cane in they were reduced to a sn°cific form
as a. matter of administrative convenience. They were then analj'"zed to
determine what -orovision of a -narticulnr code had h^^n violated. If
there ■were no suhstance to the com-nla,int, either as a matter of la,w
or evidence or if it '-rer° ohviously a "crank" com-olaint, it might he
rejected. If it i-rere not anonymous it "ould nrohahly be r°turned to
the sender with the erilanation of the reason it had heen so treated. A
comi^laint that was acce-oted wps next olaced UT)0n the docket. This
meant that some formal disposition had to he made of such cas°s,. There
were many cases -olaced u-oon the docket in "hich no formal action '-'PS
ever taken. This might result from the fact that the comi^laints in-
volved difficult Questions of interpretation which had never h°°n set-
tled. There wpj-o p mimher of instances '-'here these susoended cas^s he-
came so old and such a harden uoon efficient administration that they
were wiped off the docket in wholesale lots.
After the comrilaint '^as turned ov^r to the iro-oej- official, either
9838
-101-
the lator complaints officer or th° trp.de -nractice conolaints officer,
it was assigned to an adjust=r. This adjuster o'^co-ies very ir.oortaJit
in the schema's of cormliance "b°ca.\ise he r^i.-^r^sent^d the first contact
of government i^dth the, individual. The a^djuster •'^'^uld send. a. lett'=r
to the res-oondent, statine the charge w^i'^-h n^^- heen made against him
and asking him to ans'-er ^heth^r the' charge ij©.^ true or not, and to
state, if true, what had heen done to rectifv the violation, and if not
true, to state his version of the fa.cts. A co-oy of th-^ code involved
and an erolanation of the meaning of an^r particular iDrovision involved
might "be sent along '-'ith this letter. At the same tim'^ th^- conTolainant
^'Hs notified, that an investigation ^ts heing made and that he ^voxil'=\_ he
informed of its results. If no r^^i^ly '^-s 'heard from this letter, t'-'O
other letters ^-ere sent, the last on'^ informing the r=sToondent that the
.conrolaint would "b" r'^ferr^d to the National nr R°gional Cormliance Di-
rector,
After the adjuster had entered into negotiations with the res^iond-
ent, he had to determine to his o^n satisfaction p-hether there had he'^n
a violation of the code. Then, unless the res-oondent woul-d immediately
agree to a settlenent, it wpg necessary to tr-^' to persuade him to settle.
Here it was auite nRttiral for the adjuster to advanc"-' certain arguments
as to the desirability of settlement des-.^ite the fact thaf he was under
a duty to advise the resnondent of his ri.Tht to aTroeal, It was d^sir-
ahle to settle these nany cases which arose as enrly,.as -oossihle, and
to do this the adjust°r might sug.^-est that ha.-'ring such a iirohlera arise
and r°main i.ms^ttl°d "-ould cost the res-nondent loss of husiness or
prestige in his community. Ke might furter sug.'^e-t th^ ■'.'•alu° of the
Blue Eagle economically and -ooint o^^.t. the' costliness of court iDrocedure,
These arguments were all matt^-'s of informal ne.gotiation. Th-^ adjusters
in the main conceived their function as one of education. In the lahor
questions the usn.al requirement was that raoneta,ry adjustments he made
and a certificate of co-inliance he signed, while intrar^e -practioe vio-
lations the usual req'-irement "--"s th^t a r-ertificate of future compli-
ance he signed. However, either in lahor or trade nractice violations,
the viola.tion was frenuently re-oea.ted or '-ar of too odious a cha.racter,
the adjuster and his imirpdiate s:'an°riors might refuse to settle the mat-
ter in the way indicated. ' '
In case a settlement was not reached, the next ste-o was to refer the
matter to the National Compliance Director, or in later days, after an
effort toward decentralisation ^^.s made, to the l^.e^ional Com-nliance Di-
rector. This., rjprson decided the course of action to he taken. He might
decide that litigation shoul.d res-i.lt. This might he had as a result of
the NIEA or some State enaoling statute. The Director might decide tha.t
it was a "nroner case to he referred to the Federal Tra.de Commission.
This -orocedure was used only in a very fe^ instances. Another coUrse
of action was presented in the removal of the Blue Eaffle, In the ca,se
of certain service trades it was not neces^rry for the Regional or
National Director to make the decisi-^n, hut this -oowor wps delegated
to the State Director.
Throughout this -procedure res-oondent was notified of his right to
a-D-oeal. Balanced as:ainst this must h^ considered the difficulties
that such a -orocedure offer°d. Aside from the sanctions and. -iDressure
9838
pressur=> i-'hich nii^ht "b^ iilac^d u-:ion r°s-oo -d^nts in tlip enrly sta£^= of
the compliance or invest igatorj'- Torncedur^!, 'his -orooerty rights as such
were not affected until liti^rtion ts com'^.^nced in the court. There
must "be exc"=>t)ted, ho'-'ever, the -oro'bleiii cf the reinovpl of the Blue Eagle.
Whether, such a rennv?! deoriv^d an individual of orOT^erty will he con-
sidered shortly. Since the r^soondent had to he "brought into court he-
fore a fine or -nqnalty could he legally assessed ap:pinst hi-ni, he had an
o-oportunity in most irst^-^nc^s to raise all questions of sutstance and
procedure which he thought im^iortant to his cas°. It must he considered,
however, that the use of sanctions in earlier stag-^s without the author-
ity of law: ™as OToen to s'^rious Question and might actually -orejudice
rights and] interests of a r°si3nndent.
As the cases rest in th="ir disorganized st."t°, it is extr°mely dif-
ficult to "oredict "ha.t -^rocedural du^ -orocess may reauire tomorrow. In
"narrow review" fields, oarticula,:'!-'- tn?;atirn, a hearing any time he-
fore the final collection of the ta::, or ev^-n after that if it has he=n
paid in oth'^r and srjecified means of "orotest, is considered s\:i"ficient
due TDrocess. (42). By analog:/, and it must he renemhered that there is
'a poor comoarative hasis het'-fe^n tax collection and tusiness regulation,
it might he said that due rji-ocess is satis:'^ied hy the hep.ring had in the
court or hefor° the Federal Trade Conrission satisfied due -orocess re-
quirements. This "is excepting th'-'^ r'=noval of the "hlue epftle", ^hich
if its use was treat^r" rs a oronerty right, demanded full notice and
opiDOrtunity to stat° a case ps ^•^ell as other safe/ruards the courts might
feel fairness would demand (43).
But due TDrocess of la-'-' can n°an nu.ch more than hare lorocedural forms*
It can mean faitness and good administrative i^ractice. When the courts
have felt that justice demanded a mor° clos<= control hy th°ra of proced-
ure and. higher standards of fairness they have not h"°n r-^liictant to act*
Investiga.tion to find violations '-'ould se°m a r^ro^ier administrative
function. N.R.A. activity '-'as nev°r for that ouroose, with a fe^-r eyce-ot-
iOns, hut was mainly directed at ironing f^ut difficulties and agree to
sUTDport the codes. It nev°r r^cc^niiz^d that in soite of patriotism,
which must necessarily he short-lived, ther= would h° those who woxild
violate codes (44). Assuming that such mediation and education activi-
ties wp,r° not lepia.lly ohjectionahl "=, the systeTn of "selective justice"
that was develo-ned seamed highl'^'- miestiona.hle (45). It was not designed
to create judicial tnist in the ad-'iinistration of I'.H.A. This situation
could hav° he^n linked with the vaions twes of duress r°sorted t.o hy
IT.R.A. officials and used to stri're- down the -najor fiinctions of "comi^li-
ance".
9838
-io;j
P A -R T I
P&.7ERS OP TIE U.l.R.A. AlID
TIIEIH DSLEG4TI0N
9838
-104-
c::apter xiii
pc-.veiis of ^hs 1ii3a
A nura'ber of tae powers ITHA sought to exercise are specifically
ejaujner.r.ted in the Act (l). It starts off with a declaration of policy,
which is not a power, but mij-it "be called a limitation, in the form of
standards, upon the powers grfuited (2). The Supreme Court refused to
consider this as a proper standard or limitation upon the exercise of
delet^j'ated power (o). Next the Act provides for tlie creation of ad-
ministrative agencies by the President (4). Although this was a novel
practice it does not seem to be as objectionable as m^jiy fon"as of
delegated power. This is true despite the fact that some State courts
have challenged tne validity of a deler;ation of power to an executive
to create an office (5). The prevailing view is prob;ibly contrary to
this, as the demands of administration may rea.sonably require the
delegation of such power. lus is no abdication as such, tho-ogla it
may be the instroinent through wliich substantive pov/ers are abdicated.
Tlie powers to approve codes of fair competition (6), agreements
(7), and to impose licenses (8) or limited codes of labor provisions
(9) were the real meat of the delegation, standards aside. The effect
of exempting from the operations of the anti-trust lav;s was corollary
but of utmost practical importance. As incidental to these powers,
two methods of procedure were specified. These were the dual enforce-
ment procedure of applying to the federal district courts or the
federal Trade Commission (lO) and the investigatory procedure of the
Tariff Coimiission (ll). The President was given the fu.rther powers
to delegate authority to the administration of the Agricultural Ad-
justment Act (12), to prohibit transportation in interstate and foreign
commerce certain petroleum products (13) and to initiate proceedings
before the Interr-tate Coirmerce Commission leading to the regulation
of rates for the transportation of petroleum products (14). The
President v/as given the specific power to require reports to be made
and accounts kept as conditions to his approval of proposed codes (15).
In addition the Act attempted to set up certain standards for
the Adininistraticn (16) and the industries (17) and others that
might be called negative standards in that it was mandatory that
these things be found not to exist before there could be a proper
approval given to a code (18).
In addition to these powers specifically granted other sources
of pov7ers existed. Certain minor powers are incidental to and a
normal part of the inain grant of powers (19). These are necessary
to efficient administr&.tion. Other powers may be implied. In the
administrative field as in tiie iminicipal field, the implication must
come after a delegation by the legislature (20). This v^^eakens the
9838
positicn of a clain of implied powers with tli3 courts. Such implica-
tions it is usually sr.il must be necessary, essential, or indispensable,
not merely convenient. Students of administrative law frequently
tninl<: in terms of constitutional ls.w. They 'become used to tho broad
use of implied powers made by Cliief Justice Marshall, his colleagues,
and successor justices in buildinj up the federal power. Z-Jut such
implied -oowers are not to be confused with implied powers claimed to
exist after a delegation by Congress. Tliese would seem to be more
closely analogous to the delegated legislation found in municipal law.
To conrprehensive analysis of the poT-ers l!?A claimed as inrplied
or incidental ic necessary to this study. (31) Some fev; of these may
profitably be mentioned. Interpretation is necessary to indicate the
meaning the Administration felt should be ,_dven the Act and codes made
there-ojider. It is so essential to acininistration that it could be said
to be indispensable and so an ira;olied power. !Tot so clear aro po\;ers to
make an insignia 3.nd to remove it as a pvjiishment v,'hen other enforce-
ment means are already specified in the Act, nor are the other various
IT?A enforcement activities vdthout question (22). The requirement of
contributions and me.hing of assessments present a similar problem (33).
Hiring and firing employees and making regulations concerning them seems
incidental and unquestionable. The c'ismissing of Code Authority members,
ho'-'ever, is not such a clear power. As the whole Code A^ithorit^' problem
rests upon doubtful ; round, this civ.estion \;ou-ld seem to revolve upon the
decision of the Code Authority problem. As long as Code Ai^thorities
acted as government agencies, a control of personnel v/ould seem essential.
Affecting individ-oa.l contracts (24) and the requirement of trade prac-
tices contrary to specific rem^irements of the Act, would seem to iiave
little basis in the Act. Sorie o;: the none ir.ioortant of these "oroblems
Y/ill be considered bclov/.
After the passage of li.I.~.A. a number of Yfriters o:c;-rer,sed the
feelin;:, ths.t it viould be hold constitiitional (25), Enthralled in the
do-oths of economic disaster it se ::ied but one short step legally for
the court to uphjold the Act. lev/ writers were so naive as to feel
that it was constitutional in the then state of the cases. Rp.ther
they felt it h3.d 'iieen so drafted that the court by a mere forv?ard
step could xiphoid it. These views then, in most cases, vore expressions
of ho'oe or desire. The illogical --'art of tlie situation lay in the
fact tliat if this new agency improved economic circxmistancei- , the con-
ditions pressing for the upholding of the Act r-ould no longer be so
strongly present.
V.3A shoulc'. have early made a cax^eful analysis of the constitu-
tional doctrines -underlying the Act. This study wotild h?ve afforded
a more intelligent basis upon v.-hich to proceed, ;oresnjning the.t !1?A
desired the Act to be upheld. Prime among these doctrines T/as the
qxiestion of interstate cominerce. Powers of the federal goveniment
under the Commerce claiise (26) are closely related in the cases to
the "dxie process of law" conce-n (27). The approach to the question
is facilitated if the court's attitude is ]:ept in mind.
The Commerce power v;as the wB.joi- portion of IIirA'c. ccnstitu-
9838
■106-
tional icimdation (38). A cursory ^.lance at some of the leading com-
morce cases rill afford a tasis v.pon uliicli to fomi a general view
of tlie conir.ierce concept. In G:-iol)ons v. OAC-en (29) t'ne atter.Tpt of
the coixrt ^7as to "broaden corrraei-ce from tarter, sale, and trade to
inclti.de transportation. Said the court, "The coujisel for the ap-
pellee ^-ould limit it to "buying or selling, or more interciiB.nee of
commodities, and do not adjnit the.t it comprehends navigation" (30) .
And a.ltho-u^h purely local transactions vere not a recognized part
of interstate conuaerce, the dicta of the court indicated a willing-
ness to judge this question in terms of convenience aiid necessity
(31). This open-mindedness to needs placed -upon government clis.rac-
terized this early court. In iicCxilloch v. Maryland, Chief Justice
liarshall strongly condemned a rule of constru.ction th^.t did not talre
into consid.eration changing and. immediate circxunstances differing
from those at the time of the foujiding of the Constitution (52).
As a restilt the concept of 'cominerce was far more "broad for the fedi-
cral government of the early nineteenth century ths.n it is, consider-
ing the economic facts, for the i:,overnment of the twentieth century.
3cfore proceeding, it is ^r'ell to repeat Chief Justice Marshall's
famon.s definition of commerce:
"Commerce is intercourse; one of its most
ordinary ingredients is traffic. It is inconceiv-
able tjf^.t the power to authorize this traffic when
given in the most comjjrehensive terms, with the
intent that its efficacy he complete, should cease
a.t the point when its continua.nce is indispaas^le
to its value." (33)
Later courts lia.ve not "been so ready to .justify regulations
of interstate commerce (34) in the light of existing facts (35).
Tod-ay it is in the field of transportation 'that the interstate
commerce concept is most secure. This, indeed, is an unusual
sittmtion from that existing at the tine of &i"b"bons v. Ogden (36)
Federal railroad regulation is firmly ostahlished (37). The cou.rts
have seen the necessity for a "system ad.equate to the needs of the
cotijitry" (38) . The cases do not stop at positive ref;u.lation, "but
extent to freeing transportation from local restraints. (39) Nor
does transportation stop vath railroads, hut rather it estends
to telegraph lines (40), pipe lines (4-1) and other transpcir: j,tion
forms (42).
Another use oi the coraraerce concept has "been to ."b.ui'li a .f .ed-
eral police power (43). Congress ha.s "been sticcessful T;here the pur-
pose \7as protection or promotion of commerce in the sense of trans-
portation (44), vrhcre injuriou.s commodities or illicit transactions
were denied the use of channels of commerce (43), or v/hero there was
an attenr-jt to aid the State police power (46).
The courts Imve consciously tried to remove wha.t they felt to
"be im;oedimentE to the free flow of commerce by prohi"biting attcnrot-
ed State regu.lations (47). The anti-trust laws furnished an addition-
98C
-1. ov-
al basis for the oourf's activities in this., directicn (43). This is
es-:ecially true in the Ir.hoL' cases (42). Other cases int'.ica.te a
dis-oositio:"'. upon the ■■'art of the. courts to re-;j]L^late commercial sit-
uatio:-LS "by the anti-tru.st laws that could not "be called commerce in
the sense of the 'Ian ,ua..^e of the Schechter decision (30).
The development of the "streara" theory of comncrce offe^x'ed
much encoui-a.^ement to those desi'i-int,' to fee l''irLA uphold. It v;as
thou^;ht th^-t ''Swift, v. U. S. (7-1), Stafiord v. Wallace (33), and
Board of Trade v. 01 sen (53) li-'d co-.T'letely made archaic the views
exoressed in such cases as Hill v. '. /"all-ace (5-1-) -and U. S. v. D. C.
ICni,:ht Co. (55). ^il±t'h the li'ber-al view taken hy the court in recent
Federal Trade Cases (56), and the e;q3ressed. desire i c :- full evidence
.?nd the i:icication thr t cooperrtive ■price and ■orod'cictio:"! control
activity mi, ht "be Justified foii-nd in the A-o^oal8.chig.:i Coals case (57),
Kll jave credence to the theory tVia.t the court was a^ain ready to
emha.rl: tt^on the sea of a "broadened conmerce co^ncept. Tut these
cases should' have "been read in the liyht of other decisions in y/hich
tiic court felt it was protectin_, coLxierce "'oy narrovrer intemreta,-
t ions'. True, ■ the court (\iC not hesitate to follo\7 these "broade-ned
views i;r ruch a case as Local Uo. 167 v. IJ. S^. (58) v/hich apparently
■ gave ■ so m"uch false hope to ^overnuent cc^iuisel in the Schechter case
(59).: It was j-iossible for the courts to "broaden the views ejqoressed
in these cases st\^-/;:ested. to encoHiiass txie IT. I.?.. A. i'.ost of them did
net prefer to do so (60).
It must he recof,ni"-.ed th"t though it is difficult to draw s.
distinct line, that t'ne courts clearly reco:2,nir,ed ti.at ccrtai^n thinjjs
were -lot i^nterstate^ conuierce (61). II?iiU-:er v. Da,;enlia.rt (6.':) illus-
trates the view tliP-t federal >olicy po:/er can not he exte-nded to
i-tems- or transactions not condonned by ^ ^^-enerally recOi;;nized illicit
che.racter. There existed a helief that the "stream" c-ases lia^d in ef-
fect c^u.t av/ay rav.cla of tJie cases of this case. Nevertheless, it was
clearly seen that tlxis case and the line it represented were the ones
to he avoided or overiailed if r.I.Z":.A. was to he siistained.
The commerce concept is not- mp.de more clear ''oi' a str-dy of
cases involvi:v State exercise of -oo-.'er. It is v/ell recognized
that the taxin^r pov/er of the State overlaps the retaliatory pov/er
of the federal government (63). I'rasiness may have hotl. local and
interstate as^oects for recula.tory a^nd tax puiyooses. This is tnie
parti cti-larly in transmission of -^ower (64) and gas(65), a-nd the
operation of rs.il' -ays (66). Certain rna.tters are of su.ch a predomi-
nantly local clmracter .(67)' that the State's right to regulate un.der
the police pov.'er is never questioned (58). In other i^nstances the
vital local chj?.racter m?.y otitv.'eigh the, fact of commercial movement
(69).
?ar more S-tate sta.tutes than fedei'al stat'CLtes, hoth :ujiierically
and in terr.is of percentage, lia.ve heen challenged as an interference
v'ith the -p-rcper flo\7 of conmerce. There is a dignity to federa.l
statutes v.'hich is not alwajs carried hy State statutes. Then too, .
federal regulation Iia.s not so often tahen. the foiTii of hiirdening com—
5838
"108-
raerce, nor iis.s it snaclzed of governmental meddlin;,- to the extent ths.t
the coiirts have felt some state statutes Ciicl (70).
Soi-iG of the carefxil analyses ma.de by Professor Corrin (71)
rould serve to lend some order to an apparent chiaos. It clears o\jT
thoughts to realize thrt apparently contradictciy lans^xiage does not
mea.n contra-dictory cases. The courts have more than one theory ap-
plicable to many types of cases. Tl:ia.t one case is phrased in the
lan^Tia.^-e of a pai-ticular theory does not mean that a related or even
contradictory theory has been abandoned, iuore than likely it is
qu.iotly awaiting its' turn to be dxisted off a.nd ■o.sed to fiimish the
basis for a.n important constitutional decision. This .is said vjith
no intention to be unduly flippant in dealin,;, with one of our ^reat
divisions of government. It is only natroa.l to ejooress views in
terras which may to a good deal fa.rther than the viey/s on the partic-
ular ca-se. This judicial teclinique must be recognized, especially
the duality of theories available for the courts' selection. An ex-
cellent examole of this is thoroughly illustrated in the doctrines
of "broad" and "narrov/ review" di&ciissed earlier in this study.
Such variation in theories may lia.ve a fairly unified expla-
nation. Professor Corwin points out that "dual federalism" ma.y in
part be o:>r-!lained by the cbiirts' desires to protect vested interests
and to free the stream of commerce fro:i impediments rather than to
extend or delimit governmental powers (72). The commerce concept
has been far from sta.ti'c. It could not remain still, and yet serve
the needs of growing industi-y. In the case -of this concept the
grovrth was unusu2.1, From a stingglo to mad:e comiuerce mean interstate
transportation there hs-s developed a situa,tion v^here the effort is
now to ma'ke commerce mean anything bu.t interstate transportation(73) .
As cases sta.rted to shove aside this n-arrow concept of commerce, it
was possible to visuf-.lizo an idealized HRA as constitutional (74).
And as the needs of the country-" pressed home to the court tha.t to
foster, protect, and prom.ote commerce might demand regu.lation it vas
possible fha.t the courts might relinquish its long gu»,rdianship to
the legislature (75). If lotteries, opium, and illicit traffic in
women ma.y invoke a hitherto non-ex:i sting police power, could it
not bo expected tliS-t gricvou-S evils in indn.sti-y and trade might
likewise invoke such remedies? (76) URA rhould have clearly realized
tha.t the Act a.nd its acrninistration must bear hea.vily iroon the no-
tion thc'.t local business may seriou.sly affect interstate business
(77). Sut the enthusiasm for codes led ITPA so far afield that
counsel op-^osed to the government in the Schechter case could make
an in^enio-o.s but powerful argujnont against the interstate character
of codes merely by naming some of them (78). The gcvernment in the
Schechter case argtied. tha.t the llcw York price affected the price
over the entire country (79). Although there may be some argument
ths.t tra.de practices governing local problems a.ffect price or access
to ma.rkot, the government's argvjnent on this point is not lucid.
The burden upon the governraent was to show such direct a.ffectation
of interst-:tc commerce by industries codified to convince the court
that tlie best interests of our economy demanded such a system (79a),
9838
Tlio activities ox i!?A -verc so closel;,' related to tte.t of the
FeLerr.l Tre.t.e Co.Tii-uspior. that the ir.rilicatic-i, of cases involviixi: it
can not he ignored. The Con^,rcss has cnco-ontered difficulty in
draftin statutes maanin:^ much more, after inter-^retation hy the
courts, thxT.n the common lav concepts of trade law (80). The narrov.-
cases linitin^^ the va.rioixs statxites need to discussion (Ol). The
re-isnt I'lurrj' of more literal CpSCS iS-ve hopes to the cause of liTA
(32). Oo-opled with the lan^ur.^.e of tho A-.y-'alachian Coals case (83)
there seemed to he ;:;;ood possihilities thr.t the l;.I.r:.A. mi^ht he
sustained. (84) But such views did not add in at its proper
wei,^-ht (so it now appears) the allCi';iancc of the court to the
■ economic case m.Gthod in hu.siness prohlcms (84a.). lIHi was not the
slow evolti-tionary development with which the Federal Trade Commis-
sion lis-d started to i_,3-i'^i some successes. In fact, an iraraedia-te
analysis of present needs far oti.tv,'ei^hed past decisions of the
courts. Price-fixin^: and price-stahilir.ing devices were allovred
to flourish despite r.tronj judi :ial pi-onouncem.ents against them
(35). C/crtainly, there wore stron^j demands for such devices (86),
hut TdA trade practice provisions went iiiacr. farther tlia.n this. They
attc.n-'ted to estahlish ouality standards, trade customs, and re{:;ula-
tions 01 a -mrely tecl-mic'.l natu.re over minute hr.siness details.
3!]s.ch of these mi^:ht l:ia.ve "oocn very admir?.ole in itself, Dtit as an
"vjifair method of corTOotiticn" lire, little hasis historically, and
prohaoly analytically (87). TIA could not, except for a fev: hricht
spots, lia.ve hoped for as much iiore i'avoraole treatment than the Trade
ConiiViission ha.s received as v'ovd ". "nSYe been necessary t© hav :■ sustain-
ed all its trade practices (3d).
The notion of "oLisincss affected v;ith a puhlic interest" lia.s
heen hu.ilt up in recent years. It is a tiscful instin.iment hy which
the courts forestall certain ■uaidcsii-a.hle restrictive regulations (89),
This concept, hased u-oon the mista;:cn rea' in^- hjr Chief Justice Vfeite
in liimn v. Illinois (90) of Lord Halo's Do Portihus ia.ris (91),
now looms lar£.e in the law of oxisiness re:;^xilation (92). The prohlem
•.■-as one of those iTPA regulation should lia.vc had to face Imd not tlie
Schechter decision intervened (95). The now famoup, case of 'People
V. llehhia (94) did much to allay some of the ha.rsh and more question-
ahle sic.es of the "puhlic interest" conce-'.t, siich as freedom in rnalc-
in^ prices and contracts (95). The "liherty" of the 1890 's and 1900' s
seev.is to h^ve heen dyin^i, re/^idly (96). In annoujicint, tlir.t tliere is
"no closed . . . category of hr.siness a.ffected v.lth a puhlic interest",
the court made a positive contrih-ution to the usefulness of the con-
cept (97), Having deflated any notions tlia.t price can not he con-
trolled xuider any circxmstanccs (98), the court turned to the due
process of law concept as u.sed in the field of tra,de law. Legisla-
tive declarations of policy shou.ld not he lia.stily overruled hy the
judicia-ry. Sai ~. the coiirt:
"So far as the reqiiiroment of dxie process is
concerTaed, and in the ahsence of other constitiition-
al restrictions, a state is fi-ce to adopt T-l:ia.tever
economic policy ma2' reasonahly he deemed to promote
piihlic welfare, and to enforce tl:ia.t policy hy legis-
lation ada-'?ted to its -Turpose. The courts are with-
out au.thority either to declare svxh policy, or
when it is declared "by the le^jislature, to override
it. If the laws passed are seen to ha.ve a reaeon-
atle relation to a proper legislative purpose, and
arc neither arbitrary nor discrirainatory, the re-
qu-irements of due process are satisfied. " (S9)
Zv.t this lan£U£>.^:e did not mean that the due process concept,
will no loni.,er he conveniently at lia.nd v/here in a particular case
legislation appears to he -unreasonable (lOO). Perhaps, the most
it means is that the iron lia.nd will henceforth wear a silken glove.
Friends of liPA at the time of the decision of the ITehhia case were
undul;'- optimistic. They failed to consider v/hat lia.s heen pointed
out tlip.t the court did not say it vrauld in the future unquestion-
injly •?.cce;^t legislative findin'js or declaration of policy, "bu.t on
the coiitrarj" indicated a keen awareness of controlling economic
facts, and t Its. t the case involved the policy power of a State. And
so it ?/as that coxmsel opposed to the government in the Schechter
case did not meet an entirely •unresponsive court when the concept
of »"b-Li.siness affected with a public interest" and its implications
were presented to it (lOl) .
The labor aspects of the IJ.I.R.A. presented the most obvioxis-
ly questionable constitutional b^.sis upon' which the Act relied.
\Yliile the UFA v;as in its early stages rnd writers were declaring
that the Act v/ould be upheld, doubt was oqiresscd as to certain of
the la-bor problems, pa-rticuJLarly ¥.'age differentials and minimum wage
fixing (102). General Joliiison, though secin^ no cause for failure
in the fact, recognized that 1T?A could not expect to enforce siibsts.n-
tive labor provisions in the courts "by pains and penal hies" . (103)
Section 7(a) (104) of the Act was broad and needed interpretation
to fit it to the many situa-tions tliat v:ould arise. It involved a
field over which the courts had shov/n a disposition to exercise a
stron^ control (105). Althoug-h the federal government had been re-
stricted in labor regulation to the trans-iortational systems (106),
the courts had shown no hesitancy in finding such an affectation of
interstate commerce as to ju.stify injunctions where labor activities
affected btisiness usually considered local (107), A more liberal
note toward the handling of labor problems by the federal government
ha.d been struck in recent years (108). Such cases gave considcra-
able hope to defenders of the II.I.S.A. In fact, the Government in
its brief in the Schechter case laid strong empliasis on the case of
Local 167, etc. v. U. S. (109). TMs involved a proceeding in equity
under the Sherman Act against wholesale slaughter house operators,
an association of ms-rketmon, and tv.'o labor unions and certain of
their members. The combination conspii'ed to allocate retailers to
v.'holcsalers s^no!. to increase prices. Although the commerce point,
brining the case within federal jurisdiction was not clear (llO),
the court felt tha.t such a restraint upon business should be removed.
Seemingly the most pov;erful argument at the Government's com-
mand was tlia.t labor matters were used as mctliods of competition, and
as su.ch, and as part of the cost of produ-ction and transportation a
9838
-111-1
direct p.ncl strong efioct i-?.s had v:~'on intcrstc.te commerce (ill).
The £,ovcninent attevjotcd to avail itself of this vicv; (ll,':), tut
■vrooahly svi"fGreek froni itt^ too ready admissiiy., that one of -n-imc
pvinoses rv.s to stiiiailo.te -mrclia.sih;; ;pov;er vithoxit pointin,;^ the
interstate corrpctitive asoect (llo).
The "omer^encyi' declarations in acts passed in 1933 'ycre
thought to strengthen their constitutional hr>sis (ll<L-). This result
Y/as not reached when- the Supreae Court ha.d occasion to consider such
provisions (ll-O* It ii~^s lon-j oeen thought thr t an "en.er^ency" vdll
lend sone justif xcation to a measure not othervise . justifiahle (116).
So.-ie of the cases grovdnp ov.t of the V;orld VJar pave v-'ci; nt to this
viev; (117). Later cases such as the Ayent C-ase (118) inc"ic?ted ll-^.t
an I'emerpency" mit,ht allov an e::tension of ordinar;;- powers (llS).
Any ho"Te alon^; this, line was snia.shed ^i)y the Supreme Coxirt. It
may he ttet the coiirt hru-shed tlie "emerpency" doctrine aside he-
cause the "craer;-;er:cy" no lenpe.: existed i;i the co-arts' mind when
tlie cases were decided.
Tiic lepa.l hasic for "assessments" presents another important
problem. Ac a purely volraitaiy matter there is no point in callinj^,
"assessments" ta.xes. This refers to v sit'oation whore industry mem-
hers were ashed to contriov.te hut no co:np"alGion was Lrou^'ht to hear
upon them, and not merely tiia.t they were assenters to a voluntarj^
code."" .. It miii^ht he ar^;,ued td.at assenters to a code yjovIo. he le^-ally
ho-ond to pay reasonably assessed coc.e e-roonces (I'O). 'Z/v.t this was
not the general trend in h?A. On the contrary, nocesrity decreed
that "assessments" must he m.ad-3 compulsory. Aa.in ^oecD.vs^c of the
unus.ua.1 scheme of hfA, Tn,_lish ->recedents must he -c.sed. In Institute
of patent Agents v. LQclrrood (121) the Y.ov.&e of Lords proceeds on the
theory v?here Parliment made no provision for raising monej' to ca.rry on
t;-.3 activities of the Institn.te, nor liiade any statutory prant tl:a,t it
must l^a.ve intended that the money he liaised "cy the Institu-te under the
ipeneral powers given it, since Parliament realized that the activities
to res"o.lt from the statute would cost money (l.^j). Likewise the II.I.S.A.
did not provide for methods or money to defray code authority e:i;penses.
It could he argued as in the Loclr^rood case that "Congress could scarce-
ly have failed to recognize that the agencies to whom, the President
must necessarily delegate pov/er v/oxild inevitably incvLr expenses". (123)
This recognition was not necessarilj- so readily existent as one writ-
ing at the time of the full speed activities of code authorities might
think. The Act was so indefinite that probably the vast majority that
voted for it as well as many who sponsored it never visuf.lizcd the
l:in". of athainistration anc its resulting problems that would arise.
It is :iot to be doubted if the nature an' use of code authorities
h-?.d been the foreseen and a--proved tlia.t some effort would lia.ve been
ma.de to lia.ve financed or provide a method for financing their activities,
or in lieu of that the argiuaent made in the Locl:T?ood ca.se might iTa.ve
been fully tenable. As sh3.ll be seen in a later clia.pter (124) it is
open to qr.es tion v/hether Congress ever Lijidcrstood at the time of the
passage of the Act or assented to the coc'e authority system as it
developed. However, if the code a.rLthority system ha.J been approved
and recognized by Con-ress, resort corJd ha.ve been lia.d to the doctrine
-.112-
of incidental no^rers to support assessments (125). Still it sho-uld "be
reraemlDered that an administrative body is held much mora closely to
their statutory charters than Congress has "been to the Constitution.
It might be that on such reasoning the courts would refuse to follow
the Lockwood case. It is not to be doubted that "assessments" could
have been made taxes by act of Congress prestuning thft the puri^ose
of the Act had bean found to be a valid public purpose. License
fees, inspection fees, and other fees, tajv:es, and charf^es falling upon
those receiving the regulation and its benefits have long been sus-
tained in our law (l2o). Statutes of this character by the federal
government are not uncommon (127). There is no need to mention the
types of code provisions (128). Some were voluntary, but the dominant
policy of KRA was to ma-':e them compulsory as best they could be. ' Re-
fusal to allow participation in a code binding upon an industi-y, with-
holding the use of insignia as well as other methods v'ere indirect means
to malce "assessments" ma-ndatory. NRA did attem-ot to prevent the col-
lection cf "assessments" as compulsory unless the code made non-pay-
ment a code violation and an itemized budget and basis of contribution
had been approved (129\ Although the placing of a provision in the
Coo.e making non-payment a violation of the Code was thought to offer a
solution to the difficulty (I3'"'\it is not easy to see that it did.
Aside from the "incidential" -oowers doctrine which has been considered
and which if applicable would not require a code provision, little basis
for legality can be seen in the fact that non-pament was made a cede
violation. There was no such magic in calling any action an "unfair
method of competition" that the courts would withhold a, critical eye.
Perhaps, a legislative declaration would carry such potency (even here it
it is doubtful), but certainly the finding of an administrative body
engaged in sub-legislation would not receive s\ich respect. That the
courts would alio?/ p-'jnishraent of non-payment of an "assessment" is hard
to believe, unless some real unfair effect upon competition could be
visualized by them.
Although the cases are few, it v^oulcl seem probable thrt the courts
woiAld not allow fees or taxes to be charged by an administrative agency
not ba.sed upon some positive statutory bases. Despite the unusual case
of Ha:.iilton v. Dillin (I3l) in which such a fee was charged as part
of the President' s power to license commercial intercourse with the
South d.vxing the Civil War, it is doubtful that mandatory "assessments"
would be called orcperly grounded ?fithcut specific laention in the
statute (13.?').
1T?A. and the ITIHA were born in times of stress. If in the confus-
ion of these days so:Tie thought had been given to the sign pests of the
law, it iiight have been possible to have avoided much that irritated the
coujfts in less trving days, while yet accomplishing much. It is not
meant to contend for an instant that our present Supreme Court would
have uphold the I'TIIA. if this had been done, but rather that the NIRA
would have 6.one all in its power to harmonize with the judicial tech-
nique vrhile yet attempting to accomplish its objectives.
9838
-113-
CHAPTER XIV
delegatigu by CC:TCrISSS
The nfixim that delegated -n'^^'er can net te redelegated has Ion;;
been called "cne of the settled naxiras in constituticnnl Is^" (l).
'.riTj/- tills is tr\ie is not easily understocd, in view of the long line cf
cpses "by the Supreme Coiirt sustaining all delegations coraing "before
the;u Des-iTite these decisions 'Miich vculd seen to have the effect tc
discrv.rage discussion of this question, it hc)s been one of the laost pro-
lific sources of constitutional speculation. This problem is an
excellent example for students to use in discussing the separation of
gcvernnental po^.-'ers therry anc' the tri-partite division of government.
Then trr , ncre discerning students sa\7 in the great mass of State cases,
involving nunicipal corporations particularly, some real existence and
meat in the theory of non-delegability of po'-rers.
The maxim "delegata potestas ncn -potest dele, gar i" (3) has a long
and curious history. It has been traced in antiquity to Justinian's
Digest (5) as a reference to jurisdiction, and its use in Bracton in
that sense has been the subject of more comment. Professor Duff in a
scholarly article has pointed out that this maxim "'hich has been so
fully accepted in our law upon the authority of Bracton, had no basis
in Bracton but owed its existence tc an omitted comma, "the carelessness
of a sixteenth century printer" (4). So, these words of Bracton upon
reexamination come to mean "the King' s power is not diminished by dele-
gatirn to others" (5). This interpretation of the lai^ is borne out by
the Statute of Proclamations passed in 1539., which delegated tremendous
powers tc Henry VIII (6). But to erase the maxim's basis in Bracton
does net destroy it. Professor Ccrwin finds the source and fo3'm having
real significance for our law in Locke's Treatise on Civil Government,
(7). If this maxim, which has been paid lip-service in this country for
so long, had been strictly applied in our constitutional law the ' .
efficiency of our governmental system would h^ve been strangled (8),
In fact, its effect upon the development of administration has "been
slight" (9).
TTith the vast growth of administration and the growth of delegated
legislation, questions of delegation became m.ore important. This was
true in England earlier tiian in this country (lO). The old maxim
"delegata. -ootestas non potest delegari" was dusted off and used as a
v/eapcn in attacking statutes granting sub-legislative "oower. In this
country delegation is seen as a due process of law problem (ll).
This iTCiild seem to be a more justifiable use of the conceiot, as in-
volving a broad question of constitutional procedure, than the more
substantive problems to which the "due process" concept has been
aiTOlied. In the mass of legal articles upon the N. I.R.A. , po-vers were
seen as important but delegation was thought to present little diffi-
culty (12). In 1825, the court could say that "the line has not been
exactly draim which separates those- important subjects x^hich must be
entirely regulated by the legislature itself, and: those of less interest,
in which a general provision may be made, and power given to those who
are to act under such general provisions to fill up the details", (15)
9838
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This T7PS the state of the cases in J-'^nuary, 1935. As one comraentetcr
said, "'iTo delegation of po'Ter hy Congress has ever oeon invalidated; sv.c-
cessive delegations, each greater than the precedia.?, liave "been upheld,"
(14) This was the iraportant fpct to most students rf the suhject (15).
The legal theory of delegation has teen suggested in an early
chapter 016) . The legislature states the policy. The administrative
tody finds facts conditioning the application of the policy. Statutes
involving delegated legislative power are suhject to classification.
1. Crngress may declare the policy hut leave its enforcement dormant
until the administration makes it effective "by finding certain facts (17),
The facts to he found may allow a considerable exercise of discretion.
This was one of the earliest forms. 2. Congress outlines the general
policies hut leaves to the administration the problem of filling in details
details (18). This mode is particularly valuable where detail not in-
volving broad policies is needed, where expert knowledge will furnish
teclmical knowledge, or where Congress can not foresee the many contin-
gencies. 3. Involving many of the same reasons as the preceding cate-
gory are situations where a certain measure of discretion must be given
to the administration (19). This is more true ^dien delegations are mode
involving subject matter not readily reducible to treatment by -nrecise
formula.. These cases approach the line of legislation most closely (20).
Rate-making power, utitil recently, has been the outstanding example,
A survey of all the cases here would serve no useful purpose (21).
Sioffice it to say that in a long line of cases the Supreme Court never
found a delegation improper until the Panama Refining Case (22). Two
questions a.re of importance. The court could have questioned the stand-
ard as being too indefinite, or it could have said this is a non-delegable
power. Even today the court has never said that any particular atteupts
to delegate powers of Congress are bad as the powers are non-delegable.
This line of approach should not be thought to be closed, however (23),
In light of the decisions the important question is how definite must a
standard be. In Field v. Clark (24) if the President found the situation
as to any country in connection ^^dth certain items "reciprocally uneqtial
and unreasonable" he was reqiiired to suspend the free list. Though this
might not present a very debatable problem the standard was not stated
in precise terms, and though mandatorily stated, by lolacing the power in
the President's hands it became discretionary. A similar standard,
though not to be exercised by the President, is found in the power given
the Secretary of War. to require changes or alterations in a bridge over
a navigable stream if he finds that it is "an unreasonable obstruction
to the free navigation of such waters" (25). But where terms of general
nature are used in a standard such as one for the approval of films
found to ■'be Uof a moral, educational, or amusing and harmless character",
the standard would seem to be approaching the realm of indefinite nrrns.
The Supreme Court did not object to this standard, though (26). Even
the general term. "public interest" was treated as a proper standard, the
court seeing it as limited as the act "was designed to better assure
adequacy'- in transportation service" (27). A similar standard is found
in the words "reasonable. ... in the interest of the public and of commerce"
found in Avent v. U.S. (28). A statutory proviso that came before the
court in United States v. Chemical Foundation, Inc. (29) allowed the
9838
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President to make exceptions "in the imtlic interest" to the rule for
sale cf alien property to the highest "bidder at a oublic sale. Such a
previse has no greater requirement than tnat presumed to be applied b"- a
le-,lslature in making legislation. It can easily be understood, frcH
revievring these few exonples. wliy the problem of standards was not
thought to present any serious nroblem. Even ^hen objection i;.';is taken
te the a.Caninistrative assumption of power under a delegnition with bread
standards (30) neither the standards nor the delegation were attack_d (31).
AS Icng PS the court has been able to see so/ae definite concept tied up
with the standard, whether it was the one intended by Congress or not,
the delegation has been held to be proper (33). As stiidents have nOw
plirased it delegation is Droper; abdication is not. Some writers saw
this possibility before January, 1935 (33). There was an excellent basis
in the State esses for some constructive thought upon the question of
delegation. From these coses it was possible to set up certain tests
that delegation should meet to escape judicial criticism (34). As the
government presented its case to the Supreme Court two of the standards
of the Act were negative in character (35). These were the requirements
that 1. there be no inequitable restriction u.pon admission to membership
and the requirement that the proponents be truly representative, and 2.
tliat the cedes should not promote monopolies or eliminate or oppress
small enterprises (36). 3y merely saying wliat codes could not be, no
standards were set up to guide the President in a'oproving codes. Por a
positive guidance resort must be had to the third standard suggested by
the gcvernment's brief that the codes must tend to effectuate the policy
laid down in the Act (37). The Declaration of Policy seems to be a. bread
premble (38). The objectives of the Act are stated in broad and joossibls'-
contrrdictory terms. Mainly reference is made to industry and labor,
without restricting these to any concept of interstate commerce.
Suggestions as to the method to accomplish these bi-oa d objectives were
not found in the Act. Broad standards have been approved but never liad
so many and possibly contradictory ones been contained in one Act which
indicated no basic or underlying plan. It was obvious that the Congress
did not know what -'ould be done, nor did the Adiiiinistration. Here was
abdication. The Congress had said, take over the problems of industry
and labor, phrasing it in platitudinous language. Despite what a carefu.1
analysis would have shown at any time, the Panama Refining decision (39)
came as a distinct surprise to most informed persons. Delegations in
England had gone much farther than they had in this country, the English
co'orts being without judicial review have had difficulty in curbing them
(40). Delegations in the United States having been so broad as has just
been seen, it seems that in the Panama case the maxim directed against
delegation "rises as a ghost te hamper" (41) government. That this me-xim
which had been kept alive by the State courts as part of the unwritten
constitution (42) would come to vjlague the federal Congress had been seen
only by a few students (43). But Chief Justice Hughes" opinion in the
Panama. Case gave flesh and stature to this skeleton i.-diich had so long
rattled in cur constitutional closets. Here was a case that proved that
as had been intimated there were cases T/here the judges would draw the
line (44). The co-'ort felt aoparently that if it upheld the delegation,
free as it was from standards, "it would be idle to pretend that anything
would be left cf limitations upon the power cf Congress to delegate law-
making f-unctions" (45). Mr. Justice Cordoza contended against the Chief
9838
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Justice that the Bclicy^of the Act tecaine the standards for 9(c) (46),
althrvA later- in" the Schechter Case he did not feel thnt it providea a.
stppdard frr 3(a)(47). The most precise reading vrill hardlj^ discover
more than here --as a delegation in a field v/here the court felt too
broad standards ixndesirahle.
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CHAPTER XV
DLLEC-ATIO'" BY T^rlE FZESi:nEi'TT AITD IT.R.A,
In the first insto.nce rdrainistr-.tion is the exercise of delctiated
power (l). It r.iso is ch-^.r.-.cterized intern-^lly liy the delegation of
poY'ers :^nd f-mictions, Tncn r. "board or coirjiiission is given povrer it is
exT-ected th-,t this power v/ill he exercised hy subordinates. The mem-
bers of the hoard or coLunission or the ac^ninistrator (if one r;ir.n has
the entii>e. r^'sponsihility) "re responsihle for t>.e exercise of the
authority, hut they cannot, except in the idost minor inst--,nc'^, physic-
allj'' perform the myriad of det',ils en;:endered hjr ."dninistrr tion (2),
P'T'rticul-rly is this trxie where duties are piled uooi. tlie President,
wncre Congress has really intended to ttirn the ..lattor over to executive
decision (5), There has heen no uniform statutory jjractice in stating
what iDO'ver or po";ers could he redolejp.tcd', especially where it seems
natural that the duties will bq -Performed by responsible subordinates
(4), T/iiere it is thoivht t^r.t pov/er v.dll he redelogated to a more in-
dependent official statutes have been more jirecisc (5),
In the precedin^^ ch-'pter it has ''oecn seen that delegation by
Congress had never aresentet' " question of burning; interest uiitil
recently. This likewise is tvce of the problem of redelegating povrers
deleaated by Congress. As has been sug^^'estcd redelegation in cert/An
limits is the nornrl impli(?r",tion of the first delegation to administra-
tion. The question now arises could the reci-oient of the powers from
Congress so far rcdelcgate its pov/ers th-t tno courts would invoke the
maxim "dclegrta potcstes non -ootest dolcg'.ri"? It would seem th-.t this
might hap'oen. If the strtutor;i' '■.n''^ctici;' is to specifically mention
deleg'.tions to be ma'^.e to other "^' c/;cics not directly responsible to
t^ie a; ency reccivin;'. the power ori;-"in~.lly, it mi, /-t be inferred that
Congress at least did not a— ^rove such - rede leg-" t ion not s"pecifically
authorized by it, YJhere -i-iowers -re exercised. by the ?-gency or --^erson
receiving them but the ;'^ressurc of work necessitates resort to staff
assistance, as this is a primary ch-rachteristic of admiiiistr" tion, ob-
jection on the delegation ground would, not p:roporly arise. This is as
long ".s a department exercised, and was responsible for the powers dele-
gate'- to it, no question would seom likely to come up. So with the
President gr-nting his fiu-ictions to a cbinet officer or other offici■^l,
for in this -un.usual situation such 'oursons might pro'i-'^/flj^ be eonsidered.
part of his staff. Trls problem is entirely in tiie re-.lm of -peculrtion,
with no direct, but only coll-.terrl assist ■.■.'.ce in the c-'scs. It v/ould
seem logical to exoect responsibility and fin-.l determination to stay in
the person or agency receiving tne power from Congress. As in. the ques-
tions of the deleg-,.tion b^- Congress there can not be abdication. It may
bo tlir,t this effect can be scciu-ed by too muich reliance being given to
the recommendations of -dvisory agencies, but th^.t is a question of the
hunpji equation not readily treated ^s . m-tter of law. (5)
The NIRA specifically stP..ted th'^.t the President might delegate the
functions and pov/ers given him to "officers, agents, and eioployces" (7),
It did not authorize rodelegation tiy them. The President did establish
more th.an the ITRA uno.er the autj.ority of the Act (3), Tliese agencies were
not subsidiary to >IIIA., but adjunct or sep-.r-ete age-cies of cqua.l status
to aid the President in ac'LUiinistcring the Act, The exact st-.tus of all
9S3o
-118-
such r.£encies wr.s never cle-^-r (9), "but p.s long rs thej' were crer.tcd "by .
the President they do not being up the question of remote redelegr.tion.
The delegr.tions mf>de "oy executive order r,rc Viot open to this question
either (lO). They, too, Y.'ere authorized "by the s",r.ie "revision of the
Act, Sedelegr.tion "by the ITHA, ho?;ever, vr.s oiion to question. Power
V7?,s redelegp.ted "by the IJ-.tionr.l InC.ustrii'J Recovery Bor.rd to the Deputy
Adininistr-.tor for nr.w-ii (ll) and for Alr,s"!:r. (12) to exercise the powers
delegated "by the Presio.ent to the 3o-ird, Li'.:evdso the Administrator
redelegated iiowcr to the "".epii.ty Adrninistr.tor of the Service Tx-ades
Secoion to approve trade arer.s and related actions (13; and to the
Depiity Administr-,tor of the Idstri'outin;';^ Trades Section to approve
certain local code ruthorities nd couiicilG (14), liven more question-
able was the vast redclegation (15) to Code Authorities (16) "by IIEA.
These redelegations were not usually in the form of official orders (17).
PoA¥cr was given, and aaa-irovc-.l was given 'by -p.'^roving the code provisions
containing such grants of poY/er, V/he:i the t;:rant of rjowcr was approved
'by the A. ministrator r- ther than the President the redeleg tion qties-
tion 'becomes more acute, Pirst t"ne President lia.d delegated the power
to do cert.'.in tilings to the Administr-.tor who in tvcrn delegated it to
the Code Authority, w'nich frequently rcdclcg-.tcd tne power to some com-
mittee or division, 1 or regional •\uta.07ity, (18) I'ncre is no rule t"ii t
can be applied to o.ctennire what is too remote a dclcgrtion. But here
it can c^rt 'inly ""oc s.'\id the dolegT'.tion v/ent much further in number of
redelegations th-n is corimon pr-.ctico. The tost tiv^.t tne courts wotild
probably "-yoly 'touIc bo the brord o.-'c used in so r.r.ny adiainistr~.tive
law problems, "Is t.iis bad acxiinistr- tive practice?". Such remote
redelegations not recognized specifically by Congress would seem to be
undesirable administr-.tivc practice. Yfncn the public, feeling the
effects of the administration of the ITIHA, c-ia^^ to realize th- t arivate
groups of interested "crsons were exorcising great povrers which coulc*
effect its soci-1 -nd economic future, and no longer looked upon these ■
groups as a;cnts of the President, then it v/ould seem as a matter of ad~
ministr-tive aractico doleg\tion had gone too far, Y/hen the effect of
action by such groui-s --as the fin',1 exorcise of acjninistrative -power, over
which only an ineffective and forraal control \t\b w-'intained, • then it might
be argtied the a^draini strati on receiving the < a li;;a tod pov/crs lirA -.bdicated
the exercise of these power? ie. favor of groua? n:-rccognized by the legis-
lature, 'H'lie announced ;oolicy of "Self-doveriii-icnt of dusincss" was not con-
■sistont with - simple d>, leg -.tion of power to the President and his sub-
ordinates.
Pie 1, ted to the I'omoteness of t "ic rcdeleg^tion is the question of to
whom the power was redelegated, aa.' vexthcr t.LCso 'a,rso:is or /^^Toups could
exercise such power. It vrould seem 'orfectly prue-icr to delegate vovrer to
other federal officials such -s v/' r , one where tne President delegated
po?/Grs u;ider the IIIBA to the Secret eries of Interior and Agriculture (19),
The coimnon practice is to redclcg-te power to responsible federal officials
(20'1, It has been held pro;oer for the federal government to use State of-
fici ,1s w/icre the Congress had so provided (21), This was decided undea?
the stress of v/ar, but no objection c^-n be seen to using a state official
where there is nothing in his state duties or responsibilities inconsistent
with his proper performance of the federal duties given him.
To uiiderstand the leg:\l aspects of tne coae .-U-thority problem in
relation to delegation, sorao thou^;ht should be aiven to tne nrture of code
9838
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r.uthorities. Couc r.utliorities end their memlDers iip.d conflicting r.llegi-
.-^.nces (32). ITiicn the Code --.uthority memher V7",s given the power of ■^.
-vablic officer he owec. the d-(ity f ithfully to cr.rry out the hest inter-
ests of the ^overiu:ent -.? he s: .w it. Yet .s ■ vfoin'oer of industry he ovcd
:\ dut-- to the industry to help promote it, Presu^ie txvt he could
possibly fbrt'-cet his industry's inter' sts cr.. sciously, still his \7hole
trcinin:^, v.-ould ler^d him to f .vor his industry, since he so -^.cutely sym-
pathized with its prohlems. Hi thin his industry hin' interests would he
first with his cvrn firm, -:':' next with firi.'.s of the Frnc clr.s^ .f his own.
"ore, too, few i.ien could h-ve --.ossihly oecn hoth f-^.ir r:rsl imp rti-^.l, no
m."tter how hp.rd they strove. As the co'.c -.uthority v;onherE corrocns-.tion
usu"lly cpjne in the form of r, s-.lr.ry p id 'by - ..^er.-.-.or of t:.io i/.dustry
for services ^s -. coirip-ny erecutive , he co-'old ill ■",fford to jeoprrdize
his future security, if f-lrness r.nd irap.: rti-^.lity dori'vided it.
The hIHA recognizes th t tr-.de -?.ssoci.?,tions vould •■p-'.rticipr^te in
the ie£;isl. .tive "irocess, hut fiiere is in it no reco.';ni tion th-.t they ^-'o^ald
actively administer portions of the result (23), The code r.uthorities
were very Ir.rgely fostered h;-- •^nd grov; orit of the tr^dc r.ssocir.tions pro-
posing codes. The tr-.de -ssoci-tions r presented usur.lly the most pro-
gressive r-ad l-.rger interests in ind:..stry, ni'" from these interests, ii
tne ur.in, coce -uthorities vjcre dr- -n., r-.ero v.'".s in mmy cr^.ses ^ close
hond ■bet--een the code "uthorit;- of .n ind/nstry -,nd its trrdo pssoci- tion.
In some cses one v'-.g nercly t^^e -leer c;:o of the other (;M). '\^A in its
first c-^^.-es, ueiecui-'pcd to / .hnister the rarss of codes it \"^,s e--i^--'''-ij-''-g
out end irh-aed ^.-'ith t/iO indiestry sclf-governuncnt doctrin.e , en.cour-ged the
code ruthorities te t d:o over conGit;er.'-:hlo -drninistr" tivc pouers. This
is -''.rticuedarly true in c-ne of "coraipercir.l resolutions" vhich frequently
h-d tne effect of legisl'\tioe:. (S'"^ Uhis, coijpled with the dominrucc of
trr-.dc -ssoci etions vdiich in -. en/ c'\ses elected the code "Uthority or con-
trolled its selection (;r,6), virtu"lly e:'vc to meeny industry groups the
'Dov/ers denied them hy the eeiti-trust l-ws - nd noi; specifically given them
oy the codes. It cen re-cily he seen th-t w'lcre -e tr-do p.ssocfntion pro-
posed ", code provision widen -Tr.s dvnied hy the Administr-'tion, -".nd yet :
tnere wns given into its h-nds .neo-d -elmost i.inchoched powers to effect
the sneie result in "che eoru of code -uthority reeu.l-,tions, th-'t the terirpta-
tion wrs too grent for eireiy to withst-^ad,' &rcr,t confeision repulted. At
the time of the Schochtcr decision there were still m-ny code "uthority
rcgulntions rende with little or no -nethority tli t Y;ere '>-.cing .ollowed hy
industries, '.IrLA recognized tnis difficiLlty. Its efforts to er^se it took
t\;o forms: 1, e;:.prov-l oy tee Ic ^1 -^.dvisor -nd the deputy without formr,l
-e?-:rovnl hy the responsihlc eefnority -..'ns discontin^led (27), e,nd 2, efforts
were mc.de to sep tn^.t tne code nuthorities were truly represent etive eeid to
scnr.rnt, them from the trede .nssocie.tions (28),
Code r.uthorities were ,■ iven the po\7er to ieivestig-\te c^.ses r.nd re-
comi'iend r.ction (2S), These recommend'^/oions were f.TC-.tly relied uoon hy
iTIEA "before it hecrme fully erqierienced to its orohlems. Althou^-h r.ppee.ls
from code authority .-.ction I'ey to ITllA. whether given in the code ("O) or
not, the code reathorities' rttitiidc \7r?.s treated r.s stro.ngly persur.sive
by .IRA The sejiic wns true when the code r.uthorities recorxiended in reg".rd
to eca.iinistr-'.tive notion, such r.s exemptions, exceptions, st .ys', intor-
-oretetions, "conncrcinl rulings," ~.nd even e...icndr-ients (31),
9838
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In-tlicir rel tio.-. with tlic ."-.cbiinistr tion the code p.iithorities
hr.d r, powerful position. Tliorc vrere inst-.iices whore r. code -xithority
couls suspend price scncdules, pcndinr-; . ctcrr.ii.v tion of their pro-
priety- hy Ghc r^dministr-^tion (32),'T/herc tlic code .v.tiiority r.ction vr.s
fin\l ui-.lcss the Adninistr tor dis-^.p^-Tovcd it (o3) , ".nd v/herc the code
-uthorit;;'- vr-.s placed u-'on : .n eqtu.l position vith the A ministrr.tor in
reviewing ction by . or-nch co.up.it tee o:: cert -in questions of bringing
nev/ or idle ;^roductive cnpr.city into \iroduction (34),
'iTnere code provisions outli::cd propop Is irpo;;. various subjects to
be mr.dc by the code authorities -/.'jj. r.-- roved by the ^resident or Acmin-
istr-tor (35) it becomes -p --.rent th t there will ---rob-bly be no resort
to findings or ~. f ,ctu ,1 b-.sis for -proceeding, other th-,n those ncces-
sr.ry to get ecJininistretivc -'vorovr.l. The effect of such provisions
wr.s to pr.t ^rcr.t finelity in the eff'-.irs of ^n indu.stry into the h-aids
of tne code authority,
Yrncther the code .authority 'vr^.s given po'.ccr to n-'.he rules end rc-
gul",tions for the ;\- ninistr-.tion of the code (36), or v/hether it "sswaed
suchpov/crs it rr ,5 -Jmost ir.ipossiblc for tVic A: hnini street ion to hcep -^ny
effective cliccl: upor. wn-.t \r.s done (.':":6e). h!icn code 'uthorities used
region -.1 or divisio:i-el cornnittecs ■ .2 /A-rninistr.etive ■ cncies, the pos-
sibilities of checking u"o : ^ction t Iren under the guise of government
■authority bec-jne even more reraote (S7). This difficulty vr,s "oerticulr.rljr
evident i:; the v;orh of tvde "n- cticc cor.pl'^.int j'^roced'JTe. TTlien no
•^.ppe'.ls \"': re teho:- :y.y ■r>. sr^urc, mlsinter-^ret-.tion or rnr.lf eo-sance by the
ccimittce would not be ;:■ .rent (3G). The only v/;;iy iTJlA. could have
cne eked' upon these -ctivities -.vould have been to h ,ve reqiiired a full
record of the proceco.ings to be submitted to it or be held avail"ble
for its in3;"-ection. Such . irocess would have been costlj'' in money
to the code authority in hccping the records, -.nd to "TllA in ersonnel,
j'ull records were probably never he-it of more than the gerioral st^ps
trlcen. In time it becej.ie st-nd-.rd "-rac'ti ce'' to maho thc:i available' to
IIRA. The Achnini strati on did, in time, rcq^iire re-;orts from code author-
ities "regarding the .-dj-ja oi lont of ccmi^lel-nts -"a.d other compliance ac-
tivities" (39), These rep rts, ha over, were often h-.zy and in a number
of situations none '.t :\11 v/cre made.
Under the I'ilA. vr.st po-e'ors were- enbriisted to -,ssociatio;is of busi-
ness men (40). Code autho'ities rc-rescnted the orga-nization of busi-
ness alo'ng the lines of g-'.iild soci ilism. The result did -not hermonize
v/itn tne -notion of "gnvc-rraient 1 coo-^er .ion wit a b-eainoss, for to many
business' men t/iio re-'ircscntc.' tne f-iaiibion of "'aorc business i-n gove-rn-
ment , and less govomne'nt ia business." .?oi' -c-ncee business men the
plan v/as really one of industry self-govern .ent (41). The fui^.ction of
pLa---ining for tne industry vrs rightly an i::dustry function (42). Trade
associations md long done this. Sut -when the code authortties advanced
into the realm of "compliance" or enforcing lav/ lapon their respective
industries the f-unctio-n seemed more govern;uental» Veritable armies of
inspectors sprai-ig up vdth •, m.ore or less anomalous position (43), Ap-
pointed by code authorities they exercised fuictions govermnental in
char-.ctcr (44),
It 'wOuld be far from vvopcr to ..ss-ume th.t private agencies can
9833
not ■;^orform diitier? pmC. d^f.c bions '.scic'^iec' them "by the government. There
r.r-'. , nii.ioer of specific i-.-.r>t".;iCGs of sit■a^tions v;herc; t'_;ovGr;-uuent h-.s
given ftuictions to priv:-.te ",; cncics. One of the earliest sitiirtions
fo-u-.d is th-'.t where :-•. ;-'riv, .te -.ssoci -tiou iy ,'^iv:yL pover to clcte-i-mino the
nienhorphi' of its -jrofessio;!, set u"-i rules for profession;-,! cor.'i'.uct, •".nd
dir.ci^^line i:ifr;.ction ol these rules, .-^i English c 'se deciccd in 1691
covers this -urohlcin (45), A ho-.rc'. of cerisors, purely c. priv:^te or;;-.n-
iz .tion, h^d jurisdiction over the a-i.iinistr' tion of "physick" (-16).
Tnc court treated thin "bo-rd -.s an .--jcncy ■.■;:crci5in3 ,::GVErnmental po'-'eiv
"It is pl-.in," s-^id t.\e court, "th::-.t t'.-e c :,isors iirvc judici?.l povrer.
It i? trut:., th-\t some persons h-vo po'ver to com^'.it, who •: re not Jii.d;'es
" (47) In the United S:rtes, v-.rious v.!odic-.l societies h"ve hsen
five/, licensin™ pov^ers ('^^8). 'T.'iesc enniini;-.^, ho/n-ds irve hcen t-'-cted
rs public r,;:;cncics (l-Q). Another vrofessio.. >i:,vi...{;: rrocn -jcncies is
the 1 \v;. hny St;\te st/,tutGS :i::vc incorp.:r-,ted t.:- .cTi.jer;.; of the o-r
int". orr ■ ssoci- tions oxercisi:-i,2; cor^id_:r".hle pcvers over its rieinoers
(5C), I-.rt of tho powers ,,";ivcn to h -.r r.ssoci -.tions must c^ov out of
the t:^?.di-cionrl pl.ce -f 1- v, rrs c "officoA's of .'.".-le co^.irt," This does
not p;??l-in t: g h sis go- t ..• ■■ -- of ..;cdic-.l societies, Th- courts
hnve not tried to .-n lyzo t i., rohlon in t.:.nr.3 of rover. orient,?.! r.,'.:encies
and pov?ers. Thry h',vc h-xn i; -ntc' c z'j h:.lov; G.lf-rei--l tion hy these
professions vhich i-dll o''vi'jv.sly '.■^y.'^iit tr -^.ublic o; "•-isin;;-; tnc
^;,ener",l chrracter of oho profession. O^.^er tin t.^is tnc nuhlic \-j::5
little interest in the purely intern: 1 rL/ul uion of v -ofessions ,
In ITcw Ycrh r. priv.-'.te .rain'^nc society h ,s hoen givcii the -^■oxiqv to
iss-ae dog licenses, coMoct ffcs to c'efry the cost of c-.rr:>'i.;y out the
act and -•: int-inin;; a siv.ltcv 'or lost, st---ycu, or ho;--eless -.nimals.
Any oxces? nionsy colloctod 'g to be co: rxv'sation for enforcin^ tho act,
This act ^/ent to t.ie -h.itcd ;; !;es S-iJprcrie Court, (ol). In a trree page
opinio--! '■- y '■ir. Ju.'^ticc . c"': .lOlds, one '■• yo of wnicn "a.s devoted to
quoting tne st,:tute, tne act ■;■ .s .•■-Id valid. Tho court did not discuss
the problem of giving such -loi-ers to v a-'-ivate or,." nization, r-.ther it
considered f.ie case f'.^ori: tho siabstantive due nrocess of !■ '-7 vievu It
held th-t the statute ro-.res.mted ". vlid enercise of the police power.
The Cor-'orotion CoMrnission of Ohlr.hona was given power by statute
to prorate oil, and to "siv.ploy o'.- • ; a.oint such -...onts with th.;, conserit
of the Governor r.s nay be necess:ry to enforce tlie Act.= (52) The
Coaudssion used inf or.aation as - or,sis for action furnished oy -;.ro-
ducers serving v;itnout p-,;)- aa a i^-wire wnose sal/-.ry w^.s nr.id by the
proo.iAcers in 'hc?f.'.ult of " Icgisl-^tive a.-^;-ronriation. Tho cox^n-t refused
to set asic.o action b'^ the Co: 'mission \;ased upon this iaf orraation neroly
beca::'-sc of its source, but s id th t th;r order nr.;.st oc shown in fact to
be ra-bitrary -:.:. discrir-.in tor;,'' ijcfore it \.'ould interfere ('3S), The
question of arivate i.^rsons ;,oing -.cts ta .t voulc". interfere with prop-
erty of other .~crsons would socm to hr.vc a more rcr 1 existence ia; this
CSC than in the otlier cases consi.'cred here. Still the final deter-
mination of policy is not involved, and the priv;-..te --lersons r.ct in no
greater position t^xir. collectors of f:-.cts, which the Co-n-nission could
tre.-,t .-.s it wished.
Joint stoci: l.vnd banl-is , the stocks of -diich .oave been saoscribed
for r.nd o'.Tned ba priviate j.K'rsons, org.aniz&d pursuant to feder-.l str.tute,
act ',s fia-ar.cirl aaents for the goveiniinent in /.lahing seed loms. The
CLiiestion of their -^rivr.ts ca-.r-cter :r p never 'been considered "by tlie
courts (54), Forever, littlc: objection c-.n be seen to the use of r.
privr.tc r./,encj" tc ;;r^:e lo.-ns vmcre there is no policy m"i,king power
r.nd no cipecir-l interests lipon the part of the ./ency. llr.tional "banlcs
have been rcrmitted to en^"v:-:e in -irivr.te f-Oiictions such as acting as
brustee Wj."hoiit injury to their public chr.racter (55).
Activities of ,;;cvcrn..icut-- 1 char-.cter ty - rlvatc "o-rsons r^re
louiid in tvo r'.ore i: t rcsti:\ c .ses. In Fl;^.iouth Coal Co. v. Pennsyl~
vanla, (56) no otjocti;,-: v.r.z ::.(e cy the conrt to the determinant ion of
the width of ti.-,rrici' --ill-.r in co j. .iine? oy -n ins^^cctor errployed by
the Strte rnc' the eii^'inccrs of t.:o a'hioinin-;, vfoncrty oraiers. The
court viev/ed the question ; -. ru-r-trntive one of effect upon propertir,
and not one concerning tne ,,ro-orict3'- of tne persons exercising power
(57). In St. Louis Iron ho.nt-in -.nc Scnthcm Ry. Co. v. Taylor (53)
the Court considered tlie cor.Gtiontix li.y -v- .:>ction 5 of the Safety
Appliance Act of 1893 (50) - la-ivi.lin;, t.i.-u ait.?:- a dtc naned only cars
v.'ith dravnaars of u: ifom height should be used in interstate commerce.
The standard for t'.rir. hoi,9-:it w..s to he fixcc^ by tJie American Eailv/ay
Association; the Intcrrt.-.tc Coriin-arm "-; r^irrion -a'.s to :;lvc notice to
all common carriers. It ■- ,:; cona : ':.;!:■ -a? an improper dele-
ga,tion of pov;cr by t'.-.c Cor.yi-cs'' , _ a^b " i- Little -bout this con-
tention. Tne co-'.ii't viewed t.,o "t-jvI ■ j- j/- .■■ a n-tur^l intention to
diminish economic losses (60). In bjtri t.vjse cases the matters Avere
purely i:_tcr:-al. to fa i .-•:•- ; i. volvod. l^o effect could be felt
by the ;/nerr.l public. ":-■... : ,.■ ar ulai^ions to be ;.\ade were, in both
cafees, hraiily technic- 1 .: c a-,,; hrve little a-^-n-eciable effect ujpon
property.
Seme cases have been found, where, dele a'aloiT, to -Drivate persons
have been held bad, D.: lega.tions of poa-a- c ^ c-^n_ity political committees
to designate and establish delegate discricts (61), to cemetery associa-
tions "of leaislativo rnd rule :Tra:ina poa'er i:icluding prescribing of
penalties for viola.tion of rules to be enforced by civil action (62),
and to tlie national Board o:^ Fire Un' erv/ri tors tj enact and promulgp.te
codes setting forth ri'.les for tao last .:. 1 -.tio.i of electrical equipment
(S'f) kave been i.eld uiiconstitati a.-l r'ciei-.r.tions of power to private
organizations,
T/liat was the legal jiosition of code ; t;:orities7 Their private
clir,raxtcr is evident, yet mrny of ta^eir fi'^'C tioa.r- were of a public
nature. Code au.thoritics were allov/cd a^ i.:coip3rate and to sue and
be sued. This opens up -wide vistas of -.fiie.i is a, corporation a govern-
ra.ental a' ency, T'owever, th.cse facts of i-icornor:?tion nid the pov/er to
sue and be suod is indicative of ■-■. p•-iv^te n.ature , v/hich of course can
be overc.om.e by sufficient i cts of public cho,r;'Cter.
Tne liability of code authorities to taxr.tion will lend m.uch light.
Not only federal officers, but federal cmploj'-ees are exempt from State
income taxes (64). 5'ederal instrumentalities such as corporations of
various types and Ividian lands are exeiirj^t from State taxation (65).
Taxing th"^ sa.le of liquor ''oy rn army post bas been an improper tax upon
a federal instruinentality (66), Kore rccentl;/ this rule seems to be
overturned by allowing tc!?;Gs \x[)on arr;iy posts celling gasoline privately
(67). Clearly then, -, public aaency m-^y have private taxable functions.
9833
-123-
On the other hand privrte persons .doinc public functions have Tseen held
ta::r.ole (bS) . In lietcalf "and Bdc\y v. llitchell (69) it -fas held that a
fiiTi of consviltin^; engineers upon a -'orl: project, "hich ■ 'P.r, not permanent -
ly or continxiously cnc;cr.e(-, -'as not a puolic apenc-. The court .a^oplied
tlie test that:
"An office is a -ov.olic strition conferred hy the rp'rointnent of qov-
erii'ient. The tern enhraces the idea of tenure, curation, eiiblu'-nent ?nd
cmties fi::ed J- la-" (70)
Code authorites liad tenure, du-ration, and da.ties fi::e(" 'y deler;rted leg-
islation. Like-.'ice, the larger salaries v-erc control"'.ed hy i'?A. Of
course, specific hrsis did not e::ir.t in the statute -vhich night "be said
to heep then fron oein- puolic a;cncies. The results are rr.ther anona-
lous. liany of the attrihuter, of a puhlic agency are found in the code
authority. Yet, its nenoers did not always devote their full tine to
their code ruthority d\itie?, nor did they fors-ear other pursLiits of
profit. It --as recognir^ed th. ,t co'de aiithorities --ere not ^nade up of
puhlic officers "mt rather private j^ersons. The I'^lul Leg:.! lleserrch in an
extended ne^iorandrji concluded t':-' t code "utlioritiaf, -'ere not e::enpt
fron tr.::p.tion as piihlic r.iencies {]!) .
In a nenoranduj: directed -t the "broader' cuestion of --hether code au-
thorities -rere pi,i"blic officers, Legd :ieso.:rch concluded th't they -^ere
not (72). Code authority nenoe-^s --ere not "officers of tlie United Stat-
es" vrithin the leaning of Article II, Section 2 of the Constit-dtion,
•i^hich vests the appointnent 01 such officers in the President, in the
courts of la-r, or the departnentpl heads (73). Neither -'ere code author-
ities created "oy legislation {'(h) or properly delegated legislation look-
ing to their e::istence (75). I'levertheless, nany of the po^^ers e::ercised
"by code authorities -ere in the nrtare of sovereign fv.nctions properljr
assigna"'ole to r, rn'olic officer (76). A mhlic oi^^ficer -lust "'oe account-
a,hle to the govern:-.ient (77). Code authorities in the early days of rifA
'--ere seen rs pprts o"" indu^tr- rnd accountr.'ile to inc'ustry, 'out as ti::e
■•ent on irA. "oegr.n to iiold then to ;.iore strict account'.jility. As in
the discussion of privrte persons exercising governnental functions,
this discussion of ;Du"'Dlic of\"icers hr.s offered no final ans-er. Code
autiiorities do not see:i to nave the legal strtus of puhlic of:':icers
yet they exercise the legrl functions of nuhlic of:"icer5.
The h'lPA --as intended to encourage cooperative rction on the part
of "business (7o). Tuen fimctions of greater public ciiaracter than pure-
1"/ internal planning --ere given to a coc^.e au.thority, it -'as a great
tenptction uron r. coj.roetitor to r'yo.se t>e :.o-:'er given :iin r,s p. nenher
of r code aut'norit;-, rnt". even if tlie po"er -'ere not a'ro.sed, cMstri-ist arose
fron the acces" of a conpetitor to confidential infornation axd fron his
position to finally decide irrr-ortrnt natters vitally af-ecting his con-
petitor (79). The General Co-ansel of ::.:.-:..^. , in his oral argument "before
the Suorerae Court in the Schecter Crse did not recognize this prohlen of
interest^. He ashed, "That coulf. "oe a fairer st,-ndrrd than that adopted
"by those ""no inpose it upon thensclves?" (EO). It has long heen recog-
nized thr.t interested persons nay not al" -ays legislate reasona'oly (Si)
Particularly, in the field of price and cost provisions -jaz it possi"ble
for the ele;.ient of personal and class interest to influence code axithor-
ity s,c"'J.linistr^.tion. These provisions -ere often adiinistercd against
those '.7iio nere thought to oe "out of line." Pressure ■-as 'orought to "bea-r
that there -ould 'oe c::e.-iination 0:^ their 'Oooks, prosecution, and other
unpleasantness (S2). The po-ers assuned over nany fields hy the code au-
thorities in nahing "con lercial resolutions" reflect the interest of the
code authorit- nen^bers. These rules v/ere often nade to effect resvilts
-124:^
that could not be achieved b?/ code provisions (S3). Code authorities
'jere not alvrays the most desirr.ole a£;ancies for the handling of statistics,
reports, and confidential inforiio.tion. An interested competitor on the
code authority'" often nould hecome informed of vital and secret details of
his competitor's "business (84). Just as important, "but of an opposite
character, x:a.s the refusal of code atxthorities to publish price lists, or
dela;^ "b;- the code authority'- in pu'blishing them "because it felt prices
were too lou (35). The po'.'er to collect statistics often "becaino the "basis
for a general "fishing ercpedition" v.hich r/ould never have "been sa.nctioned "by
the courts (85). Lil:e difficulties were louncl in trade practice complaints
committees that often assiuned investi-xator^^ or jtid.icial functions rather
than mediator3' ones (87).
The Ice Industry- presents, for a period of time, the beautiful spectacle
of interested members of industrj^ ruling upon the bringing of nev; additional
capacity into the indu'itr^'- (80). It can hardly be expected that an industr^r
member "culd welcome a competitor with outstretched arms (89). Tne diffi-
culty is so obvious that as one ccai v"ell expect it became the target for
columni:vi;p opposed to the Acijiiini strati on (90). The force of industr]^ inter-
ests uion the code authority "'as quite apparent in this industry. In a
letter "ritten to "All Regional Advisors and Coiiunittees of Arbitration and
Appeal," April 27, 1935, the Code Authority Chjirnan stated that the
National Industrial Recovery Board had agreed to Sot disturb Article II (91),
despite the fact that a new procedure ^-'as almost immediately'- authorized
r/hich hed the effect of destroying much of the value of this article to
the Indus tr3^ (91a).
Code authorities as private inte-.-ested agencies had man;- deficiencies
both as instrdraents administering public le.v' and as industrial agencies
(92). TJhat effect had this matter of interest u^Don the legal position of
code authorities? It is a ;7e"i.l-:-;no''n naxim of lav? that "no man sliall be
a judge in his onn cause." (91) Interest disqualifies a judge (94). Pecun-
ia.rj'- interests are particularly fror/ned uoon. ilo matter ho'J small the pe-
cuniar-'- interest, it disqualifies. Other interests must be more substan-
tial (95). English laA? has logicallj^ extended this rule as to judges to
administrative officers (96). And although cases have not been found doing
this in the "United States, there can be seen no reason vrhy it is not a
proper "due process of lav?" reqiiirement. It is considered as one of the
foremost principles of natural jxistice in England (97), and the verjr lack
of cases in this coixntry must testify to its acceptance here. There are
State cases sabring that a grant of power without responsibilitjr to the
government can not be made to a public official (98). The difficult:^ of
recovering for the malfea.sance of an ad-mini strr.tive officer in this coun-
try is so \7ell hnonn, that leading schol^.rs have long urged the ab?,ndl:ment
of Dicej'-'s "rvle of la-a" in favor of a modified droit administratif . If an
adjninistrative officer using discretion is only to be liable for malicioixs
negligence or Trilful disregaird' of the rights of others (99), the danger
of trusting this immnnity to an interested person is tremendous.
Briefly stated the legal position of code autiiorities ^/as open to
serious questions. Admittedly, they ^-.'ere of a private character com;oosed
of privr.te functions yet they rrere endowed with many -niiblic functions.
The ;5recedents are feu, but such as they are tliey did not indicate that
private agencies could administer public law. In every case where the
facts involved such a problem the Supreme Court had ignored the ouestion,
9838
-125-
The most lof:ica.l ansver seems to be tuo.t private a.v;encies are probablj'-
adaptable legal means for the a.djainistra.tion of minor rei3,-iilations, the
cliaracter of v'hich cotLld not be open to serious pub].ic dispute such as
hu-nai^e activities, and for the handling of purely internal affairs of au
indiistr;- resting on the uoe of experts and likewise involving no questions
of disputable social or econonic policy. The anomaly continues when it is
discovered that there are certoln technical legal requirements eittached to
the position of public officers or agencies which the code aut'iorities did
not fu3.fill. Coupled v;ith their private chars.cter, which might have been
cured, i/as the irremedlal interested character of code authorities. Although
recognising in certain instances that the interep.ted cha,racter of code
a^ithorities might disqualify them in making certain decisions, the H.H.A.
Legal Divirdon v/as content to scratch th 2 surface and call code authorities
sui ^•eneris,as if this esp].ained their legal status. (lOO) The same
ap-oropch indicrtcd in the field of the scheme ■'Jinderlying JM.R.A. has been
taken here (lOl). Tlie code authority instiument has not been condemned
as nen. In many respects it was useful, but its disabilities outweighed the
advojntages it offered. It murt be concluded that code authorities as known
to IIHA, and with the e?:ce■^tion of a fe\.' minor f-jjictions of the type previous-
ly'- conducted by trade associations legally, existed without the sanction of
law.
It may have been possible by a gradual evolution to have developed
private agencies in this countrj.^ to take on more functions of a public
character and handle th.em in an efficient manner. This vjould have required
slow development to educate both the private agencies and the courts to the
use and value of these new f^mctions. But i:3A allowed for no such orderl,y
deveio-iDnent . The problem was placed blusteriiigly before the public and the
coiu'ts in a shot space of lef5s than tvfo .j^-ears. It came before both these
critics in its worst light. "Industr"'- self-government" at first meant abdi-
cation to code authorities (102). As doubts were expressed as to the pro-
-ririety of unsupervised code autliorities, efforts were made by i'HA to more
carefully and closely control these agencies (105). Code authorities were
being treated as having a public responsibility shortly before the
Schechter decision (104). In this decision the court did not speak about
other than the legislative f"LUictions which inc'ustry attempted to exercise,
but it did spealc about these in uninistalcable terns:
"The Government ui-ges that the codes will 'consist of rjJes of
competition 6.eemed fair for ea^cli industry'- by representative mem-
bers of that industrj^ — b-''- the -oersons most vitaJl^^ concerned and
most fcjniliar with its TJroblems.' Instances are cited in which Con-
gress has availed itself of such a-ssistance; a.s e.g., in the exercise
of its authorit" over tae public domain, with respect to the recogni-
tion of local customs of rules of miners as to mining cladms, or, in
ma.tters of a more or less tecimical na.ture, a.s in designating the
stE,nda,rd height of dravjbars. But vrould it be serio\isly contended
that Congress could de].ega,te its legislative a.u.thority to tra.de or
industrial associations or grou-ns be constituted legislative bodies
for that purpose because such associations or grouos are familiar
with the problems of their enterprises? And, co\ild an effort of
that sort be made valid bj'- such a preface of generalities as to
permissible aims as we find in section 1 of title I? The answer is
obvious. S-ach a delegation of legislative power is -anlaiown to our
law -a.nd is utterly inconsistent with the constitutional prerogatives
and duties of Congress." (105)
9833
-126-
A similar abdication by the President of his administrative duties in en-
forcing and a,dmini storing codes could ha.ve hardly been treated more gently
had the court taZ:en u? the point.
TThat standards v/ere set up to guide the code authorities in the per-
formance of their administrative functions? Certainly the standards set
up by Congress in the HIRA should have continued to govern in anjr event
(106). It is impossible in legal contempla-tion for an administration in
the United States to go contrary to the e:q-)recsed standards o.f a statute it
is administering as has been thought possible in Engla.id under the "Henrj'^
VIII clauses." (107) The same criticism of the standards of the I'lIlA. in
relation to the JITA apply to the Act's relation to code authorities. As
a further step it might reasonably be concluded, that standards for the ad-
ministration of law Dy code authorities must be mucb. more precise and de-
tailed, and thr.t they should leave to the code authority no room for exer-
cising polic;'- power, 'This is merely another v/ay of saying code authorities,
not being public rgencies, should not exercise public powers of discretion.
It \7oiald seem perfectly proper that the J^RA in some instances. . set up
standards for the exercise of code av.thority problems. In fact it would
seem highly desirable had such a course been pursued. (108) This leads
aga,in to the same point that the most rigorous standards would have been
the best practice. This is not to suggest that high quality stand.ards
either 'by Congress or the Administration could, have cured the inlierent in-
adequ.acies of the code authority instrument. Such norms as were created
should, have been in harmony with and furtherance of those stp-ted in the
Act.
l'?A' s practice did not accord, with these suggestions. Frequently,
sheer power was redelegated withotit the slightest attempt upon the part
of the Administre^tipn to guide, the channels of its use (109). Power was
given to establish accounting systems (llO), to make allowances for trade-
ins (3.11), to change the period to elapse betv/een the filing and effective
datesof price lists (112), esta.blish the maximum periods of free credit
(113), and fix the amount of liquidated damage assessments (114). This
list is fa.r from exhaustive and was found r.s the result of the most cursory
'examination of several .volunes of codes. The sta-ndards set for compliance
activity by the code authority'- or t^ie courts under the enforcement proce-
dure were no different, in manj^ instances (115). The greatest standard for
code authority exercise of po'./er was the vote of such a body (116). The
pov/er reserved by the Administ raptor to approve or disapprove code authority
action (117) could not be called a, gtand.ard, although some might a.rgue that
such a device cured the lack of standards. The value of this argument can
not be conceded when such checl:s often served as a. mere formal control.
7.'hen standards were set up by ITHA they were often in such broad language
that thoy v.'cre wholly inadequate as norms. Code authorities were given the
power to "compute the lowest reasonable cost of production on a fair basis,"
(118) to provide rules to distingtiish certain class garments using wholesale
prices of about a certain date as a guide, (119) to exercise \inchecked pov/er
after finding certain circumstances to exist (120), a.nd to require price
lists to be filed if it found that "the generally recognized practice" of
the Industry had been "to sell on the basis of printed net price lists" (121).
These also were found as the result of a hasty glance at a few codes, NBA
9838
-127-
adopted standards set up or to be set up "by private agencies (l22) or "b^'-
other governmental agencies over which it had no control (123). ilo matter
how reputable the agency, it does not seem proper for ilEA to have sanctioned
that which it had not yet seen, and which may he made without any reference
to the purposes of the Act. Even where standardr alrer.d;^'- set up were adopted
a full consideration of their substantive effect should hcve been had.
The standards problem as related' to code authorities presented to the
courts was just one step more removed than they had ever been called upon
to consider theretofore. iIRA, just as a legislature might act, but without
even the qualifications demanded of legislatures, said we recognize a policy
of price-fixing to be desirable (124). For peculiar reasons of their own
this was forbidden. Even had it been proper for a legislature, IHIA, the
administrative body, had forsworn its traditional role of filling in the
details of legislative polic;^, and had assujned the policy making power of
the legislature. Even had this escaped the courts' cordennation there was
yet the question of standards to govern the code authorities which assumed
the administrative functions as well as legislative functions too. It was
the existence of this situation, where the administrative agenc3;-( IIBA) had
ceased to function as such and had given over its proper functions, his-
torically, to agencies of questionable stajiding that caused the Supreme
Court for the first time to give such serious considerr.tion to the problem
of delegation of power in the Panama Refining Case (125).
In considering the pow.ers exercised b;r code authorities no useful
purpose would be served here by an attempt a,t extended analysis a<'d class-
ification (126). Rather it is more productive to siirvey the genjjral
character of the powers granted with a view to the public or private ad-
ministrative character based upon the tests already suggested.
The power to require assessments has been considered. Exercised by
ITM without statutory'- specification it was questionable. In the hands of
code authorities the problem isintensif ied. Assuming that the delegation
had been cured it would not seem proper to allow private intere^sted persons
to enter into even the mechanics of assessment administration. The relation
to the ta:xing power is too obvious. Certainly,, fixing of the basis of
assessment is a public question, which was not ha.ndled as such merely because
ilM had to pass upon what industrjr proposed. The possibility of "putting
something over" was alwajz-s too great. Then too, the psycholog;/ was to
treat the recommendations of industry as nrima facie correct. Tot that
this was not true in the great mass of instances. 3\it there v;as no
guarantee that the viewpoint of objectives between industry SJid government
were the same. Even where the industry's function was to collect statistics
as to production u-oon which to base assessments there would seem to be
more desirable agencies such as the Census Bureau.
A number of different kinds of powers to carry on investigations can
be found in the codes. The provision most favorably viewed by IIRA allowed
members' records to be inspected by agreement (127). The fact that mem-
bers agreed to lay, their books open may have cured the public aspect of
the problem. However, it may well be that when members so agreed it vms
with the feeling that these records were to be inspected and used as govern-
mental information and that this was not raerel.y an exchange of trade in-
formation. By far the greater number of codes, hov/ever, carried, broad
po\7ers "to investigate" (128). Related to such provisions were others giv-
ing specific power to code authorities to inspect the records of members (129)
or giving that poner to a confidential agent (130)» Tlie "oovrer of investi-
gating records has alvrays been looked upon "by our courts as "being close to
the border line which separates public from private interests. Such in-
vestiga-tions siiould properly "be conducted nith specific gcvarnmental -pur-
poses in mind and, as the courts have said, should not "be resorted to as
mere "fishing ex^Deditions" (l3l) . As has "been loointed out, the "confiden-
tial rgent" provision did not alv.'ays keep the information gained, 'bj the
investigation from iiiterested competitors. The -oo'.ver of securing confiden-
tial informrtion seems govermnental Ity nature.' It seems extremely qaestion-
able to alio'-' its exercise "by code authorities, their agents, or anyone
who 'Tould allow competitors access to isrivate records.
Pov/ers r/ere given to code authorities to "bind their respective industries
by proposed amendments for r.'hich no public hearing Xras required (132), Al-
though it '.'agnecessar;/- to have approval of the President or his properlj/-
authorised representative, the effect of these 'orovisions 'vas to give great
legislative and representative power to the code authorities. It nay be
necessary'" to allov.' a v/ell organized group to speak for disorganized industry'-,
but this sliould involve no more than the right of petition and sliould not be
trea.ted as binding upon either the government or the industry imtil resort
ha.s "been had to an adequp.te public procedure.
In the field of uniform cost systems code authorities were allo'.7ed to
impose formulae upon their rc-zpective industries (133). There were, of
course, other rel£i,ted t;^^?©^ of provisions with varying sliades of authority,
but it is sufficient here to joint otit that powers of a public character
were being exercised by an sgenc^'' composed of interested persons. "Uniform
cost s'"stems bear a ver^r definite relationship to price and price control.
As s^ich, they are delicate devices and if exercised by a public agenc3'-
would be subject to the most careful control bjr the courts. In fact, such
provisions have often been held ''ce.& per se. It can be seen that in the
hands. of a code authority the courts would probo-bl^r treat such provisions
as improper. Classification of customers is of a similar character. Code
authorities were allowed in some instances to impose upon their industries
mandatory classific >tions (134). The courts in the past have treated
claOcification of customers, as a matter of agreement, as being undesirrble.
It might be that the courts would accede to a legislative judgment that
customer classification was needed, but it is dotibtful that they wou].d allow
the same people who as members of trr.de associations illegallj'- classified
their customers to do this as code authorities. The effect both of uiiiform
cost systems and customer class fication may be of serious econo:iic consGru.cnc'
Such power therefore should only be exercised by public agencibs ana not by
private or quasi-private ones. The collection and disbursement of liqiii-
dated damage assessments has generally been held improper as a matter of
trade association activity. As a means of enforcing law (135) such devices
should, of course, have a legislative basis. Further than that, the ackiiin-
istration of such provisions is so easil3^ open to abuse it would seem )roper
that it be performed by public agencies only.
To ''"•id in the administration of the codes, code aiithorities were given
the power to designate self-governing divisions (136), cjid to determine trade
areas or zones of activit5'- (137). Such power was merely incidental to ques-
tions of a substantive nature. It would seem that as long as code authority
activities \/ere confined purel^r to legal trade association activities and to
ajiy other functions which might properly be perfoiiroed b^^ interested members
of industr;'- for their industrj^, that such pov;ers \7ould be proper, V/liere the
effect of designating such divisions or trade areas might have a profound
9838 ■ •
-129-
economic or social effect, it woiild seem improper to give this pov.'er into
the hands of code authorities.
It r.-as quite com'-non to allou code authorities the a^dnistrative power
of granting exceptions or exemptions. This vras true in the ca-.e of distress
merchandise (138), consignment of goods (139), the operation of price (140),
hours (141), rage (142) or peak period (143) and rest -day lahor (144)
provisions. Here, likewise," the test must "be the character of the provision
to nhich the exceptions or exemptions vrere granted. 'Jhere the effect of
such provisions and their adiiiini strati on r?as felt beyond the immediate
bounds of the indvistr;'-, it would seem imprcrpcr for a code authority to
exercise such powers. In the administration of most of the provisions of
this l:ind the social and economic interests of tSe public would seem to be
such as to require public administration.
Code authorities were given power of a Judicial nature (145),. and in
a great number of instances v/ere given the power to hear and decide com-
plaints withotit referring them to ITBA (146). It might be urged that fre*
quently the power to act Judicially was given only where the members of
industr;- involved agreed to the resiilts of the code authority action. It
must be remembered that such agreements and compromises affected property
interest Just as substantially as if the members of industry had followed
the procedure of appeal. To the members of industry dealing with code
authorities they were faced by an agjencj'- backed with the sanction of the
lav;. Further than that, it was known that the recommendations of the code
authority would carry great persuasive weight with the Adiaini strati on. Often
members of industr^^ agreed to settle the matter with the code authority rather.
than go to the expense of pursuing it further. The very power to can.se such
inconvenience and expense to a member of the industry gave to the code au-
thority the exercise of powers public in character. Such power of arbitra-
tion, mediation and exrc.rd. as we.s desirable in the administration of the .TU.
should hrve been exercis-3d by responsible public officers. Code authorities
were also given the power to incorporate (147). '.Then this is treated as
purely an a.dministrative adjuiict to the carrjring.on of its general po^-^ers,
it seems perfectly proper. It cajinot be said that the incorporrtion is
inconsistent with the nature of a public agencj^for numerous examples of
incorporated public agencies are found in our governmental system. Such
r^encies as a railway or a financial loan institution engage in business
functions and do not adjuinister law in the sense that IIIIA did. Tlierefore,
the power to incorporate wou3.d seem inconsistent with the public functions
exercised by code ai\thorities.
The imposition unor. code authorities of a duty to make recommenda-tions
on specific problems does not seem objectionable (148). As has been sU'^ges'U&d,
the right of petition in this country is well founded, and it would seem -"
im-oossible to prevent anj''. group of interested priv£.te persons from petitioning
the government or a goveriimental agency for Certain action. Merely because
this is stated in the mandatory form of a duty imposed u;'Don this group would
not seem objectionable from the public viewpoint. The only issue that could
be made would be if the code authority itself refused to accept the duty.
There is little need to consider this angle because the problem would never
have been raised.
Tlie extreme number and importance of powers granted to code authorities
9838
-130-
becajne otvious in a short time. Various^ checks vrere resorted to. Action
'hi'- code E.uthorities vras required to be submitted to the Administrator for
a-yproval, or the Administrator r/as given the pcTer to disa:oprove (149). This
latter poner meant nothing heyond a formal expression of the power r--'
superior keeps over a subordinate, unless the code ?,uthorities are looked
upon as coordinate agencies of equal status to the Administrcition, because
of the President's approval of the codes chartering them. It can be reason-
ablj'- assumed that the President never intended this. Even the positive
reqtiirement of the Administrator's airproval v/as no cure all. It is doubtful
if it 'forked anj'- improvement ericept upon assumptions of pov/er patently bad.
Here the reading by an NRA official v.'as a helpfvil check. In other instances
TThere information v;as necessarj^ to e>:plain the proposed action of the code
atithority this was furnished almost invariablj^ by the code authority?-. Coupl-
ed with the psychology of industrial self-government it cpji readily be seen
approval ''oy the Administrator, no matter hov/ conscientous he might have
been, became, as a resul.t of the precsure of circumstances, a mere formality.
Dominance of trade associations likevfise presented a problem demanding
control. The res^'olt was requirements for representation by non-association
members (150). But organized trade minorities did not allow this to thwart (
them. The picture resulting \7as mucli like the Biblical stor:?- of the hairs'-
hands of Esau. Hepresentative ch:;r: cter did not solve the baffling question
presented by the lab^^rinth of organizations and divisions found in some
industries (151). The problem was responsibilit3^. As in all gover:nmental
and 'oolitical stru.ctures responsibilitsr is of extreme importance, so v/as
it in the control of code authorities. Aside from the s"iioradic requirement /
of re-iorts, the "adjninistra.tion members" on code authorities presented the '
agencj'- potentially best able to check excess and abuse of power by code
authorities (152). Prom the first it appeo.red that these representatives as
a whole would never exercise a.ny important control. Almost all of the first
ninet;- ap'oointed -fere lulA deputy ad-iinistrators Vfho ''ere far too busy making /
codes to check on their administration (153). Tlii s was remedied "by appointingV
full or part time administration members later, but ITEA never capitalized on
the Dossibility of this device. The individual members ustiall.y fouiid it
easier to float v/ith the current, and in absence of strong backing one. pre-
cise instru-ctions from iJHA it was easier to accede to industry'-' s plans and a
draw their pay from the government. This does not mean that individuals did *
not render valua,ble public service, but rather rs a group IIRA never sought to
malte them a. strong effective instrument of control, although steps in this
direction were being taken at the time the codes died (154).
The redelegations made to the code authorities were '.-/ithout the soJic-
tion of statute. It is doubtful if a statute would have cured the "due
process" difficalty found in using privrte interested persons to administer
law 'With a public chare cter. The powers granted and the standrrds for
their exercise v/ere such that code authorities appear to have been an
extremely questiono.ble governmental device legally.
9838
-131-
F A H T IV
COlTCLUSIOilS AIT) SUGG-ESTIOITS
3838
CHAPTER r/I
i'OZESTALLINa "BKOAD REVI3W"
The desire of administr?.,tion to escpoe the "broad review" of the courts
is more than a selfish desire for power. New administrations are not created
to employ people. They are created to administer an idea or a numljer of
them. "Broad review" may take the guie-e of shaping a positive course of
action. Too often, the premium is placed upon maintenance of the status
quo, no matter what the demands of society. It is this last aspect of
"broad review" that administration desires to avoid.
No matter ;vhat lofty statements the courts malce of detached interest
in the law alone the courts are vitally interested in the conduct of any
administration both internally and externally. This interest has been
such a drag upon the development of needed fovernmental forms and methods
(1) that legislatures have been led to try to avoid too great judicial
control (2).
Viewing the NIHA before ;av.ch administration of the Act was had, it
was not unreasonable to say in the light of the cases that it v:ould be
held constitutional. True, to say this one had to go one step beyond the
cases. Many authorities felt that tiiis one step ':vas the next one to be
taken and a ressona'ble one. Administrative action was gaining a stronger
hold upon the courts. The commerce po'.ver had been subject to extensions.
The "stream" theory had swept aside the narrow Suger Trust case (3). And
the Supreme Coui't shov;ed a strong disposition to relax the anti- trust
laws, with its refreshing opinion in the Appalachian Coals case (4).
Economic unrest lay heavily upon the country, and the courts seemed re-
luctant to block action rea.sonably designed to alleviate conditions.
Two attitudes upon the part of the Supreme Court ruined the predic-
tions of legal scholars. One was the misgivings about greatly increased
federal authority, and the other was a feeling that executive power had
grown too strong. With the a.dditional problems that a new federal ad-
ministration sought to cope, it was impossible to avoid all appearances
that might lead to the com-t developing the attitudes mentioned. A
conscious regard for the views of the courts might have gone far to pre-
clude too hostile judicial treatment, &ood administration, full procedural
safeguards, and completely reasoned action "^ased upon the best evidence
obtainable might have aided greatly. It is not possible that stories of
the haste in, and the injustice resulting from, the administration of NEA
did not reach the ears of the justices. If these stories had been different,
the court might have been more prone to consider iJEA a na-tional need. In-
stead vie have such cases as the Schechter case (5) limiting federal power,
and the Panama (6) Hum-phreys (7) cases limiting ad;.unistrative and executive
power,
A possible explanation of the Schechter case may lie in legislative
and administrative approach. If action had been cexeful and reasoned the
possibilities of being sustained would have been much higher. It is
not meant to suggest the.t this alone would he.ve caused a different de-
cision. It would have afforded the court a much better basis upon which
9838
-133-
to hr.ve decided otherwise, For instance, if an overwhelming record
is ^^roduced to show the direct and vital relationship of snj problera to
interstate commerce, the court --ould be more hard put than they were in
the Sche enter case to say this is not such interstate commerce as t o
be -ithin the power of the federal government. It would be b etter,also,
to ."lave the court aioproach the problem with a viarih feeling of commerv'
dation for the excellent administration of the agency than to beun--
\7ittin3ly prejudiced by kno\7led,2e of an unjust conduct of its affairs.
9838
-134-
CHAPTER XVII
ADI.IIUISTEATIVE SAPEGUAEDS AND THE CHALLENGE OE ADMINISTRATION
iiore then the practical consideration of escaping "troad review"
is involved. There must be a pride developed within adminis-
tration. Efficiency, which is the chief merit of the administrative
technioue, ixnist not smother our neritage of fairness. The goal of .ad—
ministrr.tion should be to provide the beet possible governmental agency.
This meriis that places both for efficiency and fairness must be pro-
vided.
Administrative structure is important. It cannot be naively s.s-
sumed, horrever, that government can be made fool-proof "by the develop-
ment of governmental forms. The couplet of pope is expressive:
"Eor forms of government let fools contest;
Whate'er is best adminstr'd is best," (1)
A proper personnel is vital. The success of an administration r ests
upon the type of personnel it employes (2) if the basic idea is soand.
Persons of limited approach in positions influencing the administ ra,tive
policy of an administration, may offer a severe handicap. There nere .in
NBA too nsjiy responsible officers '"dth a desire to get things done
without regard to fairness or appearances of fairness. An efficient
business man is not necessarily an efficient administrator. Even a
business man desiring to. be fair does not necessarily provide a fair
administrator. It is very proba )le that v/ith proper instruction or
advice that the personnel of NRA could have met the requirements of I'chie
process of law" both procedurally and substantively. The conclusion must
be that tuo alternatives v?ere open, 1. All responsible positions .could
have been filled by persons experienced in the administrative technique
This, it has been suggested was impossible either through the Civil
Service (3) or otherwise, 2. A certain few trained persons, with a
proper feeling for the administrstive approach, could have been selected
to supervise administration and to instruct other officials therein.
This sounds almost ludicrous to anyone having observed NRA in its early
days. This is probably true because the imraedi.acy of the vision of
hustling-bustling NRA obscures one's vision necessary long range ob-
jectives. The very notion that NRA was to be temporary must have iiad p.
great effect upon administrative and personnel policy. It may be true
that good administration '-XJiold not have prevented the Supreme Courtis
view in the Scheohter case. But had the court approved the b asic .idea,
good administration would have gone far to have made NRA a healthy
efficient agency of government.
Properly trained personnel for all positions or even for the key
positions are not readily accessible. This does not mean that all per-
sonnel nast be experienced, although in this country with our inadequate
training sources experience is one way of gaining a proper appreciation
of the problem. Even experience is. no guarantee, ho\7ever. A person
'vhose experience comes from a poor administration i-iight fail to appreciate
the inadequacies of that administration,
Tfliat '-'PS needed, and vhat '.'ill be required again and again in the
futui-e, is more than expert training in a single line, A long range
view of our problems, grounded on a gen- ral \inder standing of our social
9838
and legrl history, coupled '--ith specific knowledge of immediate
economic rnd social frets, this is some of the training a responsible
administrative official should have (4). True, the sources which pro-
duce such men are too few. A i^ossitle solution nould be to p ick persons
thought crpable of appreciating and developing proper administrative
technique, (5). Then these persons should be given an intensive schooling
in:^-; in administration by trained persons (6). Lastly, the graduates
should bo closely sunervised in the pen'ormance of their regular duties
until t;iey h'd demonstr-^ted such ability thrt they could be fitted into
the est-'.liehed procedure.
As lifs been suggested it is quite possible that NRA personnel
would have reacted favorably to pro-oer guidance. If its intelligence
was a.s great as its loyalty and --'illingnest; to work, a charting of the
proper course might have been enough. Certeinly, proper administrative
aTopror.ch upon the part of the personnel ^.Tould have done much to have
established NSA in a much superior position.
Mechanical safeguards might be sugt-ested aplenty. In England,
departiiiental advisory committees have been successfully employed, (?)
These coimittees are authorized by statute, have a peri:ianent membersliip,
are -laid ^oy the government, and as their names suggests are ^adyi.ser.s-.
An analogjr is suggested to the KEA Advisorj"- Council, although its status
was different. Some detached advisory p.gency whose recomraendatiPJis "TOulci
have received every i:)0ssi''9le consideration and commanded respect 'Would
have been an invaluaT*le aid to the IIBA to have seen the long range prob-
lems, engulged as it -as in a sea of immediacies. A conscious .effort
to apply "natural law" or "due process concepts" could have only worked
as an agent for good administration (7a).
General Johnson, u-oon retirement, seemed to sense a number o f the
mechanical administrative difficulties of HEA (8). Some of these coin-
cide rith difficulties already pointed out in connection with substantive
questions of policy (other than administrative) which are not within the
scope of this work. Donald Hichberg saw similar broad administrative in-
adequacies (9).
In the general review (10) or.. c. ding this study Curtain specific
difficulties are pointed out. Remedies can not air/ays bo suggested,
HTharo they Can not bo seen by a statement of the problem, an attempt has
been nac'.e to point out wherever possible action -hich might have been talren .
in connection T^ith each nroblem.
As the President said in the beginning NEA presented "a challengo
to administration" (11), UHA answered it "ith devoted speedy action.
It failed, however, to provid.e that high standard of administrative justice
that the courts demand as the right of our citizens.
This "challenge to administration" v-ould have oeen judged by the
courts. In the light of what the courts have done and said this study
has tried to point out how they -Tould have treated IffiA administration.
Even though late, lYRA is preparing to ans'-'or the challenge of administration.
9838
Its cp.reful self-criticism should iDoint the v/ay for future adminis-
tration. The inadequacies and the difficulties will oe foundation
stones u-^on which to 'build anew. Someday, perha-ns not immediately,
fi'overnment will have to again administer the -Drotlems v;ith which NRA.
was concerned. V/lien this time comes, it is our fervant hope and belief
that the government will "build an administration fully capable of
efficiently dealing with the comDlex and important economic problems
of modern society, vriiile affording justice to every man.
9838
ITOTES TO ClrlApn^R I
(1) ThR National Industrial Ilecovqry Act, 48 Stat. 195.
(2) National Recovery Administration - Bulletin -^0. 1, J^one 16, 1933.
(3) For th^ more inroortant la^^s, see:
26 Stat. ?09 (The Sherman Act) ;
38 Stat. 730 (llie Clayton Act) ;
38 Stat. 717 (The Federal Trade CoTmission Act);
For further statutes and cas^s xxoon th'=s'= la-s s"". The Federal Anti-
trust La.i^K, U.S. Gov'=rninent DooAu/ient 19r-;0.
(4) Wahrenhrock, "Federal Anti-Trust La- and the IT.I.R.A., "
57 Michigan Larr Revi°^- 1009. 10^^1017. ]019 (l953).
(5) A list of th^s-^ is found ati-.ach°(? to nemoranciuin of the Legal
Division, N.R.A. , I';r,i-ch 31, 1934, ^-]iich -as su-i-'lieri h'^ the DeTjartraent
o.f Justice. The list coi-ered defendant^. enf:a-r:ed in t^-'O-hundred sixty-
eight of the industries for -hich NRA had Tironosed cod^s. It is to "be
reraemhered JHIA. s.-o^oroved five hundred fiftv-seven cod'^s (not incliiding
su-oDlements). Th° list does not in'^lude th^s"^ against ^.emher'3 of indus-
tries or trades not codified "by NBA.
The menorandun enjoined rr^Tn-bers of the Legal Division to suhmit
T30ssi"ble conflicts in r.roiDOsed codes or conolianoe la.tters of a-o-oroved
codes to the De-oartment of Justice "h^fore final a.ction. "
(6.) Brookings Institution, The i'ational R'^cov-^rv Administration -
An analysis and an Aip-nraisal. (19^^.^), 5: "Even ""^efor^ the de-oression
there T-ar- -rrach talk of so-called 'sick ind-.istrie?,. '"
.(7) Johnson, Th° Blue Epgig fyn^ S.t- to Snrth (Sattirday Evening
Post, Jan. 19, 1935), 72:
"Before, the ^^ar, Araericm husinsss was a honeyconi"b of ^-^ater-tight
industrial comrjartments. Each cell -as jealously g-aarded. There ^pg
a maximum of conoetition and a, minimim of co-o-?era.tion. Ruthless and
untem:^:>ered com^oetition ^a.s decreed "b^- the Sherman and Clayton Acts. The
war changed tha't. The '^orld '^^nt mad. The nations ^nt^r^d a contest
to se'= which could xjour the great°st '-^ass of its young manhood and the
largest amount of its monesr and -oro-o^-rty into the fir° in the shortest
space of time. That -as the -rray to -dn the --t-t,
"The old honeycom"b machine of the United Stat°s couldji't iDroduce
things fast enough in this race to destroy °yervthing. '^e had to scrap
it. And in th° short period "bet-e°n Aoril l,.i917, and ITovemher, 1918,
we literally tore it a^^art and vvA it to.';:qther a -a in. On the call of
Cov^rnment and und^r the -or'='ssure of -oatri-tism, th--' eld individualist
"battlers royal "becrn^ an orga,ni?;ed squad, all marching to'^ard th° sound
of th-^ g-'ons.
"^e did not re-oeaT the Antitrust Acts, '^e simiDly ignored them.
9838
-138-
Ccnr-tetito'rs ^oool^c? th°ir r^soixrc^s, tli^ir trr>df= s°i",r=ts, th^ir f?niliti°s.
Industries organized .th°Tnse Ives into groups and figures ^-'ith the sneed
and almost the iDrecision of a hi^:hly drilled chorus on a nusical-comedy
ste^sre, and Govemnent took charge of "both -oroduction and consumtion a,nd,
to a large extent, prices. It -'orked. It "loxired forth such a flood cf
Toroduction for the us°s of "^ar as th'= -"crld had nev^r se^n in one country.
It TTon the '-'a.r."
(8) Ihid. , 68: • ■ .
"Plants, findin;'^ p scant market for their -^Droducts, h^gin frantically
to seek for any -oossihl^ -lethod of r'^ducing nrices, and the most ohvious
methods of all ar^ to r°duce yp-'^^s, s-o^ed uo machines to i^roduce mor^ in
a shorter ti'no, and ext^-nd th-^ hours of -fork to the limit. I^ost humane
em-oloyers do not '^ant to do this, hut a single gr°pt com-oetitor can force
it, and, like a. rotten .an-ile s-i^Hing a -frholo harrel, one i^lant or one
locality which ado-nts this method can hring it eventually to a, -""hole
industry.
"That yerv thing '''as the worst cf this derjression. It h^gan to have
its d<=structive effect almost immediately in 1929. Early in 1930, Presi-
dent Hoover made strong efforts to arrest the dizzy do-^Ti^arrl sioiral in
wages and employment, hut one comrja.ny after another, in savage rrolfish
com^Tetitinn for the ra-oidly declining husiness, cut ^a/res and lengthened,
hours. As erich did this, its comrjetitors "er° ohliged to do like-dse,
until all did it in industry aft^r industrv. This descent into the mael-
strom ^-'ent on for four years."
(9) Ihid. , 75:
"It haiDToened hecpuse they '•re:-'= doo:ned hy th° la.f^ to unchecked and
uncontrolled comnetition-rdoomecl hy the ip'^r not to talce common co-unsel,
not to regard each industry as a unit, and not to regard the countrjr as
an economic integer in which °very citizen had an inter°st and every
employer an ohligation. They could not have saved theTns^lves, hecause
any com-oany that lagged in the fight for a. new ca.-Dacity, constantly in-
creasing -orodu-ction, and the other fellow's market, would go to the wpll.
The laws of the United States simnly said: 'Root hog or die. Devil take
the hindmost!' and th^ devil took it all. 'Th° higg°r they are, the
harder they fall, ' and this structure first hecame monstrously hig and
then fell with a crash that shook the whol° world."
(10) Pr^ss Digest, June 13, 1935, quot°s from a speech hv Hon. Don-
ald Richherg at CJal^shurg, Illinois, "Unless wp> have fact finding agen-
cies and wj-it°rs of scientific works to whom legislative and judicial
hodies will accorri aiithority, now -^rioicLed to physicists and chenists, wo
shall hav=> arise ,., profound issues of fact which will "bo declared wrong
ty the courts . . ."An arjioeal continued for a "cordial alliance of the
social scientist and the iDractical -oolitician to gain for government what
Congress has won from the union of husin'^'ss and sci^^nce."
9838
JJOTES TO CKAPTER II
(1) Willoughby, Constitutional LexJ of the United States (New York
1929), 1616-1635; ;.nd Goodnow, The Fx-inciples of the Administrative Law
of the United States (New York, 1S05) IV, ol— i2. . The Theory of the
Separation of Powers in the United States.
(2) Frankfurter and Da^vison, Cf.scs on Administretive La'.7 (Chicago
1932) Appendix 1. Th.e Separation of Po^'ers in State Constitutions, 1149.
Eight States have mere structural tri portite division. Six repeat the
three department formula. Six add a prohihition against admixture of
powers. Twenty-six provide for separation of powers with exceptions.
Two recognize an "adniinistrative" in providing for separa.tion of pov/ers.
(3) Articles I, II and III.
(4) Holmes, Collected Legal Papers (N<:w York, 1920), Essay on
Montesquieu,
Sec Ijr.rlich, "montesquien and Socir.logical Jurisprudence", 29
Harvard Law Review 562, 592 (1916) '/nere the author suggests concerning
the chapter "De la Constitution d'Angleterre", "There is no douot that it
is founded entirely on observation of the vjorking of the British Con-
stitution. Yet there is still no mention of G-rest Britain e"cept in the
title fnd a few words ;:.t the end of the chapter. The question with which
he is concerned is not the fra.ie of the British Constitution, but how the
Constitution of a free people must be framed." •
(5) Pranlvfurter and Lsndis, "A Study in Separation of powers,"
37 Harv. Law Review, 1010 (192'l); Surprise is expressed at prevalence
of the rigid separation of powers theory.
(5a) Committee on ivanister ' s Powers Reoort (Cmd. 40cO, Presented by
the Lord Chancellor to Prsrliament in April, 1932) S4 - 95.
The Comniittee comments on the f.i.ct that "the doctrine of the separa^-
tion of powers is not sacros/nct, " :nd states, "the separation of powers
is merely a rule of political wisdom, and must give way where sound
reasons of public policy so require."
(b) See discussion upon grov;th of Administr? tive Law in relation
with the doctrine, infra, this chapter, section e.
(7) Bondy, Sepa-rstion of Governmental Pov.ers (New York, 1893).
Admixture of powers and overlapping. Part II, 41-49; - The Legislature
and the Courts, Part III, 5; - The Legislature and the Executive, Part
IV, 89; The Executive and the Courts, Part V, 105.
(6) Eingngji v. Miller. 17 Ohio ..ep. 445 (18^i8), Pranlcfurter and
Davison, op cit., 51: In addition to the historical practice the court
felt that to "declare all the consequences resulting from it void, is
pregnant with fearful consequences." Maynard v. Hill, 125 U. S. 190 (1887),
But contra, based on the separation of powers doctrine see: Spa rhawk v.
Spar hawk, 116 Mass. 315 (1874-1075), Pr^.rikfurter and Davison, op cit., 46,
9838
-140 -.
(9) Calder v. Bull, 3 Drll. 586 (1798) despite a dictum at page
588, "An act of the Legislature (for I cannot call it a law) contrary to
the first great principles of the social compact, cannot "be considered a
rightful exercise of lGgislat\are authority."
(10) Cooper v. Telfair, 4 Ball. 14 (1800).
(11) ffilkinson v. Leland, 2 fet. 627 (1829).
(12) Honolulu Rapid Transit Co. v. 'lawaii, 211 U.S. 282 (1908),
preventing courts to interfere to maintain a rate schedule.
(15) layman v. Southard, 10 Wheat. 1 (1825).
(14) Article III, Section 1 and 2.
(15) Tutum V. U.S., 270 U.S. 568 (1926)
(16) The Constitution, Article III, Section 2 /l/
(17) Hayturn's Case, 2 Ball. 409 (1792); Muskrat v. U.S., 219 U.S.
546 (1911); and Willing v. Chicago AuditoriuJJ Association, 277 U.S. 274
(1928).
(18) Willis, parliamentary po'jers of English Government De-^
pa.rtraents, (Harvard University Fpess, 1932) 6; The Author points out
the.t the separation of poT.-ers doctrine has never been realized in practice,
If it could have "been in the early days of our government he doesn't say,
tut he points out that the changes in economic society have not forced
upon us other governmental methods disharmonious vrith this theory.
(19) Goodnov, op. cit., 35. The doctrine does not apply to local
government.
(20) Ibid., 34, 37.
(21) Story, Commentaries on the Constitution (1833), II, 8:
"When we speak of the three great powers of government and maintain
that the separation is indispensable to public liberty, ve are to under-
stand this maxim. in a limited sense. It is not meant to affirm that they
must be kept wholly and entirely separate and distinct and have no common
link or connection or dependence, the one upon the other, in the slightest
degree. The true meaning is that the whole power of the one department
should not be esercised bjr tne same hands which possess the whole power
of either of the other departments,"
(22) Holmes, op cit., 253: "His Englajid - the England of the three-
fold division of power into legislative, executive and judicial — vifas a
fiction invented by hira, a fiction which raislead Blackstone and Deboline. "
(23) Goodnow, op cit., 31-53.
(24) Benthara, Principles of i/lpral-s and Legislation (Oxford
University Press, 1879), 13. Bentham ridicules the principle expressing
the view that its history is doubtful and its utility even more so.
(25) Frankfurter and Landis, "Power of Congress over Procedure in
'Inferior' Pederal Courts - A Study in Separation of Powers", ?? Harvard
Law Review 1010 (1924).
9838
-141-
(?6) See the rliscussinn of "-oolitical ou'^stions," infr^i, III
(27) . Blachly and Oatnan, Acl-^iristrptiv^ L'^giFlation and Ad.j-gtication
(Brookings Institution, 1934) ?33: "Th<= doctrine of set)?ration of -jo-rers
had not develoiDed in the Unit'^ci Stpt^s, as it ha-, in I^rsnc^, in such a ^a.y
that the ordinarv co^irts ^nav not int'^rf'^r° '^ith administr- ti^'-e nets and
ther=>for° administr'^tiv^' courts hi'd to 0° ert;ihlinhea ; hut rather in such
a rray that the ordinary , courts, -^Jiles? =^s--ecial -provision is lade others
wise, control the administration The du« T>roc°ss of la'-*
clauses of the federal Constit^ition have not h'='=n used to hrinp- ahount a
T^ell--olanned, well thought out, and -ell- controlled syst^-i of adninis-
trative adjudication, hut hav» h-^^n us<=d ^riraarily as a nethod of con-
trolling suhstantive la^-'. "
(28) Franl-rfurter, "The Tpsi' of Adninistr-^ti^re La-," 7E University
of Pennsylvania La- •'^Pyje^^ 614. 616 (l9?7) : "And so, this illegitimate,
exotic, administrative .lpi7, almost overnight over-^'helmed th'^^ r)rofession,
which for years had h°=n tola of its st'^ady advance hv the lonely watchers
in t he to'^er."
(29) Goodnow, Comparativ" Administr-- ti^-^ la'^ (iTe-- York 1903). This
is the first r ecognition of "administrative la./-" as such in th^ English
language. ' This was first mihlish°d in 1893. Harriman, "The Develoriment
of Administrative Law in th° Unit'-d States," 25 Yale Law Journal 658 (l916'
(30) Beard and Beard, The American Leviathan (lie-r York, 1930) .
(31) Frankfurter, The Fuhlic'and its Goyornraent (Yale University
Press, 1930). '
(32) Ihid. , 17.
(33) Willis, 0-0. cit., 9: "This ess?"' is mainly concerned with
■orocedure — trivial stuf-f, it might h" thought. But th^ controv°rsv which
at Tjresent ras'^s around del<=gntion of l^^gislativ^^ -oower is not in essence
concerned with anything mor-^ exciting than rirocedure. That slums must
h'='. cl^ar^^d and sa-"°ty devices made com-oulsory in factories has never
he°n in dis-™.te. 'The issue is solel^ hy what means Parliaraent shall car-
ry its declared T:io] icy into effect, i'ust Parliament itself define the ■
details- aftd presfcrihe^th-^. methods? Or slia-ll a suhordinate authority he
charged with those duties? How fnr shall the -oerformance of those du-
ties 'hy a de-oartment he sunervised hy the courts? Thus stated, questions
of r)rocedure hecome questions o'f r)cw=r."
Seo also, Hewart, Th^ g°w Des--otism "(New York, 1929); Allen,
Bureaucracy Trium-nhant (Few York, 193l).
(34) Infra III and IV.
(35) An extended discussion of Ilelegation of legislative Powers
will he found, infra ^IV and. ^C/.
(36) Blachly and Oatraan, otd. cit., 53:
-142-
"Its principal advantages are: Economy of the time of the legisla-
ture; availability of eirpert !:nowled.ge; alDsence of "oartisan conflicts
concerning details; fleriitility; possToility of correct drafting; com-ole-
tion and clarification of the statutory larr, and consequent avoidance of
unnecessary liti^'^ation.
"Its principal disadvantages, iinder the system now existing in our
federal government, are; Possibilities of inharmonious and inconsistent
sut-legi slat ion; of secrecy; of imiDroper influences; of failure to
consider the general will; of lack of an adequate statutory "basis, ending
in the assumption hy the courts of im-portant and inappropriate
suh-legislative powers; and of incidental sub-legislation "by either the
courts or the administrative authorities, particularly the great
regulatory commissions, in the t)rocess of deciding particular cases.
"The nost interesting thing ahout these advantages and disadvantages,
when thus set forth side "by side, is the fact that the advantages are
general, permanent, and inherent in the function of a.dministrative
legislation in any government system organized wi,th reasonable care;
whereas the disadvantages are almost all dependent upon special condi-
tions and lack of careful organization. This means that due attention
to the government structure will eliminate, or at least minimize, the
disadvantages of administrative legislation, while all its advantages
will remain,"
(37) Uillis, op. cit., 52: "One of the chief reasons for delegating
power to make rules to the department is, put shortly, to enable questions
of detail to be removed from the consideration of Parliament."
(38) Laski, "The Limitations of the ^jroert," Harpers. December.
(1950). Groenvelt v. Biurwell at al ^ Censors of the College of Physicians,
1 L. D. Raymond 454, 471 (1691). The court recognized the value of.
expert skill and that its findings in a teclmical nroblem be not
disturbed,
(39) Carr, Delegcated Legislation (Cambridge University Press 1921),
19-26: Tlie Case for Delegation. The author mentions, 1. the time
element which has existed in England since 1832; 2. "the limitation of
aptitudes" citing John Stuart Mill; 3, Parliament does not govern the
country in the sense of enforcing the law or policy. Therefore, the
actual governing agencies can best fill in the details of that policy,
and in certain cases make policy themselves. This point is difficult
to e^rplain succinctly. Parliament is not always in existence, and even
if it were, its jDrocedure is slow. Tliis point is auite similar to the
reason Professor Comer assigns to the fact that so many examples of
delegation can be found in the first session of Congress.
(40) Dickinson, Administrative Justice ond the Supremacy of Law
in the United States (Harvard University Press, 19?7). The author lists
advantages of acljninistration: 1, Initiation by the Government of
efforts to protect the public interest; ■ 2. Prompt action of a preventive,
and not merely remedial nature based on technical knov/ledge; 3. The
protection of public interest in a way not -oossible by law suits of private
oarties; 4, Tlexibility in determining socially hurtful conduct.
9838
i
(41 ) ?r.irlie, "Adrainistrrtive Le.^islation," Uichifran Law Review
131 (1930) oi'.tlinRG .tlie .adTninisti-^ative rule protlera in fields of the
government's orm 'business or essential functions.
(42) Carr, o-n. cit. In ^n.^? and delegated legislation can be
cuestioned judicially v/h'^reas Acts of parliament can not "be so questioned.
(43) Short, National ....dnini strati ve Or.g:anization (Urhana, 111.
1923) I. See also, Peo-ple v. Tremaine, 168 1-T.2. 817 (IT.Y. 1929); and
supra, n. 2.
(44). Sarly cases free].y recognized .administrative action,
i:urray>?l Lossje v. Eohoken Land and I.-.TDrove..ient Con-pany. 18 How. 272
(1855), See also, Goodno\7, dD. cit., 24-25; Dicey, The Law of the
Constitution, 8th ed. (Loi:don 1527),
(45) Cooley, Constitutional Linitations, 8th ed,, (Boston 1927),
229^ 230: "The legislature must declare the policy of the law and fir.
the legal jpjcinciples irhich.ar'? to control in given cases; "but an admin-
istrative officer or "body ras.y he invested -^ith the power to ascertain
.the facts and conditions to rhich the policy and princi-oles a.-oply."
(46) Sears Roehuck and Co, v, Federal Trade Commission. 258
P. 307, 312 (CCA, 7th 1919).
(47) Laski, "Book Review," 45 Harvard La^ Review 754. 756 (1932).
"Parliajaent has "been led to exiDerinent with departmental jurisdiction
"because jr.dicial review of social policy has "been reactionary in temper
and clums;^ in erect\tion. It has failed to appreciate the elements of
policy which is involved. in finding the facts wherever quasi- judicial
problems eiisrge,"
(48) 'llishimra 3kiu v. U. S.. 142 U.S. 551-659 (1802).
(19) See the discussion of court's review of administrative
action, infra. See also Dickinson, op, cit., XI; and "Revie'-^ of
Administrative Determinations of Qaestions of 'Constitutional Fact'",
80 Penn. Law Review (1953) 307-532,
(50) This is the traditional statement. The -orinciple, however,
is not infler.ihly adliered to. Dickinson, op. cit,, 50-54.
(51) Smith V. Hitchcock. 226 U.S, 53, 58 (1912). The case
involved, said the co\xrt, a ouestion of law whether a publication is
a book or -oeriodical, "We should not interfere with the decision of
the Postmaster General unless clearly of the opinion it was wrong,"
See also Dates and Guild Co. v. Payne. 194 U.S. 106, 107 (1904),
v;here the co\irt injected the suggestion that a q^iestion of law coupled
with some discretion in the Postmaster General existed.
9838
-144-
(5:1) T-T.C:jsr, A Preiininar-'- Treg.tise on fn- Larr of ~!vidence
(Boston, 1898), £02. See Dickivison, op. cit., n. 49; Du^--an v. U.S.. 34
Court of Claims 458 (1899), held thr t the dncision of the Commissioner
of Internal Sevenue that an officer in charge of a 'oost exchange is not
a retail lienor dealer is a decision of fact in his .jurisdiction and final.
The Secretar;' of the Treasur;- suomitted the buostion as one of "lau."
The -court is not clear \7hether finality is given to the decision of the
Internal Revenue. Commissioner hecause of jurisdiction or because
" Question of fact" rras involved. See triat'ient of "qtv^stions of law" in
consideration of court's review of acljiinistrative action, infra, III,
(55) In Haladam Co. v. Pederal Trade Comiiission. 42 ¥. (2d) 430
(C.C.A. 6th, 1930), the question of the scientific value and safety
character for ohesity cure is a ouestion of opinion, not fact. In many
fields requiring err^ert knonledfe "facts" as apart from "opinion" are
almost impossiole to find. A question involving fixing of prices and
lessening of competition in intersto.te commerce which depended to a
great extent upon opinion is found in Federal Trade Comriission v.
Pacific Coast Paper Association, 275 U. S. 52, 62 (1927). lir. Justice
lutler said, "The rreight to he r^iven to the facts and circumstances
admitted, as well as the inferences reasonably to "be drawn from them,
is for the commission." (Underlining mine),
(54) Interstate Com:ierce Conmissian v. Union Pacific 2. R. Co..
222 U.S. 541, 547, 548, 550 (1912): "'In determining these mixed
questions of law and fact, the court coiifines itself , to the ultimate
Question as to whether the Commission acted within its uower. It will
not consider the expedience or wisdom of the order, or \7hether, on like
testimony, it would have made a similar ruling. 'The findings of the
Commission are made "by law prima Facie true, and this court has
ascri"bed to them the strength due to the judgments of. a tribunal
a-oT)ointed by law and inio.rraed by ^merience. ' Illinois C. R, Co. v.
Interstate Con.ierce Commission, 206' U.S. 441. Its conclusion, of course,
is subject to revirv/, but, '"hen supi.:)orted by evidence, is accepted as
final; , , , not that its decision involving, as it does, so many and
•such vast pvblic interests, can be sup-oorted by a mere scintilla of
■oroof, but the coitrts inll not examine the facts further than to determine
whether there was substantial evidence to sustain the order
With that sort of evidence before them, rate ex-oerts of acknowledged
ability and fairness, and each acting inde-:)endently of the other, may not
have reached identically the same conclusion. We do not know whether
the resuJ.ts would have been ap-oroximately the same, Por there is no
■oossibility of solving the Question as' though it vrere a mathematical
problem to -hich there could only be one correct answer. Still there
T/as in this mass of facts that ou.t of Thicli ex-oerts could have named
a rate,'" See also horth German Lloyd v. Jledden. 43 Ped. 17 (1890).
(55) harouez v. Prisbie, 101 U.S. 473, 476 (1879): "The lan.guage
of this Court in hoore v. Robbins. cited above, is that equity will inter-
fere 'When it is clear that these officers have, by a mistake of the law,
given to one man the land which., on the uiidisputed facts, belonged to
anofner,* The meaning of this and the sound principle is, that where it is
a mixed of.ostion of law and of fact, and when the court cannot so separate
faem as to see clearly where the tribunal to which the law has confided
the matter is conclusive,
9838
"But if it can be nade entirely "olain to a court of acuity that
on facts aboLit rrnich there is no o.ispute, or no reasonahle douht, those
officers have, "by a mistake of tl:e law, de-orived a man of his right, it
will give relief,"
(55) i'ranlcfurter and Davison, oxi. cit., Preface, -td. vii, for the
statement, "Administrative Lan is c;:co-p'.np:,; it necessrrily is still
crudely emoirical. It is dealin.^ v/ith ne\7 problems, calling for new
social inventions or fresh adaptations of old experiences."
9838
-146-
rOTES FO CHAPTER III
■ (l) Dicey, The Lav/ of the Constitution. 8th ed. (London 1927); see
also Dickinson, Administrative Jastice and the Su^oremacy of Law in the
United States (Harvard University Tress, 1927); and Little v. Barreme.
2 Cranch 170 (l8C4). ...
(?■) Comer, LeA'islative Eunctions jf National Administrative
Authority (iTew York, 1927), 187:
"A study of the Statutes at Large reveals, however, that rlthough
Congress has from the first demanded an occasional accounting-: to
itself hy its agents who wield le^aslative power, this de^nand
ap-:)ears. only spasmodicallj'-. "
(3) Radio Act of 1927, 44 Stat. 1174; and Comi'nuni cat ions Act of
1934, 48 Stat. 1064.
(4) Slachly and Oatman, Administrative Let-;islation and Adjudication
(Srookinss Institution, 1934), 235:
"In respect to an increasing nujnber of administrative determinations,
there is no statutory provision for review. For exarainle, provisions
for any adequate review are almost entirely lacking in the laws
establishing the 'fPJi and the AAA. Sometimes no judicial remcdj^ of
any sort is available, a^lthough in numerous instances an adminis-
trative review is allowed."
(5) Act Ilarch 20, 1933, C. 3, Title I, 5, 48 Stat. 9:
"All decisions rendered by the Administrator of Veterans' Affairs
under the provisions of this Chapter, or the regulations issued
pursuant thereto, shall be final and conclusive on all questions of
law and fact, and no other official or Court of the United States
shall have jurisdiction to review by mandamus or otherwise any
such decisions. "
(6) Infra, this chapter and IV
(7) Willis, Parliamentary Powers of English G-overnraent Departments
(Harvard University Press, 1932). The last Chapter, "Postscri;.it", deals
with the Report of the Coraaittee on 'dnisters' Powers (Emd. 4060, Pres-
ented by the Lord Chancellor to Parliament in April, 1932), which the
Author says comee as a complete answer to Lord Hewtirt's su._,^estions of
abuse.
(7a) Hum^ohrey's Executor v. U.S., 295 U.S. 602 (1935).
(7b) U.S. V. I.Iyer s, 272 U.S. 5? (192G).
(7c) Pound, C.U. , in The Growth of American Ad::iini strati vc Law.
(Thoma,s Law Bool: Co., 1923) 113:
9838
-147-
"The whole subject of administrative law is, on the threshold, one
of constitutioiiality, but, beyond that, it belongs to the field of
stcitesmanship and not of law as administered in the courts,"
(7d) Hewart, The "'ew Despotism (London 19?.9), VI, Department
Legislation, 83-104.
(7c) Letters from Professor Rof'uney L. Mote of the American
Lceiislator's Association, Chicago, v/ritten in Hay, 1931 and iir. Geort^e
C.S. Benson cf the same orr^anization in February, 1936.
(7f) Letters from the rew York Let-islative Librarian, Iir. Uilliara
E. Hannan written to the writer in ay, 1931 and February, 1936.
(7,J General Laws of Massachusetts (ter, Sd. ) chr.pter 30,
sections 5, 32, 37.
This information was furnished by the ■ :as5achusctts State Librarian,
Mr. Edward h. Eedstor.e- in letters written to the writer in riay, 1931 and
February, 1936.
(7h) General Laws of Massachusetts, ibid., cha.-nter 30, section 33:
"All annual rei^orts required by law to be made by state officers and
departments or heo.ds fucreof shrdl, except as otherwise expressly
^r provided, cover the -ireceedin,,: fiscal year and, except for facts or
'i-nformation specifically required by law, shall be a brief siommary
of the said yea-r's work, t0t.ether v/ith recommendations for the
succeediue' fiscal year. All such reports shall, except as otherwise
expressly provided, be deposited with the state secretary and by
him transmitted to the General Court on or before the third
Wednesday in January. "
(7i) Letters from Dr. Edwin E. Wittc, then of the Wisconsin
Legislative Reference Library on k'ay 1 and i :ay 12, 1931; and a letter from
Mr. Howai^d ?.■ -Ohm of the Wisconsin Lc-^islative Reference Library in
February, 1936.
(8) Jacooson v. Massachusetts. 197 U.S. 11 (1905). The legislative
may choose one of op--.osin^ medical theories as the bs.sis for a vaccination
statute.
(9) Albertsworth, "Judicial Review of Administrative Action,"
55 Harvard Law Review 137 (19':!).
(10) Panama Refinin.^ C.3OT;^ny v. Rya.n 293 U.S. 338 (1935).
(11) Carr, Delg,:,ated Lc ,islation (Cambridge University Press, 1931),
5.
(13) Institute of Patent Agents v. Lockwood, A.C. 347 (House of Lords
1894), But see, discussion of ultra vires. Blschley and Oatman, op.cit.,
VI; where the authors point out tliat adirdnistrative adjudication has been
formally recognized in France, Germany and other countries, and definite
steps taken to -establish it as a system apart from the Courts, which are
limited to priva.tc law.
9838
"143-
(13) The Federalist (Chicago, 1894). Madison, a,t pat^e 275, speal-cs
of the legislature as superior through circumsta/Aces, while the judiciary-
is defined by landmarhs less certain. Corwin, "The -^^rogress of Constitu-
tional Theory Between the Declaration of Independence 'and the Meetint-,s
of the Philadel-ohia Convention," 50 An. History Review 511 (l^?.5), treats
the early history of judicial review.
(14) Corwin, "The •Hij;her Law' Ba jkground of American Constitutional
Law," 45 Harvard Law Fueview. 149 - 135. 365 - 409 (l938).
(15) ■ Bracton, De Le;::ibus et Sonsuetudinbus Ane;liae, (Travers Twiss
ed. London, 1878), 1, 13-21, where a full discussion of natural law is had.
(16) Corwin, o-o. cit., 175.
(17) Corwin, on. cit., 109. Professor Corwin s;oe.^Js:s of Coke's hope
. . . "to restore to England the constitution of the early Lancastrians,
centering' about the name and fame of Kai^na Charta, f/hereof 'the courts,
and especially the Kigh Court of Parliament, were the chosen guardians"
as being one of the "well-springs of our own constitutional theory" . . .
"A current which has imparted an entirely different coloration to the
tradition" is found in Montesquieu's doctrine of the separation of
powers. 12 Coke Eep. 75; 12 Coke Sep. 82, 84; 12 Coke Re-i, 85.
(13) 3 Dallas 386 (l79o). I-Ias^gs, "The Constitution and the
Recovery Le,iislation; The Roles of Docuiacnt, Doctrine and Judges,"
1 University of Chicat,,o Law Review 6c5, 669 (1934). Corwin, "Basic
Doctrine of American Constitutional Law", 12 iuichigan Law Review,
247 (1914), 250-252.
(19) Corwin, ibid. Willoughby, Constitutional Law of the United
States (rew York 1929) 1692-1693; . and Ritchie, ^-'^atural Rights (Wew York
1895).
(20) This is also true in England. Willis, op. cit.,' 68:
"They alone among English courts, refrained from' standing, in the way
of administrative decision of disputes, from confusing the course
of Comi.ion Laiv procedure with 'natural justice, ' from sacrificing
reason and justice to ex post facto technicalities. YiTliether their
shility to see through the books to t'le ircsenfc realities is the
result of occasional participation in debate, or of an acquaintance
with other systems of law in the Judicial Committee, it is difficult
to say, but there 'can be no doubt thrt the foundations of our
modern system of government have been preserved unsh.J:cn because of
the decisions of the Law Lords." Board of Education v. Rice, (1911 )
A.C. 179; Ex parte Yaffc, (l93l) A.C. 494.
(21) Local C-overiiment Board v. Arlidge. A.C. 12C (House of Lords
1915), Franl'furter a.d Davison, "Cases on Administrative Law (Chicago,
1932), 376,586. Lord Shaw of Dunfcrline:'
"If it (the AdjBini strati vc Board) is left without express guidance
it must still act honestly and by honest means . . . the assumption
that the method of natural justice are ex necessltp.to those of
312:
-149-
Courts of Justice is wholly unfounded. This is e:nressly a-rjlicable
to ste^TS 01 -orocedurc of forms of olcadin^,. "
(33) Holmes, Collected Le,.,g,l Fayjers, "Essay of latural Justice,"
"The jui-ists who believe in naturcal law seem to me to he in that
naive state of mind that accepts what has been familicir and accepted
by them and their neighbors as somethin.;, that must be accepted by
all men everywhere,"
Of the same philosophical basis, see '"ietzsche, "Beyond Good and
Evil", (Translation by Helen Zimmern, I'ew York, 1934.)
(33) Ma^^s, op. cit., "natural Justice" is still important in
En-land. Report of" ComjTiittee on Ministers' Powers (Cmd. 4060. Presented
by Lord Chancellor to Parlicoment in Ajjril, 1933) 75-CO.
(34) Willout^hby, op. cit., 1689:
"It is a very remarkable fact tha.t not until our written Constitution
was more than half a century old did the ^^hrase receive an interpre-
tation and application which an-oroximates that which it has today,
and not, indeed, until a hundred years had passed away was resort
had to it as the usual devices of those disapproving of the acts
of their legislatures."
(35) Haines, The Revival of I'atural Law Concei^ts. (Harvard Studies
in Jurisprudence, Cambridge, 1930) V, Fatural Law.
(36) Corwin, "The Doctrine of Due Process of Law before the Civil
War", 34 Harvard Law Review 566-385. 460-479. (1917).
(37) lAirray' s Lessee v. Hoboken Land and Im-orovenent Co., 18 How,
372 (1855); Story. Commentaries on the Constitution, (l347), 68:
"This clause (the due process of law clause), in effect, affirms
the right of trial, according to the process and proceedings of
the common law." This and a few other lines are the only reference
in this large and ejdiaustive work."
Corwin, op. cit., 74, 95, 118-19:
"Coke, in his Institutes, defines due process of law precisely as^
"indictment or presentment of good and lawful men ... or by writ
original of the common law, " a.t page 74,
"TJhen the Fifth Amendment v/as added to the Constitution in 1793,
no, one, so far as I am aware, had ever su,,<^ested that the term 'due
process of law' had any other than its anciently established and
self-evident meaning of correct iDroceduro; not v/as such a suggestion
to be accepted by any court, in any jurisdiction, for many years to
come," at page 95,
9838
-150-
"As was -pointed out in the -nrevious cha-)ter, no one at the time
of the framing and ado^ition of the Constitution had any idea that
this clause did more than consecrate a method of i^rocedure against
accused -oersons , ' and the modern doctrine of due -nrocess of law, the
most im-tiortant single "b?Gis of judicial review today, could never
have "been laid do\vn e::ce-ot in defiance of history." at -oages 118-
119.
(28) :;ac_:5, o-.i . cit., G69:
"The jud.^es have held oince the latter or.rt of the nineteenth cen-
tury that certain clauses of the document (Tlie Constitution)
authorize- thei.i to -oronounce doctrines not deduci'ble 'oj constriiction
or interpretation of the docirnent. The due ^^rocess clauses of the
Fifth and Fourteenth Amendments, they hold, authorize them to de-
clare invalid rs ■'onconstitutional any statute, not specifically
authorized "by other clauses of the document, v/hich they deem
arbitrary, ca-iricious, or ■-anrer.sonaole. Under thea, the judges
pronounce doctrines as to unre.- c-onahleness of statutes 'relrting to pro-
-^cedure, to judisdiction to ta::, to the regulation of public utility
rates, to any and every subject - doctrines constituting in no sense (
of the vAork construction or inter-^retation of language formd in the
v/ritten document."
(29) ,Dred_S.c_o.tt v. .^aiidford, 19 Hov/. 393, 450. Ooinion of Ilr. Chief Justice
Teney (1857).
(30) 12 'Jail. 457 (l87l) . But se-, the Sla^i£ht o_r Jouse_Cas_es , 16^7all.
36, 64 (1873), where the court refused to rv■y.^ly it to a statute in-
volving the State police Toower.
(51) LQan^Ass_ociati.qn v. To:ieka, 20 '.Tnll. 655 (187 [3)
(32) Justice 3rancleis, in Fnitney v. California, 274 U. S. 356, 373
. . (1927), "Desiite arguments to the contrary which nad seemed to me
persuasive, it is settled that the due -nrocess clatise of the Four-
teenth Amendment a^Tjlies to matters of substantive law as well as
to matters of procedure." The Court ui^held a California Criminal '
Syndicalism Act. Haines, o-o. cit., V. Theories and Due Process of
Law, 104-149, "oarticularly at page 106. Ho-'jgh, "Due Process of Law -
Today" , .24 J^:arvardJiaw_He.vieu_36_5_ _Cl9_l,ll.
(33) See opinion of Brewer, J. in Kichi^an Central ZR v. Powers. 201,
U. S. 245, 295 (1906). ■ ~ " '"
(34) Eeine^ v. Do_nnan, 385 U. S. 312, 326 (1932), annoimced the doctrine
that a statutory statement that a transfer of -oroperty within two
years prior to death shall be deemed to have been made in "contem-
plation of death" is a violation of the Fifth Amendment, either
treated as a rule of evidence or substantive lav/. See also
Schlesinger v. Wisconsin. 270 U. S. 230 (1926). A-Tf.lying the Four-
teenth Apiendment, likewise, to a State statute. Haines, op. cit.,
116-117 discusses Judge Cooleys efforts to extend the meaning of
due process. Tliis is -Tarticularl;,- noticeable in his voi-k on "Law
of Taxation" v/here he stated certrin formula to restrict legislatures.
9838
"151-
Many of these for;--,iila nre acce-ptfd -s a -jart of our l-^v/ today with
a-oparently no -nroci'ie constitutional o sis.
(35) MsiCCyi v/ Farrner'_s_JLo_a;i_and .TruA^^ 154 U. S. 362, (1393).
(36) S^ldv-dn V. Iiiss.q.uri, 381 U. S. 586, 595 (1930). Corwia, op. cit.,
69-70:"""
■'The torm "due nrocess of lav/' siniTly drops nut of the con-
stitutional clause when ■..-ay is made in it for the doctrine of
vested rijjhts; and, it may oe added, the words 'life' and 'liherty'
do li]:ewise. "
(37) Haines, op. cit., 123-139, sPisests that the doctrine is used to
sustain reactionary interests. Lerner, "The Sui^reme Court and
Ainerican Ca-oitalism", 42.JQile_.Law Jojarjird _55.8..Cl333) ; and Corwin,
"Tlie Supreme Coxirt a.nd the ITourteentn Amendnent", 7_,_^;ichiiian_Law
.Sevie:vv,.,643_(.l.Qp_9}.. (liuch of this material is now found in his
"Tlie Twighli;jht of tho Siipreme Coixrt", op. cit., and his "Social
Planning under the Constitution - A Study in Perspectives", 26
^ MH^uVAQSA J_Q.li t.i Q.C'.1 ..Sci ence Aevieji .1 XlSv.-?i--
(33) iJillis, OP. cit., 8:
"To the special aspects of the Snj;lish proole.ii tahen u.o in this
essay there can he no AuKrican -^ar^llel — such is the povrer of the
Fourteenth Aiviendnent . A rule of L^tatutory finality is imthink-
aole in a country u'here an Act may not even r<o so far as to make
the determinations of a covmaissioner final on questions of fact,
hut must go on to exclude 'jurisdictional fact' from that finality;
any legislattire which sought to prevent the courts from passing
on the question of ultra vires would he told that hy so doing it
was depriving the individual adversely affected of 'due process',
of. a constitutional ri,;,ht to challenge 'illegal usurpation of
power' before the courts."
(39) Mard_gf_^ducati_on V. Hi.c_e, A. C. 179 (lloave of Lords 1911), Frank-
furter and Davison, op. cit., 572, 574: Lord Lorehurn-, L. C. "The
Board is in the nature of the arbitral trihujial, and a Court of law
has no jurisdiction to hear appeals from the determination either
upon law or upon fact. Sut if the Court is satisfied either that
the Board have not acted judicially in the v/ay I have described, or
have not determined the question vhich they are required by the Act
to determine, then there is a remedy by mandariias or certiorari."
Tills is our procedural due process concept. See the, ui^ra. and
intra vires discussion rnd diL^cussion on nat'aral law, infra, this
chapter.
'(40) Rojanfeldt V. Phillips 35 T. L. 3. 46, (Court of Appeals, 1918):
Scrutton, L. J.
"A war could not be carried out according to the principles of Magna
Charta. Very wide povrers had been given the Ezcecutive - - - The res-
ponsibility for giving those powers rested not v/ith the Judges, but
with the reorescntatives of the people in Parliament . "
9838
-152-
(41) Cor-;in, op. cit.:
"Judicial review in the sense of judicial discretion has devoured
its progeny, constitutioml law; and "by the saiTie si{ji, 'due
process of I'w' is no Franl:enstein' s monster that rides dovm
iet;islation in defiaJice of itr> creator's 'vill — it is the servaiit
of the Court's legislative judgment." at oage 86.
"In ?,r)eaking of the interference of the Court with state legis-
lation through the jjuise of the Fourteenth Aiaendment , Professor
Corwin says: "The result is- that the Court is ahle today to aio
^roach the question of factual justification from, either one of
two o'^posed angles, according as it wishes to sustain a statute
or ot overturn it, and is a^ole to cite an airrole array or precedents
in jiistif ication of either a-iproach." at -Oc\^:e 101.
It might be suggested that this also applies to administrative review and
interference \/ith Federal adininistr-tive .lejisl'^tio.i.
(42) '3-ray, IL'lfcare _ajid Xo^xce^L. .pX A-^e JLaw, 2nd ed. (ilew York 1927).
(43) Corvi'in, on. cit., Ill: Profesi^or Corwin suggests that Congress
has reioeatedly uLiderta]:en "to decl'U-e lav; \.'ith the definite intention of
binding the courts."
(44) Dickinson, Adini;u strf_tive_ Ju."-tice_ ..a--,d -^16 .S,u;ore;.iac^ p.f jLaav in. Alie
rJsi'fced -Statues.. (Harvard University Press , 1927), 105: 'Hie author
indicates that the ^J^t r a . vl ?Les. doctrine is a limitation both uoon the legis-
lature and the administrative bodies.
(45) Ibid.
(46) I'IcFarland, JxidAciaX .QPH^jyX Pf-XX^. X^A^JSXXyp-A^. S^PPiX^AXPJk SJ\X .the
.I)lte_rstjit.e_Co!]rnerce CohB.iission^ 192"o-1930 (Harvard University Press,
1933), 23:
"Then the courts do more than hold the cor.imi.ssioners to the out-
lines of their autliority or demand the existence of evidence which
justifies the exercise of that authority, then the legal expert in-
terferes with the administrative s-necialists v,ho cnmorise tne -oer-
sonnel of the Interstate Commerce Coiriiiiission and the Federal Trade
Commission."
(47) Infra, IV, 3.
(43) •••illis, 0:0. cit., II. 47:
"Owing to the existence of a great number of semi-autonomous bodies,
the Guardians of the Poor, the Enclosure Commissioners, and the
licensing justices, for instance, whose discretion was mthin its
limits absolute, control by the courts has al'.'ays tpken the form of
defining those limits, and the judges in order to -mt into force
their ideas of how the machine should run — and that is a factor
to be reckoned with, if wc follow the school of '•.Uuicli lurists' — •
have been forced to correct the decisions of these bodies on the
9838
-153-
gro-und that they erred in law in mistaking the limits of
their powers. The law of ultra vires is curious not only for
the very different uses to which it has been put, any-
thing from the testing of a State statute by the standard
of the Constitution of the United States to the testing
of the issue of new shares by the corporate charter, but
also because in applying it the courts stand as it were
apart from the body whose actions they ;oiass in review."
(49) Willis, op. cit., 22, 23:
In searching through the statutes from 1848 to 1931,
the Author states that he has discovered over one hundred and fifty
instances of this type.
(50) A. C. 347 (House of Lords 1894), Frankfurter and Davidson,
op. cit., 513.
(51) Frankfurter and Davison, op, cit., 519.
(52) Eeg. (Glee land) v. Pharmaceatical Society of Ireland, 2.
I. R. 268 (1896). Although the Court did not decide the case upon the
question of ultra vires, the problem loomed large, and three justices
gave it considerable attention. The statute was similar to that in-
volved in the Institute of Patent A^-ents v. Lockwood in that it pro-
vided "all regulations made under the authority of this Act" when
properly laid before Parliament -become "of the like force and effect
as if they had been enacted in this Act." "It certainly is jomewliat
alarming that it should be in the power of any body of p.?r;;m,s, by
means of an obscure and unnoticed formality, at the 'suggestion, it
may be, of private interest, to smuggle through Parliament illegal
regulations, affecting, the rights of the public, and to invest' them
with the force of law; and if we admit the answer given by Lord
Harschell in his judgment, that the regulations in that case were
made by a public authority, namely, the Board of Trade, in which
the law would be siipposed to place confidence, yet this argument
must be confined to the question whether the rules ought to be
considered intra vires. . and yet the more general question as to
their effect assumes that in the instance under consideration the
authority was transgressed." See also Willis, op. cit., 70; and
Committee on Ministers' Powers Report, op. cit., 40-41, and at 61-62:
"We are of opinion that in delegating legislative ftinctions
to a Minister, Parliament should be careful to preserve in all but
the very exceptional cases, which we describe below, the jurisdiction
of the Courts of Law to decide whether in any purported exercise of
those functions the Minister has acted within the, limits of his delegated
power. Tlie rule of law requires that all regulations should be open
to challenge in the Co^irts except when Parliament deliberately comes
to the conclusion that it is essential in the public interest to create
an exception and to confer on a Minister the power of legislating with
immunity from challenge. "
-154-
(53) 2 K. B. 98 (1930), A. C 494 (House of Lords 1931).
(54) Willis, op. cit., 82:
"I venture to suggest that words of this nature will protect
any rule bona fide nade to carry our the objects of the section which
defines the rule-raalcing power, and directed in the opinion of the
Court towards effectuating the general p-*.rposes of the Act to be
gathered from the terms of the Act as a whole. The same test would
be applicable to a power to make orders, except as regards orders con-
firming schemes. Hiere the words VYOuld nave at least the force claimed
for them oy Slesser, L. J., and would validate 'an order legally intra
vires but administratively imperfect; and perhaps an order made according
to a course of procedure not sti'ictly in accordaaice with the terms of the
Act, but affording equally good protection to the individual owner.
Beyond that, in the light of Yaffe's Case, it is impossible to hazard
a guess, "
(55) I. C. C. V. Union Pacific Railway Compajiy. 222 U, S. 541, '
547 (1912), and Intermountain Bate Cases. 234 U. S. 476, 490, 491,
(1914). .
(55) Dickinson, op. cit., 310-311, 315.
(57) A section on jurisdictional fact and constitutional fact is
included in the consideration of Administrative Finality and the cases,
IV.
(58) Ma-King v. Blair, 271 U. S. 479 (1926).
(59) Dickinson, op. cit., at 315 especially.
(60) Dickinson, op. cit., 55:
"In truth, the distinction between 'questions of law' and 'questions
of fact' really gives little help in determining how far the courts will
review; and for the good reason that there is no fixed distinction. They
are not two rautua] ly exclusive kinds of questions, based upon a difference
of subject-matter. Matters of law grow downward into roots of fact, and
matters of fact reach upward, without a brealc, into matters of law.
The knife of policy alone effects an artificial cleavage at the point
where the court chooses to draw the line between public interest and
private right. It would seem that when the courts are unwilling to
review, they are tempted to explain by the easy device of calling
the question one of 'fact'; and when otherwise disposed, they say
that it is a question of 'la,w'. Thus, while the reasonableness of
a rate is said to be a matter of fact and not reviewable, yet when the
rate-fixing body has omitted to taJ.e into consideration some element
or factor which the court thinks ought to have been included, error of
law is promptly held to have been committed and the power to review is
exercised. "
9838
-1!35-
(Sl) Infra, IV. In ■americ.-m School of Ma.-^g-ietic Healing; v.
School of Kasnetic Healing v. McAnnualt/, 187 U. 3. 94, 109, 111 (1902),
spoke of the problem as a question of law throi:ig-nout the opinion, out
at one place said: "We do not mean to preclude the defendant from
showing on the trial, if he can, that the business of complainants,
as in fact conducted" was a violation of the statutes.
(81a) Federal Trade Commission v.. Gratz. 253 U. S. 421 (1920)
(62) Comer, Legislative Functions of National Administrative
Authority, (tlew York 1927), 137.
(S3) Thayer, Preliminary Treatice on the Law of Evidence (Boston,
1898), 202:
'"The _judges have always answered a multitude of
questions of ultimate _ fact which forms part of the
issue. It is true that this is often disguised by-
calling them questions of law."'
Eiis can also be found quoted in l.'cFarland, op. cit. , 25, n. 62
(64) Smith v. Hitchcock. 22 6_TJ. S. 53 (1912). McFarland* op.
cit., 26, expresses this view as regards the Interstate Coimnerce
Commission and the Federal Trade Commission.
(55) Federal Trade Commission v. 'Sirestern iieat Co., 272 U. S. 554
(1926); Federal Trade Coi.naisgion v. Curtis s Publishing Co.. 260 U. S.
568 (1922).
(66) Federal Trade Commission v. Cratz. 253 U. S. 421 (1920), and
Frischer & Co.. v.Bakelite Corp., 39 F. (2d) 247, 259 (Ct. Cust. & Pat.
4)p. 1930).
(67) G-egiow v. UM. 239 U. S. 3 (1915). Tiie Court treated as a
"question of law" the decision that aliens were "likely to become public
charges" where the Commissioner's action was based on the condition of
the labor market at Portland, Oregon, the Aliens' destination. Likewise
in Hanson v. Haff , 291 U. S. 559 (1934) the Coxirt reviewed the facts,
reversed the administrative determination (preswaably upon the existence-
of a question of law), aiid held that an alien woman who had entered the
country and left it to go on o trip with a man v/ith whom she was having
illicit sex relations was not barred from ret-uming under the statutory
prohibition of entry into the country "for the purpose of prostitution
or any other immoral purpose" where the facts indicated a paramount ■
object of entering to follow a legitiniate occupation.
(68) 14. Pet. 497 (1840).
(59) For the distinction between ministerial and discretionary
acts see: Kendall v. Stokes. 3 How. 87 (1839); Brashear v. Mason. 6
How, 92 (1845); Seeside v. Walker, 11 How. 272 (1848); Commissioner of
Patents v. Tniteley. 4 Wall 522 (1867); U. S. v. Seaman, 17 How. 224,
(1855);' U. S. V. Guthrie. 17 How. 284 (1855); U. S. v. Commissioner
5 Wall 553 (1867); Gaines v. Tliompson 7 Wall 437 (1869);' Secretary v. ■
McGarrahan 9 Wall 298 (1870); Marque z v. Frischie. 101 U. S. 433 (1879);
U.S. V. Churz 102 U. S. 378 (1879); Butterworth v. Hoe 112 U.S. 50 (1884);
and U. S. v. Black 128 U. S. 40 (1888).
9838
-156-
(70) Kansas Association v. Wilder, 2Z Pac. 1061 ^Kansas, 1890),-
(71) Noble V. Union Hiver Lodging: Railroad, 147 U. S. 165 (1893),
involving the decision of the Secretary of Interior upon the question
whether a railroad -.yas entitled to a land grant and whether this could
"be revoked by his siiccessor.
(72) national Life v. National Life, 209 U. S. 17, (1908).
(73) McFarland, op. cit., 31-32; The Court's review and frequent
complete re- examination of the facts, the author attributes to the
failureof the Court to accept or to appreciate the merits of problems
involving expert knowledge. Cr;me v. Uichols, IF. (.2d) 33 (1924);
(74) Silver v. Federal Trade Commission. 292 F. 752 (C.C.A. 6th,
1923); and Florida and East Coast R.R. Co.. v. U. S.,. 234 U. S. 167
(1913).
(75) Minnesota Rate Cases. 330 U. S. 352 (1913); Interstate
Commerce Commission v. Illinois Central R. R. . 215 U. S. 452 (1910).
(76) Rhode Island Hospital Trust Co.. v. Conmissioner of Internal
Revenue. 29 F. (2d) 339 (1928), The court required tiiat evidence, made
expressly prima facie by a statute, could not be ignored and should "be
given substantial, if not controlling weight, "
(77) International Shoe Company v. Federal Trade Coi.imission. 280
U.S. 291 (1930). .The court refused to sustain a finding that compe-
tition was substantially limited and cominerce restrained where it was
not supported by evidence..
(78) Chicago Junction Case. 264 U. S. 258 (1924), 264-265. "The
provision for a hearing implies both the privilege of introducing
evidence and the duty of deciding in accordance with it. to make
an essential finding without supporting evidence is arbitrary action."
Interstate Commerce Commission v. Louisville aiid Ilashville R. R. Co., 227
U. S. 88 ( 19 1 3); &■ Chicago, M. & St. Paul Hy. v. Minnesota, 134 U. S.
418 (1890).
(79) Yudelson v. Andrews. 25 F. (i:d) 80 (C.C.A. 3d. 1928).
(80) Southern Railway Co.. v. Virginia. 290 U. S. 190 (1933).
(81) Ibid at p. 197. There was a strong dissent in the case
by the Chief Justice, concurred in by Justices Stone and Ca.rdozo,
based upon the fact that later review of the administrative action
before a co-'ort was afforded.
(82) U. S. V. Williams. 194 U. S. 279 (1904), in a deportation case.
(83) Federal Trade Commission v. Good^^rape Co., 45 F. (2d) 70, 72,
(C.C.A. 6th 1930). The weight to be given the evidence is for the Com-
mission to decide.
9838
(CU) Federal Paclio Connission v. 1-Tolson Brothers, 2o9 U.S. 26G
(1533). Ei.Trloyers Inc-urance Cor-''., v. Inc":astrir.l Accident Connission.
151 Pac. h 23 (Crlifornia 191:0.
(C5) Un-:g-r v. S-g-mF.n. U 3 (2d) £0 (C.C.A. "th, 192^0; l^il:er v.
Federal Hadio Connission. , ^"7 ". (2d) 5 35 (1931) ; and General Broad-
car.tin- Systen v." Federal fuidio Conuission, kf I . (2f.) U26 (1531).
(So) Dickinson, 00. cit., 323:
"The dif:^icr.lt cases ar-> tliose --liicii occra- ;Then the d.oulit
arises not fron the- logical or ".hysical inpossi'cility of the inference,
nor froLi the totcl phsence of evidence, Mt from its neager andi. unsat-
isfactory charr.ct-rr. "
(rSy) rcFrrland, cy-. cit., 29-30. The Authoi continr.es:
"Althoxigh the detei-nination of tlie facts is ar'.-uttecLly the
function of the adninistrrtive con'. lis s ions, experience has
shorn that on judicial e::r;iination of the evidence upon r/hich
pcxiinistrrtive action is pr'dicalcv. tlie courts freouently oust
adninistrr-tive j udfonent and suostitute therofor the opinions
of judpes,"
(SS) Chief Jiistice Huphes, in the I^Te- York Tineas Feoruary 13 , 1931,
"The pouer of rdviinistrrtive oodies to mclze findinps of fact -ihich
may oe treated r.s conclusive, if there he evidence "both -rays, is a
poiTer of enoiTnous consequence."
(S9) Ha-:eraan Famers Coro. . v. 3ald-7in. 29 3 U.S. lo 3, 55 Suo. Ct.
7 (193U); Frentis v. Atlajitic Coast Line. 211 U.S. 210 (I90S); Stanley
et a.l V. Peahodv Coal Cct^F Supp. S;2 (D.C. S.F. 111. 1933.) I Chicr£0,
Ful. C: P. Up. Co. V. Strte Hi'::r,Ty Con;-iisEion of llissouri. 322 rio. U19
(1929); and Uhite v. Federal Frdio Connission. 29 F. (2d) 113 (192&').
(90) rLed "C" Oil lianufacturin- Co. v. Board o:: A-rici,i-lture. 222 U.S.
3S 0 (1911); Petersen Fakinp Co. v. :>:ran, ,290 U.S. 57O (193'+)-
(91) G-olrsnith v. U.S. Fogydof Tan Ao-.e^ls. 27O U.S. II7 (I926) ;
he Chord V. Louisville r-, Hashville I^^nlC] U.S. Ug 3 (1902); and lIcFon-
ald V. Foard of Street Corriiasioners. l57 F.F. -'I7 (h'ass. I929).
(92) FinJ:elstein. "Judici al Self-Lin.itation, " 37 Harvard La\7 Fe-
vie'7 338 (192U). And Uilllu-j-hoy, op. cit., Ill, 33, 1327-133S.
(93) The Fui:e of York's Clain to the Cro-n. 5 Fotuli Par. 375 (1U60)
(9U) Pet .1 en v. Central Leather Co. 2^6 U.S. 227 (19IS). The Con-
stitution, Article IV, Section '!-. The doctrine also is applied in
England.. Luthe r v. 3p_er, 3 U.F. 3 32 (I921).
(95) Luther v. Forden. 7 Hon. 1 (12^9); and Pacific States TeleT)hone
and Tele-ranh Co. v. Oregon. 223 U.S. US (I912).
9S3S
-158-
( 95) The Constitution, Article III, Section 2. See ?inhlestein,
Q-}, cit. , sivora, Chapter II, n. 17.
. (97) I-Ieller v. Potoinac Zlectric Pouer Co.. 2S1 U. S. 428 (192C).
(93) Villin/; v. Cliicaro AuJlitoriujh Co.. 277 U. S. 274 (192'j)-
(99) Po^aiio., "3ook P.eview" , 41 EarvarJ. L. R. 115. 114 (1927).
S'pealcs of administrative lav; decisions as "a '/■ilc'ierness oi sin-le
instancee, ambiguity ahcl inconsistenc" of "jrinci )les . "
(100) Willis, on. cit., 172-173:
"Under the 'oresent syste-'. a rjj.e miich Parlia :ent itself would
never have d.rerued of autxiorisin.-: :-av continue for years unchallenged,
if technicalities or the \:)0verty of -oersons' agyrieved orevents the
issue from heing raised "before a co'ort, v/hile a rule r/hich to the eye
of somnion sense is ilainly r.'ithin the Durvievf of the Act na-/ fall be-
fore an unsjnn-oathetic or 'nisinforned tribunal. It is so haxjliazard.
IHien a. State nay force its subject to obev rules made b-- its e:cecutive
arm, and later through its judiciarv mulct hin for obej^in- \7hat ^7as
held out to him as binding law, soiiething is i7rong. A rule r.iust be
either legal or illegal. T^ay should the issue renain in dcabt until it
hatDoens to be ro.ised in the coiu'se of -oroceedings by an individual liti-
gant, and then before a body which, as I '•lointed out above, is unsuit-
ed to t:ie decision of questions of govern; lent?"
(101) 7illis, o-Q. cit., 4S:
"But when he" (Lord Hen.ai-t) "assumes in his oreuises- tha.t a court
is competent to -lass uDon all matters involving the aiDili cation of
standards, SJid tha.t, beca^ise in the "oast coiorts have ercercised-iowers
remaining to them from a 'leriod in history when justices in ejrre exer-
cised taxing DOwers, and justice;; of the peace were in substanc6 if not
in form a oart of the e::ecutive, the;'- sho^uLd be granted the control of
any new powers which resemble those no?: -controlled by the King's Berjch,
it is impossible to agree." ' >
(102) i.icFarland, op. cit., 14-15:
"L-/- subjecting the coinnissions to a scrutiny mol-e or less in ac-
cordance with recently developed principles and bjr rendering decision
in terms of statutory authority and evidence, ' diie- iDrocesa of law' and
'private rights' have almost disappeared from the language of the de-
cisions. _ It is not that the judges who test legislation in terms of
private rights are any less vigilant in the censorshi-o of administrative
orders (the contrar-- is to be e:roected) ; there are more subtle ways of
reaching the same resuJ.t — chiefly throu^-;h 'interpretation.' Tlie com-
missions have been held dov:n to a procedure aiid sco^e of axithority which
nakes abstract consideration of validit" of their orders unnecessary-.
So far c,s the due process clavise remains, it is to be seen in the ju-
dicial -jrohibition of 'arbitrnr-'- and ca-oricious' act-ion,, and the re-
qpiirement of orderly '-process." ' - ■
(103) I.icFarland, oo. cit., 22
9833
(104) For references to the literature on this suoject see Bon-
chard, "The Constit-ationalitjr df Doclarator3'- Judrwents", CI Colijjiibia
Law Review 561 (1951).
(105) ::cFarland, o-^. cit., lJ-19 .
(106) Dickinson, oo. cit., 3o4:
"T he action of .^lovernnent requiren in sor.e c"e;=;ree to he
hro\i£;ht to the touchstone of judicial decision if progress is to
be orderly' and' consistent ."
-160-
NCTES TO CHAPTER IV.
(1) A good general stateinent of the formula is fo-und in
Pitts'oyijgh C. C. & St. L. a. Co. v. Backus, 154 .U.S. 421 (1894).
(2) Dickinson, Adjninistrative Justice and the Supremacy cf Lsxr
in the United States (Harvard University Press, 1927, 59,
(5) Dickinson, ibid, X, 263-305; The subject is court revieu cf
detervainpticns made in the administration of the business of government,
(4) Dickinson, op. cit., 265, et seq,
(5) U. S. V. Pisher, 109 U.S. 143 (1883)
(6) Evans v. Gore, 253 U.S. 245 (1320); and C Do no hue v. U.S.
289 U.S. 516 (1932).
(7) Humphrey' s Executor v. U. S. , 295 U.S. 602 (1935).
(8) Ex parte Hennen, 13 Pet. 230 (1839).
(t) Act of June 10, 1890, Chapter 407, 26 Stat, at Large 131.
(10) Shurtleff v. U. S. 189 U.S. 311 (1903). See also Reagan v,
U. S.. 182 U.S. 419 (1901).
(11) Xeim V. U. S., 177 U.S. 290 (1900); U. S. ex rel Redfield
V. "indca, 137 U.S. 636 (1891); U. S. ex rel Dunlaw v. Black, 128 U.S.
40 (13C8); U.S. ex rel Boynton v. Blaine, 139 U. S. 306 (1890); and
U. S. ex rel McBride v. Schurz, 102 U. S. 398 (1879).
(12) Meyers v. U. S. . 272 U.S. 52 (1926).
(13) Huffiuhrey's Executor v. U. S. , 295 U.S. 602 (1935).
(14) Angelus v. Sullivan, 246 F. 54 (1917), 57, Judge Rogers;
Boitanc v. District Board, Northern Dist. iv'o. 3, Sacro:nento, Cal,, 250
P. 812 (1318).
(15) Blake v. U. S., 103 U.S. 227 (1881).
(16) Crensha'j v. U. S. , 134 U.S. 99 (1889)
(17) Smith V. Whitney, 116 U.S. 167 (1886). Dickinson, op. cit.,
268 et seq. See Fairlie, "Administrative Legislation", 18 liichigan
Laxi Reviev 181 (1930) for a discussion of the importance of the a.dj-ninis-
trative rule and the vast fields thev cover. Professor Fairlie served in
the Judge Advocate General's office during the V/orld ?Jar.
9838
-IGl-
(18) 220 U. S. 506 (1910).
(19) 18 Kr". 272 (I85f5).
(20) I^id. , 277-279.
(20a.) Generally, -oryinent of ta:: money under TJrctost is the only
prrced.ure open to the t-3:cp3yer. In the case of incone, estate and gift
taxation an appeal from the determination of the Ccrr.iissioner of Internal
Revenue tc the Board of Tax Appeals lies prior to the assessment of -pay-
ment cf any tax money. The Revenue Act of 1924, Section 900; and The
Revenue Act of 1926, Section 1000 et seq.
(21) Ihid. , 280
(22) Louisiana v. licAdco, 234, U. S. 627 (1314).
(23) Eisner v. Maccmher, 252 U. S. 189 (1920).
(24) U. S. V. Bahcock, 250 U. S. 328 (1919).
(25) Bartlett v. Kane, 16 How. 263 (1853).
(26) Au-ffuordt v. Heddin, 137 U. S. 310 (1390).
(27) Louisiana v. McAdoo, 234 U. S. 627, 632 (1914).
(28) U. S. V. 200 Chests of Tea. 9 THieat 430 (1824); Barlow v.
U. S., 7 Pet. 404 (1833); U. S. v. 112 Casks of Sugar. 8 Pet. 277 (1834);
De Forest v. Lawrence, 13 How. 274 (1851); Maillord v. Lawrence, 16 How.
251 (1853),
(23) U. S. V. Fassavant, 169 U. S. 16, (1893).
(50) Carey v. .Curtis, 3 How. 236 (1845).
(31) 137 U. S. 310 (1890).
(52) Ihid at page 324.
(33) Dickinson, op. cit., 277 et seq.
(34) Knight v. United Land Association, 142 U. S. 161 (1891);
U. S. ex rel Riverside Oil Gc. v. Hitchcock, 190 U. S. 316 (1903); ^nd
Warner Yalle^^ Stock Co. v. Smith, 165 U. S. 28 (1899).
(35) Mar que z v. FrisMe, 101 U. S. 473 (1879); U. 5. ex rel
International Contracting; Co., v. Lament 155 U. S. 303 (1894);
M( Clunig; v. Silliman. 6 wheat 598 (1821).
(36) U. S. e:c rel Riverside Oil Co. v. Hichcock, 190 U. S. 316
(1903).
9838
(37) 234 U. S. 569, 710 (1914)
(33) St. Lcuis Sr.eltinA- etc. Co. v. Kenro, 104 U. S. 636 (1882)
(3j) Burke v. So-gthern P.-^cific R. H. Co., 234 U. S. 669 (1914)
(40) Hoble V. Union Lo.p-,g;ing: Co., 147 U. S. 165 (1893)
(41) Vpnce v. Bur'bpnk, 101 U. 3. 514 (1880)
(42) Steel v. St. Louis Sneltinp; etc. Co. 106 U. S. 447 (1G82)
(43) French v. Frypn, 93 U. S. 169 (1876); MajTrjuez y. ?ris-bie, 101
U.S. 473 (i:.79); and Jchnson v. Tonsley. 13 'Jail. 72 (1871).
(44) Ifewhall V. Sanger, 92 U. S^_761 (1875); nnd Donlpn v. Cp^rr,
125 U.S. 618 (1887), -hich involves the Question ,of '-hether certain l?nds
T'here there exists s claim of title tesed on iiexican or Spanish grants,
are "pulilic lands".
(45) Wilcox V. Jackson, 13 Pet. 498 (1839); and Burfennin.g v. Chi.,
St. Prul etc^ H. Co., 163 U.S. 319 (1896).
(46) 138 U. S. 573 (1891).
(47) Supra, III. Decatur v. Paulding',: 14 Pet. 497 (1840). See also
U.S. ex rel Dunlap v. Black, 128 U. S. 40 (1888),
(43) Butter-7orth v. Hoe_, 112 U. S. 50 (1384).. See also Philadelphia
& Trexitcn E.R. v. Stimpson,. 14 Pet. 448, 458 (1831). The court said in
part, "It is not necessary for the patent to contain any recit.^ls
that the prerequisites to the grant of it have been duly corrolied v;ith,
for the lav; makes the presuinjDtion. "
(49) llarquette University v. P.. -eral Radio Comhdssion 47 F. (2d)
406 (1931), "j"here the Comraission refuses to increase a station's power
"the court '■•ill hesitate to set aside a finding (as to fact) of the
Co: mission unless it appears to "be manifestly contrary to the evidence.
(50) Infra., this chapter, section 2.
(51) Sarlp V. Pulaski Coimty, 88 S.W. 953 (Ark. 1905).
(52) Brougham v. Blantcn Lifg. Co. 249 U. S. 495 (1919). Power is
limited to admission, exclusion and ercpulsion. Keller v, U. S. , 213 U.S.
138 (1909).
(53) The right to exclude was early recognized. The Chinese
Exclusion Case, 130 U. S. 581 (1889).
(54) Ihu-ray v. Schooner Charming Betsy, 2 Cranch 64 (1804),
9838
-153-
(55) U. S. V. Ju Toy, 198 U. S. 253 (190.).
(56) llishimura Ekiu v. U.._S^, 1^2 U. S. 651 (1892).
(57) uilwaukee Publishin.f^ Co. v. Biirlescn, 255 U. S. 407 (1921).
(58) ivs FmijS: Ho V. -Jhite, 259 U. S. 276 (1922).
(59) Van Vleck, Administrative Control of Aliens, (I'fev/ York, 1932).
(60) Broune v. Zurtrick, 45 Fed. (2d) 931 (C.C.A. 6th, 1930)
suggests that Immigration Act 1929, 46 Stat. 41, by making attempt of
deported alien to return a felony vTill cause greater due process of Igi;
requirenents. See "Reguisites of an Administrative Hearing", 80 Fa. Lan
Review 878 (1932).
(61) Compare U. S. v. Williams, 194 U. S. 279 (19C4), and Tod v.
Waldnan, 266 U. S. 113 (1934); Colyer v. Skeffington, 265 Fed. 17
(D.C. liass. 1920);8nd U.S. ear^l papa v. Day. 45 F. (2d) 435 (D. C. S. D.
W. 1.-1930).
(62) Hanson v. Haff, 291 U. S. 559. (1934).
(63) Dickinson, op. cit., 27, indicates the increase in the C-overn-
ment's activity in supplying putilic services.
(64) Fairlie, op. cit., 181.
(65) Public Clearing House v. Coyne, 194 U. S. 497 (1904).
(66) Bates and' Guild Co. v.' Payne, 194 U. S. 106 (1904).
(57) Ajnerican School of Magnetic Healing v. McAnnuIty, 187 U. S.
94 (1202).
(68) Leach v. Carlile, 253 U. S. 138 (1922).
(69) American School v. McAnnuIty, 187 U. S. 94 (1902) See the
dissenting opinion.
(70) lalwaTikee Publishing Co. v. Burleson, 255 U. S. 407 (1921)
Was probably anunusual case because of the war circumstances coloring
the facts. . ,
(71). Ibid.
(72) IvTational Life v. National Life, -209 U. S. 317 (1908).
(73) Albertswcrth, "Judicial Revierr of Administrative Action,"
35 Harvard Law Review 127, 153 (1921); "Tnen the government is dispensing
a boiuity, i-^hen it is admitting aliens, a proper balancing of the interests
involved leads the Supreme Court to give greater liberty to the executive
official; v/hen vested rights, or personal liberty are involved, a nore
rigid control is kept over executive officers. This resixlts in having
rules of cue kind for the exercise of the police po^jer, of another for
taxation, of another for aliens, of still another for the operation rf
varimis kinds of puhlic "business,"
(74) Blackly and Oatman, Administrative Legjislation and Ad.judicaticn
(Brookings Institution, 1934) 7: "".Then, on the other hand, the state
attempts to exercise a day-"by-day regulation over private economic enter-
prise, it is confronted with very difficult administrative pro'blens.
Instead rf agreeing on terms, or controlling the internal management cf
its crm "business, it is regulating and controlling a business which it
does not cxm, the internal management of -.Thich is entrusted to n^rivpte
individuals, the fiscal relationships of '.'hich must meet the necessities
of private profit as well as the reouireraents of pu"blic ser"Sfice,"
(75) Dickinson, op. cit., 216: "A sufficient excuse for distrust of
the operation of law in fields of clashing social opinions is afforded "by
actual e:cperience of the failures of the law in these fields, or what is
worse, hy its occasional perversion into an instrument of injustice. The
trcu"ble, it is su"bmitted, does not go so much to the applicability cf law
as to the improper manner of its application."
(7S) Frankfurter and Landis, The Business of the Supreme Court
(New York, 1927), 173: "Courts are less than ever technical erpounders
of tecliiiical provisions of the Constitution, '^h.ey are arbiters of the
economic and social life of vast regions and at times of the whole
ccimtr;'- — The wisdom of debatable policies, like the proper scope for
competition or for monopoly, policies never susceptible to quantitative
Judgments, is for their ultimate decision,"
(77) Texas and Pacific H. Co. v. I. C. C. , 62 U. S. 197 (1896);
Frankfurter and Landis, ibid., 164- n. 86. In the first twenty-three
Cases the Interstate CoraiTierce Commission sought the aid of the court, it
was reversed in twenty-one; and Sharfman, The Interstate Commerce Ccm-
missicn (l^ew York, 1931), Vol. II, Chapter X.
(78) 34 Stat, at L. 584.
(79) Interstate Coiamerce Cor.inission v. Delnware, Lackawanna &
Western ?.. Co. , 220 U. S. 235 (1911); Interstate Conmerce Connission v.
Illincis Central R. S. Co., 215 U. 'S. 452 (1910); U. S. v. Louisville &
Nashville H. Co., 235 U. S. 314 (1914). Dickinson, op. cit., 159-167
(80) Avent v. U. S.. 266 U. S. 127, 131 (1924), cites U. S. v.
Grimsud,
(82) 222 U. S. 541 (1912): "ivot that its decision, involving ps it
does sc many and such vast public interests can be supported by a mere
scintilla of proof, but the courts will not examine the facts further thnn
to determine whether there iras substantial evidence tc sustain the order,"
-16?-
(83) I.C.C. V. Alabama Midland R. Co. , 168 U.S. 144 (1BS7);
I. C. C. V Illinois Central R. Co., 215 U.S. 452 (1910); Texas and
Pacific ~. Co. v I. C. C. , 162 U.S. 197 (1896); Southern Pacific Co.
Y. I. C. C, 219 U.S. 433 (1911); I. C. C. v. Delaware, L. and W. R.
Co. , 220 U. S. 235 (1911).
(84) I. C. C. V Union Pacific R. Co. . 222 U.S. 541, 548 (1912).
(85) 227 U.S. 88 (1913).
(86) Florida East Coast E. Co. v. U.S. , 234 U.S. 167 (1913)'
(87) Dickinson, op.cit., 175.
(83) McFarland, Judicial Control of the Federal Trade Commis-
sion qjid the Interstate Commerce Commission, 1920-1930 (Harvard Uni-
versity Press, 1953), 167-168: The sparing control of the courts is
undoubtedly one of the more important factors which ha.ve made the
Interstate Commerce Commission tae foremost example of administrative
Justice in the United States."
(90) Wisconsin Railroad Commission v. Chicai^o B ic 0 H. Co» ,
257 U.S. 563, 589 (1922). Congress was seeking, the court declared,
"to make the system adequate to the needs of the country. " See
Sharfman, op.cit., Vol. I.
(91) McFarland, op.cit., 170-171.
(92) This does not mean that no remedy existed if the expert
was clearly wrong, or if tnere was a questionable statutory basis
for the proposed application.
(93) Handler, "Jurisdiction of the Federal Trade Commission
over False Advertising," 31 Columbia Law Review 527 (1931).
(94) Comment, "Judicial Review of Administrative Orders under
NRA and AAA. " 43 Yale Law Journal 599 (1934), 600 n. 9. Of 719,
cease and desist orders between 1915-1926, 22 were sustained by the
Circuit Court of Appeals, 2 by the Supreme Court, and only 17 were •'
reversed. In regard to new standards established by the Commission,
it has not been so successful. Of 97 orders over the same period,
9 were sustained by the Circuit Court of Appeals, 2 by the Supreme
Court, and the Commission was reversed 26 and 11 times respectively.
These figures are talcen from the National Industrial Conference Board,
Public Regulation of Competitive Practices (Rev.ed. 1929). See also
McFarland, op.cit.. Ill, 93. The aj.thor summarizes the unfair methods
of competition treated by the Comm.ission in the Courts, false or mis-
leading advertising, misbranding of products, or other misleading
sales practices. In this field the Commission has done its greatest
work.
(95) McFarland, op.cit., 94-97, states taat the commission has
had little success witn commercial bribery, although this practice often
partake-s of fraud and unfairness. The orders concerning interference
in the channels of trade and distribution have been sustained only
9838
-166-
where associated or concerted action was shown, which element
probably came from the common law doctrine of conspiracy and its
weight in making a practice ijiifair which might not otherwise^ be so.
Ee-sale price maintenance orders were freely dmodified, and the Com-
mission finally gave up attempting to regulate this practice. In
this field particxilarly, the Court evinced a desire to establish the
law as against any disposition to let the Commission establish it.
Other practices were imitation of competitor's trade ns,me, misrenre-
sentation of competitor's products or ability to serve price fixing,
time contracts, price discrimination, and full line forcing.
Handler, op.cit. See table of cases on tnis "ooint cited at the
end of the article.
(96) McFarland, op.cit., 8, 96: "The Federal Trade Commission
has been restricted to the exercise of a preliminary investigating
power by the decisions, while tne Courts do not ordinarily interfere
with' tne authority exercised by the Interstate Commerce Commission
"In connection with all cases, tne courts determine the suffi-
cienoy of. the pleadings (although this appears to have been the sole
ground of decision in only one instance), what shall constitute proof
and what conclusions shall be drawn from the evidence, when the mat-
ter is of public interest, what amounts to interference with compe-Tt
tition, and when monopoly exists or is fostered. If an order of the
commission is successful in passing this minute scrutiny, in some
coarts tnere is still the troublesome question of enforcement."
(97) 253 U.S. 421 (1920).
(98) 260 U.S. 568 (1922).
(99) Supra, n.94. McFarland, op.cit., 178, suggests that the
inadequacy of the Federal Trade Commission has probably been nartly
responsible for the frequency witn wnich tne Commission has been
reversed. Sep also Dickinson, op.cit., 240-250; comment- "Ju-
dicial Review of Administrative Orders under NSA and AAA," 43 Yale
Law Journal 599 (1954).
(100) Ibid., 580.
(101) Now Special Assistant (in the Anti Trust Division) to
the Attorney General of the United States snd sometinp attorney for
the Federal Trade Commission.
(102) McFarland, or^.cit., 29.
(103) Ibid, , 99.
(104) Ibid,, V, l''0-18R: "The orders of the Federal Trade Commis-
sion are subject to a judicial rnconsileration on the record taken before
the trade commissionors, while the orasrs of the Interstate Commerce
Commission are subject to be set aside only for excess of authority or
9838
-167-
disregard of insufficiency of rvic'ence. The trade conmissionprs
themselves huve i'in.ally takren tne vie'7 taat trie commission is an
investigative body r?nd paolic u-osecutor in a s-oecial field."
See also Henderson, The Feder-'l Trn:'e ComnuESion (Yale Univer-
sity Press, 1924), 77, descrioxng t.ie procedare tc tne Circuit Courts
of Appeals.
(ins) FcFarland, .op.cit. , V, 170-183, n. 2; "Accordingly,
wnat extensions will be made from t;ip evidence depends u-oon the ju-
dicial attitude toward the legisla.tion administered. Obviously,
without some conce^jtion of the purposes and desired legal situation,
a treatment of tne evidence must meander into ineffectiveness."
(106) Ibid., 175.
(107) Ibid., 176-177.
(108) Ibid. , ?; "One item of trade commission process, however,
has been singled o^^t for oarticular criticism — the inadequacy of the
ooinions and findings of the commissioners. Although the courts
themselves have not remarked the absence of argumentative opinions and
even vvhere findings are made have either ignored them or have subjected
them to an almost metaphysical consideration, the absence of an extend-
ed administrative reoort on each case confirms what, in some cases,
is a judicial conviction that administrative orocess is 'oarticularly
open tc tne suspicion that careful consideration nas not been given
the evidence. iiVhere the courts point out a lack of findings, they
have no hesitancy in drawin?r tiieir own conclusions from the record. In
comparison, the decisions or reports of tne Interstate Commerce Com-
mission are carefully dra^'n and treat the evidence fully, although
tne Supreme Court has oronounced t-iat tne courts nave no concern with
the soundness of tne reasoning, tJie application of administrative pre-
cedents, or tne wisdom of the action of tne Interstate Commerce Com-
mission. On occasion, however, tne commerce commission has been
admonished to state in its reports the facts and reasons for its con-
clusions to facilitate judicial review. Apparently, while the courts
in their regular course of proced'ore may render decision by memorandum
or deny relief "for want of equity," administrative decisions must be
clotned in the garb of judicial o-omion before they will be accepted
oy the bench as bona fide adjudications. Herein the federal trade
commissioners have, undoubtedly been remiss."
(109) Ibid. , V: "The form of the legislative character of
authority for each commission is much the same. The delegation of
authority is in terms of legal standard such as 'reasonable rates' or
'tending to create monoiooly. ' Sometimes the standard, thus clothed
with authority of law, is given a moral color — 'unfair competition, '
'undue prejudice,' 'unjust discrimination.' But these standards, as
between the two commissions, differ in scope or particularly of sub-
ject matter. The standards which the. Interstate Commerce Commission
must apply are more specifically related to particular situations —
S838
-168-
rates, services, facilities, and so on. But tne standard entrusted
to tne Federal Trade Commission — the maintenance of com-oetition
or prevention of moncooly -- embraces the whole commercial field; "
(lin) See discussion of tne Interstate Commerce Conmission,
supra, this section.
(ill) Supra, n. 94. Handler, op.cit., states tiiat the statu-
tory standards in the Federal Trade Commission ict, 88 Stat. 719
(1914) was -ourposely made indefinite to insure flexibility and adat)-
tation to new situations.
(112) i-cFarland, op.cit., 2^, 21: 'These standards, if such
tney may be called, are not the materials of common lav; administra-
tion of justice; nor is it that the legislature had a definite legal
order in mind — rather, authority has been granted -to the administra-
tive agency to work out the problem thus specified.
"I«evertheless, because of this very character of the Federal
Trade Commission Act the courts assume comlete authority; If, as
is the case with the Federal Trade Commib;.ion Act, it is for the
courts 'ultimately to determine ^s a matter of law' whrt the standard
'unfair methods of competition' means, then the' courts are either ex-
ercising the delegated authority or, by fiction, convert a general
expression or specification of' delegated power into substantive law.
Althougn tne proolem has been delegated to a specialized tribunal,
the courts of law have set themselves in the place of the adminis-
trators, wnich means to many people tnat the ourpose of the entire
scheme is set aside — the classical politics and economics of 'judges
prevail in full."
(113) Ibid. , 185: "The field of trade and commerce regulation
is no excep^tion to tne rule of exioerience that there are no sharp
turns in government."
(114) In the narrow fields it has been observed in this study
that finality extended to a field such as alien determinations might
be circumvented by tne courts.
(115) Iv'cFarland , oo.cit., 188: "To vitalize the regulation
of trade and industry, Congress and the executive have yet to oro-
vide a capaole body of administrators, and no'7 the statutes must be
revised. In the substantive oortions of such legislation a ■oolicy
must be stated and maintained as administration progresses. On the
procedural side, if the regulation is to be administrative and not
judicial, the d.eterminations of tne administrative agency must be
made effective without resort to the courts. This was the legis-
lative program which revived the regulation of interstate transpor-
tation^ in 1906 and 1910."
! tll6) Federal Trade Commission v. Royal Milling Co. . 288 U.S.
212 (1933), See also. Federal Trade Commission v. G-oodgrape Co. ,
45 F. (2d) 70 (CCA. 6th, 1930). For an earlier case see. Federal
Trade Commission v. Pacific Coast Paper Ass'n. . 273 U.S. 52 (1927)
9838
-160
(11?)
Federal Tradp Com' icLiou
67 (1934).
(118)
Federal Trade Connis::ion
(119)
Ibid., 309.
(120)
Ibid., 312.
V. Alabama Lumber Co., 291 U.S.
on V. Zecjel, 391 U.S. 304 (1934).
(121) Ibid., 314. Note Rsoecially the citation of a case in-
volvine, the Interstate Commerce Commission.
(122) Dickinson, op.cit., 57.
(125) Lawton v. Steele, 152, U.S. 133, 140-141 (1894).
(124) North German Lloyd v. Hedden, 43 F. 17, 25 (1890): "It
was perha'os unnecessary . . . that I should have d.one more than ac-
quiesce in the doctrines. . .announced, and support the validity
of the Act. . . without further discussion, but the large amount of
money involved in the present actions, and the earnestness and force
wit a which the plaintiff's claims have been pressed, have induced me
to make a more extended presentation of tnem thaii was at first de-
signed. " (Underlining mine).
(125) Davidson v. Federal Hadio Commission, 61 F.(2d) 401
(1952). See also, "Power of Federal Radio Commission" 28, III. Law
Review 409 (1932); Chicago Federation of Labor v. Federal Radio Com-
mission, 41 F. (2d) 422 (1950); Strawbridge & Clothier v. Federal
Radio Commission. 57 F. (2d) 434 (1932).
(126) White v. Federal Radio Commission, 29 F. (2d) 113 (1928).
(127) Great Lakes Broadcasting Co. v. Federal Radio Commission
37 F. (2d) 993 (1930). Certiorari denied, 281 U. S 706 (1930);
Journal Co. v. Federal Radio Commission, 48 F. (2d) 461 (1931).
(128) Dickinson, op.cit., 67.
(129) City of Knoxville v. Knoxville Water Co., 212 U. S. 1,
18 (1909).
(130) Merchants Exchange v. Missouri, 248 U.S. 305 (1919),
held a statute prohibiting weighing of grain or hay by -orivate weigh-
ers where public ones are present is not a denial of property with-
out due process of law.
(131) Infra, XIII ' '
(132) State v. Gullatt Cleaning. 'i Garment Co.; Same v. Garfield,
C. P. CT. , Hamilton County, Ohio, Nos. A-4216607, May 5, 1934, (Ma-
thews, J.); and
9858
-170-
United States v. Sutnerland et. al. (D. C. W.n.Mo.) Dec. 27, 1934,
£q. Ko.2552. (Otis D. J.).
(135) Hegeman Parmprs Corp. v. Baldwin, 293 U.S. 163, 55 Sut).
Ct. 7 (1954). ■ ■
(154) People v. Nel)toia, 291 U.S. 502 (1334).
(155) See infra XI — discussion of U.S. v. Spotless Dollar Cleaners
ers, 6 Fed. Supp. 725 (D. C. ii. D. N. Y. 1934).
(136) San Diego Land and T'om Co. v. National City, 174 U.S.
739 (1889); Sam Diego Land and T.. m Co. v. Jasper, 189 U.S. 439,441
(1903); see also Dickinson, op. cit., 177.
(137) ■ This is self-limitation linder the separation of powers
doctrine.
(138) "It (the statute) deprives the Company of its rijSiht to a
judicial investigation, by due process of law, under the forms and
with the machinery provided "by the wisdom of successive ages for the
investitation judicially of the truth of a matter in controversy, and
substitutes therefor, as an absolute finality, the action of a Rail-
road Comnission which, in view of tne po^^ers conceded to it by the .
State court, cannot be regarded as clothed wita judicial functions
or possessing the machinery of a court of justice The -ques-
tion of the reasonableness of a rate of charge for transportation by
a railroad company, involving as it does tne element of reasonable-
ness both as regards the company and as regards the public, is emi-
nently a question for judicial investigation, reqairine: due process
of law for its determination. "
"If tip company is deprived of the power of charging reasonable
rates for the use of its property, and such deprivation takes place
in the absence of an investigation by judicial machinery, it is de-
prived of tne lawful use of its property, and thus, in substance and
effect, of the property itself, without due process of law." See
Willoughby, Constitutional Law of the United States,, (New York 1929)
p. 1703.
(139) Smyth v. Ames, 169 U.S. 466 (IBbB); St. Loaia & 0' Fallon
Ry. V. U. S. , 279 U.S. 461 (1929).
(140) An extreme case is United Railway of Baltimore v. West,
280 U.S., 234 (1930) which sugfl-ested that a return of less than 7.44^
was confiscatory.
(141) Ohio Valley Water Co. v. Ben Avon Borough, 253, U.S. 287
(1920), See contra, New York dc Q.ueens Gas Co. v. McCall. 245 U.S.
(1917).
(142) Dickinson, op. cit., 195.
9838
■ -171-
(143) Ohio Valley Water Co., v. Ben Avon Borough, 103 Atl. 744
(Pa. 1918).
(144) At page 289.
(145) Georgia Ry. a Power Co. ,■ v. Railroad Commission, 262 U.S.
625 (1923).
(146) See Wilcox v. Jackson, 13 Pet. 498 (1839) as to use of
doctrine in cases of disputed jurisdiction between State and Federal
courts.
(147) Crowell v. Benson, 285 U.S. 22 (1932).
(148) 259 U.S. 27S (1922) See also United States v. _Ju Toy.
198 U.S. 253 (1905).
(149) Groenvelt v._Burwell, 1 Ld. Rayraond 454, 467 (1691).
(150) Philadelphia & Readin? Ry. v. Di Donato, 256 U.S. 327, 328
(1920), involved tne question whetner a flagman at a railway crossing
where Dotu _inter3tatp a~id iritrasta,tft traihS passed was enga^dd in
"interstate coitiTnerce. " Dickinson, op.cit., 52; "To allow an exec-
utive body thus to deterynine conclusively the limits i^f its own 'juris-
diction' looks suspiciously like allowing it to determine a 'matter
of law. ' "
(151) Western Indemnity Co. v. Pillsbury, 151 Pac.398 (Cal.
1924). The court allowed finality to the board's determination, but
apparently only because the court approved it.
(152) Employers Insurance Corp. v. Industrial Accident Com-
mission, 151 Pac. 423 (Cal. 1915).
(153) Kansas Asoociation v. Wilder, 23 Pac. 1061 (Kan. 1890).
(154) I iller v. Horton, 26 h'.K. 100 (Mass. , 1891) , The de-
cision was handed down by ,\Justice Holmes,, who later refused to
recognize the doctrine as urged upon the court in U. S. v. fTu Toy.
(155) People v. Public Service Commission, 195 N. Y. 157 (1909).
(156) Brougham v. Blanton Mfg. Co.. 249 U.S. 495 (1919).
(157) 198 U.S. 253 (1905).
(159) Van Vleck, Administrative Control pf Aliens (New York
1932).
(160) 259 U.S. 276 (1922); see also Van Vleck, op.cit., 189.
(161) Gegiow V. Uhl . 239 U.S. 3 (1915); also Hanson v. Hoff ,
291 U.S. 559 (1934).
9838
-172-
(lo2) 253 U.S. 287 (1920).
(163) Supra, section 2, this chapter.
(Ib4) Dickinson, "Review of Administrative Determination of
questions of 'Constitutional Fact'/', 80 Penn. Law Review 1055 (1932) ,
1072: "The doctrine of constitutional fact is the doctrine of juris-
dictional fact in a special form. Constitutionality is a question
of power to act, arid when it_ is held to depend en the presence of a
fact, tne situation is the same as when what is called the 'jurisdic-
tion' of an adrninistrative "body is made to turn on a fact issue..
The difference is only that in one case the limitation is deduced
from the Constitution and in tne other from the statute creating
the body whose power is in the issue."
(165) Dickinson, ibid. , 1061: "It is well settled tnat when
tne re is provision for a proper administrative nenring, t;ie indi-
vidual 8-fiected is not entitled, to another and second hearing in
the review proceeding at law. "
(166) Dickinson, Administrative Justice aiid the Supremacy
of Law in the United States, op.cit., 200 et.seq.
(167) Dickinson, "Eevie'¥ of Administrative Determination of
Questions of 'Constitutional Fact,'" op. cit. ,1059-1060: "It (the
doctrine) holds that when statutory authority to decide deoends on
tne actual existence of a fact, then the existence or non-exist-
ence of that fact must be independently decided in Court in order
to enable the Court to determine whether or not as a natter of law
the Administrative decision is ultra vires and void. What the doc-
trine means in practice is that unless, on those facts which are
held to be 'jurisdictional,' the administrative tribunal reaches a
finding corresponding to that which a Court will later reach on dif-
ferent evidence, tne administrative decision will be over-thrown
as in excess of jurisdiction."
(168)285 11.3.22^(1932); see '.Theeling Corrugating Co, , v.
Mcmanigal . 41 F.(2d) .593 (CCA. 4th, 1930), whicn was overruled
by Crowell v. Benson.
(169) This does not mean to suggest the doctrine had never
been applied to federal agencies. See discussion of Mg Fung Ho
V. White, S59 U.S. 276 (1922).,. . , •.■
(170) Ibid., 60.
(171) Ibid., 93.
(172) Dickinson, Review of Administrative Determination of
(questions of 'Constitutional Fact'" op. cit., 1058,. n. 12.
9838
-173-
(173) Dickinson, ibid., 1081; also Comment, "The Federal Long-
shoreraen's and Harbor ./orlcers' Compencation Act," 43 Yale Law
Journal 640 (1934'^; sop Vochl v. Indemnity Insu.rance Company of
North America, 288 U.S. lo2, Ibo (l'^-'3).
(174) State ex rel ::ilwuakee i.edical College v. Chittenden,
107 N.W. 500 (1906 vVisc.) Employers' Insurance Corporation v. In-
dustrial Accident Connission, 151 Pac. 423 (192b Cal.); Western In-
demnity Co. V. Fillsbury, 151 Pac. 398 (1926 Cal.).
(175) San Diego Land and Town Co. v, Jasper, 189 U.S. 439, 441
447 (1903).
(176) Note, "Due Process Reqairements of Notice and Hearings
in Adrainistrative Proceedings," 34 Columbia Law Review, 332 (1934).
(177) Brown, "Book Review," 41 Harvard L^-^w Review 115, 114
(1934).
(178) Consider the confidential report in Local Government
Board v. Arlidge, A. C 120, (House of Lords 1915), and the laxity
of requirements in the aDoraisal of imported goods; Origet v. Hedden,
155 U.S. 228, 237 (1894).
(179) North American Colri Storage Co. v. Chicago., 211 U.S.
306 (1908); Neff v. Paddock, 26 Wis. 546 (1870).
(180) Supra, tnis chapter, section I.
(181) Origet v. Hedden 155 U. S, 228 (1894).
(182) Palmer v. I'cMahon, 135 U.S. 660 (1890); Phillips v.
Commissioner, 283 U-.S^ 589 (1931); Murray's Lessee v. Hoboken Land
and Improvement Co. 18 How, 272 (1855).,
(183) Van Vleck, "Administrative Justice in the Enforcement
of Q,uasi-Criminal Law, " 1 George Washington Law Review 18 (1932)
45-46.
(184) Van Vleck, iDid., 46. .
(185) Yamataya v. Fisher, 189 U.S. 86, 100-101 (1903); see
also Nishim.ura £kiu v. U.S.. 142 U.S., 651, b59 (1892).
(186 Chin Yow v. U.S. . 208 U.S. 8 (1908).
(187) Gonzales v. Zurbrick, 45 F.(2d) 934 CCA. 6th, 1930).
(188) Ex -parte Bun.U Une . 41 F. (2d) 239(S.D. CAl. , 1930).
(189) Smith v. Hitchcock, 226 U.S. 53, 69-61 (1912); see also
the opinion in the lower court, 34 App. D. C 521 (1910); Note - "The
Necessity of a Notice and Hearing in Administrative Determinations,"
80 University of Pennsylvania Law Review 96 (1931).
9838
-17<-
(ISn) Communications Act of 1934, 48 State. 1064.
'- ^i) (Ibl) Hadio Act of 1927, 44 Stat. 1174.
(192) Courier Journal Co. v. Federal Radio Commission, 46 F.
(2d) 614 (Ct. of App. D. C. 1931)'.
(1^3) Southern Railway Co. v. Virginia, 290 U.S. 190 (1933); ■
Sabre v. Rutland K. Co:. 85 At] . 693 (Vt. 1913).
(194) State Railroad Tax Cases, 92 U.S. 575, 6^9, (1876), in re-
fusinfT to ;pke such requirements said:
"The 'Tiain function of t..is Board is to equalise these assess-
ments over txie vhole State. If they find that a county has had
its property assessed too high in reference to fie general standard,
they may reduce its valuation; if it has been fixed too low, they
raise it to that standard. When they raise it in any county, they
necessarily ra.ise it on tne property of every individual who owns
any in that county. Must each one of these nave notice and a sepa-
rate hearing? If a railroad comoany is by law entitled to such
notice, surely every individual is equally entitled to it. Yet if
tnis be so, the expense of giving notice, the delay of hearing ench
individual, would render the exercise of the main function of this
Board impossible."
Accord see: Bi Metallic Investment Co. v. State Board of Equal -
i gat ion. 239 U.S. 44 (1915). For cases raaJning the requirement
see Kunt z v. Sumotion, 19 N.ii. 1 (ind. 1888); Londoner v. Denver.
210 U.S. 627 (1914)
(195) Lander v. Mercantile Bank, 136 U.S. 458 (1902); San
Diego Land and Town Co. v. National City, 174 U.S. 739 (1899);
Pittsburgh etc. R. Co. v. Backus . 154 U.S. 421 (1894).- •
(196) Erie R. R. v. City of Paterson, 76 Atl. 1065 (N. -J. 1910).
(197) Supra, n. 195.
(198) Huhling v. Ehrich. 55 M.E. 636 (111.1899).
(199) Supra, 194.
(200) Hag^.r v. Reclamation District, 111 U.S. 701 (1884).
(■-201) Bi I.ietallic Investment Co. v. State Board of Equalization,
239 U.S. 441 (1915); and North American Cold Storage Co. v. Chicago, 211
U.S. 306- (19^'8).
(202) In Chicago Junction Case, 264 U.S. 258 (1924) Justice
Brandeis lists notice of hearing required under the Hepburn Act of
1906 and the Transportation Act of 1920, In the cases of .unreason-
able rates, discriminatory rates, 'switching connections, division
of joint rates, pooling, railway control of water carriers, valua-
tion, extension of time for new constriction and abandonment. Notice
of hearing i^-as not necessary, however, for the issuance of securities.
9833
(?03) Fote - "Re-'uisitss of -ni Aclninistr-^tive Hearirir-v," SO F. L.
H. 878 (19"2).
(204) Cro Id smith v. U.S. 3o-u-d of Tnx Appeals. 270 U. S. 117
(1926); Stoehr v. Wall.^oe. 335 U. 3. 239 ( 1931) ; TJ. S. ex rel Root) v.
Douglas, 19 D. C. 99 (lE90) .
(205) San Diego Land ^^ Town Co. v. National City, 174 U. S. 739
(1899). A mere conference may be a hesjring.
(208) Fittsbur^ch Stc. R. Co. v Baclcus . 154 U. 3. 421, 426-427
(1894): "A hearing "befors judgnent, vdth full opportunity to present all
evidence and the ar.^uments which the party deems important is all that
can "be adj\id;5ed vital If a single hearing is not due process,
douhlin^i' it v;ill not make it so . . . "
(207) L'ew York and Queens Gas Co. v. McCall. 245 U. S. 345 (l917);
Chin low V. U. S. . 208 U. S. 8 ( 1908) ; Kwock Jan Fat v. White, 253 U. S.
454 (l920) . Dickinson, Adrninistrative Justice and Su"oreniacy of Lav/ in
the United States, op. cit., 106, n. 3.
(208) llorwe-rian Nitrogen FroiOicts Co. v. U. 3. , 238 U. S. 294
(1933) .
(209) Zayos v. Lathrop. Luce & Go . . 231 U. S. 171, 177 (1913);
State ex rel r:il-78u3cee "medical Colleg-e v. Chittendtan, 107 i\'. W. 500
(Wise. 1906); Bradley v. City of Riclmond. 227 U. S. 477 (1913).
(210) Bratton v. Chandler, 250 U. S. 110 (l922) ; &age v. Censore
of New Hampshire Eclectic l.iedical Society. 63 K. H. 92 (1884).
(211) Garfield v. U. S. ex rel Spaldin.^-. 32 App. D. C. 153 (1908).
(212) KFOck Jan Fat v. White, 253 U. S. 454 (l930); U. S. ex rel
Bilokumsl:y v. Tod, 263 U. S. 149 ( 1924) ; Federal Trade Coimnission v,
Goodgrape Co., 45 Fed. (2d) 70 (C.C._4.. 6th 1930).
(213) Chamher of Commerce of I'.-.inn. v. Federal Trade Commission.
280 F. 45 (C. C. A. 8th, 1922) 148: "A hearing is granted before the
Commission, and ultimate review by the Circuit Court of Appeals is pro-
vided; therefore there is no denial of due process. The Federal Trade
Commission exercises administrative, not judicial, powers. The act pro-
vides no penalties, nor has the Commission power to make more than a
finding of facts, v/hich requires confirmation by this court before any
biorden is cast upon the parties subjected to inquiry."
(213a) Note - The Necessity of a Notice and Hearing in Administra-
tive Determinations, 80 University of Pennsylvania La.w Review 96, 97
(1931): "Notice and hearing, however, detract to some extent from admin-
istrative efficiency. They involve delay and expense. Publicity may
deter government investigators from frankly reporting a harsh truth, or
disturb the relationship of confidence and discipline between inferior
and superior officers." The Board of Tax Appeals and the Court of Custans
and Patent Appeals are excellent examples. But see,
9838
-176-
(214) Frankfurter and Landis, op. cit., I¥: "The fortimes of the
ill-fatea Conmerce Court were not so good as those of other sjyoolall^.e'i
courts." Blachly & Oatman, op. cit., 11.
(215) Reports of Americ.a:i Bar Association, Heport of the Committee
on Adi-ainistrative Law, (Baltimore, 1933, 1934) 'IVIli , 203-204, LIX, 539,
sugcrest that rule making and the prosecutions functions should he in
separate hands aJid speaks highly of spec ialized courts such as the Board
of Tax Appeals. Blachly 5: Catman, op. cit., 215:
"6. '.There administrative adjudication, is separated from active
administration, it is possihle to "break av/aj'' from the control of the
ordinary courts over administration and to substitute a system of control
liy administrative courts. In case administrative adjudication results
from the administrative process, tyro otjectionahle features appear.
First, the administrative process is not surrounded "by the safeguards
necessary for proper adjudication. , Second, the act of the administration
is not controlled hy an impartial outside authority."
9838
-17?-
NOTJj;S TC CTIAFTER V
(1) Dickinson, "Political Aspects of the iJew Deal", 28 Am.
Pol. Sci.Rev.197. 201 (1954):
"these (NIRA and AAA) are the most extreme
and striking illustration of the degree to
which administrative aathox'ity has oeen
expanded in connection witn the recovery
program. "
Frankfurter and Landis, Business of tne Supreme Court, (New York, 1927),
at oage 173 expresses the doubt that Congress would ever entrust to five
men the DOwer given the Commerce Court. Its short existence (February
1911- October 1S13) resulted from the sharp reh-uffs handed it by the
Supreme Court. Blachley and Oatman, Administrative Legislation and Ad-
judication. (Brookings Institution 1934).
(2) The statement ..that such was the case comes from a person in
high official position throughout the early cart of the Act's adminis-
tration. He has not given his oermission to be quoted..
(3) Brookings Institution, Tne National Recovery 'Administration -
an Analysis and an Appraisal, 47, suggests NRA as a matter of organiza-
tion had broken with traditional pattern.
(4) T/illis, Parliamentary Po'^ers of English Government Departments,
Harvard University Press 1932) IV, deals with private bill legislation.
(5) Jbid. 59:
"Delegated legislation in England fails, like
parliamentary legislation, into two main classes,
that which corresponds to a public general Act,
the rule-making power, and that which is in the
nature of a private Act, the power of confirming
schemes by order." ■
(5) This entire procedure is fully described, ibid. ,133-135.
(7) Ibid., IV.
(8) The King v Minister of Health (ex parte Yakke), 2K.S. 98
(1930), and A C 494 (1931).
(9) Willis, op. cit. , 137:
"Only after the 'world V/ar is this procedure by scheme
moulded to the task for which it seems destined, the app-
lication of adoptive socialistic measures to the groups
or areas willing to try tne experiment. The Electricity
Supply Act permits the Coram.issioners to divide England
into districts and establish electricity authorities in
them; the Mining Act provides for cases where the majoritjr
9838
-178-
of owners in ^ district wish to amalgamate but are
unable to bring in the small minority whose cooper-
ation is essential for success; the Agricultural
Marketing Act enables trading boards to be set up
by order. Therein the imderlying principles of
pufelic and private Acts are reconciled.
(10) Supra, 8.
(11) Henderson, The Federal Trade Commission, (Yale University
Press, 1924).
(12) Flexible Tariff Act, 42 Stat. 858, 941-943.
(13) Brookings Institution, or), cit., 4, sur-^gests that the lare-
cedents available were to be found in the Interstate Commerce Commission,
Public Utility Commissions, labor laws, trade oractice conference agree-
ments, axid the corporate bodies of the wartime. Trade ujiions, cooper-
atives and trade associations had all been vario\isly used by the American
public.
(14) Infra, VI
(15) Title I, Section 2 (a) and (b).
(16) Cochnower v U.S. , 248 U. S. 407, 408 (1919). The creation
of offices and assignment of compensation is a legislative function.
Although denying the power claimed in the case, the court recognized
that such a power could be delegated by "clear expression or implication.''
See also Childs v. State, 113 Pac.545 (Okl. ,1910) ; and Carson v.MeLead,
148 S. E. 584 (Ga. , 1929).
(17) Brookings Institution, op. cit., 43, 162:
"The machinery the President has set up is a balanced
sort of executive-legislative-judicial tribunal. It
' is not a bureau and it I'^ill not become one. It is
rather a for-ura for cooperation. It will duplicate
no existing government machinery. It iias the active
and vital guidance, cooperation, and supoort of every
government department, and on its board of directors
sits every Cabinet officer whose department is af-
fected or can help." NPJl Release No, 11, June 25,
1933,
(18) Brookings Institution, op. cit., 96-97 outlines three steps
in code-making;
1, The preliminary checking, classification and assign-
ment; 2. Preliminary conferences and hearings; 3, Final negotiations
leading to Approval.
9838
-179-
(19) Johnson, The Blue Eagle from Se:,": to Earth, Saturday
Evening Post, January 26, (1955). Pag-e 85: 3. within iJRA itr-elf
were departments made up of accredited representatives of the three
conflicting interests: (a) Industry; (h) Lahor; (c) Conswners.
"It was to be their husiness to point out every Code proposal which
they thought might Dear harshly or unfairly on the interests they
represented. They voiced and supoorted their protest and, he as-
sured, they did it. "The Boards not only wei'e to do this themselves
but they were to activate and assist all puhlic cr orivate .groups of
similar interest to present their cases."
(20) Field, The Effect of an Unconstitutional Statute,
■j('Minneapolis 1935) 305.
(21) Brookings Institution, op. cit., 31.
(22) Infra., XII
(23) Norwegian Nitrogen Products Co. v. U.S. , 238 U. S, 294 (1933).
(24) Legal Memorandum No. 54, July 30, 1934 directed to the
Legal Division from Blackwell Smith, Acting General Counsel, quoting
a memorandum from Robert P. Reader on "Notice and Hearing:"
"In legislative matters the requirement of an opoor-
tunity to he heard rests upon statute and not upon the
Constitution. Yet, as the Supreme Court held in the
flexible tariff case (Norwegian Nitrogen Products Co.
V. United States, 288 U.S. 294, 321) data may be placed
in the record otherwise than at public hearings and
may be treated as confidential; the record may include
letters, reports of confidential investigations, other
governmental reports and trade journals; and the right
to a hearing coes not include a right to have access
to such data or the rignt to cross examine witnesses.
In that case the court said:
'If it was under a duty to give the kind of
hearing that was fair in all the circumstances,
it was free to shape its course within reason-
able limits Dy its own conception of the
promptings of policy and fairness. It would
have kept within the statute even though it
had made the hearings private and had refrained
from the publication of. anything, either the
records of its agents or the testimony of wit-
nesses. ' "
This last sentence, on its face, is dictiom. It is also interesting to
note that this is the earliest statement of the precedents the Legal
Division felt NRA was acting under, that the writer has found. This
statement is dated over a year after the W.k began operations.
9838
-180-
(25) Tariff Act of 1922, 42 Stat. 858, 941-943.
(26) Norwe^gjian Nitropen Prodacts Co. v. U. S. , 233 U.S. 294
505, (1930).
(27) Tariff Act of 1922, 42 Stat. 858, 941-943:
"Investigations to assist the President in ascertain-
ing differences in costs of- production under this
section shall be made by the United States Tariff
Commission, and no proclamation snail be issued
under this section until such investi!p:ation shall
have been made. The commission shall give reason-
able public notice of its hearings and shall give
reasonable op-oortunity to parties interested to be
present, to produce evidence, and to be heard. The
commission is aiithorized to adopt such reasonable
procedure, rules, and regulations as it may deem
necessary. "
(28) Norwegian Nitrogen Products Co. v. U.S. 294,
303-315 (1933).
(2S) Ibid. , 318:
"It is very different, however, when orders are
directed against public service corporations
limiting their powers m the transaction of their
business. "
(30) Ibid. , 321; also 307:
"The statute does not say that they are to have an o-oioortunity
to produce evidence and to be heard to whatever extent they
may desire. It says that they are to have a reasonable
opportunity, and this subject to the power of the Commission
to adopt such reasonable procedure, rules and regulations
a,s it may deem necessary. Nothing in the statute suggests
a belief of the law-makers tnat every producer or importer
is to be viewed, like a party to a la,!" suit, as the adver-
sary of every other, with the privilege of examination
and cross»^examination extended through the series. 'There
must be a limit to individual argument in such matters if
the government is to go on.' Holmes, J. in Bi-Mctallic
Co. V. Colorado, 239 U.S. 441, 445." (1315)
(31) Ibid, 512, and see 317:
"The answer will not be found in the definitions of a
hearing lifted from their setting and then applied to
new conditions. The answer will be found in a considera-
tion of the ends to be achieved in the particular condi-
tions that were expected or foreseen. To know what the;'-
9838
-131-
are, there must be a recourse to all the aids avail-
able in the process of construction, to history and
analogy and practice as well as to the dictionary. "
(32) Supra. IV, 1.
(32a) When this entire problem was stated to a Tariff Commission
attorney, Ivr. E. G. Martin, he immediately'- felt that a great difference
betyreen the problem of the NIRA and the Flexible Tariff Act existed
in the underlyin^e; concepts, "vvhile it is conceded tnat no one has any
right in a rate of duty, it is not likewise conceded that the "vested
interests" of an established industry will not demand both procedural and
substantive "due process."
(33) 137 U.S. 310 (1890).
(34) Supra N.29.
(35) Title I, Section 2 (b) .
(36) Executive Order No. 6543-A, September 30, 1933.
' (57) Hampton v. U.S. . 276 U.S. 394 (1928).
(38) American Stores Co. v. U. S. , 58 Treas. Dec. 6 (1930),
(39) Glassie, "some Legal Aspects of the Flexible Tariff,"
11 VA. Law Review, 329, 442 (1925):
"Litigation involves the concept of actor and reus,
arid of a right infringed or a duty broken. But an
investigation by the Tariff Commission is not for the
purpose of ascertaining whether somebody's right,
under the law, has been infringed. It is for the
purpose of ascertaining whether there shall be a
change in the law. "
(40) Harriman v. Interstate Commerce Commission, 211 U.S. 407
(1908); Infra VIII.
(41) Luce, Le.-rislative Procedure (Boston & New York, 1922), 142-
148.
(42) Yates v. Kilwaukee , 10 Wall 497 (1870); Hammer v. Dagenhart ,
274 U.S. 251 (1918).
(43) Freund, Administrative Powers over Persons and Property
(University of Chicago Press 1926), 84;
"If oublic policy requires the exercise of a mediating
discretion whicii cannot be turned into an expert dis-
cretion, it seems on the whole that it should be exor-
cised by a politically constituted authority, i.e. ,
9838
normally by the legislature; from this point of view
the delegation "by Congress to the Interstate Commerce
Commission of the power to fix a fair return appears as •
an anomaly. "
(44) Dickinson, Administrative Justice and the Supremacy of the
La'T in the United States (Harvard University Press 1927) 18.
(45) Fre^ond, op.cit., 84.
(46) Ibid. , 154-155:
"Provision for som.e kind of notice and hearing, which
in the case of a reeiilation is at best a matter of 'legis-
lative requirement in the interest of equity and intelli-
gent action, becomes in the case of an order a constitu-
tional requirement under the due process clause of the
Fourteenth Amendment." (vlnd the Fifteenth Amendment).
(47) Frischer & Co. v. Bakelite Corp. , 39 F (2d) 343.CC-t ^.Cust.
& Pat. Aoo. 1930); Federal Trade Commission v. Curtis Publishing Co.,
260 U. s/568 (1922).
(48) Freond, op. cit.; 108:
"The combination of a provision for hearing '"ith a provision
for competitors becoming parties to the apolication preceding, may thus
turn the latter into a contest of a semi- judicial character. The hearing
requirement is however, the exception rather than the rule; and ordi-
narily competitors have not the requisite locus standi to contest the
grant cf an application.
"It remains to be seen whether the hearing requirement will become
a permanent feature of licensing provisions; it may be appropriate as a
prerequisite to refusal; but there is little purpose in malcing it a pre-
reouisite to a grant -unless a definite right to contest the applicat
is given to other interested parties, and this is not done even by the
Transportation Act." See also Chicago Junction Case, 264, U.S. 258
(1924).
See also Freund, op. cit. , 108:
If in the absence of such a substantial sho-"ing and finding the
application is nevertheless granted, there is a technical illegality
which may remain remediless. The Supreme Court has, however, held
that a competing carrier may be permitted to intervene; ^nd, thus
becoming a party to the proceeding, it may contest the consent order
(Chicago Junction Case, 264 U.S. 258; see also People v. Public
Service Commission, 195 1".Y. , 157) "
(49) Title I, Section 3.
ion
9838
-183-
(50) Panama Refining Co. v. Ryan , 293 U.S. 338 (1935); and
Southern Railway Co. v. Virginia, 290 U.S. 190 (1933).
(50-). A) "EXECUTIVE ORDER NO 6205-B
"CODES OF PAIR COIvPSTITION
"Pursuant to the authority vested in me by Title I of the
National Industrial Recovery Act, approved June 16, 1933,
"I hereby prescrioe the following regulation, modifying any
previous order inconsistent therewith:
"Any code of fair competition anoroved by mp shall be deemed
in full force and effect on the effective date as stated in the code;
but ifter the approval of a code and as an incident to the immediate
enforcement thereof, hearings may be given by the Administrator or his
desi.enated representative to persons (hereby defined to include natural
persons, partnerships, associations or corporations) who have not in per-
son or by a representative participated in establishing or consenting to
a code, but who are directly affected thereby, and who claim that
applications of the code in particular instances are unjust to them and
who apply for an exemption to, or exemption from, or modification of the
code. Such persons so applying, within ten days after the effective
date of the code, shall be given an opport^anity for a hearing and deter-
mination of the issues raised prior to incurring any liability to
enforcement of the code, and the Administrator shall, if justice re-
quires, stay the application of the cod.e to all similarly affected
pending a determination by me of the issues raised.
. "FRAMLIN D. ROOSEVELT"
"The White House,
July 15, 1933. ~'
'Approval Recommended:
Hugh S. Johnson. "
(51) Blachley and Oatman, op.cit., 8-9; speak of MA and AAA
legislative but do not have this problem in mind.
(52) In Louisville & Nashville R.R. Co. v. Garrett, 231 U.S.
298, 305, 307 (1913), Mr. Justice Hughes spoke of the rate-making power
as legislative. However, he continued the procedure may properly
conduct inquiries, giving notice and hearing, even "Necessarily"
(underlining mine) doing this.
Brookings Institution, op.cit., 33, U.S.:
The aatnor finds a strong resemblance between NRA and the
Interstate Commerce Commission and agencies of that character.
1. The notion of business affected with the oublic interest
is involved, and it is a resort to general concepts of 'fair ', 'reason-
able ' , etc,
9838
-184-
2. The administrative regulations have the force of law and
effect of law.
3. The authority has been extended over the whole area of
trade and industry.
4. The power is "based upon the federal authority over
Interstate Commerce Commission.
(53) Eerie, "The Expansion of American Administrative Law,"
50 Harvard Law Review 430-440 (1917) , points out how Interstate Commerce
Conimission exercises all three powers.
(54) Dickinson, Adninistrative Justice and the Supremacy of Law
in tne United States, op.cit., 19-20:
"The whole discussion should go to demonstr/ite the futility of
trying to classify a particular exercise of administrative loower as
either wholly legislative or wholly judicial. The tendency of the
Administrative procedure is to foreshorten "both functions into continu-
ous governmental act." See also Blachley and Oatnan, op.cit., 167, 225.
(55) Blachly and Gatman, op.cit., 256-57:
"In respect to agencies connected i-ath or placed under the
WRA which, during the first year, have acted almost exclusively as
administrative, mediating, and conciliatory authorities, there was at
first a d.ire confusion of functions, with little recognition of the
fact tnat fnere.is a separate and distinct function of administrative
adjudication. This fact now seems to be recognized, and it is probable
fhat the MA will soon provide for better organized administrative
adjudication agencies. "
(55) Southern Railway Co. v. Virginia, 290 U.S. 190, 197 (1933).
(57) 264 U.S. 258 (1924). This case was" earlier than the
Worwegian litrogen Case, supra, n.26. The case is referred to above
indicating its requirements where the statute orovides for a hearing,
(58) Chicago Junction Case 264 U.S. 258, 26-1-265 (1924):
"Congress by using the phrp.se 'whenever the Commission is of
the opinion, after hearing' , prescribed quazi judicial action. Upon
application of a carrier, the Commission must form a judgment whether
tne acquisition proposed will be in the public interest. It may form
this judgment only after hearing. The provision for a hearing implies
both the privilege of introducing evidence and t'ne duty of deciding
in accordance .witn it. To refuse to consider evidence introduced or
to make an essential findin^i; without supoorting evidence is arbitrary
action, "
(59) Executive Order "No. 6202-A (Administrative for Industrial
Recovery) .
9838
( j9a) Infra, Forcing Issuance or Restraint of Codes.
(59"b) This .gj-'gument has "been advanced, by Dr. E, ?. Blachly in mem-
orrmuin form and. ia conversations '-ith the T^riter. This is also the
vievT erroressed by the lei^al Division,, supra n. 24, But see Legan ueia-
orcnd-ujn, IJo, 7, re Functions of the Legal Division, January 4, 1934,
"hich a;Tolies ordinary concepts of aoministrative la'"^ to the co de-raslcing
process:
"(b) As to Constitutionality;
"The question of constitutional validity of codes comes dor^n priraea—
ily to p, o^uestion of due process, . If the property of a member of the in-
dustrs^ or a laborer is taken v-'ithout due process of lav under the ten.is
of the code, it is subject to attack on Constitutional grounds,
"In determining this question the matter defends upon the interpre-
tation of the facts relative to the emergency of the particular industry
plus reasonableness in meeting the need. If provisions Fhich Fould nar-
mally constitute a deprivation of property r-ithout due process as to a,
particular member of. the industrjr axe essential to meet the emergenc"'- of
the '7hole country, then they can probably be sustained, if not arbitrs.r;r
in for:a, jnethods of adoption,
"This again requires evidence of facts in the record upon '-hich the
Aojninistrator can reasonably find that the emer-;ency demands the provis-
ions in cue-tion.
"It also requires a full opportunity for any potentially aggrieved
part" to be heard so that if there are facts contrary to the other evi-
dence in the record he may bring- it out. If after full o^iportunitj- to
all interested parties, to be heard such a provision seems necessar;^ aiid
the particular one seems the most reasonably devised to meet the need,
it will probably stand,
"Here again legal advice is very important^'
(59c) Supra, Part I.
(59d) Supra, IV, 11.
(59e) ,1, urray' s Lessee v. Eoboken Land and IraDrovement Company, 18
HOTT, 272 (1855),
(5Sf) See particularly Carr, Delegated Le:aslation (Cambridge
University Press, 1921),
(59g) Ibid,
(59h) Dickinson, Administrative Justice and the Supremacy of the.
La'.', op, cit,, 21,
(5Ci) Ibid., 19-20,
9838
-186-
(o9j) Supra, IV, 11.
(59k) Investigation for the purpose of legislation is a proper
f\mction of the Congress; kcG-rain v, Daugherty, 273 U. S. 135 (192S),
But see ZillDOume v. Thompson, 103 U. S, 168 (1880).
(591) Infra, VIII.
(59n) In fact each field is treated individually. Precedents are
used from other fields when the courts feel they are helpful. Suprc,,
IV. See also, Stephens, Administrgtive Tribunal and the Riles of Evi-
dence (Harvard University Press, 193S), 101: "Discrimination must be
made between the commissions themselves. The proceedings of the Inter-
state Commerce Commission are clearly the most dependable."
(59n) Dissent in Springer v. G-overnment of the Philippine Islands,
277 U. S. 189, 210-211 (1928).
(59o) Supra n. (27).
(59p) Carl Zeiss. Inc. v. United States. 76 Fed. (2d) 412 (1935)
which interestingly limits the President's reliance vcpon evidence not
gathered in conformity vith the statutory procedure. See also T. D.
45673 to 45677; and T. D. 46086.
(59q) Pacific States Box and Basket Company v. TThite, 80 Law Ed,
(Adv. Ops) 133 (1935).
(59r) Ibid, at page 139:
It is urged that this rebuttable presumption of the existence of a,
state of facts sufficient to justify the exertion of the police pover at-
taches only to acts of legislature: and that '-'here the regxilation is the
act of an administrative body, no such presumption exists, so that the
burden of proving the justifying of acts is upon him '"ho seeks to sus-
tain the validity of the regulation. The cont«=ntion is without support
in authority or reason, and rests upon misconception. Every exertion
of the police po^er, either on the legislature or bj'' an administrative
body is an exercise of delegated power But where the regula-
tion is within the scope of authority legally delegated, the presump-
tion of the existence of the acts justifying its specific exercise
attaches alike to statutes, to municipal ordinances, and to orders of
administrative bodies,
"Here there is added reason for applying the presumption of vali-
dity; for the regulation now challenged was adopted after notice and
public hearing as the statute required." (Underlining mine)
(m) Mississippi v. Johnson. 4 Wall 175 (l867). WiHoughby, op.
cit., 1497-1500. The author points out that in Harbur''- v. Madison,
the court stated that the Secretary of State would be s\ibject to
mandamus in the performance of a purely ministerial duty, but when
acting as the agent of the President in carrying out his discretion,
that such a writ would not issue. At the trial of Aaron Burr, Jefferson
9838
-187-
refused to ans^-"=r a su'bpo'^^na duces tecum. Chi'^f Justice Marshall is
reported to have said, "In no case of this >:ind would the court "be
required to proceed arainst the President as against an ordinary indi-
vidual. The objections to such a course are so strong and obvious
that all rmst acicnowledge them. ... In this case, however, the
President has assigned no reason -whatever for withholding the paper
called for. The pro-oriet:" of withholrUn.-^ it must "be decided bv himself,
not by another for him. Of the wei.^ht of reasons for and against pro-
ducing it he himself is the Judge." Counsel argued that the President,
because of his office, was "above the process of any court, or the
jurisdiction of anv Court, to bring hin to account as Pr<^sident." The
court held that the act'of th'^ President wr-s executive and as such was
not subject to judgment of the Court.
Dickinson Administrative Justice and the Siit) remac^r of La^ in
the United States, ov. cit. , ?62, K. 2? and See also. People v.
Bissell, 19 111. 229 (185?) there cited.
(5l) A. L. A. Sch^chter Coro. v. U. S. 295, U. S. 495 (l935) .
(62) Kendall v. U. S. ex rel Stokes. 12 Pet. 524 (l838) ;
Eutter^orth V. Foe. 112 U. S. 50 (l884); U. S. ex rel. HcBride v.
Sehurz, 102 J. S. 378 (l879); see also the dictum in liarburry v.
Madison, 1 Cr. 137 (l803). "TiHoughbv, o-o. cit., 1501.
(63) Interstate Commerce Commission v. Humbeldt S. S. Co..
224 U. S. 474 (l912).
(64) An interestinr situation arose in the Inland ^ater Carrier
Trade in the Eastern Division of the United States operating via the
New York Canal System, a-onroved Cod^ Ih. '^66. In the Spring of 1934
the Code (Art. VIIl) allowed the industry to propose a tariff schedule.
This the industrv did. The schedule proposed included an "arbitrary",
which is in the nature of a differential. It was the understanding
that if there were no objections from the industry or Administration,
that the schedule would go into effect ten days after it was received.
Later a representative of the Le?;a.l Division orally stated that the
schedule became effective the instant it ■wa,s put into the mail box with-
out an;'- -oossibility of prior Administratis review.
The industr-"- is composed of two elements: the tow boats and barges
and the motor shi-os. The motor shi-o people felt that the proposed
tariff WPS unfair to them and asked to have it siispended. The Deputy
Administrator's office drew up a suspension order which wa„s forwarded
to General Johnson for action. Shortly thereafter the. Dep-iity Adminis-
trator called a meeting of interested "oersons in Non York City, att<^m-o-
ting to get the divergent elements of the inriustry to agree upon a
course of action. Thile this meeting was in progress General Johnson
signed the susnension order. The Deputy Administrator preferred to have
the tariff schedule remain in effect, since the various elements of the
industrv had agreed to work out some amicable arrangement. To prevent
the publication of th= suspension order th° Deputv by telephone told an
assistant to keep it from being made public until he arrived back in
Washington. According to the procedure then in effect, the Deputy
9836
-188-
Adrninistrator was to notifj'^ the code authority of the industry by tel-
ephone immediately upon the issuance of any administrative orders
affecting it. This the Deputy failed to do. In addition, he prevailed
upon Code Record Section to dela^' puhlication of this order for nearly
fifteen days, approximately nine days more than the dela^j- which would
have heen entailed due to the pressure of work then upon Code Record.
During all this time the industry was going ahead charging tariff, when
in fact this tariff had "been suspended. Pinal-ly a cancellation 'order
was dravm up and placed with the suspension order in some NRA file.
The fact remains that neither of tnese orders was ever published, and
the e::traordinary thing was the flagrant violation of publication pro-
cedure. (This information was furnished me 'oj Mr. K. B. Fitzgerald in
a conversation in the latter part of iMovember, 1935).
(65) Chicago, Roch Island c^- Pacific Ry. Co. v. State Highway
Comiflission, 17 S. ff. (2d) 535 (iio.l-?29) . Injunction will not lie
where the petition can get a remedy by order cf the Public Service
Cor.rnission which has already ordered adversely to hin. Also see Padgett
v. State Highway Commission, 143 S. E. 548 (Ga.l929). Injunction v.dll
not lie because the Commission proposed to complete the project before
the court cpji pass on the validity of the bond issue.
(66) .Dickinson, "The major issues presented by the Industrial
Recovery Act," 33 Columbia Law Review. 1095 (1933) 1095; "It is an
interesting commentary on the past half-century of our history that
legality should have come to be so widely associated with governmental
inaction." .U.S. ex rel Dunlao v. Black. 128 U. S. 40 (1888).
(67) Hamilton v. Dillin, 21 TSTall. 73 (1875). The Act authorized
the President to license commercial intercourse with the South during
the Civil ¥ar. A regulation by the Secretary of the Treasury clia,rging
a few was held not proper despite the fact it had no statutory
basis. War conditions, then existing, probably go far to erq^lain the
case; See Freund, op.cit., 113; See also International Railway Co. v.
Davidson, 257 U. S. 506, 514 (1922). The statute authorized the Secre-
tary of the Treasury to issue special permits for lading or unlading
of vessels, etc., and to fix the compensation to be paid customs
officials at euojense of licensee. This could not be extended to
include a bridge company's activities in keeping open on Sunday. Said
Brandeis, J., "A regulation to be valid must be reasonable and must be
consistent vdth the law."
(68) Dickinson, oi;).cit., 1095. See also Brougham v. Blanton
Mfg. Co., 249 U. S. (1919). The Secretary of Agriculture could
withdravr his approval of a trade name where the ingredients were so
changed as to malce the name misleading.
(69) Freimd, op.cit., 113. Board of Education v. Rice, A. C.
179 (House rf Lords 1911).
(70) Wahrenbook, "Federal Anti-Trust Law aiul the N. I. R. A.,"
37 liich. La.w Review 1009, 1050 (1935).
NOTES TO CIIAPT3H VI
(1) Brookings Institution, The National Recovery Administra-
tion - an Analysis and an Ap^rgisal, (1935) 25.
(2) Blachley and Catman, Adjninistrative L-3,^islation and Ad-
judication, (Brookings Institution 1934), 203:
"The decisions of t-ie authorities connected with the
National Secovery Administration almost of necessity
must "be made in h.amiony with the aims of the program
of industrial recovery. Such authorities are not
administering en abstract law, "but are administering
a social and economic policy."
The difficulty in doing 'this' can "be readily seen, with theories as
numerous as tiey were.
(3) An example of tho flexibility which axLnini strati. n can
furnish is illustrated by the NHA Office Lirxiual.
"Code Administration III-4000 Enforcement III-4113.7
"(g) Restitution to All Employees
"A respondent must ordinarily make restitution to
all his employees entitled to restitution and not mere-
ly to those who made complaint or who are the subject
of the evidence of finding or violation in the partic-
ular case. In many cases, therefore, an exaniination
of the respondent's books, acco"'ants, records or em;oloyees
by either the State Director's Office or an accountant
will be necessary to determine the amount of restitution."
(4) Brief for A. L. A. Schechter Corporation, in Schechter v. U. S.
Brookings Institution, op. cit., 37.
(5) Brookings Institution, op. cit., 37.
(6) Ibid, 46; suggests that two methods presented tiiemselves to
l^JRA; that of "slow academic study of all the complications
and contingencies to be met in code drafting punctuated by
erpert testimony and oriented in the long-terra effects of these
changes in economic balance that would inevitably result from
t.'..e new recovery set-up — that is, in the opinion of men who,
however rich in academic learning, never knew the ¥i?eight of
a business responsibility in their whole lives.
9838
-190-
"Tiie :tlier was to i^et the codes in, meeting the ■aneiiroloyinent
situation after some fashion, cleaning up the work of the economic
abuses, ^Dutting first things first, letting the minor maladjust-
ments fall where they raigiit, and dealing with the long-term effects
as they iDecame evident,
"The choice was between academic conjecture and action and the
decision was for action. Now according to plan, WRA steps to take
stock of its shortcomings, to deal with the complaints. The work
of refinement begins." See also IIHA Release Mo. 2993, January 25,
1934; address of Recovery Administrator.
(7) Johnson, The. Blue Eagle from Egg to Earth (Saturday
Evening Post, January 19, 1935), 15.
(8) Brookings Institution, op. cit. , 89:
"At the very outset of the NHA some trepidation
was felt as to whetaer industrial groups would embrace
the voluntary scheme offered by the government, involv-
ing, as was supposed, some initial sacrifice on the part
■of the co-operating groups."
(9) Brookings Institution, ibid, 92, 95:
"The positive incentives v;ere: (l) relief from the anti-trust
laws; (2) the authoritative enforcement of price-control devices; and
(3) relief from competitive practices deemed to be ruining the market ."
"Since there was little disposition on the part of the Administration
to use the power to impose codes, applicant groups held t'.ie key to the sit-
uation. T-iey could appear with proposals or not, as they jpleased. Since
most of them were little interested in negotiating with the NRA on the basis
of the initial limited objectives, the KRA quickly adjusted its ideas to
•the situation, and thereby implicated itself .in .the immeasurably complicated
task of dealing in short order with the whole realm of business practices
for each of the hundreds of groups."
See also ibid., 93-94, 'for a further st&tement of the motives that
caused industries to apply for codes.
(10) Ibid. , 6. See also 86, com:nenting that NRA was no impartial
referee.
(11) Hearing on the Telegraph Communications Industry, February 6,
1935. The bargaining character of the fair trade prS.ctice provisions is
indicated by a statement of Mr. Kern, a member of tlie Industry, who said
at page 11:
"If that means a substantial or additional commit-
ment after we go back to the forty hour basis, what ad-
ditional provision will be made in tlie fair practice to
enable the companies to do that?"
9838
(lla) 3rookingi5 Institution, op. cit. , 85.
Tlie ideal unself isli sacrifice in promoting enrployment
soon gave V7a.y "to the realitii's of an out and out bargain-
ing process in Miicii selfish interests were pla.yed against
one another. "
(12) Jolinson, op. cit., (January S6, 1935) 91.
(13) Ai'nerica' s Recovery Program - (Oxford Press 1934) 72;
"... the Code will contain unfair trade
practice provisions .... Here industry obtains
its quid pro quo for its efforts in behalf of labor
and for its cooperation with the CQiojitry . . . ."
(14) Iron & Steel Industry Code #11, Report of Deputy Administrator
K. M. Simpson:
"It is to be observed that in partial compensation for increased labor
costs, the steel industry seems likely to derive substantial market advant-
ages from tlie price-stabilization provisions of the code, 'iiniile leaders
in the industry indicate that they would gain no advantage by raising pre-
sent prices, tliey evidently refer to published officialy base prices.
Members of the industry have not, as is conceded, been able to secure
these prices uniformly under the competitive conditions recently prevailing.
On the other hand, it seems likely that these prices will be firmer, and
result in substantial increases in profits, under the influence of provis-
ions requiring publication of base prices and prohibiting concessions con-
tained in tha code. Further, the mere elimination of credit abuses should
greatly help the industry. Stabilization of prices may have a favorable
effect on employment and business generally."
Later, Mr. Simpson frankly states that the industry is being given
price stabilization in order to enable it to compensate the additional
labor burden it undertook as a result of the code.
(15) Transcript of Hearing for the Telegraphic Comrnanications In-
dustry, February 6, 1935, p. 100-105, Deputy Administrator Fuller:
"I think that it would be well to put into the record an estimate given
by members of the different units of tlie industry as to vmat they anti-
cipate it is possible to recover from these fair trade practices, and the
effect of the code. ------
"Deputy Fuller: You are overlooking some of the simpler recovery pos-
sibilities, are you not, which miglit be set up very definitely. We will
say, the charge for call boxes. Our estimate was that there are some
500,000 call boxes from which you might collect 25 cents a month on #3 a
year rental. Perhaps it is not possible to do so, but the thought of the
Research, .and Planning Division was along that line, and on the question of
where you put teletypwriters, that you charged him fixed rental for the
machines, plus the service charge. Things like that are rather definite,
are tliey not?-----
9838
-192-
"Deputy Fuller: I would like to have the view of the industry
upon those subjects. Are they going to pass them up entirely or are
four or three units interested in getting rentals for machines or
services that they are furnishing, if any, or is that a competitive
situation that no one wants to give up?
"Mr. Kern: May 1 answer that?
"Deputy Fuller: Yes.
"Mr. Kern: We are discussing realities now, Mr. Administrator.
Our desire to obtain benefits is always tempered by a desire to main-
tain a competitive position. It is diffic\clt sometimes to work out a
formula that will not have repercussions from a competitive point of
view.
"Deputy Fuller: Q;uite.
"Mir, Kern: It is obviously impossible to put in some of the charges (
on particular facilities when you have a competitive situation, on a basis
which makes it to the interest of the customer to only have the services
of one company. A formula has to be devised, if you have a competitive
situation, which will not make it to the interest of the customer to use
the service of only one company. Otherwise, one company or the other
will be sacrificed by the customer, llo matter how sincere the industry
or the Board or the competitor is in trying to work out a formula, we
do not always see eye to eye, on it as to what the result will be. Unques-
tionably benefits can be obtained in the industry, if we can find a formula
tiiat will not hurt one company or the other from a competitive point of view,
and if the Commission will approve whatever is recom^nended by the Code Au-
thority.
"Deputy Fuller: Even if the Commission . should not approve of a merger,
I suppose it would psrnit you to abandon some duplicate facilities, if you
could work among yourselves a proper division of the income from those
facilities. '
"Mj". Kernt That can be agreed upon now without violation of the
Anti-Trust L^vs. v.rAriv N„Il.A. Code Authority, v/here'it could not have been
agreed upon before. A^ain, it comes down io a competitive basis. One com-
pany may give you a diiTerent amount than another company."
(15) Brookings Institution, op. cit., 131:
"Had any deputy administrator been so unrealistic as to have attempt-
ed to function in a judicial capacity during the code-making process —
that is, first impartially taking the testimoriy offered by all contending
parties and advisers, and then, by an uninteriniped study of the record,
formulating a final decision — he would have found himself in an embarrass-
ing position at the end of the code process.
"In actual practice the deputy never evaluated the entire code in the
lig>it of a comprehensive and digested record. A code took from, provision
by provision, out of bargaining and haggling. Even in the attempt to secure
agreement by this process, the deputy found himself in possession of a re-
markably flimsy set of materials to assist him in determining and defending
his own position on proposals of far-reaching economic and social consequences."
-193-
(17) Bfookings Institutiorij op* cit. , 36, suggests that NRA. was not
an impartial referee, but rather an active proponent of certain ends, and
that the hargaining process is largely a result of the fact that such in-
definite standards were stated as to those ends. But see. National Re-
covery Admini strati jn Release No. 181 in respect to the positi:n of the
government in the code malcing process: "In order to explain the National
Recovery Administration one might compare it to a three-cornered game in
wliich labor, industry and the conswaer are players. The National Recovery
Administration is not involved in any attempt to direct any player, rather
it occupies tiie position of a referee, insuring tiie establislimani of proper
rules of play, and to s-ee that no player achieves an unfair advantage."
(18) Presiding Officers did not always feel tlie need for a record
however, See Hearing on Telegraph ComiTomications Industry, February 6,
1935. Pages 100 to 105 indicate the attitude of the Administration toward
codes and code provisions:
"Deputy Fuller: I do not think that the fair trade practices are any-
thing that we should consider here. That is a matter for the industry to
agree upon, that is, assuming that they are legal, ivir. McConnell,
"Mr. McConnell: All I v/ant to know is to be sure that I know exact-
ing what they mean, to be sure tiiat later on, when we try to enforce them,
we wont be thinking about different things, because that is the trouble.
Tliey look all right at the time the code is apj'roved, and then somebody
gets mad at anctiier fellow and he comes dovm here and wants us to enforce
them, and we don't agree on what they mean.
"Mr. Fnite: You don't think that could be pos?ible in this industry,
dc you?
"Mr. McConnell: Yes, I do.
"Mr. Kern: I thiiic we should aslc you to give a thorougli consideration
to the fair trade practices, because that is the only way that we can do
this thing at the present time and we thinl: that by proper enforcem nt of
those the industry will be able to do what the Administration is asking
in tlae matter of wages and hours.
"Division Administration Peebles; That is the reason that we wanted
them interpreted properly."
(19) Ibid.
(20) Floor and Wall Clay Tile Manufacturing Industry Code, No. 92,
Codes of Fair Competition, II, 445:
"Section C - No member of the Industry shall sell second-grade tile
in an amount in excess of thirty-five percent of the total square footage
of glazed tile sold by him, nor in excess of fifteen percent of the total
square footage of unglazed tile sold by him, or such other reasonable per-
centage as may hereafter be decided upon by a majority of the Industry, and
approved by the Administrator,, from time to time; provided, however, that
tiie Administrator on petition and after such hearing as he may prescribe may
9838
-194-
modify tlie percentages Ler'ein 'esta-'blished; and _5rfflvided'_f\i,rth.er tliat aiiy
raemb^sr of tlie Code may participate in the provisions 'of Section D here-
inafter set forth. The provisions of this Section C' shall not ^apply to
unglazed quarry tile. "
The ruling test provided is majority vote not a test hy the Administra-
tion for desirability.
(Sl) Brookings Institution, op. cit., 116-117, indicates tha g^eat'
pressure brought not only upon IJRA. officials, but other persons in' the
governm'eht, to secure desired code provisions.
' ; (22) Ibid., 119-129 discusses the three Advisory Boards. It is
suggested' tha.t' the Consumor' s Board did not have the pressure groups
behind it that the other Boards had. The method, it employed, was to
collect basic economic data, then analyze proposals and evaluate " in
terms of the general public intorest." The opinion is expressed that
the method was ill-adapted to tue code - making process.
(23) Johnson, op. cit. (Fsbriary 9, 1935), 81.
"It is true that business descended on IJRA faster than we could
'man the organization to handle it. It is true that I could not get
space to house the people I had, and that mad congestion. It is true
that many people came to Washington with ready-made Code provisions
written in their oi/?n interest and expected to rush out with an IIBA
signature on the dotted line without waiting for the other follow to
be heard from. These things made for delay, but it should not have been
•otherwise."
(24) America's Recovery Program, op. cit.
A. Heath On thank (Asst. to the Executive NRA) said, "Haste at tliis
time will probably mean v/aste at a later date."
(25) This is formation is commonly thought to be true in NEA, al-
though it is not capable of documentary proof. Every statement has been
made only after careful consultation with persons in a position to know
the facts,
(26) Oral Argument of Hon. Donald R. Richberg on Behalf of the
United States in the case of A. L. A. Schec iter Corporation v. U. S. , Friday,
May 3, 1935, Fir. Richberg made tie follo-./mg statement indicating the limita-
tion of Congress and the Courts despite t.ie fact t'lat the Recovery Admin-
istration in many instances operated as if there was no such limitation
placed upon it:
"Congress and tie courts cannot know where to draw
the line until they can survey a comprehensive record of
the actual coperations of each trade and the character of
business transacted in different parts of tlie country."
(27) Brookings Institution, op. cit., 96, suggests the extreme con-
fusion which existed in tie code-malcing process.
9838
(28) Johnson, op. cit. , (February 2, VJZ5) , ,B4:
"ivTorvos T.'ere stretcaed so taut t'uit there weru several explosions.
Even two-fisted Bill Al'en once di sap .reared for two days in a huff. The
Dudley Gates episode was nine-tentJis overwork. Host astonisuin£ of a'l,
Alvin Brown once "went ^irima-donna on me" and I had to send two of t.iy
younger men away to prevent physical and nervous collapse. One man drooled
dc^ad in the coal ne:;^otiations. Earl Howard collapsed in a garment hoaring.
Several '^f my principal assistants had to leave 'b.Dcause the simply could
not stand tlie physical strain."
(39) Office Manual, ,
(The following quotation indicates the uurr^'- that x^revailed in K.R.A.
w::iere"by advisors were expected to malce recom.aendaticn despite the fact that
tjiey had no information:)
"Code I.laking and Anendi.ient II-.?000 Pro ce lure 11-3506
(7) Ti'/.e designated adv-sors wxll submit tueir preliminary reports
to the Deputy Administrator with.m 73 .lours after receipt of proposed code
and letter of transmittal."
(30) See Code Hev-Sion, i.lemorandum llo, 1, Evolution of Trade Practice
Policy, L. 0. Liarshall, including an acco'ont hy Edwin C. George.
( 31 ) Office Llanual,, "Code ivMcing and Amen'.:lment III-IQOQ Substantive
G-:iides 11-1002
(3) T-iis does not -.i^^an th.at every cede in pr'^cess -nd not ap-
proved at the time of announcement of a general policy must conform - in
the sence of including the ty;oe of jrovisi.;n favored by policy. Under cer-
tain circuinstances, it rai;glit be manifestly unfair to require substitution
of a new clause after lengthy negotiations have finally resulted in assent
by the indur-,try to a supposed final form of the code. It would be equally
unfair to the i:iembers of an industry to approve a provision and tlius cause
them to adjust their practices to conform thereto, when the provision is
so framed as to 'require subsequent change or elimination." Tlie adsninistra-
tion of Administrative Order Ko. X-36 suggests the hastiness without due con-
sideration of facts because of the wholesale exemptions which were made from
the provisions of this Order.
(32) Transcript of Hearing - The Traffic Control Signs ic Signals In-
dustry and The Advertising Lletal &: Display Manufacturing Industry - March
50, 1934.
"Deputy Brady: If there is nothing else to come before this hearing,
I am going to ask the two comnitteeiaen to get togetlier with Erabricated
Metal azid with the advisors, and iron out all the little difficulties, so
that v/e will get out of this wandering in the de-ert that you liave been for
the last few months, and get this cleaned up. I T/ant to turn it over and
have it signed and complete, .and not half done, and I want to turn it over
next week, and if you will help me by all getting together so taat v/e can
have the matter ironed out, I would appreciate it.
9838
..-196-
(jhereupon, r.t'10:50 o''clocI: ::,,m. , ■tliq .lie.-^.rin;; wo,s
recessed subject to tlie c:"-.ll of tiae Aduunistr .tor)" , The
her.ring 'bec'-n .".t 10:1:3 .-..n. •:.
(oo) Hcr-^^rl.r-nd, Judici.l Control of. tho Jeder-.l Ti-^.de Comidsc-ion
p.nd the Intcrst-Qc Coip..:iercc Corn. '.is 'o ion, 19'dO-13^.0, (H.".rv.''^rd University
Press, 193:), -17 - n. 39:
"?ie (tlie "burcDiicr-^.t ) lr;io'-s uost vli-^.tis to "be ;'o.ie '^nd the most
convenie:".t : :ep;ns of do •■.-;£" it; he ir, th: ciroGrt, '.'if.i speci-^.l r.ier.ns of
laiowleCl.,',e -,t his co-;iir\:v--\ ^n^: v.'hen principles of lev n,re piit in his way,
he is "pt to he irTO'-.tiont of them "is mere ped,antic ohstructions." Allen,
3ure -'-.UP r - cy Tr i-uia'^n- .nt , (dc" Yor:'-:, 1931), 59.
See r.lso Broolrings Institution, op, cit., 131,
(54) Brookings Institution, op. cit., 390:
"The Code structure - - - - 'just grew' rather
th.-ui heir.g :-. "o.-.rt oi .-".ny contcm;Tlr,tcd plon,"
(35) "Jo. Date
Jan. 4, 1934 Draftsmanship
*9 J.-,n, 12, 1934 ITotice and An Opportuiiity to he ?Ieard,
12 Pch. 5, 1934 True Representation,
16 Mar, 31, 1934 Codes .and Anti-Trust Decrees.
18 Apr, 16, 1934 Standard clause for Uniform Cost
Accoxmting,
28 I.iay 15, 1934 Effect of Code Provisions on Contracts,
May 34, 1934 Codes Legislating for groups repre-
sented hy the applicants,
32 May 24, 1934 IIon-Association Hepresentation on Code
Authority
*S5 June 2, 1934 Hearings on proposed Amencanents.
Jimc 21, 1934 Ezrjnination of Boohs.
50 July 23, 1934 Contr.cts for Future Delivery in Onjen
Price Systems. .
*51 July 24, 1934 Hotice
*54 July 30, 1934 Notice and Hearing.
60 Apr. 4, 1335 Ahuse of Powers of Code Authority.
9938
-197-
7 *72 Uo.y.2Z, 1935 ''oticc.
(^'i) I'oid. i.:c.ic:^tot. Ly *
(37) Leg-1 ^.eeo-.rcla Euliotin No. ,;;7, P-esi.Tie of ilRA. Cr.ses.
(5S) See Ofvica i;emor-.n:.-iri Ho. 228, June 7, 19o4.
(3Sr,) Ail interest. L.v;- -nL. hel-if -ol docu'-;cnt wpor. this -orolileni is
Scji-^.te DocxTinent 164, 73u Coni5:rest-, ~;nd Sesrion, Letter from the National
Recovery Aomnisti— tor entitled, "En-: lo;;ee: of the ll-^tionc.l Eecovery
Admi.ii s t r ",ti Oil . "
(39) r?rGo]-:i:i;'i"s Ii-stitution, op. cit., 103:
"One Ox the re 1 -^irohleis cre^.te'.'. .for tiie IIFlA. or£LMiiz?,tion "by the
code delio^'e -.y-.r -thr^t of discovering^; .deputie s ^corip.etent to carry on the
exacting \iov.: of coL.e negotiations. The jTFA. pi:nn:iOse was to ccranvand the
services of Men '.-ho h^d est 'o "fished reivutati ins in, their fields, who were
tem-Dormentaliy an'.- iv.tc ■.lect".i Lly c a .'blj of reviewing-; ;':.roblems in terms
of the "broad public int>;r35t i- ^Vi: r thm fro;i the stanopoint of the
narrower intersts of an p ^ic at ,;,:■ ~"P'. Uorcove-', the specifications
crllcd for r.ien with a aractic 1 turn of inind, ..hid as r. i:r,tter of policy
no deputy vns to he a?5if:nec', to any code covering' an industry in vdiic'n
he heldsubsr-^nti ;1 iab,:"Ci:t^. Sucn sjjccific ■ ti oas mi^ht It.yc "been
partially met in s d'-ffi'a, r , '-,;.ial '. ors-ani" ti t.l, ruch ar was originally
contemplated, ilo doiibt auri-^ the ior;.;-tlve y^vvi:-': of :T7A. they were ^^let,
in soae degree, oy "drifting leaders in various fields for tours of duty.
But with arogressive adcitinns to the volume of worh, the NHA was forced
to adjust personnel idcls to the iv il-hility of material, Hegoti'^tions
on tne first major coder v;oro supervised "by deiraties selected according
to t]ie original -lersoniel plan. After tint codes were in general distri-
"buted to tJie 'least "Duraenad' dc-uty and he in ttirn reassigned them to
such a?rist'nts as were ii-^i.e _.vaila'jle,"
Cn the same page n. 2S rrads:
"It ho.s been .alleged th'\t.so;'e of them "ere 'plaited' to protect
the intercuts of grouos or large enterprises. This of course is hardly
su'oject to verification. It is true that some of them., as well as higher
officials, were on temporary loam from ousiness emplojmients, and tlxat
most of them. e>:pocted to return to private omploj-ment after a temporary'-
tenure at the llEA, These frets, iiowever, arc merelv a part of the general
personnel problem and c-.-.n "be given no invidious interoretation otlier tlion
the general fleco of 'Dias descri'bed in the tent."
A memo-.-ndun "by Enid Brira to Corwin I;. Edvards, Octoiar 29, 1934
reads in p.irt :
"I chucJ::ed with the Personnel Oiiice n • found that Assistant Depxity
Administrator Jrancis Lowthrop vvas wi tn ta- .Law firm of ""Jise, ^toitney
and Par]:er heforc ne came to the Paper Eivision of the ICIA,
Wise, V/liitney :'.nd Parher are general coiuisel for the Paper Indxistry
9838
Authority, ?.s well -'.s for the Pr.per "iid Pulp Association. They po.rticip-^.te
very directly in the proceeding's of the Code Authority through Mr. TJhitney
and Mr. P-"rl:er.
Mr. Pr.rher, himself, is man'^.ging director of the Booh P';-.per Manu-
facturers' Associ.^tion, and represents the Pool: Paper Division - one of
the most, important divisions - in all administrative relations. He evi-
dently succeeded George H. Head, who was formerly managing director of
this group "before he hec-^jnc chairman of the Industrial Advisory Board,
Mr. Mead is still vice-cliairman of the Paper Industry Authority."
Ho officirl statement in the form ^of -^.n Adjninistrative or Office
Order has hcen fo-ond v/hich covers this suhject,
(40) R. D. Paddock, Cotton Ga-rment Manufacturing I.ndustry; Ward W.
pichard, Paper Industry; Tilman B. C;uitrell, Ice Industry; ¥, B. Lawson,
Cotton Textile Institute; H. 0. King, Copper Industry; W. L. Pinger, Hubber
Association; Max Meyer, Millinery Industry; Erail Kekich, Match Institute;
H. B. Lindsay, Ahrr^.sice G-r:iin Grinding '".'heel; E. G. Montgomery, Canners
Industry; John Mathews, Jr., Am.ericai Glassware Industry; A. B. Dickinson,
Cotton Garment; Walter Mitchell, Purniture Manufacturers; Reed Lane,
Retail Motor ■V"ehicle Trade,
See U._S. V. ITilliaras, 19U' U. S. 279(1904).
(41) Johnson, op. cit., (Pe^. 9, 1935), 83;
"Of coiu-se t'ne chn.rg? that we sold out to "big business or unduly
favored it is the precise reverse of the charge of "bulldozing it, and
is equally untrue, Tliere is no dou"bt thj.t some deputies and assistants
could never reconcile themselves to the la"bor i^rovisions of the law and
v;ere not c -.rrying them out in the spirit that animated them — not con-
sciously, "but "because of long habits ,of thought in a contrary direction,
Wlienever I found thr^t this v/as triie, I let such men resign."
Brookings Institution, op. cit., 136-137:
"One fact v;as of specie! im-oortance. Most deputies v/ere dravm from
the r^nks of business occupations. By virtue of training and inclination
they were ther fore s^/inpathetic with the business point of view. This fact
undoubtedly colored their views of wlx-.t the proper content of a code wr^
and affected the direction in v/hich their influence v;as exerted during
code negotiations. The wei:hting of sn.ch bias as deputies li-.d is, however,
less to be charged against them than against the responsible higher official:
of the NPiA, The ;rjmlunt of definitive guidance given thorn was slight. They
were to exact as much as possible in the direction of re-cmploymcnt ; were
vaguely instructed, against price fixing; v/ere left to .assune that an ap'^li-
cant group Imew more about the remedies for its problems than any one else;
and were instructed in any case to get codes completed.
"The one real guide \7hich deputies .h,:id vfas what was plready in
approved codes. The sam.e guide v/o.s open to apilicant groups. Since in
the earliest codes the JfRA hpA gone far in granting collectives powers
over prices andproduction, precendent granted wide scope for concessions
9833
-iC":-
of po'7er."
(4.3) Taf:c"., XV.
(■^3) Ibid,
(41) Tfcsjiinjtoh ilev;p , Sej-'teiibcr 26, I'-'Sj. A lotter v/rit'en
TDy Prosident Roosevelt to lutlier Ster-.-r-.r."., Preside-.-:t of the l^atiDn?!
Feder-.tion of ^edorr.l EnplDveos is quoted. The article re-\ds in p.irt:
"Defending the exeiapti in 01 the he-:^ Dcc.l mr.chinery froni the rerit
svstom, Hoosevelt yointed out fch-it in March, 19o'3, the elipjihle registers
of the Civil Service ConL.dssion were many S'-ears old. Sxc-Tii nations hr^d
not "been held for a considerahle period for many of the registers from
which the emergency af;eMcie:^ ''ould h-.ve had to drr.w pcrsonael, h\d they
heen under Civil Service.
"Hundreds of thousands of r/el — ■nr-.liiic-" -'ernons vAo lost their
positions durin. the depression "oi.d Jeen ;,iv,-n ..0 op'oortuiiity to qualify,"
Hoosevelt e:qil ',ined. The s'.agnation v/as due, he sai-' , to reduced Civil
Service -,p TOoriati ons,
"The Conidssi n vras not in a position to suprly imi ledirtely the
personnel required by the e;aergency agcnc'.es. It \-r.s obvious, of course,
th-.t the'-e a;:encies, if they were to "be effective, vrould "nave to begin
operations at once."
(43) Broo"-in,';:s Institution, op. cit., IT. 2?.
(46) Herring on Proposed Aaca/' .entp to the Ceaient Industry Code,
(ap:rroved Code So. 1-B, Codes of 'c-iv Competition, Vol, III), Julj- H, 1934,
Divirion Acnunistr^tor Murray: "You have r-.ised a q,uestion v;hich I
thiixh shoi-.ld b-j ansv.'e".-ed here vhile the ouestion is clear in the minds
of those of the industry \7ho are present. You h^ve ray personal assurance
that nothing v/ill 'ii?:-y\^en to the cement code, so far as my res:oonsibility
extends, that does not have the co:.^plete assent of ohe members of the industry
who have been delegated by the industry to administer the code.
"The proposals thia.t you refer to as having been made by Advisory-
groups in the Ac'jp.ini strati on are presented for discussion just as those
vmich are the pro^oosals 01 y^vx gTou,j , ,nc". i.': no 'aay do the:, nave the
sanct..on of the Administrr tor other c'lm tn t lie "'.' s a;.v oiated and has
seen fit to give considerable tlioiight to the recorii;'eia" -/cions of the
Advisory boards. They arewhr-t their title v.oulc' ieau one to beli-.ve,
advisers, and in no way t'.o they m.al:e those proposals in any other capacity,"
(47) Title I, Section n(b).
(48) Infra, IX and X. In a I.Iemorandua, dated December 15, 1935 to
the Consuaers Advisory Sor.rd from an odvisrr, re ' the P-,j^jlic Hearing of
the Spray Painting and Finishing :3q.uipmGnt lianuf i.cturing Industry an accute
ex^ampie of this feeling is illustrated. The presiding officer showed
extra, 16 -annoyance at the adviser's suggestions. He interrupted him "with
9838
squelching but not -r.ngry questions", and fin-lly rslced Mm to put "further
sioggestions- - - in . report to be sub:.;itiecl to him ".ftcr the hearing."
Later the presiding officer told th. adviser that his actions were "ernbarr-
asing to him -^iid oho Administrate. on,"
(49) Jolmson, op. cit., (janu-ry 19, l^r.5) 74;
"lio industrial ■,jroc'.\iccr ivho loiows all aonut the price and inventory-
situation in his industry is going to over-produce in the fact of ?n uai-
manageable surplus and a downward price trend. It v,'il^ not necessarily
require a.ny quota system to attain che en''- of control cd industrial pro-
duction. All th:-t is needed in i .dustry is full, accur:te, co::Tplete and
honest information on prices .Vid inventories,"
This does not consider the huii:^er for volume that drove m.any industrial
concerns to Icnov/ingly over proc.uco,
(50) Pro-^kings Institution, o-j. cit., .?73,
(51) Iiemor:.,ndum to Consvj^er? ' Advisory Bo_,rd f-or.i W. L. Chandler
June 3, 1935. "Subject: Some incident? Reflecting the Attitude of
Deputies and Other Adninistr- tive Officials I'o'.vard Consumer Problems
a.nd Consu. ers' Advisory Eo.n-d Lrpresent..tives.
•'"Uhen El- is ..s. a de-oixtj was handling P.et_.il Solid Fuel he ".a-.d a
similar complacency in regard to tint Code, As one illustr -^tion of
the tro"o.ble v/hich ensued from that I thinh of the e:cperience v/ith deter-
minations of lov/est .reasonable costs,
"We discovered th.,t instead of exercising sfiDervision over the
costs being determined 'i)y the 41 division .1 Code Authorities, he aad
discouraged all division.;- 1 Code Aiithorities from sending to this office,
the transcripts, of hearings, cost d. ,t.a and other information necessary
to .:ai analysis of the cost determination v;hich it was his duty to be
fruniliar v/ith in conformity v/ith the Code whihc provides th-.t he slir 11
have the 'right of the Administr -.tor to ap"''rove, Cisr-yovovc or modify.'
''The deputy nad r.ttemrpted to communicate ivith the Code Authority,
but had received no replies, ic sent a .'lan to call on the officers of
tne .ssociation. The oflicerT- gave '■, very hay.ipy pictui'c of the opero.-
tions of the Code, The Code Authority had cnnendec the C:-.'-e three times,
hac' inserted tlie provision requiring a 20" percent mr.rk-up on :'\11 their
products, aad in general they v;ere getting along splendidlj'', I believe
that suit::,ble action by the deptit;^ v-.s imdor way v.'hen the Svipreme Court
"decision was handed c.ov/n,"
See also letter by Walter F.iite, Deputy Administre„tor , to the
Mayon;iaize Industry,
"Ivir, W. F. L. Tut tie, Jlanaging Agent,. July 6, 1934
Code Authority for the Mayonnaise Industry
114 East 33 d Street
New Yorh, 1', Y,
9338
•201-
''Der,r Mr. T-tc!
'"■'his; \!i' . ■,c^::ov/lc^■■;e rccei-'t of tlic M'/,yo:::v ise Code
A-athoritj/' Ilclo-',?e y?', .■.';.,L-jd July 5th., 1934,
"In ;:.ccor'i..Mice ^dt'i oiit convcrs .t.vv, tno he 'ring scheduled
for July 6th h.s L>:cn r istTov.-.-c. uiitil Jul.y 13th. This her.rinc is
for the :j\u'poso of r^cciviiip evidence with :-, viev to deterninr.tion
r.nd ?,p;-roval of the lowest reason; l)lc coot for produces of the
Mayonnr.ise Industry in accord.. vrice -s/ith the provisions of the Code,
I -rn hr^py to -note from Relor.se #7 thr.t the Industry has tahen steps
to correct the price situ-tion itself, racher th-.nput the "burden
on this Administr-.tion to reaulate your Industry.
"Fnile it is the :oolicy of the National Recovery Administr-.tion
to invoke every o:o- lie .ole Code provision in the elir;dn.ation of
destractive rrice-cuttina, v;r i.tuch prefer tli t the icmbers of any
particul r indiistry -.rrai£::e by r,:;ro-!.ier.t to follov; r. const-'-uct^^/e'--
policy of solf-prcscrv-tion for tho iadustry :,s a v/hole, which does
not require thj intcrveat in oi' tnc aovr-ani cnt . If you c:n furnish
us with re -.^oviiJljlc evia.j'-_cc tht the nc'-' price lists renovc the
ener^-ency situt..on in t"_ie Kayoa.vis? ladustr^.i", 'tc will he £;l^d- to
?.d,jou:'n the aroposc-d he rina iudefinitely, I certainly hope th-t
I nay h ,vo such v'ord froa ^'ou pronptly,"
Very truly yo-ars,
"Jalter Wliite
Deputy Adininistr' tor."
-202-
NOTES TO CHAPTEH VII
(1) Supra, III.
(2) Supra, H, 5.
(3) Supra, IV, 2.
(4) Title I, Section Z{\>) .
(5) Approved Code i\io. 84, Fabricated Metals Products Mfg. P Metal
Coating Ind. , Codes of Fair Competition, II, 227.
(6) Approved Code To. 287, Graphic Arts Industry, Codes of Fair
Competition, VII, 1.
(7) See J. M. I-Iadley' s Heport on the Graphic Arts Industries, April
3, 1935, to the Cons-omers' Advisory Board.
(8) See trenscriot of he-^ring for the Animal Soft Fair Industry,
Dec. 7, 1933 (Approved Code Ko. 253, Codes of Fair Competition, VI, 97).
The industrjA employed forty-five men at its peak, Its yearly business
was from $200,000 to $300,000 gross.
(9) Approved Code No. 9, Lumber &_ Timber Products Ind., Code of
Fair Competition, I, 95.
(10) Approved Code No. 116, Mop Stick Ind., Codes of Fair Competi-
tion, II, 57. See also the Paper Disc Milk Bottle Cap Code, approved
Code No. 246, Codes of Fair Competition, VI, 16; and the Sanitary Milk
Bottle Closure Code, Approved Code No. 371, Codes of Fair Comoetition,
VIII, 581.
(11)' Approved Code No. 25, Oil Burner Industry, Codes of Fair Com-
•etition, I, 339. Brookings Institution, The National Recovery Adminis-
tration - An Analysis and an ATDnraisal (1955).
(12) Hefring on Traffic Control Signs c" Signals Industry, Vol. 1,
Mar. 30, 1934: 4 - "94(b) and 94(a) have to do with the supnleraental
codes for traffic control signs and signals industry and the advertising
metal signs and display manufacturing industry which the record shows
were originally offered under the code of fair practices for the fabri-
cated metals industry and originally occurred on the preliminary set-ui)
list of the fabricated metal industry which T;as offered at the time the
code T;as offered to the administration. In the consideration of these
two there is nothing in regard to labor under the agreement reached at
the time the code of fair practices for the fabricated metal ^tjroduct s
manufacturing and finishing industry contained in supplemental cocies
offered, and appearing on the list would mr?k:e no changes in the Irbor
provisions of th?t basic code, and these, as we understand it from, the
records, v/ere originally offeree under that code. In the transfer of
this code, it ap-i^^ears thrt these t'-'O sup-olemental coc'es were in the
wrong category in going under the mcrkin^: devices indu<;try, ?nd after
discussion between the Administration and the two code committees, this
hearing was called to consider removing them from the marking devices
9838
-203-
industry end ---ut them brc> Vnere they originally Cc?me from the fabricsted
metals ina\istry.
(lo) Office Order X-36.
(14) Re?tfcnir;:nt Industry, Code }lo. '3~:, Code:: of Fair ConToetition,
VI, 512, Art. Ill, Sec. 1: "Tho term 'rer,tau.rant industry' as used here-
in, shall mean the husiness of operating, directly or indirectly or tlirough
any subdivision, a restaurant, as hereinafter defined in Sec. "'."
Balcing Industry, Code ]\To. 445, Codes of Fair Com-oetition, Vol. XI,
7, Art. II, Sec. 1 - "Definitions: "The terra 'Baking Industry' or
• Industry' as used herein shall me^n the raanufgcture, distribution in-
cluding trucking, and/or sale, in any manner whatsoever, of bakery pro-
ducts. Said term shall not include (a) hotels, clubs, restaurants and
similar places ^7here bakery product? are manufactured exclusively f or
consumption at the place of manufacture, (b) wholesale or ertail groceries,
provided the owner or operator thereof does not manufacture, directlj/- or
indirectly, througu an a^ent, affiliate unit, or otherwise, any "oart of
the bakery products offered for sale therein. If wholesale or retail
groceries do so manufacture any pert of the bakery products offered for
sale therein, as to them said term shall include only the manufacture ,
distribution including trucking, and/or sale of the bakery products manu-
factured by them. " ■
(15) See Cons^omers Advisory Eoerd Files, Erking Industry Code Sum-
mary, 11-1£.
(16) i.iemorandum to A. C. Coo"': from Consumers Advisory Board re
Request of Wholesale Hardware Industry for Extension of Sxemption from
the rholesale Plumbing and Heating Code: "The wholesale plumbers prefer
to sell exclusively to maoter plumbers or plumbing contractors. Whole-
sale hardware houses do business with the latter and also with retail. . . .
hardware stores. Because of this and other differences in methods of •'
doing business, the wholesale plumbers desire price filing, the hardware
wholesalers do not. ■why force the latter to file prices? In addition
to this, is the further considera.tion th-it price filing under distribution
codes offers far greater problems than under manufacturing codes, and
those distributing codes with price filing provisions are having consider-
able difficulty. We recommend exemption from this provision."
(17) Approved Code 150, Fiar Trapping Contractors, Codes of Fair
Competition, IV, 151.
(18) See Title I, Section 1 and especially Section 7(a) (b) and
(c) , indicating that labor v;as to receive certain benefits from the codes.
(19) John M. Keating, later ■ G-enei" al Counsel of the Dress Code Auth-
ority, now in the private practice of law in New York City.
(20) All the story that can be found in writing exists in the tran-
scripts of hearing.
9838
-204-
(21) Cons-umers' Advisory Board memorand-um to D. C. Pilkington re
Pump Manufacturing Code, (Approved Code No. 37, Codes of Fair Competi-
tion, 1, 573) , May 14, 1955. Tlie industry tried to include manufacturers
of dredge pumps, who had little relation to the industry. At least
twelve industries or subdivisions were affected by the "broad definition
of the industry.
(22) Field, The Effect of an Unco istitutional Statute (Minneapolis,
1935) .
(23) Legal Memorandum, No. 16 from Jack Garrett Scott, re Conflict
"between Codes aaid Antitrust Decrees, March 31, 1934.
(24) Memorandum "by Eugene Culver to the Consumers' Advisory Board,
re Anti-Trust Decrees and Injunctions, June, 1935;
"Tnile these ( some named) axe the only codes in vmich the decree
of injunction has "been modified, it seem.s certain that of the 169 re-
maining cases in which decrees have "been entered th^t these defendants
are now operating in violation of some code. It is not likely that any
industry or group of industries, sufficiently large to have "been con-
sidered a monopolistic menace under the Anti-Trust laws, could have es-
caped codification under the NilA
The case of the United States vs. Tile Manufacturers Credit Association,
at al. involving 13 corporate defendatns and 15 individual defendants is
illustrative. There has been no modification of the decree in this case
which enjoins 23 specific acts, 12 of which are permitted, in fact re-
quired, by the Floor and Wall Clay Tile Industry Code approved by the
President on November 4, 1933.
"The following practices (copied from the decree) are enjoined.
(a) To adopt or use a uniform basic price list, or to fix and adopt
list prices for their products;
(b) To establish or maintain uniform prices for their products;
"(c) To establish and maintain individual prices that are uniform
for all/ classes of purchasers or dealers and for all sales;
"(d) To establish or maintain rules or ree,ulations as to the ac-
ceptance of orders at prices in effect prior to changes there-
(e) To establish or maintain uniform extra charges for builtup
letters, for numbers or for beveled edges;
t=(f) To establish or maintain uniform limitations on the propor-
tionate amounts of the lovifer grades of tile sold;
(g) To sell tiles f.o.b. factory with freight equalized with other
factories in the United States manufacturing the same class of
tiles;
9838
-2C5-
(h) To compile and distribute freight rate tooks for -Use in making
freight equo.li nations ;
*(i) To establish or maintain xuiiforra terras of sale;
*(j) To establish or inaintaiii imiform conditions on or for the
acceptance of orders;
*(k) To establish or maintain -uniform charges for barrels, half
barrels or boxes used for shipping tiles; to refuse to allow
credit for old packages returned; to quote prices- with package
charges included, and to charge for packages vvhether used in
shipment or not;
*(l) To establish or maintain uniform conditions for the furnish-
ing of tiles for sample purposes;
(m) To refuse to" combine loss than carload shipments into carload
shipments invoiced to one of the purchasers;
(n) To refuse to ocll to any persons or corporations because of
any unpaid acco-ont'or accounts;
*(o) To formulate and establish or to retain in effect any require-
ments, circumstances, or conditions, nonconformity or noncom-
pliance with which shall exclude any customer or customers
from securing credit or shall impose anj^ limitations or con-
ditions whatsoever upon the credit granted;
*(p) To restrict sales to dealers or contractors in tile or to
establish uniform requirements for classification as dealers
or contractors;
(q) To establish any system of cooperative purchasing of raw ■
materials or supplies or of cooperative o\'ming of the sources
of raw materials, which shall eliminate or tend to eliminate
competition in the purchasing of sadd m^aterials or supplies;
(r) To adopt or to use a c ornmon trademark;
(s) To pool orders or to enter joint bids;
*(t) To prepare and publish any list or lists of dealers or o.f
certified dealers;"
Those starred were listed by Ivlr. Culver as having been allowed by
the Code.
(25) Brookings Institution, op. cit., 78:
(Reference is made to overlapping jurisdiction resulting from the
number of regulatory a^^encies created by the present administration.)
9838
-206-
"The jurisdiction of many of these agencies overlaps that of others
in many important respects. Even if there is no outright overlapping
of jurisdiction, the total coverage is so "broad that adoption "by one
agency of a given policy or method may vitally affect the success of
another agency in carrying out previously adopted policies." As an
example of this prohlem, the relation "between codes such as lumoer and
tim"ber products and the construction code with the activities of the
FHA is given.
(26) Mr. W. H. Hastall who is making a study on relationships with
other government agencies furnished this information in a conversation,
Novem'ber 8, 19S5.
(27) National La"bor Board, National La"bor Relations Board, nnd the
Department of La'bor.
(28) Hearing on Telegraphic Communications Industry, Pe'b. 6, 1935.
The question of jurisdiction was brought up at page 52.
" Mr. IIThite: They (The Federal Communications Commission) had a
hearing on free service here just a few vreeks ago.
"Deputy Administrator Fuller: They retained jurisdiction over that.
"Mr. TJhite: I think pretty generally they have jurisdiction over
everything. I think that is one of the difficulties."
(29) Mr. C. H. Osthagon, Deputy Administrntor furnished this in-
formation in a conversation Hovem"ber 8, 1935. The relationship, he stated
was quite cordial.
(30) See hearing, Electric Light and Power Industry, Jan. 12-13,
1930, 10 a. m.. Hall of Nations, Washington Hotel, Washin^'ton, D. C.
(31) Approved Code No. 199, Cork Industry, Codes of Pair Competi-
tion, V, 45, Merchandising Plan, requiring that distri"butors filevith
manufacturers their prices on certain items; see also Ariendment No. 2
to Approved Code No. 199, Cork Industry, Codes of Pair Competition, Vol.
XX, 271, requiring that industry mera'bers shall not sell to distributors
unless they enter into the contract provided for in the Merchandising
Plan; see also Approved Code No. 88, Business Furniture , Storage Equip-
ment and Piling Supply, Codes of Pair Competition, Vol. II, 38C', Exhibit
C, Art. VI (f), which was once interpreted as requiring resale price main-
tenance. All uniform contracts. Approved Code No. 546, Pacific Coast
Dried Pruit Industry, Codes of Pair Competition, Vol. XXI, 39; also
Approved Code No. 503, Pretzel Industry/, Codes of Pair Competition, Vol.
XV, 87.
(32) Ibid.
(33) Memorandum by Blackijell Smith to the Legal Staff, May 24, 1934,
re Codes Legislating for G-roups not requested by the Applicants.
-2C7-
"Many of the proolems of industries relate to practices of individuals
outside of the industry itself , such as malpractices of jo'cbers injuring
a producing' induatry. There ia i?;rec:.t pressure for elimination of such
practices even though they arise outside of the industry for v^hich the
code is adopted. We are asked to do this sometimes "by prohibiting any
transactions between members of the codified industry and members of some
group who enga..^'e in the practices conplained of. Sometimes also the ap-
plicants seek to provide for a required agreement to be entered into by
the member of the other group in transactions with members of the codified
industry.
"Section o (a) sets up the procedure for codifying a 'trade, industry
or subdivision thereof on application of a trtide or industrial association
or group for such trade or industry or subdivision thereof. Such associa-
tions or groups must be truly representative of such trades or indxistries
or subdivisions. When a code is approved its provisions become the stand-
ards for the trade or industry or subdivision.
"The whole conception is of voluntary codification of a particular
trade or industry or subdivision thereof on the application of an associa-
tion or group truly representative of it. It is probable that purported
codification of one group on apiDlic tion of another group under Section 3
(a) is liltra vires. In any event it is contrary to the principles under-
lyin- the conception of the Act."
(34) Hearing for Approved Code Ko. 59, Harking Devices Industry -
Proposed Amendment to Code of Fair Competition, January 30, 1935, (Codes
of Fair Cdmpetition, II, 13) 84 and 86.
"Mr. M\irray: Mr. Administrator, this Code for the Traffic Control
Signs and Signals Industry, this proposed Code, is one of the Codes that
has been bruited about for man;- months in cm effort to secure approval,
and it has been passed through the Review Division. Tne Code as a Code
is acceptable to the Administr tion and is now ready for approval in its
final form. However, the Heview Division have questioned the representa-
tive character of the sponsoring groxip and requested that that matter be
firmly established before Administrative approval will be given. .....
"A que tionnaire was sent to the twenty-six Icnown members of this
industry, replies received from a large majority, and it clearly indicates
that the proponents who originally claimed to represent 75^ of the industr;;-
in truth only represent 25'/^ now. So the tables, as it were, are turned,
and the non-association members are more representative of the industry
than the association members. The association proposing the Code has
been properly notified that their approval is not sufficient to obtain
Administrative approval of the Code."
(35) See the transcript of hearing. Flaying Card Appendix of the
Graphic Arts Code, January 10, 1934, 35 et seq. There appears an indica-
tion that U. S. Playing Card Co. desired no price control in the industry
and held back in approving the administrative structure for that reason.
It was successful in securing its wishes.
9838
In connection \7ith the problem of assent it might "oe argued that
an assenter would "be estopped to deny the representative character of the
proponents. AnsY/ere of duress and secret action and intent might te
made.
9838
llOTfiS TO CHAPTER ^'111
(1) The Procedai-il Scheme and the He rings.
Slachly and Oat man, Administr-'tive Le|g;isl'^.tion and Adjudication,
(Brookings Institution 1934), 21S:
"An advantage possessed "by administrative tribunals, which, if prop-
erly safeguarded, is also an advantage to the public, is the relative
simplicity and flexibility of their methods, procedui'es, rules of evidence,
and manner of making decisions. In na.ny cases such tribunals are •■^iven
newer to establish their 'ovm Taroceciure, to create their o'-m rules of evi-
dence, and to control to a very la.r,?e extent the factors 7/hich ^7ill govern
the mahing of their decisions. '''Iven when they are not given conmlete "oovrer
in such , natters, they are generally left a inuch freer hand than the ordi-
nary co^irts Toossess.
""'oreoyer, the .iudicial coLirts thcr^.selves h9VG been verv liberal in
leaving such authorities a frei? ha.nd in these matters, instead of insist-
ing on the a.iTolication ^f ordinary .iudicial -orocedure and criteria. It is
generally the practice of administrative boards and tribunals to conduct
their hearings in a much freer manner than the jud.icial courts would em-
ploy. Thus, the hearings are generally exoedited, rules of evidence are
reduced to a, minimum, ca.ses are freouently loresented. without counsel or by
TDublic accountants, and the decisions are based not merely on the evidence
■oresented in the hearing of the case, but also on facts ga„thered by the
commission or administrative tribunal itself."
(?) Ibid., 1"^175:
"Eiere are no general rules of ^roced:are a,-o-nli cable to the authori-
ties that -re carr^^ing on administrative adjudication. Procedu.re is so
varied^thpt no layn^^er ■'mo^-'s ho^T to "oroceed with a. case without examining
the -oarticular rules of the authority with which he is dealing, i^ven
when he does so, he ma.y find the rules so va.eue and indefinite that he .
hardl^- ^^no^-'s with anv degree of certainty what is reauired. Although
several eLabora.te general treatises have been v;ritten on the subject of
federal procedure and practice, as well as many special treatises dealing
with the proceccure of particular actoinistrative adjudicating bodies and
administrative tribunals, lawyers as well as litigants are often at a loss
regarding the proper steps to talce.
"joules of evidence range all the way froij those almost as strict as
the rules a^iplied in ordinary judiciaJ courts to practically no rules, ex-
cept, perhaps, those of ordinary co]Tmon sense. In some administrative tri-
bunals, the hea,rings are very formal. In others, they are scarcely more
formal than conversations. Informality is generally most pronounced in the
case of mixed a.uthorities v/here the quasi- judicial function is as yet hard-
ly recognized. Yet even before some of the authorities that are acting as
controlling agencies over administrative action, there is very little
formality and the rules of evidence are almost negligible."
It should be pointed oui> that mles of evidence and procedure frequent-
ly vary v;ith the jurisdiction, and that in private law courts, the attorney
-210-
encotmters the same difficulty as tliese rules are so different and of
such delDatahle merit, and especially in the case of adi^inistrative bodies
where the prohleias vary, have special reasons for differing. It would
seem that the authors' criticism, if meant as such, is not particularly
in point, although it might he desirable to have some simplification.
(3) Van Vleck.- "Administrative, Justice in the Enforcement of
Qp.asi-Criirdnal Lav/," 1 G-eorge "Tashington Law P.eviev; 18 (1952). The
author sugj^:ests that only two references to administrative procedure for
expulsion of the Act are made within the Act: (l) Proceedings "begin by
the arrest of the accused on a warrant issued by the Secretary. (2) The
accused oa^/ have bail. The Administration worked out its ovm rules of
procedure. See Rule 19, Rules of January 1, 1930, nage 37.
(4) 31achly and Oatman, op. cit., IfiS. The authors point out that
statutes vary as to established -orocediire for administrative bodies. The
statutes outline procedure for the Interstate Commerce Commission, but
say little or nothing of the federal Trade Commission. Others definitely
give pov/er to administrative bodies to establish their own rules. On
this proposition, see Stephens, Administrative Tribunals and the Rules
of Evidence, p. 8.
(5) Comer, Legislative Inunctions of Ifational Administrative
Authority (iTew York 1927), 200:
"In recent years maay of the statutes authorizing delegated legisla-
tion have included provisions to the effect that a hearing must be held
before such legislation can legally issue." e.g., 37 Stat. 315 Sees. 5,
fi, 7, G (1912); 39 Stat. 728, Sec. 23 (l91fi); 41 Stat. 10h3, Sec. 20
(1920); -2 Stat. 1435, Sec. 3 (1923).
{<^) Yi.ra::tava V. Fisher. 189 U. S. Pfi (1903); Brat ton v. Chandler,
2fi0 U. S. 110 (1922); State Board of Health v. McCoy. 125 111. 289, 17
W. E. 781^ (1C3S); Coojoer v. Board of fforks. 14 C. B. (il.S.) 180 (18(^5);
State V. Chittenden, 127 Wis. 4^3 - 107 K. "f. 500 (190(^); U. S. ex rel
Roop V. IDou.-lass, 19 D. C. 99 (1390). See also, I>:cParland, Judicial
Control of the Federal Trade Coimnission and the Interstate Commerce Comr^
mission, 1920-1930, (Harvard University Press, 1933).
(7) l.ayers, A Hand Book of H.R.A. . 2nd ed. (New York, 1934), 192:
"On June 27, 1933, at its first public hearing, the National Recov-
ery Actministration announced that inasmuch as the statute laid down no
requirements for any public hearings upon codes of fair competition or
any procedural requirements, it would determine its own procedure. It
then stated that sponsors of codes 'V/oxild be called unon to present evi-«
dencc on the various matters in, Section 3(a) resTjecting which the Presi-
dent is required to malce findings. It further stated that persons offer-
ing objections to or modifications of any code provision or additional
code provisions must file a specific statement in v/riting requesting
simply the elimination or addition of a specific provision, or a modifi-
cation in language proposed by the objector." This was quoted in the
Brief for A. L. A. Sch.echter Corrioration in Schechter v. U. S. , 52.
9838
-211-
(8) See also Brookings Institution, The National Recovery Adminis-
tration - an Analysis and an Aoor-yisal (1935) 14:
"Except in the case of tariff investigations, procedure requirements
are limited to the vague specification of public notice and hearing, "
(S) Title I, Section 4(b').
,(10) K.I.R.A. , See 3(a).
(11) Brief for A» L. A. Schechter Corporation, on. cit. , 49-50:
"There is nothing in this section 3(a) or anywhere else in the Recov-
ery Act wiiich provides for notice to persons in the industry, particularly
those not members of the applicant trade or industrial association, and no
provision whatsoever is expressly made for a hearing to determine ^whether
the provisions in the proposed code are properly contained therein. No
evidence is required to be taken and no findings of fact are required to be
made by the President except those i?re have mentioned -above, which have no
relation at all to the fairness or unfairness of most of the practices pro-
hibited by the Live Poultry Code. Thus, in this respect the President is
free to act in a purely a.rbitrary manner, A trade 'oract ice .is denominated
unfair simply by reason of the fact that the preiDondera,nt majority in the
industry has ordained it to be such, and this .without any required notice
to other members of the industry, without any reouired hearing, without
any requirement for evidence and without any requirement, foi" findings of
fact or judicial review. Thus, it is plain that the code may be formulated
in a purely arbitrary and capricious manner, for it makes no difference
that the National Recovery Administration .may .have customarily held in-
formal public hearings to politely listen to the complaints of 'persons en-
gaged in other steps of the economic process'. When presented for approv-
al to the President his action in ..gjpproving, rejecting or modifying the
same may be utterly arbitra.ry and capricious, because he need not say why
he acts. "
(12) Supra, V,
(13) Brief for A. L. A. Schechter Cor'o oration, op, cit., 51.
(14) 38 Stat. 717.
(15) Brief for A. L. A, Schechter Corporation, op. cit. , 46-54,
(16) Infra, XII.
9838
9838
(17) Johnson. The Blue Ea^-^le from Eg^ to Earth. (Saturday Evening
Post, Fehruarjr 9, 1935),. 31:
"The very Act was cohceived in controversy — controversy as old as
civilization — controversy among labor, management and consumers. For
reasons recited earlier, "we organized to make, that controversy vocal,
public and intense, iVe preferred to write the rules for a new economic
government of the United States by hearing every side which might have an
interest in the result and arriving by compromise at the greatest good -lo
the greatest number and tiie least possible harm to anybody,",
(18) Johnson, ibid., (January 26, 1935) 88:
"As I have said, my whole theory of administration was to make MA a
forum of controversy. Nothing short of clairvoyance can prevision the ef-
fect of a Code; first, because, the whole idea is \inprecendented; second,
because no group of men could be gathered who could know enough about
the infinite variety of circumstance in American business to pass in a
closet on its problems. The only way to get the truth in such a case is
to give every adversary and informed. interest its. day in court,"
(19) Supra, V.
(20) Supra, n, 17 and 18.
(21) Supra, VI.
(22) Freiind, Administrative Powers over Persons and Property (Uni-
versity of Chicago Press 1928), 84, and Chicago Junction Case, 264 U. S,
258 (1924),
(23) Tagg Bros. & Moorehead v. U. S. . 280 U. S. 430, 432 (1921).
(24) N.R.A. Release No. 2993, January 25, 1934, quoted by Brookings
Institation, op. cit., 85, N. 3:
"The formula is designed, by controversy of conflicting interest, to
arrive at truth and composition. This practice has been followed without
exception. Without it there would be no formula . or possibility of ob-
taining informed -opinion on any of the three principal sides of the con-
trolling questions pertaining to each code. The only alternative to
that sort of revelation through controversy is such long inquisitorial
and academic proceedings as have contributed to the .previous failure to
control monopoly -by the anti-trust acts." See infra.
(25) See NRA Release, J^-ine 27, 1933,
(26) Office Order No. 15, August 5, 1933 p. 6 is the only early
reference to public hearings (other than Press Releases which can not be
tnken as formal policy). The reference merely contains the outline head-
ing "VIII Hearing A, Hearing Proper." Immediately above, ander VII B, is
rather full instructions that the Deputy Administrators will inform Public
Relations Division, if a good publicity story exists and will check the
draft of the story prepared by the Public Relations Division with the in-
terested Trade Association,
3838
(27) Office I.«n,nunl: ■
"CODE Iv^CINCr Al'^D iU/'EI-IDIv.£lJT II-2nno PROCEDURE 11-2412
(3) During the Public Heai'ing the presiding officer (See 11-2400)
will seek to elicit facts from the opponents and proponents of specific
provisions of the proposed code, for the purpose of bringing out the
necessity, benefit', or detriment of such provisions. He will receive
suggested questions from his advisors and will make such use of them as
he deems necessary. He will, however, be guided by the line of question-
ing suggested by his Code Legal Advisor to insure the legal adequacy of
the record of the Public Hearing. "
(28) Ibid., 27.
(29) Transcript of Hearing Electrical Manirfacturing Industry, July
19, 1933, 155-165. Transcript of Hearing Cotton Textile Industry, June
27, 1933, 24-25.
(30) America's Recover^^ Program (Oxford Press 1934), 82; See also
Brookings Institution, op. cit. , 108-112.
(30a) Recommendation of the Advisory Council:
"It is a well established practice at public hearings that advisers
may if they wish, maice statements, and that so long as they confine them-
selves to questions designed to elicit facts they may ask questions . -
directly as well as through the deputy. This practice has been recogniz-
ed not only by custom but in conferences between executive officials of
the advisory boards and the Administrator, It should be recognized in
the manual. Therefore, the Council recommends that the second sentence
be deleted and replaced by the words 'he will give his advisers adequate
opportunity to develop facts, ' "
(31) Transcript of Hearing, Fire Extinguisher Appliance Maniifac-
turing Industry (Approved Code Ho, 98), Codes of Fair Competition, Vol,
III) Monday- October 23, 1933, 10:17 a.m,
Mr. A. 0. Bonniface, Secretary of the Chemical Fire Extinguisher
Associationj in submitting the code had only two sentences to say which
might have any bearing at all upon the code proposal. The Transcript of
Hearing upon Article VI, covering Powers ajid Duties, discloses testimony
running from Page 61 to 85 inclusive. It is interesting to note that of
these 24 pages of testimony not a single word was spoken in favor of the
provisions of the proposed code. The testimony in fact is limited main-
ly to briefs by people opposing the code,
(32) Transcript of Hearing, Air Filter Industry, December 21, 1933,
PROCEEDINGS
"Deputy PCing: The first code is the Air Filter Industry. I have no
requests to be heard on that, and may we consider your original presenta-
tion as a presentation of all codes?
9838
-214-
"l:r. (j'Leary: You may consider the presentation the presentation
of all codes. If you prefer, we will present each one.
"Deputy King: I think it is a useless detail, which will hurden
this hearing. I suggest to the reporter that with the announcement of
the hearing of these codes that the code for each hearing he copied into
the record of the code under consideration.
"Mr. O'Leary: I should like to have you give the chairman of the
code committee of each industry an opportunity, if they have not already
done so, to present a letter of presentation, I think most of those are
in, but if they are not, I think they should be presented. Otherwise
the code is fully presented.
"Deputy King: Does anyone wish to be heard on the Air Filter Indus-
.try Code?
"In order to save time we will consider each code first where no
one has suggested an opportunity to be heard, and after amnle oDDortunity
has been, given, pass on to the next code.
"I assume no one has any special amendments in reference to the Air
Filter Industry, and the hearing on the Air Filter Industry is recess
subject to the call of the Administrator.
"(The hearing was thereupon recess as above stated, at 2:30 o'clock
p.m.)"
(33) Transcript of Hearings:
Buff and Polishing Wheel Industry, October 16, 1933, The hearing
lasted from 10:00 a.m, to 10:55 a,m.
'Tashing and Ironing Machinery Manufacturing Industry, October 4,
1933, The hearing lasted from 10:00 a.m. to 10:35 a.m.
Terra Gotta Industry, September 26, 1933, The hearing lasted from
,10:15 a.m. to 11;22 a.m.
Hair and Jute Felt Industry,. September 29, 1933. The hearing lasted
from 10:05 to 11:00 a.m.
Ladder Manufactiiring, October 10, 1933. The hearing lasted from
10:00 a.m. to 11:40 a.m. " '
Hardwood Distillation, October 3, 1953. The hearing lasted from
10:00 a.m. to .12:15 p.m.
See also, Dearing, Homan, Lorwin, and Lyon, The ABC of MA (Brookings
Institution 1934) 87:
"The duration of hearings depends entirely upon the amount of evi-
dence to be, introduced; some last only a few hours while others continue
for several days. Public hearings on the code for the storage battery
industry required only two hours, while those for the retail trade code
required several days, "
9838
-215-
(34) Transcript of Henriiit-, Cotton Textile Industry. The hearing
lasted from June 27, ID?-', to J'une 30, ll^^S inclusive.
(35) Transcript of Hearing', Steel Industry, July 31, 1933, 1,
Statement of Mr. Donald Rich'oerg, Counsel, National Recovery Administra-
tion.
"Since the first hearing upon the code submitted by the cotton
textile industry, there has been a form of :Drocedure follo\7ed, v^fith v/hich
I assume most of those present are faaiiliar, but in order that there may
be no misunderstanding, it may be desirable to restate that form of pro-
cedtire.
"The law lays down no requirements for any -public hearings upon
these codes of fair competition, therefore there are no statutory limi-
tations or controls upon this procedure.
"It should be clearly understood that no representatives of any pri-
vate interest favoring or opposing a code have any legal rights to control
or direct the presentation of evidence, or the procedure in this public
hearing, v/hich is subject to sole control of the Deputy Administrator in
charge, acting in conformity with general regulations.
"IE is hov;ever the purpose of the Administrator to give all persons
interested an adequate opport-onity for the presentation of evidence in
support of the code, or any objections to proposed code provisions, or
any suggested modifications thereof or additions thereto.
"Tlie actual hearing upon a code will begin with the presentation of
the code by its sponsors.
"Bfiifore a hearing is given to those offering objections or additions
to or modifications of any code provision, a specific statement is to be
filed in \7riting setting forth the request for the elimination of the
specific provisions, a modification of a provision or any additional pro-
vision, and then the proposals will be heard in the order announced by
the Deputy Administrator, and all parties presenting evidence are request-
ed to confine their presentation in the first instance to oral or documen-
tary evidence produced in support of a specific proposal made.
"Oral arg-uments are not to be received in these hearings unless cer-
tain matters are subsequently set dov/n for oral arguments.. Written argu-
ments may be filed if parties so desire.
"The purpose of this hearing is to provide evidence of facts upon
which an administrator will be justified in recommending approval of codes
to the President; therefore these herrings are not appropriate for the
presentation of argument upon issues of law. If any party in interest
desires to raise any issues of lav/ in connection with a proposed code of
fair competition, he may file a written argument thereon with the Deputy
Administrator, but all arguments upon question of law v?ill not be per-
mitted during the public hearings.
9838
-216-
As previously stated, the control of the hearings rests with
the Deputy Administrator. Uitnesses are presented hy him for question-
ing or hy others representing the Administration, hut T7itnesses are not
presented for cross examination hy opposing interests, and such cross
exajainaticn is not a part of these proceedings. ■ ■
"Again I \7ish to eraphaze the point that this is an adjninistrative
inquir;!- and not a judicial investigation; there is no restriction upon
the representation of parties hy attorneys or specialists, hut such
representation so far as they are heard in these proceedings should
regard themselves as witnesses suhject to questioning hy the Deputy
Administrator and not as co-ansel conducting a lecn suit."
This statement hj'- lir. Richherg provided the pattern of procedure
folloijed in all subsequent hearings, and was widely quoted "by presid-
ing officers and legal advisers, although it was never issued as an
official II. Pi.. A. statement in eiiy other form thg.t that ahove referred
to, 3ir practice, it can he said, it was adopted as official IT.R.A.
procediire.
See also Transcript of Hearing, Cotton Te::tile Industry, June 27,
1933, 4-7. • ^
SJLepiiejiai. Ji^jrujXstj^tJLve. jrjiihiuiaj._s jyid the. ILule_s. .of. JLvi.d e.rice.;
(Harvard University Press) , 95:
"If the rules of evidence are common- sense ways of determining
whether to consider offered proof, vrhj should thej'- not he of value tc
one tribunal as well as to ajiother?"
(36) Transcript of, Hearing, Fire Extinguisher Appliance Manufac-
turing Industry, 90-91:
"lir. Evans: I wo-old lihe to state th^t it is all very rigid
for a different specialty which does not require that dsort of control.
"Assistant Deputy/- Lane: igain I must warn you tliat you a,re deal-
ing with pure opinion, and I cannot talce it unless you want to suh-
stajatis,te it with facets. We would "be pleased tc have any facts v/ith
relation to Article "VIII.
"Ilr. Evans: I will stop just as scon as I can understand your
directions, hut I cannot xinders'tajid hov/ ycu can prove a judgment
about 3'^ days, for instance; there is no proof adducible for that;;
it is a, question of judgment, trade judgment and practice and experience."
. ,-L ,•<:."
The presiding officer then aslred i:r, Evans to place his suggections
in a brief. For a discussion of this practice. Infra.
(37) Luce, Legislative Proced.ure, (Boston & Hew York, 1922) ,146-147:
Speaicing of legislative hearings" the Author saj^s - "The value of the
opinion brought out by hearings is a,s uncertain as that of the infor-
mation. The opinion is the more dangerous, for misinformation
-21':
can "be corrected, "bat tnere is no test for opinion. Ponder it for a
moment, and you will see tne risk in drawing inf-rence p,s to the opin-
ion of two million or so of ad alt humsn beings from the views
exoiessed by five or fifty persons in a committee room."
(38) Ta^gi^: Eros. & Mo ore he ad v. U. S.. 280 U. S. 420, 432 (1930),
indicates taat full arsament is allowed as regular orocedare.
(39) Supra, IV, 1.
particularly discussion of Auffmordt v. Hedden. ' 137 U. S.
310 (1890).
(40) Supra, n. (35).
(41) Mayers, on. cit., 192. Brief for A. L. A. Schechter CoriD, ,
00, cit,, 52, quoted the statement of Mayors' referred to.
(42) Mayers, oo. cit., 192. l.j.t see Transcript of Rearing, Fvir
Dressing- and Dyeing. Industry, Nov. 1, 1933, ,
(43) Farmers Elevator Co. v. Chicago, Rock Island and Pacific
Railroad Co. ,107 N. £. S41, 843 (lH.. 1915). The case consciously
follows the Interstate Commerce Commisslon_ cases. It should also he
noted that the statute requirer": a hearing. Smith v. Hitchcock, 226 U,
S. 56 (1912); Gonzales v. Z-ihrick, 45 Fed, (2d.) 934 (C.C.A. 6th, 1930);
and Garfield v. U. S. . ex rel Spalding, 32 App. D. C. 153,158 (1908).
See also, Note, "Requisites of an Administrative' Hearing," 80
Pennsylvania, Law Rp.view 878 (1932).
(44) Stephens, Administrative Tribunal and the Rules of Evidence.
(Harvard University Press, 1933). 95;
"The sacrifice of cross-examination, however,' seems serious.
It is not impossible to reject hearsay after having heard it, that is,
to determine to give it no weight. But if it is to .be relied on, how
far is the trier of fact to give it worth?"
(45) Berizz Co, v. Kransz, 146 N, E, 436 (II. Y. 1935), Evidence
is not -conclusive where there is no basis to offer rebuttal. This was
in a proceeding under the New York Arbitration Act.
(46) Infra, T', . .
(47) A. C. 120 (House of Lords 1915).
(48) Such books as: He'^art, The New Despotism, (New York 1929);
Allen, Bureaucracy Triumphant. (N=w York 1931).
(49) Cmd. 4060, Presented by the Lord Chancellor to Parliament
in April, 1932, at page 30:
"A- fourth orinciple '"hich some judges have discerned is that when
a public inquiry is provided by statute, the insoector should make
9838
his report available to the parties heard. Although the Committee
is not willing to sa' tnat a refusal to do this is contrary to natural
justice, it states its belief "that important considerations of Dub-
lic policy are involved,'"
(50) Ungar, v.. Seaman. 4 F. (2d) 80 (C. C. A. 8th., 1924);
Farmers Elevator C3. v, Chicago, Rock I '^land A Pacific Railroad Co. ,
107 N, £. 841 (111. 1915);' Sabre v. Ratland R. R. Co. . 85 Atl. 69:-,
(Vt., 1930); And Yudelson, v. Andrews; 25 F, (2d) 80 (C. C. A. 3rd,,
1928); See, llote, "Thp Risht to a Hearing Befbre' Administrative Tribu-
nals," 28 Harvard Law Review 198 (1914); See also Kwock Jan Fat v,
vfnite. 253 U, S. 454, 464 (1920), approachin^s- the problem from the
inadequac„ of the record presented ttie court,
(51) Stock V. Central Midwives Board. 3 K. B. 756, 7640765 (1915).
(52) Note, "Requisites of an Administrative Hearing," ^o^, cit., 884.
(53) Garfield v. U, S. ex rel Spaldinr^, 32 Apo. D. C. 153, 158
(190c).
(54) 38 Stat. 722 (1914), For a discussion of the power in the
alien field see Van Vleck, otj. cit,
(55) .46 Stat, 699 (1930).
(56) Title I, Sections 3 (e) and 6 (c), • ■ ■ ■
(57) Interstate Commerce Commission v. Brifnson, 154 U, S, 447
(1894), 7/hich case involved 26 Stat, at L. 743; and Sabre v, Rutland
R. Co,. 85 Atl, t93 (Vt., 1913),
(57a) Blaisdell, "The Federal Trade Commission," New York,
1932, VIII, The Commission Shorn of Power, 259-284, The theses is that
the Commission has been fought with all kinds of publicity by those
it sought to control and has often been rendered helpless to show
its side of the picture by tae Courts harshly limiting its power to
inspect records or require periodic reports,
(58) Federal Trade Commission 'v. Claire Farnace Co, , 274 II. S,
160 (1927); Fedoi-al Trade Commission v. Maynard Coal Co. . 22 f. (2d)
873 (Ct, Apo. D. C. 1927); and Federal Trade Commission v. I'lller' s
National Federation. 23 F. (2d) 968 (Ct. Aip. D. C. 1927), which held
that making a refusal to produce evidence saige'ct to a criminal oro-
secution is a denial of due process of law,
(59) Transcriot of Hearing, Pur ivianuf acturing Industry, March
19-21, 1935, 67. Mr. Hodgson, the Code Dif-ector, who should have had
tne richest experience with the tnde ' nractice orovisions and ■ who should
have been most helpful to the N. R. A., after specifically stating
upon his first appear=<nce that he would reappear with a detailed state-
ment upon the trade practice provisions, failed to do so, 'Mr, Hodgson's
statement was in response to an inq^ary by an ¥. R. A. official, Tne
suggestion was made th-<t the Industry desired that he made no further
statement.
(6^!) Ellis V. Interstate Commerce Ccn-^ission. 237 TJ. S. 434, 445
(1915), 1ihe 0 'inion of i-r. Justice Holmes; Feceral Tr^.de Commission v.
A'aerican Tobacco Co.. 264 U, S. 2S8, 306 (1924), the o^jinion of Mr. Jus-
tice Holmps; Federal Trade Commission v, Hammond Snyder A Co.. 267 U« S,
586- (1925); and Federal Trade Commission v. Smith. 34 F. (2d) 322, 324
(1929); see also Hale v. Henkel. 201 U. S. 43 (1906). Lnnge lut t i g ,
"Constitutional Limitation on Administrative Power 'of Investigation,"
28 111. Law Review '508 (1933-34).
(61) Kilbourne v. Thompson. 103 U. S. 168 (1880); and I/cGrai n
v. Daagherty. 273 U. S. 135 (1926).
(62) Harriman v. Interstate Com.mer' e Commission. 211 U. S.
407 (1908); and in re Pacific RailvTay Commission. 32 F. 241 (1887).
(63) Kr, Justice Holmes in Harriman v. Interstate Commerce
Commission. 211 U. S. 40?, 418 (190S).
(64) Logal Memoranda, from Black--fall Smith to Legal Staff,
June 21, 1934, re Examination of Books, qaoting a memorandum of
Robert P. Reeder:
"A witness may waive the orotectlon of the Fifth Amendment
by testifying voluntarily. It is very doubtful whether he could bar-
gain long in advance that h'- would vvaive the protection of the Amend-
ment. Congress could grant such imm-^nity from further prosecution
tnat he could be required to testify if such legislation were on the
st-tute books. It is not there. It seems that the President could
grant such a Dardon that tne witaess could be required to testify and
prod-ace evidence; but tne district attorney can not grant immunity."
(65) Title I, Section 3 (a). "The President may, ^s a condition
of his approval of any such code, impose sj.ch conditions (including
requirements for ♦'he making of reoorts and the kee-oing of accounts)
for the protection of consumers, com-oetitors, employees, and others....'
On the subject of periodic reports see Lilienthal, "The
POT'er of Governiriental Agencies to Compel Testimony. '"39 Harvard L-^w
Review, 694, 700 (1926); and BlaisdelJ. The Fe'deral Trade Commission.
(Columbia University Press 1932) 259-284.
(66) Legal Memorai dura, op. cit. (64):
"My conclusions are that the keeping of books showing such
data as are necessary for the enforcement rf legitimate code aims may
be required in advance and that tnereafter the production of such data
wnen necess- ry for the enforcement of the lay may be required. "
S-. e also Interstate Co-';merce Co7"Tn.ission v. Goodrich Transit
Co., 244 U. S. 194 (1912).
(b7) Approved Ccce o. 4, &lectrical '"anuf acturing Industry,
Codes of Fair Comoetition, I, 48, Art. VI; --^jid Ao-oroved Code No. 15,
Ken's Clothing Industry, Codes of Fair Comoetition, I, 235, Art. XIII.
9838
-22C-'
(68) General Regulations, Series A, issued ty the Secrptary of
As-ricultuie,
(69) -Note, "Requisites of. an Adminis^r^ti -e Hearing, "• on. cit,,
881. '
■ (70) Note, ibid.; San Diego Land and To- ti Co. v. W^tionag City.
174 U. 'S, 739 (1899^; Lander v. Mercantile Bank. 186 U. S. 458 (3.902);
and Smith v. Hitchcock. 226 11. S. 55 (191-';); but see, Farmers' Elevator
Co. V. Chicago. Rock Island & Fncific Ry. Co. 107 N. E. 841, 843 (1915).
(71) Transcript of Hearing, Fire Extinguisher A-opliance
f anufacturing Industry, 91:
"Assistant Deputy Lane: As I understand it, you want to
suggest a modification of the time?
"Mr. Evans: I want to suggest, ^ith repsect to our business,
that it as too rigid, aand useless. I made this oremise in the begin-
ning, that 1 would have to raise, these points with respect to the dif-
ferent Articles, and that is why I am doing it.
"Assistant Deputy Lane: You will cover those in your
Brief?
"Mr. Evans: Yes, "
(7?) Office Manual: .
"Code Making and Amendment II-500n Amendnipnts 11-5120
"C. Nature of Proceedings .
"(l) 'i/henever a likelihood exists tha.t a substantial
minority or group will object to a proposed amendment, or where the
nature of the subject matter involiyes the public interest, a iDublic
hearing should be- called. In other cnses notice of oooortunlty to be
heard or to file objections will ordinarily- be sufficient,"
(73) Legal Memorandum, by Biackwell Smith to the Legal Staff
re Hearings on Prooosed Amendments, June 2, 19b4:
"Questions are frequ>=ntly arising as to whether an actual
hearing on a proposed amendment or like matter is required as dis-
ti.iguished from opportunity to be heard. Obviously, from an Adminis-
trative standpoint, it is impossible to hold hearings on every
pro-QOsal- made. Tne advisable orocedure in this connection is to obtain
from known informed sources, including the industry, available f^.cts
concerning the probable result of the proposal, both within the
industry ano. in relation to otner industries. If no appjecj.able con-
troversy or conflict is likely to ensue, or if the proposal is of
comparati -£ ly minor importance, or is one ."-Jhich would not requirp f-grther
investlg -tion to obtain necessary information, or the question of d-ge
•process is not largely involved, then an opportunity to be heard probably
9838
•221-
will s-uffice. Such f^cts should be analyzed in e=(ch case from this
viewpoint, which makes the -^ns'-er to the question largely a matter of
the exercise of sound judgment. The main requirement (which should te
complied with in either event), is' to obtain in the record sufficient
facts to snow the need for the proposal, -nd that its aoprov-il is i
reasonable exercise of administrative authority, V7ithin the oolicies of
the Act." (Underscoring is. mine).
(74) Ibid. See also the language by Lr. Justice Holmes in Bi
^■etallic In\ ^stment Co. v. btate EoaL-d of '^^uuali nation.
259 -J. -S. -.1, 445 (1915):
"Vfliere a rule of condact a.oulieG to nore tJl•^n a few ■oeoole,
it is imorsctic^ble th-- 1 e/eiyone should h ive ' direct voice in its
adoption. T..'- Constitution does not require ^11 oablic acts to De done
in tO'Ti meeting or an assembly of the whole."
But see Londoner v. Jenver, 210 j, S. 273 (1908), indicating
a different requirement where the area involved wn.s smaller.
9838
NOTES TO CHAPTER IX
(1) Tgrjg Bros. & iioorhead v. U.S. , 280 U.S. 420, (1S30):
"■,;'e find in the evidence iDefore the Secretary ajn-jle su-,j--iort for the
findings and the conclusion reached "by him. It may he that some of the
evidence was irrelevant or of little weight, and that some of the reason-
ing v?as not persuasive. But, mere admission by an administrative tribunal
of matters which, under the rules of evidence anplicable to judicial
proceedings, would be deemed inco:iroetent , or mere error in reasoning unon
evidence adduced, does not invalidate an order made ''oy it "
and rote - "The Right to a .-iearing Before Administrative Tribunals,"
28 Harvard Law Review 198 (1914) at page 198:
"The law of the subject is apparently still in its infancy and this
is Particularly true of that part dealing with -orocedure. Doubtless free-
dom from procedural shackles is one of the chief ends sought" in adminis-
trative tribunals.
(2) Stephens, Administrative Tribunals and the Rules of Evidence,
(Harvard University Press, 1935).
(3) Ibid, 68: "(l) Do you apply the rules of evidence? (2) If
you apply certain of the rules and omit to apply others, please state
which and whjr? (3) To what extent, if any, have you found in your ex-
perience that omission to apply the rules of evidence operates against
obtaining an accurate understanding of the facts; and (4) To what ex-
tent, if any, have you found in your experience that applying the rules
of evidence operates against obtaining an accurate understanding of the
facts'?"
(4) An ilUistrative answer given to Judge Stephens follows.
Stephens, op, cit., 80: "In Utaii the ChairmaJi of the Commission, took
pnins to prepare the follovifing answers: '(l) As Andy says, 'Yes and no,
mostly no.' W'e pay little attention to the rules of evidence in the
course of our investigation of matters submitted. The questions we have
to determine are largely social and economic ones, not legal, therefore
requiring procedure unknown to the Courts. (2) Yes. Vife often apply
the rules of evidence with respect to wholly immaterial or irrelevant
matters. Obviously the admission of such evidence would add nothing to
the facts for determination by a regulatory or administrative body. We
also rule against evidence that is purely argumentative, (s) Technical
rules of evidence under our statute may be disregarded. In practice and
procedure their omission, we have found, not only tends to expedite hear-
ings, but affords many witnesses not under the guidance of attorneys
greater freedom of expression, which in the main will lead to a better
understanding of the facts we ultimately have to determine. Opinion
evidence, wnile generally admitted for the record, oftentimes operates
against an accurate understanding of the faces, unless supplemented
with the reasons or the facts upon which opinion of the. witness is
predicated. (4) Strict application of the rules of evidence and the
observance of court procedure would in practically all cases defeat the
purpose for varich public utility cormnissions were created, that of safe-
guarding the public interest and providing for the general welfare."
9833
(5) Far'-S, "Judical Notice oy Administrotive Bodies, "4 Indiana
Law Journal 1:^7 (1923).
(6) r-nillips, "A Practical "Method for the Determination of Business
Fact, " B Penns77-lvania Lav/ ?.eview 330 (l934) .
(7) Scer;hens, o-n . cit., 6: "But now he is, "by tne rel-'xation or
ab;xndon:aent of the i^ules of evidence, to be Vhe^rt whole aud fancy free'
as to tne facts. The 'mmch' as the basis of decision will indead have
been canonized. But if the popular view is correct and the rules of
evidence are but 'obstructive ;\nd irrational tecnnicali ties, ' then we are
well rid of them. Perha-os the truth lies part way betv/een."
(8) KcFarland, Judicial Control of the Federal Trade Coimnission and
The Interstate Comi-ierce Cominission (Harvard University -'ress 1933) 30 n.
75, citing: 17 Illinois -^aw Review 3S3 ^3^2);, Ross, "A-.Tolica.bility of
Rules of Evidence in Proceedings Jefore "'oriaiien's Coimensation Commission,
56 Harvard ^a.w Revie'v 233 (1935); and ■•'iginore, Evidence (2 ed. , 1923), 27.
(9) Van Vleck, "Administrative Justice in the Enforcement of Qu-'si-
Criminfl Law," 1 Geor,-'e Washin,q;ton Law Review 18 (1952). and /ote -
"Administrative Law. Probative value of Hea'isay Testimony, 24 Hichi/^an
Law Review 851 (1926).
(10) Stephens, o;. cit., 7-8, 15. See also v.^o. 9-14 for a compre-
hensive statement' of tne rales of evidence a-oolied by various State
public service comirdssions.
(11) Henderson, The Federal Trade Coiii:-.iission,_ (Yale University
Press 1924i) . Stephens, o". cit.: Tiie federal Trade Commission, in
answer to Juo:;,e Stennens' questionaire, stated tiiat it intended to re-
ceive only le:^,ally com etent evidence find base its findin,^^s uoon such
evidence.
(12) Henderson, op. cit., 54.
(13) Blachly and Oatman, Admini strative Leg;! slatiii)n_aM-AdJMii:
cation, (Brookings Institution 1934), 154: "Wnen. courts review the
decisions of administrative judicial tribunals, they sometimes refuse to
uphold these decisions because they consider that evidence was t al-cen in
an im-oro-oer manner, or that the rules of evidence employed in arriving at
a decision were not such as to safeguard all the interes-cs concerned.
The judiciiil courts thus have a certain influence u^Don the rules of.
evidence em'oloyed by agencies of administrative adjudication. Yet this
influence is considerably less -nowerful than might be ex^^ected, for the
courts have dis-ol^yed a marked tendency to assume, on the whole, a fairly
luoeral attituce on the matter of evidence."
(14) John Bene & ^ons. Inc. v. Federal Trade Comirdssion. 299 F.
468 (1924); and Prischer ""^ Co. v. Bakelite Corn. , 39 F. (2d) 247, 251
(Ct. Customs ajid Pat. kp-p., 1930). See, Pennsylvanis R. Co. v. U.S.,
40 F. (2d) 921 (1930). The case held that evidence between the sajne
parties in a different cause u'oon a related issue, was -oro-oerly consider-
ed. This is a recognized exce-otion to the hearsay rale. But see
Employers Insurance Corp. v. Industrial Accident Jomxvdssion, 151 Pac.
423 (Calif. 1915) holding tnat hearsay evidence in not a proper basis on
9838
-£24-
which to determine jurisdictional fact.
(lo) Jolm Bene & ^ons. Inc. v. Federal Trade Comi-nission. su-orc n. 14.
(15) Ibid, at page 471.
(17) Ibid, at page 473: "From the evidence we deduce as findings
of fact: . . . . "
(18) Stephens, op. cit.: "Even the expert Commissioner should
receive hearsay ■ sparingly , should not c'.eny hi'-Vjclf ' the ■tf-'s^3)afe v.f^ln§ 'oi
c:-©no'^^=xa:.iination, and should be willing- to introduce nhat he' acts upon."
(19) Garfield v. U. S. ex rel S-oalding. 32 Am. D.C. 153 (1908).
Attorneys disbarred by the Secretary of Interior objected to the use of
depositions, taken without notice to them or o-a-'5ort\inity to examine the
witnesses, and were sustained.
(30) Infra, VIII.
(?l) Brookings Institution, The National ^ecoven'' Adinini strati on
- An Analysis and an Ap-oraisal (1935), 104-108.
(2?!) Ibid, 112-117.
(23) America's Kecovery Progmm, (Oxford ?ress 1934'', 82: "The
post-Hearing converences are really a series of .compromises until a Code
satisfactory to all elements is i^roluced. The ITFJl's attitude is that of
leadership, although at times it has been forced, to use a more potent
influence on recalcitrant or selfish interests."
(24) Bates & Guild Cq. v. Payne . 194 U.S. 105 (l'04); infra, n. 25.
(25) Shurtleff v, U. S., 189 U. S. 311, 31^ (1903). Where Congress
had specified grounds for the removal of an officer by the President, =-nd
he was removed virithout notice or opportunity to be heard, the Court said:
"It must be presuined that the President did not make the removal for any
cause assigned in the statute . •. . " The imolication is that the Presi-
dent's action needed no evidentiary basis. The case is distinguisnable
as it involves the President in relation with a subordinate employee.
See also feyers v. U. ^. . 272 U. S. 52 (1925), 53.
(26) Kwock Jail Fat v. White. 253 U. S. 454, 454 (l920). ifhere the
instiector failed to record in its -orooer ^lace important testimony, the
court said: "It is the province of the courts, in 'iroceedings for review,
witnin the limits am-nly defined in the cases cited, to prevent abuse of
this extraordinary power, and this is possible only when a full record
is -oreserved of the essentials on which the executive officers proceed to
judgment. For failure to preserve such a record for the information, not
less of the cominissioner of immigration and of the Secretary of Labor
than for the courts, the judgment in this case must be reversed."
(27) Chicago Janction Case. 264 U. ^. 258, 264 (192-^); Atchison.
T. & S. F. Ry. v Comfnerce Commission, l'^'7 N. E, 831 (1929 111.); Inter-
state Commerce Commission v. Louisville and K.ashyille R. , 827 U. S. 88'
(1913); U. S. V. AbUene & Southern Rv. Co.. 255 U. S. 274. Note, "Ad-
9838 ':
ministrative Law - Probative Value of Hearsay Testimony," 24_5*i_ch._ Lfiw
Review, 851 (1926.).;. and 'Mote, '.'5,e.quisites-of an Administrative Hearing,"
80 Pennsylvania Lav^ Eevip-w 378 (1952) 884 .
(28) Stephens, op. cit., 98: "Certainly no practical difficulty
stands in the way of drawing the line against action by coMTiissions u-oon
■na.T)ers in their files, cairicrs' and engineers' reports, and other such
dpta, without submitting the s^'ne to the record and to the scrutiny of
the parties . nd of the reviewing tribunal. ITot only is ;i, fair hearing
not had in the absence of such procedure, out a f^ir review cannot be
made. Unles;:. evidence acted uoon is introduced, the reviewing tribunal
Cannot Icnov; of it."
(29) 235 U. S. 274, (1924).
(30) Ibid. 286-288.
•(Sl) Op. cit., 289. See also Chicago Junction Case, 254 U. S. 258,
364 (1924). Mr. Jiistice Brandeis said, "Facts conceivably known to the
Commission but not put in evidence will not sumjort an order."
(32) The recent cases of Panama Refining Co. v. Hy--n, 293 U. S.
388 (1935); and U. S. v. Schechter Brothers, 295 U. S. 495 (1935) indi-
cate this.
(33) Supra. Plorida &East Const R. R. Co. v. U. S. 234 U. S. 157
(1913); Chica-,0 Junction Case, 264 U. S. 358 (1924); International Shoe
Co. V. .Federal Trade Cornip.ission. ?B0 U. S. 291 (1930); and Federal
Radio Commission v. Nelson Bros. , 289 U. -S. 266 (1933); see also Willough-
by, Constitutional Law of tne United States, (iTew York 1929)
(34) Freiind, Adiainistrative Powers over Persons and Property
(University of Chicago Press 1928), 108: "The hearing provision thus
circumscribes discretion by requiring its exercise to be substantiated
by evidence. It remains to be seen- how this will a.ffect the exercise of
-orudential discretion, particularly uoon the basis of the widest con-
sideration of expediency. How will it be -possible to -o rove or disprove
'public interest'? In many cases it is clear that the requirement will
be mainly^ one of form: chere must be something in the record tending to
show puolic interest, or the oT)--)osite, and a corres-o ending finding.
This may inure to the benefit of the applicant if he makes a good prima
facie showing, and no evidence is introduced to the contrary, and if he
sees to it that the consent order contains the appropriate finding."
Also see page 84.
(35) Supra. ■ ■
(36) Federal Trade Comjnission v. Kerrpel, 291 U. S. 304, 312, 314
(I93^i)
(37) U. S. v. Baltimore dc Ohio R.R. Co.. 293 U. S. 454, 55 Sup. Ct.
268, (1935).
(38) Ibid, at page .'72.
9838
-^26-
(39) VJiliis, Parliamentary Powers of English Government Departments,
(Harvard University Press 1932), 184. The value of investigation ^oy ad-
ministrative officers is discussed.
(40) Su^ra., VIII.
(41) Hew England Divisions Case. 261 U. S. 184 (1923).
(42) U. S. v. Abilene__& "Southern By. Co.. 255 U. S. 274, 291 (1924).
(42a) Office Manual, 2412 (s):
"During the Public Hearing the Pre?iding Officer (See 11-2400) will
seek to elicit facts from the opponents and proponents of specific pro-
visions of the proposed code, for the purpose of; bringing out the necessity,
benefit, or detriment of such provisions. He mil receive suggested questions
from his advisers and will make such use of them n.s he deems necessary.
He will ,. hoi.vever, be guided by the line of questioning suggested by his
Code Legal Adviser to insure the legal adequacy of the record of the Public
Hearing."
(43) Brookings' Institution, op. cit.. 111. .
(44) Johnson, The 31ue Eagle from Egg to Earth, (Saturday Evening
Post, Feb. 2, 1935), 82: "The Lumber Code, too, come in- during this period.
I did not conduct these hearings. There was no epic fight in these nego-
tiations, bxit, on the other ho.nd and for the very reason that there was
not sufficient controversy to develop the subject, the Code has never been
so satisfactory as others of the Big Six. We have had to change it more
than once, said I fear that it is still not right."
(45) 3i-ief for A. L. S. Schechter Corp., in Schechter v. U. S, 160:
" '§elective buying' was referred to in the Government's brief below as
one of the 'evils' corrected by the Code. The evidence relied on in
support of this contention and also for the purpose of linking 'straight
killing' with interstate commerce, is that of Government's sitness
Tottis, himself a slaughterer. The nature of the 'evil' was thus naively
stated by this witness on his direct examination by the Government:
" 'Q. Will you explain the practice of selective killing that
existed prior to the time that the Code became effective? A. Well,
at that time a buyer went in and handled each bird himself and
picked out just what he wanted.' (R. 294)
"^is objection to the practice was expressed with equal frahkness and
naivete on his direct examination by the Government as follows:
"'Q. IThat happened to the rest of this poultry? A. It was sold
at a cheaper price to whichever buyer they could get at a satisfactory
price. It was a sacrifice price.' (R. 294-295)
"In the opinion of this witness, concurred in by the Government,
selective killing is an 'evil' because it permits the customer to buy
what he chooses, leaving in the possession of the slaughterer inferior
9838
227-
poultry required to be sold at a lower i^rice."
(45a) The follovvin,^ is an interesting exam^Dle wfhich can best be
considered by quoting: from the Transcriot of Hearing Kabber Manufactur-
ing Industry, January 12, 1934, 8, lir. Eugene A. Kingman representing
the LaCrosse Rubber Mills Co., The Tyler I-ubber Co., and the Goodyear
Hubber Co. testified:
"■'■n commenting on that I would say that the Code on which we had a
■Duolic hearing, so far as the pur-30ses of our discussion today are con-
cerned. Was not this Code. These, so far as these proceedings go, are
new features. There was in that code a definite tjrice fixing -orovision
differing from these in i.ts wording and possible operation, to which we
most strenuously objected. That provision has been omitted. But in a
series of conferences which took place between the socalled hearing
committee, and representatives of the Administration, there were put into
this Code the provisions to which objection is now made.
"Concerning- these provisions we were not consulted, although our
petition, in objecting to the isrinciple of price fixing and its operation
must have been well knoFn, because of the attitude aiid position which we
took at the hearin,^.
"In this industry, as we will point out very early, there is a
great difference in this tyrje of manufa,cture and distribution of goods
to the public. The provisions of the code were prepared not by a rep-
resentative group of the industry, because no group of the industry can
be representative which represents one division of the industry whose
economic interest and advantages are utterly opposed to another.
'Representative' cannot mean size. 'Representative' can only mean that
it fairly represents all elements in an industry.
"As I say, we objected, or, rather, we requested an opportunity to
sit in and be represented and at least present, when this thing which is
now longer was being formulated, — present our views, \7ithout know-
ledge and without permitting us to oe present, this was approved and be-
comes law, and the law which now exists was formulated by those whose
economic interest is entirely at variance with our own. In saying this
I wish to say that I fully appreciate the very great pressure which the
administration is under.
"That, however, does not in any sense take away from what I have
already said, that a code is written by our competitors who are in a
different position, and approved without our having an opportunity to be
influential, if we might be influential, in the framing of its provisions.
"And since these a,re entirely new provisions which are in here,
which were not in the code at the time of the public hearing, our position
is that this hearing here is a hearing in which we address ourselves to
the government primarily because to address ourself to those whose economic
interest differs so radically from our own, as will appear presently, is
quite analagous to having a Judge appoint the adversary attorney as his
delegate to decide some claim which I have in dispute with him. So that
this argument is addressed primarily to the Government, and waiving tech-
nicalities of machinery for changing codes, it is a proposed review of
■^hich laa-s "been done; it is pi-opo^ieo. on r/hat Icr'jers call a nunc pro tunc
tasis at tliis time, doing that ;-hicli '^'e '-'ould have done had there "been a
hearing on the code T/ith these provisions in it, rather tha.n those
"hich '-.-ere in it rt the tine of the hearing,"
(U6) ' Fu.r Dressing and ITur L^^eing Industr^^', Approved Code Ho. iSl,
Codes of Pair. COiToetition, IV, l6l.
(Uj) Ihid, , Art. VIII, 2-3 5 "2. In order to effectuate the pur-
poses of the Act and to r-sure tiie nrintenrnce of laoor stande.rds, an;,'
division of this industr;,^ ■•i?-7, c-.t an;' tine a"ter the effective date of.
this code sutuit to the Adninistrator, throtigh the 'Code Authority Board,
a schedule of charges applicajle to services rendered hy nenhers of
said division, hased upon the lo'-est reasonrole cost of production. If
and -hen siich t-chedij.le shall oe ap'rrovec" op the Ac-.iinistrr tor and "by
employers of 55;'.' of the employees engaged in the division af "ected, the
rates set forth therein for the servicer specified shall he the mini-
mum charge for said semrices in the industry, and the rendition of ser-
vices for chrrges helo" those appearing in such approved schedule shall
he a violation of this code. Sahsenuent changes in srid schedrile shall
"be arrived at in the scxie manner rnd shjll not oe su.hject to the pro-
visions of Section 2 (c) of Article VI.
"3. Any group of fur dresr-er^. or fixr dyers, not other-rise hound hy.
an approved schedule of charges as contemplated hy Article VIII, may
agree upon a minimiira service charge to assure the mrintenance of .lahor
standards covering any one t-poe of service or a schedule comprehending
more then one type, of service, '7hich shall hecome effective and hind-
ing upon the parties to such agreement '-hen approved hy the Atoinis-
trator. Any violation of such agreement after approval thereof: shall
"be deemed a violation of this code. Suhsecueht changes in said sched-
ule shall he arrived rt in the.sajie manner and shall not he suoject to
the provisionr of Section S (c) of Article VI."
C^S) Transcript of Post Kea.ring, Tur Dressing and Pur Dyeing In-
dustry (Dog and Long Hair Division), April U, 153^.
(!45) Ihid., 7, 10, 30.
(50) These vere Indian Kitt Po::es, S'.dft Foxes, Ca.pe_Fo::es, Sand
Forces, King Foxes, and Persian hitt Foxes.
(51) ".iemorandum. Consumers' Advisory 3oard, iiajr 1, 133^«
(52) Transcript, op, cit. , II3.
(53)- Transcript, op. cit., I7.
(5U) April 30, 1S3U.
(55) Approved Code Ho. 9S, Fire Extinguishing Appliance Ilfg. Ind. ,
Codes of Fair Competition, II, ,511.
(5S) Transcript of Hearing, Fire Extinguishing Appliance Manu-
facturing Industry, April 30, 193^, 2S-3S.
SS3S
(57) A-mDroveri June 7, 1934.
(5S) '.Tool Textile -Luductry , Coi.'Le Xo. 3, (Codes of F'dr Competition,
I, 33}, 37 - "Tiie oi-ovision in the Ooae regaljioing machinery hours was
the only point at issue unon which a minority of the industry took ex-
ception. Tais minority withdrew its objection in f--ivor of the majority.
It was a fine exliioition of sportsmanship and unselfishness. A thorough
analysis of this particular problem will be undertaken immediately to
obtain the actual facts by nccurpte statistical study and research."
The provision in qi.iestion reads ps follows: Pa^'e 39 - "IV — HOURS OF
OPERATION OF MACHIrlERY — "On and after the effective date no emrjloyer
shall oper,-,te any comb or any spinning srjindle or any loom or any knit-
ting machine for more than two shifts of forty hours each ;oer week."
(59) Legitim-ate Full Length Dramatic and Musical Theatrical In-
dustry, Code Ho. 8, (Codes of Fair Competition, I, 81) Administrator's
Letter to the President, at page 83: "For the first time in history of
the legitimate theatre minimriun wages and maximum number of hours have
been fixed by agreement for actors, "oress representatives, company
managers, house treasurers, and otner labor. Wages have not been re-
duced, and, indeed, have been raised. Hours generally have been reduced."
(50) H. I. R. A., Title I, Sec. 1.
(61) Codes of Fair Com-oetiti on, Volume IV, Page 703, Administrative
Order Mo. 1-38, December 15, 1953:
"EMEJ.CtEI-ICY -^liQUIPJELEHTS aS TO FURTHER LIMITATION' OP HOURS OF
MACnllTZ OP~?J\.TION IN CARDED Y.^N GROUP OF THE COTTON TEXTILE
INDUSTRY
"Pursupnt to the recommendation of the Cotton Textile Code Au-
thority under Section VI of the Cotton Textile Code, approved by the
Administrator December 1, 1933, providing for procedure for temporary
changes in the limitation of hours of oioerition of productive machin-
ery to meet particular conditions arising in particular grouns of the
industry;
"It is required that, for a period of sixty da,ys froin January 1,
1934, spinning spindles in the industry, wherever located, operating
on the production of any type of carded yarns for sale as such (such
spindles comprising the productive machinery of the carded yarn group
of the industry) shall ^ot Lc O'-rrLor' in czzcozs^Of^-'faviir'-eit^ht-'Aoui^S^-each
in any week during such period, -orovided -that such oeriod may be short-
ened by the ^ode Authority with the concurrence of the Government Re-
presentative thereon, or that such restriction of hours of orjeration
may likewise be reduced at any time during the period as changing
conditions m^y warrant; and provided further that during the period
when such te.,;roorary limitation is in effect, no weaving mill, combed
yarn mill, or laiitting mill shall operate spindles in the r)roduction of
9838
-230-
any type of crrded yarn for sale as such which were not employed in
spinning carded yarn for such sale at some time during the ninety days
prior to December 1, 1933."
"TEE COTTON TKXTILS IlIDUSTRY COMMITTEE,
"Code Authority under the Code of Fair
Gomr)etition for the Cotton Textile Industry.
"By George A. Sloan, Chairman.
"The foregoing requirement is concurred in.
"Hugh S. Johnson
Administrator
"Leo Wolman,
"H. A. Slater.
"Government Representative on the Cotton Textile Industry
Committee, Code Authority under tthe Code of Fair Competition
for the Cotton Textile Industry."
(63) Transcript of Hearing, Cotton Textile Industry, June 27-30,
1933.
(S3) Brief for A. L. A. Schechter in Schechter v. U. S. , o ). cit.,
172, suggested to the Supteme Court that no ansv/ers could he found in this
field. Although this view seems rather hopeless, it indicates the diffi-
cult subject matter w.ith which NRA dealt: "lifhetLer a given transaction
will '-oroduce an effect upon' interstate commerce is a question which in
a corarjlex economic society involves factors so imiltitudinous and so inter-
woven with inoperative circtmistances that even an exliaustive study vail
not provide an answer. The conflicting testimony in this case amply
demonstrates that thecjiestion is practically impossible of solution."
(S-i) Transcript of Public Hearing, Zlectric Light and Power In-
dustry, January 12.-13, 1934, 594.
(65) Hemoraiid^uTi to C. W. Dupning from the Consumers' Advisory Board,
November 27, 1934. A considerable iiortion of tnis memorand-um is set forth:
"(4) Article VI, Section 7, Paragraph (j), authorizes the Code
Authority to formulate and present to the Administrator an open price
plan which- may be used in this industry. Pending completion of such
plan, the Code Aithority, for a period of four months, is empowered to
collect and disseminate information as to prices, discounts, rebates,
allowances, -nd all other terms and conditions of sale and/or transfer
to different classes of distributors. In other words, mntil the Code
Authority can work out some plan which" is acceptable to the Administration,
it is given a carte blanche for four months, to -oursue any program it
desires. 7/e regard the grant of a.ny such brond and uiirestricted power
as imwise and highly objectionable, and advise its elimination from the
code.
"This code has oeen Pending before the A. A. A. and the N.R.A. for more
than a year. During that time the proponents hnve suggested several
different price filing proposals, none of which were acceptable both to the
Administration and the members of the industry. There is no reason to
believe that the '-'ode Autnority will suddenly develop a proper ,'ind un-
objectionable program for the collection and <Jisscminafcion of orice infor-
9838
mation for use during four months following' a'o-iroval of the code.
"A brief review of the history of this industry may he of assist-
ance in pointin^t, out the dangers inherent in ajay provision such 3,s that
above referred to.
"Six mumbers of this industry do more than 80S of the entire volume
of business, the .remaining business being distributed among thirty to
forty small manufacturers. The industry is divided into two canros - the
mea-t ppckers, and the so-called " independent s" . Each group produces about
half the total output of the industry. They both apparently desire an
open price plan, but h-^ve had difficulty in arriving at a program that
was mutually satisfactory and at the same time unobjectionable to the
Administra.tion.
"The independents wish to have an open price pl^n which would apply
to the distribution method followed by the packers. A major portion of
the output of the packers is sold through branch houses owned oy the
packers. The independents realized that a price filed by a packer cover-
ing the sale of his proifuct to his branch outlets would mean nothing, ns
the branch house could sell at any price it found desirable, without
reference to the nominal price made to it by the packer. The independents
therefore proposed a price filing plan embodying the principle of resale
price maintenajice, the effect of which would be to require the packers to
file wnolesale prices aS well as manufacturers' prices. Tne packers
objected, and the proposal has been withd.rawn. nov/ever, in view of this
history, and our laiov'ledge of the desires of certain members of the in-
dustry, we believe it very undesirable to allow the Code Authority to do
anything about open px-ices until the limits of the power so conferred
are distin-ctl3' set forth.
"The wisdom of permitting any open price filing plan in this in-
dustry is. open to serious doubt, ifo plan or suggestion that has yet
been offered is ncceptable. This industry has six very large members,
and forty very small ones. It is improbable txiat any open price can
be evolved vi/nich will afford protection to the small memoers, yet be
satisfactory to the large.
"About fop.r years ago, the Department of Justice commenced an in-
vestigation of members of the Cottonseed Oil Refiners industry, follow-
ing complaints against certain activities of their trade association.
In this investiga.tion, attention was given to the operation of an open
price plan which was in use by the association. Mr. Walter Rice, Special
Assistant to the Attorney General, made a report to the Attorney General
on April 20, 1931, containing a summary of the evidence secured. This
summary indicates that the open price plan was resulting in virtually
uniform prices on the part of the 18 largest producers in the industry;
that price changes were made sumaltaneously ; and that the sale prices
for cottonseed oil shortening were maintained at a high and nearly
constant level during and following a period of time when prices for
cottonseed aiid rav/ cottonseed products had fallen to a very low level
and were still declining.
"The federal Trade Commission, in its investigation of the Cotton-
seed Industry, developed the fact that the same large refiners who dom-
9838
-252-
inate the refiniog industry, also dominate the cottonseed crushers through
suosidiaries enga^sed in that industry. At about the same time that the
refiners v/ere participating so effectively in an open price plan, the
crushers were engaging in a plan for the collection and dissemination of
information oo'nceruing the "orices which the crushers v/ere "o-yiiig for
cottonseed. According to the report of the Federal Trade Coininission, this
cooperative activity on the part of the crushers resulted in the crushers
paying uniform and ever-decreasing -oricej for cottonseed. This result
could not h.-ve heen achieved if it were not for the full coorieration of
those large crushers which were subsidiaries of the large refiners.
"Because of tne fact that the refiners wno dominate this industry
have abused open price filing plans in the past, there is valid reason
for apprehension that they would abuse permission to engage in an open
price filin^ program in the future."
(65) Jan. 28, 1935, Cincinnati, Ohio.
(67) Approved Code No. 436, rur Mfg. Industry, Codes of Pair •
Competition, X, 265.
(68) March 19-21, 1935, Article VIII, Section 15-20,
(69) Transcript of Hearing, ?:arch 19-:>1, 1935, 612, 773, Fur
Manufacturing Industry: ivir. Fillmore - "After all, aren't all these
regulations of Industry - they hr.ven't anytning to do with the consumer".
(Page 612) Mr. iiiller - (referring to a suggestion that prohibition of
style shov/s would be detrimental to consuiners in the small and medium
size cities) s.^id - "The v?oman in that small town you spoke of is not
concerned in this Code of ours. We cannot be concerned with her". (Page
773)
(70) Transcript of hearing, Steel Industry, July 31, 1933, 1.
Transcript of Hearing, Cotton Textile Inc^'ustry, June 27, 1933, 4-7.
(71) i'lemorandum to ConsuiTiers' Advisory 3oard re Some Incidents
Reflecting the Attitude of Deputies and Other Administrative Officials,
June 3, 1935: " . . . . was probably the deputy most convinced of the
correctness of the rule against advisers being permitted to make state-
ments or ask o^uestions at hearings. His contention was that .^ s the
^administration was engaged in friendly cooperation to produce a code
as nearly like that proposed as possible, it should not be allowed to
appear that any spirit of distrust or antagonism toward industry exist-
ed anywhere v/ithin N.R.A. He also was Convinced that his advisers were
to consider the facts brought out njid to render advice to him on the
side. It was his job to preside and if we brelieve further pertinent facts
could be brought out by questions, it was our function to suggest the
questions to him.
" . . . . did not hesitate to t ell members of industry at conferences
that they mis^ht well ignore certain suggestions of advisers for he in-
tended to over-ride them
"Later on, however, Kenny had an Bxperience v/ith at
9838
-233-
a conference, with the Alumin-uiii Cooking Utensil Inciustry. On this oc-
casion exTDlained to the industry that the Consumers renre-
sentatives always objected and that they might well ignore the recom-
mendations. Kenny -oointed to one -nrovision which mi^ht "be administered
against the Public interest 's re-oly was that it would
never be administered imTironerly oecause he was going to administer it."
(72) Cement Industry, A-nnroved Code ''•o. 138, Codes of T^air Comne-
tition, III, 335 at "oage 534, Article VII, "Prior to the construction
or operation of a new -olant, or the increase in the r)roductive ca-oacity
of an existing one, or the movement of all or nart of such a plant from
one place to another. The Cement Institute, on receipt of such informa-
tion, shall promptly collect complete information concerning existing
productive capacity in the area in which the proposed new pla.nt is to
be located, together i"ith data concerning consumption of cement in tlmt
area. If these data disclose that such new plant will result in further
increasing the riroblem of over-production or over-capacity in such area,
The Cement Institute may petition the President to nrohibit the construc-
tion, or ope-^ation, of the -nro-Dosed new plant, or the increase in manu-
facturing capacities of such existing plants. The provisions hereof
shall not be construed to prevent the raoderniza,tion of existing plants
to imrorove ouality of -oroduct and/or o-oeration efficiency.
"The Board may study the Problem of permanent excess of productive
capacity in any area and may from tine to time prepare and submit to the
Administrator 'for considera-.tion plans for the closing down or amortiza-
tion of the less economical nlants.
(73) Su-nra.,- n/ 71. The writer continued: ''If the Code Authority
is STDecif ically authorized to formulate and pesent a -nlan for apnroval,
the Administration has ta.citly assented to the -orincinle that open "orices
are desirable in this industry. Por this reason, we a^dvise against the
approval of the -nrovision :authorizing the Code Authority to r)resent an
open price -olan for apinroval, and recommend -the entire elimination of
Article VI, Section 7, Paragraph (j)."
The Legal Division had a. direct statement upon this Tjroblera, which-
did not a"'-iolish the use of the argument of tacit a-rrnroval. Legal Memo-
randum, No. 9, ■•lotice and an OpiTortunity to be ^"eard , January 13, 1934:
"As to addition of new matter to codes under provisions in such
codes for inclusion of such new matter on ap-nroval by the Administrator:
The comments as to notice and an opportunity to be heard supply in theory,
but where the new matter is carefully set up in the code itself, not be-
ing effective until approved by the Administrator, the Administrator
could siLTiply a-onrove stating that his apnroval would be effective on a
specifies date unless cause were shown to the contrary nrior to that time.
"In cases where the ne% matter is not mentioned in the code except
by general descrir)tion then there should be a definite hearing on the
specific new matter when Administrator had decided wliat form it should
take and- in such cases the remarks in the first portion of this raemo-
rand-Qin as to notice and hearing are a.r)-nlicable. "
9838
-234-
(74) Stra'^bridge .- Clothier v. ?erlersl "^.adio Com-gisFion. 57 F. (?d)
434 (1932).
(75) Iron pnr" Steel Industry, A-n-oroyed^ Code To, 11, Codes of ''''air
Cc;iir)etition, I, "Reriort of Deputy Administrator K. '. Si.ntjson, at nage
173: ""^nile the raemlDers of the industry and the industry advisor re-oort
that the scheme of the code involves no suhstantial change from "oresent
■oractices, a nunber of 'protests have hean made against alleged changes
in oasing noints and aj-ainst the -nrice provisions of the code a.s a whole.
Protests iiave also been made against the control of deductions for trans-
nortation costs chea-oer than 11-rail, against the control of Quantity
discounts, and against the orjeration of throiogh rail rates on ■'^roducts
fabricated in transit. The nrotestantg "nave not satisfactorily estab-
lished their objections to the o-'^eration of the code.
"In vie"' of the ■nrotests and the far-reaching effects of the nro-
visions of the code, it seems wise to -nrovide for a 90-day "oeriod of
ex-oerimental observa.tion of the oneration of the code." (Underlining
mi ne ) .
(76) Ibid
(77) Panama defining Co. v. "?.yan. ?9? U. S. of'f^, (1935).
(73) Smith v. ^'itchcock. 2?& U. S. 53, 61 (1913): ". . . the of-
ficial was not called on to state reasons or to discuss, - his only du-
ty was to hear; and beyond offei-in'- the -nrinted brief, -olaintiffs' re-
nresentatives showed no desire to be heard." See also U. S. v. Chemi-
cal Fo-ondation. Inc. . 272 U. S. 1 (1926); -uid U. S. ex rel T^-oor) v. ::^oug-
las, 19 D. C. 99 (1390).
(79) Vartin v. Mott, 12 "'heat. 19, 72. (lf^27); and Philadelphia &
Trenton R. ~.. v. Stimnson, 1^. ^e\. 448, 458 (l8-'"i).
(80) ^Tichita H. 1. ._ Light Co. v. Public Utility Commission, 260
U. S. 48, 59 (192^) in which the court said: ""'e rest our decision on
the T^rinci-ole that an ex-oress- finding of unreasonableness by the Commis-
sion was indisTensable under the statutes of the State."
(81) ::woc.k Jan Fat v. Tiite, 25". U. S. 454, 464 (l920).
(81a) ComTiJitee on ''inisters' Powers ^e-nort ( Cf.rd . 4060, -nresented
by the Lord Chcnc -llor to Parliament in Ariril, 1932) 80.
(82) '^Tote - "Delegation of Power by Congress", 48 ''■^arvnrd L"-w t^e-
(83) Ibid , ^1-22.
(8/') Ibid,, 9-12.
(85) Ibid.
(86) Pacific States 'lox and :3aslcet Cora-oany v. "hite, 2 U. S. Law
"eek 202 (1935.
9838
(87) 293 IJ. S. '"'^'^ (19-35) .
(88) Pacific States :3ox anri 3a?.:-et Co.-i'-'ony v. "'hite, 0-). cit. , ?0a.
(89) ?95 U. S. 495 (19P5).
(90) ?pcific States 3ox and "aslret .Co n-nany v. '""ni te , Ot. cit., 204.
(91) P60 U. S. ''B (19-^?).
(92) 264 U. S. 32 (1924),
(93) 290 U. S. 190 (1933).
(94) Pacific StPte 3ox and lasket CoTiijany v. 'Tiiite, O-o. cit. .
(95) Irief for A. L. A. Schechter Cor-o. , or>. cit., 80, com.nented
UTjon this fa.ct as regarded the Administrator's report.
(96) A tyne of finding is found in the letter to the President
from the Administrator on A-n-oroVed Code Ho. 49, QTjtical 'fenufncturing
Industry, Codes of Fair Com-oetition, I, 600,601, which reads, in nart,
as follows:
"The Administrator finds that:
"(a) The Code as recom.;iend ed complies in all resioects with the
pertinent "orovisions of Title I of the Act, includim' without limitation,
subjection (&) of Section 7, and subsection (h) of Section 10 thereof:
and that
"(b) The a^^ilicant ij:rou-) in-noses no ineouitable restrictions on
admission to me'Tibershi-T' therein and is truly reriresentative of the Oti-
tical ''anufacturiniT Industry; and that
"(c) The Code as reco.mended is not desi^-ned to -oromote monopolies
or to eliminate or op-oress small enterprises and will not operate to dis-
criminate against then and will tend to effectuate the policy of Title I
of the 'Mational .Industrial Hecovei-y Act.
"It is recommended, therefore, thnt this Code be imLiediately
adopted."
Another type of finding is indicated by the ''^Ixecutive Order for the
same Code, reading, in ^-.art, as follows, 599:
"N0T\ TTTTtffivoTPF, I, Franklin D. Roosevelt, President of the United
States, pursuant to the authority vested in me by title I of the I'^ation-
al Industry ^.ecovery Act, approved June 16, 1933, and otherwise, do adopt
and approve the report, reco;nmendations and findings of the Administrator
and do order that the said Code of Fair Competition be and is hereby ap-
proved, subject to the following conditions:"
Anotxier is indicated by the short letter to the President from the
Administrator in connection with approved Code No. 50, Automatic Sprink-
ler Industry, Codes of Fair Competition, Vol. I, 605, 606, as follows:
9833
-256-
"I have the honor to sulimit and recoTtmend for your aTroroval the
Code of F»ir CoToetition for tne Automatic S-nrinkler Industry.
"An analysis of the ^rovisionp of tne code has been made by the Ad-
ministration. I find that the code comnlies with the renuirements of
clauses 1 and 2, subsection (a) of Section 3 of ilaie IIa.tiT3-irJ. ImhiOlJriial
Recovery Act.
"I am, my dear Mr. Presioent, " etc.
(97) Phi lade 1-nhia Pj: Reading ^^.y. v. Pi Donato, 256, U. S. 327, ^28
(1920). The court referred to fin;iir.;'p .-nade in thp terms of the statute
as "no connected finfiin^^s of fact aside from conclusions of law." Tt'or
another critical comment, see '"enrie-^son, on. cit., IIR, 119, criticizing
the Federal Trade Cor.mission for'usin,^ such terms as "commercial bribery"
and "stifling ann suToressin-T conrjetition in interstate commerce." See
also -oage 114.
(98) ""enderson, o-n. cit,, 103-l':i9.
(99) Office "'anual: "Code Ma^ring and Amendment 11-2000 •Procedure
11-2703.12.
"(ll) It '"rill contain tiie follo-vinjT mandatory r)arpfl:rar)h beginning;
I analyze said code and find etc. (see V-P) "
It is significant that these reouirements do not tell the Adminis-
trative Official what tyoe of findings he must -riake or should make. In
fact, the i"hole indication is that this 'vas a mere form which the Admin-
istration felt it must comrily with, more as a necessary evil than any-
thing else.
(100) A--)-nroved Code :'o. 1, Cotton Textile Indiistry, Codes of Pair
Comtjetition, I, 3-14a.
(101) A-n^roved Code ''o. 9, Lunber and Timber Products Industry,
Codes of Fair Con-.etition, I, 96-135; '"illis, oo. cit., 133-135.
(102) The Pnglish practice, in cases of local slum clearance nro-
Jects, run from fifty to three hiondred oages. It includes a statement
and an analysis of the facts.
(103) Legitimate Full Length Dramatic and '''usica.l Industry, An-
■nroved Code '.'o. 8, Codes of Fair Co n-oetition, I, PI.
(104) Fishing Tackle Industry, A-n-oroved Code "'o. 1", Codes of Fair
Comnetition, I, 217.
(105) Leather Industry, A^-oroved Code '^o, 21, Codes of Fair Com-
Toetition, I, ''88-291.
(106) 3rief for A. L. A. Schechter Coro. . 00. cit., 54-59. It is
contended that "the President has made no findings of fact to bring his
action in aonroving the code within any -oolicy or standard '"hich the Act
may contain." The same suggestion is made in 'j-ote, "Delegation of Power
by Congress," o-o. cit.
(107) Infra, XV.
-237m
NOTES TO CHAPTER X
(1) 1 Coke Reporter VVb; Storrs v. Barker, 10 Am. Dec. 317,
323 (N.Y. 1822); Haven v. Foster. 19 Am. Dec. 353, 357 (Mass. 1829)
Where the maxim is stated iffnorantia. j-gris q-uod qui s que tenetur scire
memin-um; and Wharton Legal Maxims (New York, 1878), 93 where the
maxim is stated ignorant ia juris non excusat,
(2) Pairlis, "Administrative Legislation" , 18 Michigan Law-
Review 181, 198 (1920); "In the matter of nuMication, Acts of Con-
gress and state legislatures are promulgated in well known and ac-
cessible ways; "but it is a difficult and almost impossiMe task to
keep track of the multifold variety of administrative regulations."
(3) 5 Bentham, Works (1843) V, 547: "We hear of tyrants,
and those cruel onesl hut, whatever we may have felt, we have never
heard of any tyrant in such sort cruel, as to punish men for disohedience
to laws or orders which he has kept them from the knowledge of."
Quoted "by Griswold, "Government in Ignorance of the Law - A Blea for
Better Puhlication of Executive Legislation," 48 Harvard Law Review 198
(1934).
(4) Betham,' ihid. , V,' 546: "That, if he (a man) — asks in
which of all these "books he could upon occasion, lay his hands and find
those parts in which he himself is concerned, without "being "bewildered
with those in which he has no concern, — what he learns is — that the
whole matter is so completely mixed up together, ..that for him to pick
out the collection of those same parts from the rest, is utterly im-
possi"ble," ' ■
(5) Comer, Legislative Functions of National Administra.tive
Authority (New 'York 1927), 156, n. 4, indicates that often only a small
(15) per cent of rulings relative to prohlem will te found to "be pu"b-
lished. Senate Report Nc-. 27, 69th Cong. 1st Sess., p. 7 (1926) relat-
ing to the Bureau of Internal Revenue.
(6) Itid. , 195-196.
(■?) Ihid. ■
(8) Blachly and Oatman, Administrative Legislation and
Ad.lui cation, (Brookings Institution 1934), 11: "It is impossi"ble to
secure accurate statistics re:;arding the num"ber of sub-legislative acts
which are issued "by all such authorities each year: or to find out the
number of a.dministrative judicial decisions of various sorts which are
made by them. Their published rules and' regulations cover altogether
about eight or ten -fcimes as map.y pages as the acts passed by Congress,"
(9) Brookings Institution, The National Recovery Administration
an Analysis and an Appraisal (1935), 29: There is a reference to the
grea.t volume of codes, supplemental codes, amendments, modifications,
classifications, et cetera.
9838
-238-
(10) Brief fer A» L, A. Schechter, Gorp» in. Schechter ^. U. S.,
66, 68: This note is designed to show the persuasive way administrative
inadequacies were presented to the court, particularly hy quoting
reputable authority. Tlie writer has read both authorities quoted in
the ariginal. "The practice of filing Executive Orders with the Depart-
ment of State is not uniformly or regularly followed, and the totals
are really greater than above indicated. Some erders are retained or
buried in the files rf the government departments, some are confidential
and are not published, and the practice as to printing and publication
of orders is not uniform. Some orders are made known and available
rather promptly after their approval; the publication of others may
be delayed a month or more, with consequent confusion in numbering.
The comparatively large number of recent orders v/hich incorporate
pravisions purporting to impose criminal penalities by way of fine
and imprisonment for violation is vdthout numerical precedent in the
history of the government.
"'Of the recent output, approximately half have been issued under
or pursuant to the National Industrial Eecovery Act, and have had to
do either with its administration, agencies, and appropriations, or
with the approval of codes and amendments thereof.
"'The total volume above stated does not include the contents
of the codes and amendments, all of v/hich according to the act, have
the force and effect of la?/ and violation of any provision of which
is a criminal offense." Report of Special Comm, Administrative Law,
Am, Bar Assn., 215-216.
"'In the first year of the National Eecovery Administration, 2,998
administrative orders were issued. In addition to these, the Recovery
Administration has adopted numerous regulations and sets of regulations
which are to be found scattered among 5,991 press releases during this
period. It has been estimated that the total amount of 'law' evolved
during the first year of the IffiA' s activities exceeds 10, '300 pages,
probably a greater volume than the total amount of statute law contain-
ed in the United States Code.' Erwin N. Griswold, 'Government in
Ignorance of the Law — a Plea for Better Publication of Executive Leg-
islation. ' 48 Hiarvard Law Review 198, 199 (1954)."
(11) Infra, XI
(12) 293 U. S. 388 (l935).
(13) U. S. Law Week, Dec. 18, 1934, "Taken separately, though
several New Deal agencies have made an endeavor to distribute their
orders and regulations. This is shown by the' enormous number of 're-
leases' issued.
"Particularly is this true as to the codes of N.R.A. , published
copies of which aro quite readily and promptly available. It is not
so true as to the hundreds of miscellaneous orders issued by the Re-
covery Administration and other agencies.
9838
-239-
Hon Existent Provision Invoked
'•5?he interest of -the Supreme Court in this matter was aroused
particularly by the disclo:^re during the ar^^umeut of the oil cases
that four Texas oil producers had been indicted for violation of a
non-existent ■nrovision of the Petroleum Code, and that a lower Federal
Court had sustained a demurrer to the indictment on the ground that
the provision, thought to be actually in the code, v.'as unconstitutional.
This anomalous result occurred because, in amending the entire Sec. 4
of Art. Ill of the Code, the second paragraph of the section, in which
no changes were made, was not restated in the executive order. The
error was not discovered and rectified until a year later, during which
the oil producers were rirosecuted. Upon discovery of the error, the
Government withdrew its c. pi-teal to the Supreme Court in the case — ■
known as the .Smith case of the last terra (1^. W. 733)." See also,
the ilew York Herald-Trib-cuae, December -12, 13, 19u4.
(14) Lorwin and Wuonig, Labor Relations Boards (Brookings,
1935), 93.
(15) Carr, Seleg-^ted Legislation (Cambridge University
Press 1921), 42-47, at pa :e 4-1: "The dociJinentsry form 'in which stat-
utory rules and orders are officit-lly published is governed by section
3 of the Hules Publication Act and by the Treasixry re,'-;ulations made
thereunder. Before that Act ?/as passed, delegated legislation was
almost undiscoverable. Part of it was buried in the pages of the
"London Gazette," the arid nature of which still justifies "Kacaulay' is
criticisms; the rest was scattered over ParliaiTj-eutary Papers or other
departmental documents or files without any definite system."
(16) Ibid,, L'7 reproduces this (original citation 55-7 V.C.
65). Also see page 59. "Regulations, dated August 9, 1394, made by
the Treasury with the concurrence of the Lord Chancellor and the Speak-
er of tJie House of Coimnons in puj.-su'-'nce of the Rules Publication Act,
1893-1894. No. 734".
(17) Cajrr, op. cit., 42-47.
(18) Gl-is^Yold, op, cit.; Bachley and Oatman, o^o. cit.,
260-261, Tlie authors suggest: A. A uniform form for the publication
of rules and regulations, st-iting a reference to the legal basis foj?
the regi-ilation. B. That all such regulations shall be issued in the
name of the President. C. That a special bureau handle the matter,
checking it as to form, leg.-'l basis and relationship to other admin-
istrative legislation. The authors further suggest that an Official
Gazette be established to publish important administrative rules and
I'egulations, and that this Gazette be made available at "numerous
official depositories."
(18a) Federal Register Act, 43 Stat. 5)0 (July 25, 1935).
Mr. James Ronald, an attorney 'for the Federal Archives has afforded
the writer with information concerning the administration of the
"Federal Register". In iiis opinion much of the work of his adminis-
tration is educational. As various agencies are shown tlie advantages
of using good forms vvitii standardized "iLirposes t.'iey are coming to
9838
•24^
use them, Mr. Ronald advises that there has heen a higli degre^i of
intelligent cooperation "by the various agencies.
In connection with Chapter V, Tlie Scheme, it is interesting that
the Federal Register Act provides:
"Sec. 5 (a) There shall he puhlished in the Federal Register (l)
all Presidential proclamations and Execj.tive orders, except such as'
have no general apijlicahility find legal effect or are effective only
against Federal agencies or -persons in their capacity as officers,
agents, or employees thereof; (S) such documents or classes of docu-
ments as the President shall c'eteriaine from time to time have general
applieahility and legal effect; and. (S) such documents or classes of
documents as may he required so to he published by Act of the Congress:
Provided, That for the pur'ooses of this Act every document or order
whic^...i:?jffll prescribe a penalty snail be deemed to have general ap-
12.1i.oji.bility and legal effect." (Underlining mine. )
It is also interesting in this connection that some agencies do
issue final orders toward individuals and groups under the 'same statu-
tory authority.
(lO) Memorandum, re Functions of the Legal Division, January
4, 1934. 1. Eraftmanship
"The N.I.R.A. does no't operate with respect to any industry until
a code or agreement for the industry has been drafted and approved.
"Codes are thus extensions of statute. Hence they should be pre-
pared with the care appropriate to the preparation of statutes, thus
■ producing certainty and eliminating ambiguity. _The rights of all
enterprises in the industry and of the public in relation to the in-
dustry, as well as the powers of acljiainictration of the industry "by
itself and by fche Administrator depend practically entirely upon the
code.
"This means that good legal draftsmanship is at a premium,"
,(20) Research and Planning, Post Code Analysis, Serial
Number 73, .July 8, 1934, "Definitions of Industries and Trades under
Approved Codes" gives a n'ombor of examples of poor draftsmanship and
ambiguity in definiticns. Other types of provisions also furnish
examples.
(21) Dickinson, Administrative Justice and the Supremacy of
Law in the United States (Harvard University Press 1927), 106, n. 3.
There appears a long and excellent note upon notice of hearing.
(22) Freund, Administrative Powers over Persons and Property,
(University of Chicago Press 1928), 156. The author cites a number of
New York cases on hearing and states that the Coiirts look at the re-
quirement as being technical, for "nov/here does it appear that th'e
complaining party was actually taken by surprise or suffered actual
3838
injustice froia laclc c-f notice."
(23) Ibid.
(24) ToR'^ Brothers & Lloorliead v, U. S.. 230 U, S. 42'), 440
(l9o'i) holding that notice is proper if the determination is one which
the "plaintiffs shc-sild hr.ve anticipated"; and Tederal Trade Coniinission
V, _G-ratz, 253 U. S. 421 (l923). The CoinmiDsion can prohibit only
practices charged in the complaint.
(25) Chin Yow v. U. 3.. 208 U. S. 8 (1908). A party has a
ri^ht to procure evidence before hearing.
■ (25) Bi-Metallic Investment Co. v. State Bocrd cf Equal-
izatipn, 239 U. 3. 441 (1915). ■
(27) St?tc Board r-f Health v. Iic_Cg:/, 17 U.S. 786 (ill., 1838).
(28) Notice of Hearings, 0.0. 2, July 15, 1933, established
procedure for haiidling and making public the notices of hearing;
Notices of Hearings, 0.0. 14 (Undi ted) set forth procedure for handling
notices of hearing; Recornmended Public Hearings, 0.0. 23-A, November
21, 1933 stressed publication of notices; Notice of Proceedings, B.C.
6527, December 21, 1933 created NRA official bulletin board; Notices
of Hearing, 0.0. 23, August 23, 1955; Notice of Hearing, 0.0. 50,
December 25, 1933, gave form for notice of hearing on codes aa.d amend-
ments; Official NEA' Bulletin Board, A. 0. X-2, January 5, 1934; and
Publication of Notices, CM. 193, Anril 23, 1934, set forth persons '
and places where notices should be s'-nt for publication. See also,
Brookings Institution, op. cit., 108 n. 15: "It is interesting to note
that these precautionary meas^ores occurred late in the code-making
period. Previous to this time the Press and the trade associations
were informally relied on in large measure to keep interested parties
informed as to the time and subject of public hearings.
"Under the present arrangement notices of important hearings are
furnished to the Press, labor uiiicns, fed-eral government officials,
governors of states, code authorities, comiDliance directors, firat-
class post offices, trade associations, and indivi6.uals on special
mailing lists. "
(29) Tliis information was furnished by Messrs. Ridings and
Patterson, Publications Section.
(30) Transcript of Hearing Corn Dry Milling Industry, January
28, 1955. The number of inoLustry members in the Southern States could
hardly be estimated in any accurate manner.
(31) It is doubted if the fact that tj'pical evidence was
present would be a proper basis upon which to deny the privilege of
being heard to one demanding it. Supra.
(32) Legal Memorandum No. 9 by Blackwell Smith rega-ding
Notice And An Opportunity To Be Heard, January 12, 1934;
9838
"(l) In order for a code to "be valid there must, of course,
"be fair notice to all that certain subject matter is to he considered
and that miscellaneous modifications thereof may te made at the hear-
ing. (This is fairly vrell talcen care of hy the new Executive Order
on Hotice and the new Office Order on Form of ITotice.)
"(2) In order to save the value of proper notice it is neces-
sary, in my opinion, to ]:eep a hearing alive uaitil revision of the code •
has been completed so that the final code can be presented to the hear-
ing as adjourned. This can only be done I believe by a specific ad-
joui-iiment of the first hearing to a definite later time ^■nr\ pl^r-^, which
can be the deputy's office. If this is done, anyone can follow the
course of the hearing by inquiring of the deputy at the time and place
warned at the previous session. If there is to be further adjournment,
this can be stated at such later time and place.
"(o) As you undoubtedly realize, some of the decided cases
on "notice" are rather extreme, and hold that important laatters not
referred to in a notice cannot validly be dealt with even though the
notice does contain a general catch-all clause warning of consideration
of other matters v^rhich may be bro^aght before the meeting.
"There must be some line beyond which one cannot validly intro-
duce new matter not speciffically referred to in the notice. For in-
stance, if the notice only referred to. a simple labor code it would
seem doubtful whether allocation of production Ejid -orice fixing could
be validly inserted inasmuch as no one would be fairly warned of such
provisions.
"(4) In all cases where the new procedure as to notice and
form of notice is properly followed, keeping the meeting alive, as above,
will do the trick, with the exception of those cases wliere radical
de-par tures are effected. '
"In the latter t^/pe of case (radical departures) there should be
notice of the revised code containing the new matter.
"(5) The matter can be cared for as follows when a radical
departure is made from the code as noticed for hearing;
"(a) When the code is finally revised,
broadcast notice in the usual channels
somewhat as follows
"The Code of Fair Competition for
the Trade/ Indus try
has been revised in the light of
evidence and representjotion made
to N.R.A. and copies thereof may
be obtained by all interested
parties on application^ to Room
Comnerce Building, Washington. D. C.
Any criticisms or objections to said code
as revised must be delivered to Deputy
9838
Administrotor , Hoom
Building, Vfeshin^ton,
D. C. ^rior t? 1234."
"(0)11 no serious objections are ^repented
prior to tne d^te specified, the code
can be approved and pro!Tailr:ated.
"Of course if any vital objections are
made they v/ill have to he cared, for in
the manner that seen's best in lip^ht of
the developments. Siich objections .v/ould
come in, if they could properly be made,
no ma.tter i."/hat co'carse were followed and
would have to be tal:en care of, so it is better
to have then registered before a^iproval."
(33) Leg-al I'.iemorandijm, ".'0. 51, by Blackwell Smith: "In
view of the campaign 'to clean .up code-raskini^;, I have stated that the
Legal Division will approve reduced notice '^f hearing where the Deputy
considers reduction im-oortaiit, provided that no national notice is cut
to less than seven (?) days net. This means that the notice must ac-
tually be public pro;oerty for seven (?) days'."
(34) oUTora. n, 3?.
(35) Le,.?:al i'.Iemorandu.a, ITo. 72, fro.a Slackwell Smith: "1_._
ITotice "i71-ile I cannot state that it is an absolute requirement of every
adiiiinistrative action that there be notice to the parties affected prior
to the effectiveness of the action, I do wish to remind you that it is
hijO-hly important that there be rersonable notice in every case where
such course is practicable. It should ta':3 convincin;'; r easons as to
im-practicabilit:/ to lead the Legal Division tj relax its recommendation
for notice as to any action."
(36) Le:3al Memoranduin, ilo. 54, . by Blachwell Giaith, quoting
Robert P. Heeder, re^^ard.ing Uotice and Jlearing.
(37) Tagg Brothers c: Moorhead v. U. S.. 38; U. S. 42; (1930)
(08) Transcript of Hearing. Fainting, Faioerhajfiging and
Decorating Industry - Araendments to Cocie of Pair Cora-oetition, Minimum
Eatej_ of Pay for Sl:illed 17orkers, etc., February 26, 1935, p. 51:
"Mr. Du Brau, SeTiresenting the I.iaster Painters Associstion raid
Decorators Association jf Baltimore, affiliated with the IJational
Association.
"Mr, Administrator, I v;ould like to mal:e a few remarl's. This
heajring, as v/e Uiiderntand it, is nation— v;ide and- of the utmost and
greatest importance, as we as a unit from Baltimore, presenting Sec-
tions of Maryland, nave had -no time and were given no ciiiie for this
hearing. We received a notice from Mr. Eungerf ord' s office, semi-
officially that a hearing would be held todpy, ten days ago.
9838
In order to gather cate, and 50 intimately into all phases of the ques-
tion, we certainly die. not hf-ve r.ny time,, or the information a"bout
these ■oroposed ajnendmentf;, that the ::ational Code Authority, with which
we are affiliated through the ilation.-il Liaster Painters and Decorators
Association, almost feel sort ^f nnal;y that we 'belong;: to, they them-
selves did not cive us any information until now. It was printed in
the National Liaster Painters -■iaii:azine, of which only one copy is in
Baltimore, has oeen received yesterday. Thjit is no information at
all. Aiu. we would here protest a^^ainst any conclusive vote teing talcen,
forced u;^Don this industry as far as Baltimore or i.iaryland areas are
concerned. In the hrief time we have had, v/e, however, Vv-ent to work
and sent out questionnaires, over 5'), and we gathered an average o^>-
inion of what the id':a of the eraployin,]; painters in Liaryland, Cambridge,
Salisbury, Frederick, District, Ajinanolis, Laltimore area, was in the
opinion of the eaijloying painters, era.pl o^'in-^; over 3"'} men. That is
under this cross section.
"Assistant Deputy Yow: Employiiv; how many?
"Mr. Du Brau: 30 '). We sent out about 500 questionnaires, and
only received about [30 answers, and those 50 answering employed about
30 ' men. We have prepared a brief, which, if you will kindly consent,
we will leave it for you to read."
See alr.o Transcript of Hearing, Fire Extinguisher Appliance Manu-
facturing Industry, October 23, 1953, 67-?:'.
(39) Iron and Steel Industry, approved Code I'o. 11, Codes
of Pair Competition, I, 19t), Ai't. XI, "Section 1. Any notice, demand,
•r request required or permitted to be given to or made uoon any member
of tne code shall be sufficiently given if maileo postage prepadd
addressed to such member at the addres:^ of such member on file with
the secretary. A v.'aiver in writing i-i-ne by any member of the code
of any such notice, dejaajnd, or request nnd deliverec' to the secretary
shall be deemed to be t.'ie eriuiv lent of r. notice, de.aand, or request
duly given or made, v/hetner or .lot sucJ. v;aiver was signed and delivered
before the time wiien sacn notice, dc..i.vnd, or reque;;it was required or
permitted to be given or made."
(40) ITotice of Opportunity to be Heard, Band Instrument
Manufacturing Industry, April 13, 1935, Registry !Io. lG40/05. Both
types of printed notices v;ere used liere.
(41) Memorandum, to W. L. Schurz., Deputy Administrator,
from the Consumers' Advisory Zoard, May 1, 1S35: "1. Article II,
Section 1. This provision, Y/hich defines tlie Industry, v/ould, a.s it
is proposed to amend it, be extremely .a..ibigu.ous and confusing. In
the first place, section 1, in defining the 'Industry' would refer
to 'original sale *** by a member of the Industry', while section 2
defines a member of the Industry as anyone 'engaged in the Industry'.
However, insertion of the jjhrasr.e, 'and/or the original sale thereof
by a member of the Industry', at the loint suggested would appear to
confine its application to 'fabricating, aaid/or asnembling, repairing,
reconstructing, and remodeling ***,' and to exclude original sale of
9838
products of the industry. If such ir, intenderi the provision is unusual
to say the least. If it ia intended that original sale of products of
the industry shall come under the code, the effect would be, first, to
include importers and second, to cause a conflict with the general
Wlaolesalin,-; and Retailing codes, if not to establish a vertical code.
?or example, jurisdiction over orii-jinal sale of products "by the manu-
facturer to retailers would be covered by the Band Instrument Manufac-
turing Industry code,, although coming properly uiider the, v/holesaling
code. Likewise, jurisdiction over original sale of products by the
manxifacturer direct to consumers would be covered by the Band Instrument
Manufacturing Industry Code although- coming properly ■'under the Retailing
Code. Thus, a code designed to cover manufacturers and maniifacturing
would be extended to cover, potentially, the entire process from manu-
facture to final sale,
"We object very seriously to vdiat appears to be an attempt to
broaden arbitrarily the scope of the Btind Instrument Manufacturing
Industry code. This amendment v/as discussed very briefly at a public
hearing on September 24, 1935, and presumably at the post-hearing con-
ference, but it was not noticed for hearing. Thus, parties vitally
interested, namely, those engaged in v/holesaling and retailing opera-
tions, have had no opportunity to register objections. We believe that
such crganizations as the iJational Retail Dry Goods Association will
feel that they have a vital stake in such a proposal as this and that
they should be heard from. In any event, we urge that the present
amendment to Article II, Section 1, be disapnroved, "
(42) Supra, YII.
(43) Legal MemoranduTi, i^Io. 12, from Blackwell Smith, regard-
ing True Representation, February 5, 1934:
"I should thinlc tha,t true re-presentation refers rather to the fact
that the applicant group can be considered to be more or less a repre-
sentative cross-section of the industry for which it speaks.. Of course
the larger the percentage we have the more certain we can be that the
sampling is ; true one. In the case of any industry, or trade widely
scattered and made u]p of manj^ thousands of small ''jnits we can only say
that an association, when it is freely open to membership and which has
members distributed in every geographical division of the industry, i.e.,
such as metro-^olitan and non-metropolitan areas, north, west, and south,
small enterprises as well as large ones, specialized branches, etc.,
and includes members of all sizes and types, is truly representative
of the industry.
"On the other hand, an association or group which includes 85fj of
the industry as defined in the code but excludes a specific class who
may be competitors and whom they therefore wish to include under the
code bxit who did not join with the applicant association or group in
formulating a code, cannot be said to satisfy the Act.
"As the Act is phrased the President is required to rnsUze a positive
finding that the Association is truly representative of the industry.
The absence ^f evidenc?- alone, or the mere statement of the fact that
it is truly representative without more, is not sufficient, as I see .
itj^ to_ base such a finding. The trajiseript of the public hearing should
9838" '" . "
-34-
contain some definite factual evidence u^ion v;hich the deputy can
satisfy himself on this point."
See alsa ^e.^al Hemoranduin, by Blackr/ell Smith, regarding Hon-
Association Representation on Code Author i tier,;, l.Iay 24, 1934,
(44) Transcriist of Hearing, Fire Extinguisher Appliance
Manufacturing Industry, October 23, 1933, 69-70. Powell Evans of
Merchant and Evans Company: "This company, the AutoFIRstop Company,
etjects to inclusion under this code as unreasonable and' unfair to-
wards its pur-'3oses and businessj and we desire to go on record here
that we have had no notice of this code other than hereinabove stated,
and had no invitation from its proponents to become a member of it or
a party to it to d.ate; althou^;h the code, Section 4, states 'the term
'member of the ind.ustry' includes everyone engaged in the industry as
above defined, either as an employer or on his own behalf."
1927).
(45) Gray, Ilature and Source of thp. Law, 2d Ed,, (New York
(4S) Tl-ffi COlISmEES' ADVISORY BOARD OF THE H.R.A.
PROM JULY, 1933, to JANUARY, 1934
Prepared by Geo, B. Haddock
"During the latter part of llovember and the month of December, the
work of the C.A.B. continued to increase in effectiveness. The staff
personnel turn-over slowed up, and each adviser became more efficient
in his work. During December, the loroblem of code' administration be-
gan to present itself, and it became evident that many hastily drafted
code provisions would require interpretation. At first. Code Authorities
issued their own interpretations, and even some of those which were
approved by the Administration had the practical effect of a code
amentment. Because it was apparent that improper interpretations would
be as bad or worse that improper code provisions, it was decided that
the Advisory Boards should be consulted in the formulation and issuance
of interpretations."
(47) Office Manual: "Code Administration III-3'IOO Rulings
III-3114 (5) Interpretations vs. Exemptions. Individuals or groui^s
)ivill not be. relea.sed from the full operation of code provisions by
interpretation of the language thereof. Wliere the original language
of a code binds an individual or group and it is desired to release
such individual or group therefrom, this release may not be effected
by a strained construction of that langua.;-;e, but will be accomplished
by exemption or- stay as provided for in Part III 32' '0 (below)."
(48) "A tendency is noted," says the Advisory Council (October
26, 1934). "on the part of Deputy Administrators to act on Classifica-
tions and interpretations without consulting their Advisers. The
tentative MA Office Manual does not require Deputies' to obtain reports
from Advisory Boards prior to action. On September 11,1934, however,
the. Council recomraended that Sections 3131.2 to 3131.4 covering Inter-
pretations, and Sections 3331, 3332 and 3333 covering Classifications,
and Sections 3234,2 and 3235.43 covering Exemptions and Stays to be
9838
modified to restore the ori "inal rdvi^ory relptionships, for the repson
that J^xemotions, Classifications ?iia Interpretations iiiay vitally affect
the iiieanin; ; of a Co^.e, and in their nature are choices anong several
Kvail?ble lines of x^clicy. The Lieniial has plreaay been moc'-iiied by
Office nemorandiim No. 5C0 to conform to the above reco.niTiendation with
respect to Jlxemptions. The Coujicil believes it cesirable that a
similar correction be iimr.ediately made and circulated ''Ith rcsocct to
Interoretstions and Classifications."
"Some of the suggestions," Bays the Advisory Council (iiarch 4, 1935),
"are dicteted by cji vaiderlying conviction on -diiinistrptive policy vhich
is quite basic in character t?.nC which reduces to the lollov/ing progressive
form:
"(l) The Advisory Boards shoula have an apportvjiity to express
fiieraselves on all matters in wh.ich they have nn interest.
"(2) They are the only ones in a position to c'ecide when a
matter is .(genuinely of interest to them or to the points
I '-^f view they respectively represent.
"(3) To maice such decisions, they must at least be informed on
pendin., actions. "
"Since interoreta tions i.iaj' vitally affect the raeanin,^ of a code
and since by their nature they are choices smonj lines of policy, we
reco.-unend' that De^uty Ac'rainist raters be required to consult the Advisory
Eoards as well as tJieir le^^al advisers. This is the present practice,
and we see no reason for chan._;in , it." September 11, 1934.
(49) Legal iviemorono^am, ?2 from Blackvell Smithy May 23, 1935:
"2. Interpretations
"Confusion has been incicated in the minds of some members cf the
. Legal Division as to the time of effectiveness of an interpretation.
f The confusion necessarily ari-^.es if the matter is loolced at as a
question of when an interpretation shall be efiective.
"The fact is, of course, that an interpretation has no effective
vitality in itself. The effectiveness flows from the code or other
le^al document interpreted. The date of efi ectiveness of the par-
ticular doc-ument interpreted is the only efiective da.te.
"A serious question does arise however as to fairness and justice
of enforcing liabi lity g,s:a.inst i:idividi.als under the terms of any
interpreted docvjnent e^s_tp_ the period -prior to the announcement of
an interpretation. Even though the provision has been efiective from^
the date of the code,' it may very v;ell be unfair or unjust to assert
such effectiveness against one who did not in fact laiow the interpretation
questioned and who reasor-ably relied upon some other interpretation.
9838
"In any such case of injustice or tijifairness, the Le^al Jjivision
should recommend an exemption or ct lefst withholding of enforeement
activities as to any tiiae irior to the annoi'-nceoent of the interpre-
tation. The matter is really one of equity and should be so conoidered,
rather than as a question of when the interpretation is effective. "
(49a) An aide for the Bnhin^ Industr^, Cede advised i.ie in conversation
that after the Eeviev/ Division "clamped dovn" on "inter -retatinns" he had
been sendin • ov.t that he merely chan'ved f eir name to "o jinions" or
"explanations" and c:)ntinued to send them out knowin,.; they wovild be used
as interpretations.
(rO) Transcrijt of 'Tearing;, Fire Ixtin',': .isher Aopliance Manu-
facturing Indu-^try, October 23, 1953, 33-3-^, in the ( iscusrion of
Article IX.
(51) Article VII, Section 5: "PremiiJms snc. Coupons. llo member
of the Industry snail ;ive coxi.onp. or oremiiams. The tenTi "coupons"
sha,ll mean the wrapper of a bal^cer^ .iroc.uct or otlier >a.3er redee;aable
or exchan.eable for baicery products or other articles of vAlue, v/ith
or withoxit the pajonent of aoxitional inone3^ The terra "premiums"
shall mer.n my article ot vr lue- or use :iven v;ith bakery products or
exchai"i,?;eable for cou jons mentioned herein. "
(52) For example see Cons"ai:ners' Advisory Board Liemorandum to
V/eld h. Stevens, February 16, 1935.
(53) Around lafe March, 1935.
(54) January' 31, 1934, 263-310.
(55) ' See testimony Mr. Charles Vifesley Dunn, 268-279.
Mr. Girard R. V/illirms "oer-kin^' in favor of the orovision for
the Baking Inuustry (Mr. V/illipms spoke as a member of the Committee
pro,posing the Code) at >age 232, " indicates the oractice at which the
Industry aimed this orovision. He mentions the jjivin.j of tov;els,
aluminum items, pencils, toys, haraware, woodenware, novelties,
cotton goods, marbles, valentines, false faces, and Christmas goods.
This seems almost a. definition by eniuneration. Again at Page 285
Mr. Williams -tates as the cogent reason,
"The oractice is ^discriminatory rnd not in the
public intere<^t becaxise the conswner may be
taxed as much as l/3 to l/2'/'.per loaf without
any option on his part "■
(56) Baiting Industry approved Code "No. 'PS, Code of Fair Compe-
tition, Vol. XI, .20, Art. VII, Sec. 9: "Comjnercial T-ribery. No
member of the Industry shall give, permit to be given, or directly
offer to give, anything of value for the purpose of influencing or
rev/ardin,g the action of any employee, a^ent or representative of
another in relation to the business of the employer or such employee,
the principal of such agent or the represented party, without the
laiowledge of such em_jloyer, principal or party. This Section shall
not be construed to iro:iibit free and general cistribution of
rrticles commonly used for advertising except so far as such
articles are actually used for commercia.1 bribery as herein defined. "
-249-
(57) Arorjid May 18, 1935.
(58) Supra, n. 56, 23, Art. IX, Sec. 3.
(59) About May 21, 1035.
(so) Approved Code l^o. 32, Steel Csstin,-:; Industry, Cndc of Fair
CoMpeticioi:,"Vol. II, 29£.
(61) '^^n November 27, 1935, the Steel Cpr:tin,;: Code Authority
isGuec. Coniaerciel F.efsolution IJo. .<' rea^'ln.:;- as. follows;
"5I-S0LVi!]I), thpt Cast Steel "^arts for new locomotives
rr other finished -'rodi^ctc, built "oy compenies sffilisted
vith the stet^l fouiiO.ries ;.roducir:- such parts, are n^t
Diib.ject to the Steel Cr stin^ Coue, bu.t repair and replace-
ment o^rts for Gucii finis'- ed jrocaicts are subject to said
Ecde. "
(62) Conruir.ers' Advi^rory Board L.eifior-tTidi-an to J. 3. rre'ond.
May 15, 1935. The ;)ro-^osal rs^id:
"Steel Cr:?tin;;s (v;:;ether finir,l::ed, s-:';ni-fini3hedL, or rou^h) ,
v.hen sold for use as reoair or replacei.ient larts for prodiicts of
another indv.stry already in \ise and sold in coraoetition i^ith
similr:r castin-js produced by other rnemoers of the Steel Casting
Industry, arc su.bjcct to the Cod.e of Fair Comiietition for the
Steel Castin.p Industry, re.ijai'dlcss of ^'fj^ether or not thfy are
produced and/or sold by a c^Tnoany ^'Viich ir. oivned by or affiliated
vidth another coLipany /rodn.cin^ and/or selling ne^v proc'ucts of
another industry. "
The memo ran d-djii said: "Alt,;ou;h the original resolution applied
solely to locomotive castin -a, zoe. inter 'retation is of considerably
broaider scope, and. necessarily ::,o, Ueny oti.er indu.stries are in a
position similar to that of locomotive b"'"dlcang:, in their dependence
on steel c; stint's aaid in the conflict of 'castings' v. 'repair and
replacement parts'."
(63) Ibid.:
"There seems to u.s one kind of trrnsaction a,t stake nam.ely,
the sale bj- a m? c'line builder --if steel crstina;s r.ade by him, as
repair or replacement ;;arts, for use in m.achines biiilt either by
hi.n or by other biiilders cf the s'-jf.e kind of macnine. The Steel
Castin:7j Code Authority claims ji,;ris diction over tnhs type of traI^s-
action. The public hearing on i.arch 13 L.isclosed that many code
authorities representative of the machine indu-stries dispute the
claim. To be more specific, tne following' code groups also main-
tain rights over the above tran .-rcti on, through their respective
code definitions: Boiler Manuiacturina- -. Compressed Air -
Electrical Manufacturin,;; - Hc^t -^xciian'^e - Laundry ane Dry Cleaning
l,ia.chinery Manuff cturing - Locomotive i.ianufacturin j (subdivision of
IviAPl) - Machinery -nd Allied procucts and many others of its
subdivisions - Pvjnp Menufacturin,?; - jSnad Machinery,
9838
-£oC-
"It is c ;ite ? op-: rent tlipt c?lt..iouj- the St^ el Crstin^ Coc.e
Authority see'rs jurisclction over rn.?nuirct'.;rers of incc'ines or
other jroducts (in the pbovc -fi-oup) , wnon en jajecl in selling steel
castin::s rs re.-^pir or reolrceaeat p^rts, this Coc.e Antl^ority can
by no stretch of the iin;\;lnFtion oe. Cflle- re,>re^..ent^tive of such
manufacturers. 'Jxcept in ;;o far as they ^;ere siio-ject to the Steel
Casting Coc.e in other respects, the letter ;..erLUi -ctv.rers had no
part in formulrtin-; the cot e and have not r-sc-.ented to it. And
there is much to he said for the statement made by .Tames D. Andrevfs,
of the Soiler :,>ntifact-:.rin'^ Coc.e Ai^t.iority, at the hearin,; ( o. 127)
nahiely, that:
"This i"e contend, is not an interpretation but
sji arnencanent of the Code, ..-reatly increasin; the scope
of the industi-y and ille":']ly so, as the r.oonsors of this
interpretation or anen(..x.iG.it t re not tnily represe^itative
of those whom they are a.ttempting; to regulate, as' required
by Section 3-a-l of the ITational Industrial lieccvery Act. '
"In our 0 dnion the Deputy's -r.viosed inter -retation of the
Steel Castin^ Inductry '■.efinition i'- a :oo'l literal interpretation
but a vei-^,- poor practical ap ■licrtio;i of t le def iiiition, and when
seen in the li "dat of other overla > i/i cclb r'efinitions ap ^ears
impossible. 'Te ere inclined to a-:ree /dth that part of Colonel
Brae's/' s brief statemer.t, also made a.t tjie hearin- (p. 217), when
he said:
'"'We have the castings i.iO'.stry, T.'nicii ^'oes far bade,
and we have- the iroduction of products, whic'i voes back
as far as liistory ];oes. As Ion-; as these two 'cinds of
industries exist, no matter what we do, or what -"e put
on paper, you are "oin:; to have the identical -jroduct
ijnder two codes, and I def^- nw to write it in any way
that will work otliervdijc. '
"In other '-'ords tlie sai.ie ca-etin^'o u.sed as repair piid. replacement
parts v/ill come unc:,er the .'.teel Castin , Code w^ien sold by foundries and
under the machine or :)rodxxct codes v/hen sold by manvif acturers of
macnines or products. "
(34) Hearing, Airil 2, 193'-;. FilA. '''as reportec as favoring
the proposed! inter oretation.
(55) Office i/Ianvial: "The oroiriul, ;ation of an amendaent to a
code hac the same force and effect a.s the promulgation of the code
since the jmenctaent becomes X'rt of the coc'e. Therefore, the for-
mation tnd approval of an araeninent shoulo. be .;iven the same balanced
consideration as a code. Fo final aaproval or disapproval of the
proposed amencu'iients i-ill be ma.de exceot over the signature of the
Administrator." (See also :.210, to 1253.2). See also, Aiiencjnants,
0.0 Q6, May 3, 1934.
9838
(66) S'upra, this Chapter, Section 2.
(GV) S''i.'jr-, "i'lll. The Advisory Co^incil recommenced: "We do not
■believe th?t aepjjrtures from f-j.n-oved nolicics rfiould be tindertaJcen
v'ithoii-t public hesrin.^. Therefore, we re;ard t"ls oectinn of the
liPnaal ps inappropriate. L'oi-'ever, if c-ach cr.sea are to rrisc, we
believe thpt the Administrative Officer s-'.ould consult the Advisory
CoToncil as vjell as the G-eneral Counsel ana the Economic Adviser, and
ve recohunend thnt tliis section bo cheAr-eci f'Ccorcia'-'-ly. "
(6S) A-visory Council rccoranendec.: "We (cccojii.ie.nd first, that
when the L'epo.ty Aduninistrrtor inteno.s to sciiedule ; oroposal for
public hearin'r; no advisory process snoulr' be invoked -..intil after
the hearin;-:; second, thrt v/hen the Deputy Adj-.ainistretor isf'dsposed
to believe that ; jnendt-iieritn s.ioulc. be considered uno.er the procedure
of notice for the filin- of objections, reports from tlie Advisory
Boards sliouldi be- reoue ;teci before t"'~.is notice i'.-, Issued- Since the
notice of o .) )orti.uiity to be Jiearct i.-i"lies s. I'^vorable Adiaini strati on
judjpr.ent, it is 'ro ;er to .^enrdt t:.:e A;-Visory Boards to speak before
the AcLninistrf:tion hs.s co:\i:;itted itself ariL'. before it has been
definitely decic'ed. that no public nearin;; is necessary."
(59) The Ac^visory Coimcil recc.jnended:
"The v/eajcnesses of the ore'-^ent procecure are only partly corrected
by 'the sub:;titute procedure here ^.roviued. It is 'jtill possible for
an industry to be confronted by Adninistration 3;iondments of vhich it
has had no notice. It is also oossible for a prooosed Adiainlstration
amendment to be indefinitely delayed, to be rejected v/ithoxit expla.nation
to the agency proposin,;^ the ahiendiient, or to be blocked, in case the
industry, upon hearing of the AciKiini;:trstion amondiUent, v/itndraws its own
pro 00 sals.
"We regard tlie follovdnri' pra.ctices as iraoortant :
(p.) That any ERA 8,'2;enay ;ro losiu": an rme.iCrK nt be informed of the
d.isposition made of it, as is irovidedt in Office Me;norandium
Fo.''256.
(b) That industry receive notice and be penaitted to attend a
hegrins: ipon pro^-'osed Adiiinistration aiaend. iev;ts vrtiich are
about to be consid.erei:. -by tne Deputy.
"We reco;.Eiend, therefore, that the follov;ing provisions be in-
serted, vdth suitable c'~an"es in other -jrovisions to avoid conflict.
'Upon ' receipt of a 'ro,.)OStd ornenc:f:ent from any iJEA
Agency the De uty Adjrhr.i ;tr- tor , r-fter r.v.Cii consulta-
tion as he ..lay '-ish, shall i-.eteruine vhcther or not he
is disposedt to hold a public hearin;-; upon th.is amendinent.
If he' is so disoosed, he suoH refer the orcj-iosed arnend-
•r.ent to the Code Autnorit^- for its infnrniation and comment
before calling a hearing. If he is disposed to reject or
delay consideration of the jroposed ainenduncnt , he shall
notify the Divisional AdjTiini;;trrtor, who 'vlll inform the
pro jonent of the aaiendj.ient in writing of the disoosition
to be made of it and the reasons therefor. '
9338
'Administration amendments sh-^ll "be considered ty nuMic hea„ring
rr.ther than by notice of ooportimity to be heard, -anle's the latter -Dro-
cedure is acce-otrble to the Code Authority,'
"TTe call attention to three gs^s in the i.ianual's discussion of
amendment s :
1. Procedure is not specified for those cases in vhich the
Deputy Administrator r-ishes to iranose an amendment of a code
without the consent of the Code Authority. 'Je believe this
procedure should be definitely indic-ted,
2. It should be stated that \7hen a "'public hearing has been
called verbal chan^;es mny be made by those oro-oosing the amend-
ment, but not changes in the substance of the matter to be
heard, ^orovided that this lirait"tion shall not a^oly to efforts
to arrive at a satisfectory comi^romise in conferences after
the hearing. It should also be orovided that code authorities
and WA agencies may request an adjournment of a hearing in
order to consider any changes in subst-^nce ^--hich may be Tiro-
posed,
3* The Advisory Council recommended some \7eeks ago that the
Divisional Administrator be requested to hold a preliminary
conference of the Code Authority and the Advisory Boards when
■oroTDOsed amendments or revisions of codes are unsatisfactory,
or inconsistent with Tnresent oolicy or so sweeoing that their
adoption '-^ould amount to a com-iolete revision of the aorjroved
codes. This recommendation is omitted from the i^rocedure a,s
set forth in the ijresent draft of the Manual. 7e recommend
that it be included,"
See also, Yudelson v. Andrews. 25 F 92d) SO, SU, (C.C.A, 3d 1322): and
Legal iiemorandum, No. 35 by Blaclcell Smith, regarding Hearings on Pro-
posed Amendments, J-one 2, 193^.
(70) Ibid.
(71) Freund, op. cit., I3I-I32: "Most ne-ly formulated re-
strictive policies bring temporary hardshi-os to legitimate interests;
and there is al^-'ays pressure to temner that hardsnip in cases where
it should aiopear to be excessive, and particula.rly in 'emergencies.' There
is little need to make exjpress -orovision for the overriding emergencies
of calamity or disaster, which take care of themselves. The economic
emergency or claim to s-oecial consideration stands in a different category.
'.Tiere a rule serves merely administrative convenience, it is legitimate
enough to malce concessions to -orivate convenience (e.g., unloading vessels
at other -olaces than oorts of entry under official oermits (Tariff Act,
1922, Sees. kk'J, UU9), but it is otherwise where the rule serves some
non-administrative -oublic interest. In Germany both the Sunday law (Trade
Code, Sec. 105 e,f) and the women's hours-of-labor law (Sec.l3Sa) pro~
vide for emergency exceptions, attempting to safeguard the pov/er from un-
due exercise by careful checks (rules of Federal Co-'juicil, v/riting, records);
in America it is generally considered that they tend to break down the
law, and they are consequently avoided. The English Trade Board
9338
•.255-
Act, v/hich provides for the fixin;";; of wa;..cs, admits exceptions for infirm
vrorl'ers (Act, 19G9, Sec. 6 (o); this ap;:eary to ho le/:-itimatc and is
also fovuic. ■xn.Ai:--cric?..-.i statutes of the same Irind, The Prussian Incoi-.e
Ta:: Im. rt;:il<:e,s provision for ad^ainistrative reduction of rates in the
loTvcr Dr-clrots vmen special circunstances , ^-hich the Ian indic--,t,s
f.-euerical'Y (sicl^jies'- , Iossl.-^:, ctc.)» reduce the vaying capacity of the
ta:-qpa;,vr (See. 19). We r-hcild he, Lversc to granting such power to .an
adiaiiiistr-.tivc official, hut pref"r to ^rpccif'^ the exc;r'ptionG in oho lav/.
It sc-o;/s 'c.h.at disponsin.Tj powers are mor^ frcqar--ntly f-rxntcc. in Gcrinan
tnnn in Enf;lish or American leeisl-:^ti -^n , a ;.• the careful saf e^^niard;:-
th:.t are io-jnc in the laws for the -i-'ot .ct on of labor are hy no nv: ms
ty.;ical of the othrr C-errraan instances of the power." For •.xamples of
statutes aliowi:!^ ^i^ch aovdnistr^tive action, see, U.S. v. Shreveport G-rain
Co.. 287 IT.-S. ?v (13.".:). Tne Toou -.v.. T)tv{; Act, 57 St^t. 75? reported
there reads in -art: "Third. If in .^pclcr'r,\: form, the quantity of the
contents he not pi.- inly .aid conspicuoxisly iitarked on the outside of the
pacltage in ■cor'as of weight, Lieasur. , or n-umcrieal count: Provided,
hov/ever , 'Th- .t rr~ r-.^nrcl ■ --:-'i - ti -^^c r.hr.ll he ---lermitted, a.nd tolerances
and also cy. r-tz .:■ :;• ;•-- gp:1'. p-c':',>.f^ shall he cst:.hlishrd hy rules
and re£,ulGti;'nc^ ;■. c ... ■. co ■■■ :';;c vritn tiv: yrovisio^is of Section Three
of this .^et."; , nd S-'roTk. s v. ^^ijiford, ZB6 U. S. 57-1 (1952).
(72) Le^-l :'enior";n'"-'ai:i, fr.;r 3--.c' :t.'c11 Smith re.;; rd:.ng Notice And
Ail Op; orti^jiitj-, I'o To He t.'., J .ni\ ry Li, l??-.'-: "Ag to c::ceptions ..'.nd
exe '.pbions; Tiiere snoald 'oc -n c-. or'Gunit ■" to he he;,rd to the maximnm
practici^'ble ..:-:t.:nt, th: cxt .it of, puolicit;'- heinj; dependent perhaps
so:7ie'v,'j;icit. on \/hethe.r the excep^tien or exv.rnption is ge?ie:.- 1 in nature."
Sec., also, Le al Ker.io:';. n:\-Lmi, llo , 51-, froi.i ElaekiA'cll Smith, quoting Rohert
P. Rc-Cq.:, reg:-,rei .^: lIotie>. ^n-.L" Heering, July 50, 13"'';-:
"Fnen the gr ntm;^- of encT-n.- tions or cxee-vcijns is of a general
nature or is rupde to ay O.y to i.ie.ihers of c c1f:,ss it is of a legislative
character. Sec. 5 (a) gives lli-.- rignt to he heard whe'ee ijersons engaged
in other steps of the economic process are involved,
"Aside fro;,i the "jq;::al asp:ct~, ric prchahly need a nuhlic hearing
on excfr.Tcions or c.-.empcions vhei'cvcr a suhstentis.l .anou:it of contro-
versy is to he ex-:iccted, Uv-, c-.n grant c::ce;oti ins , if lecesso.rj'', in
particul.ar ceses; hut '-e irv.. .'^nc vdthout full puhlic ncaring plus cross
examination of v.hc apvlic-ni. h..cao.?e of the pressure of eircur.st.?aices.
The g anting of i:pro'--er exce^itiins is veifair to oth r memher"^ of the
industry if not -■; lisitivelj.- illcg-.l,***"
"75) Office ;>nu-l:
"Code Adninistr tion 111-500^' Rulings - III-5255-5255. 1-5255.2-5255.5
"(4) Pact -finding.
"(a) Generc-1. There must always he ran adrainisti'ative finding of
fact on v.hich to h,ase tne gr?.nting ol' an exemption or stay,
"(h) By txie Code Authori t^^. The Code Authority is required to mahe
such inv>;,stigr,tions as is necdssar;- "ci find the true operative facts.
Code Authority huj^lget itcns usuali;,- -orovide for fact-fincU ig facilities
for this ::nn-"iOEe. At the e.-rliest -ocs?ihle noi.ient , or in any event
985S
-254-
within ten days of the filing of vn a]D lic?.tion, tiae Code Authority vail
forward its findings and recoiiv cnd:?,tions thereon, and the reasons for such
recoil lendations to iT"^A in ^Vashington. In no case, however, v/ill the Dep\ity
Administrator r.llow the lack of Go(l-_ A"'rchoritv f '.ct-findi-.\g facilities or
tardiness on the "art of the Code Aiithjrity ■unroa.cona.'bl?/ to delay his action.
"(c) 3y IT5A. If it is apprrcr^t that ohe Code Authority is unat le to
furnish all tnc necessary facts, the Deputy r,x\y rco,n.est the Chief of the
Canrpliance Division to ssign a field invcsti;;.,tor to nahe the necessary
survey of the operative facts. The economic -nd statist'iccl fact-finding
facilities of the Research and Planning Division a.::e also available to the
Deputy."
(74) Consnir.crs' Advisory Board rciuor ndun, hay i3, 1935: "The Deputy
proposed to allow horn aiid Hardart , r, r„st.ur;;.nt chain operating retail
bakeries, to work its ein-'loyec?; d4 inste-^d of 40 hours a, vreek. He based
this intonti:n upon the fact i'^\x, h. h:vd visited the^ plant of Horn and ■
Hardart .-■nd in his .opinion the >.xc^pi:ion should be granted. Just wiu.t
reasons the Deputy ir.d ...c c id not disclose to his advisers unless it wa.s
a belief tnat coiTpIi?,nce cov.ld not i-.ossibl;- bu S'^curcd, It r.iay be that
the Deputy -'is perfectly" right in 'h:.t lie iatendcd to do .^nd that siifficient
facts existed to justify the proposec- ^xce -.tion. The -:>oint remains,
however, tha.t he y/o.s as'-ii-^j the a,eviEerr> to apv.rove this exception without
furnish:^ng them any facts uoon which to ba.ne their action."
(75) See Industrial A'vpeais Board, A-o"-ief.l of Central Weaving and
Spinning Corjiora.tian, Silk Textile Incustry, (r'r, roved Code, Ko. 43,
Codes of lair Competition, Vol. l), Decision do. 18. The Board said,
in part:
"Precisely bee .use the^" .'.ay "i-^v>; b en hancdcap-'cc' in one or nore
of these res:ects, the workers in the appelant 's plant may require and
deserve a so ewha: longo"' -pcrioc of tr inmf. in order to attain normaJ ■
efficiency. The reco.-nition ol' this fact imolies nothing derogatory to
eithe- their native ability or their cnyicity for development. It irriplies
merely a realistic -nd honest ■,■■> ^reciatiovi of con'itions v/hich' would lv.\ve
proved an eq-i:ially forraidable barrier to the ■■'progress of any other group
of emplo3''ees sii-iil'.rl;." sitii:>tcd,
"The •-ef ore, v/e thinl: t.i. t a ;nar"cial exemption would be fair to
the appellant, for the best interest of its employees, not unfair to its
competitors rnd would affor-l this company an opportunity to bring its
labor u:. to standard efficier.c rnc. improve its equipment and operations
so as to a.l"-ow it to continue oiier,ations uiider, the provisions of the Code
withou suffering loss. Accordingly, we are of the opinion that the
Centr-.l Weaving andSpinning Corpor-rtion should be granted an exem-otion from
Article IV, Section 1, of the Code of Pair Competition for the Silk
Textile Industry for a period of six months from the date of this decision,
upon the follov;lng conditions: "
(76) An aii.c working on the Southern Rice hilling Industry, Code Mo .
LP-5, proposed to free the entire industry of a burdensome provision by
an exemption. The matter was handlec' by ?;menc'xient finally. Notice of
Opportunity to be Heard, Administr -.tivc Ordc"- llo . LP5-5, AjTril ^3, 1935.
(77) Bur]:e v. Southern Pacific ?dl Co., 334 U.S. 669 (1914); and
9838
3rou^li,?;.i v. '.hiton ManuiVcutiu-iri;?;" .. .-j49 U.S. 495 (1919).
(7S) Tho Ac.visoJ'j' Coijr.cil r co;:ne:idatioas co>-- exit xcoon this: "(3311 r.nd
32-10) riiC ;."-ciinitiov: of str.y t; ivon inthcse; 'ivo paragrralis is not the Same,
There arc. tvo co^ts of stays; thos'j which rmovnt to a temporary cxGnrotion
of a aarticv.lar ;_:ro-ap ".nc. those which te:vroorarily rclor.se an entire in("'.uptry
fro.i SO; !c codo i^rovisiorL. The two should he cistiu^.-ai<:hcd. The sto.y of
a code -provision for an entix-c iadur-try ho miich th, force of ''.n anenLjp.cnt,
Froccc'-urt- for such Dt:ys should he set forth more clearly than is t.one
in this Section,"
(79) Wor. s -u^ Phrases, G-CS (\7cst Pul^lish-ia ■ Co., St. Paul 1905), 7.
See Brown v. S_vos, 37 L.E.A. 675 (Va. 1G95), there cii;cd.
(so) J^cj-le r a 1_ jT r2^(_e_ Co:"mission v. C'ox t i s P'e."^ 1 i T: \rh\{, Con\p.any ,
260 U.S. "■•6;, 530 (192.-.0: 'i'l^c Cor.rt st-'tet- :":ial' althjvah the usua.l -procecure
is to re;.iaaL. th- c::a;e ro tat Co- ission if suhst -a:. i:,l ovidoace IsJachin:',
tlaa,t in certrin circvristancer; vhero "it cl.a-Trl, ■■■o-DTr tlr;t , in the in-
terest 'oi justice , the coatrove'."ra' v-:ioul/ I'e ceci'.'e,. y.'i"';aoal: further
delay," the Court will decide the c^-ae it^a^lf. It eo^^c njt ;H:8ia t^iat there
is any st cator.' "ba^is, or coa.stitua^ a-r-l '■-'■3ic j'o\- thab ..lat'.-er, for
this statenent, r. i if the Coiaisc'ri ic- ;o Jc i ct findin;?: agency, it
sce/ns uhat it shoul-" '-■ so wi'ihoiit rLl'e".;.::cc to th^:, ini-ividual reqairei-ients
of various cases, althoit^ih tl\K.-rc i" so^'utliiaa to be saii" for the point
that c'uo- process of Ir.vi mi.y not he servk.e. hy ..ilatory ii^action just as
well as hy ~n nnf;? ir a. ■••rini~,
(81) Ihid. Also sr.. , _Stocl: v. Ceatr..! Midwives Board, 3 K.B., 756,
764-765 (191";).
(8.:) Sa parte Bieaj Uhe , 41 a (od) 039 (1930).
(S3) Codes of dr-.ir Competition, 1, 701,
"The Prerident, by Exccuiiv. Or. er llo . 33;i9, dated October 10, 19;":3 ,
cCiy'Tovc-. the iolLnv;::.;i^ ..xad.ao.t to ta^ Sai ' dail, i ,;_ and Sai^i Tlepairing
Coce: "Sec. 8. (r) To ef: iicrraat^ fiirther the --'C^licie-.-, of the Act, a Ship
Builain^; arid Shi - d^\- Lvir.;- Industry Co..-aittec is aere.y desi'piatee to
cooperate with a.- .-. a.lj.irtr .tor ec= f: Plraai if aa }?air Prectice Aaency for
the shia bulldinr.; raia saia ra)-iri;i^' indue try. ^ais Ccavu ttee shr.ll con-
sist of representatives of t'v Shi-- duil'^ero and Shi;- P.eriaircrs in such
numher not less zlii^ii six as the A-"' LL.istr? :or in his discr^ition may from
time to tii'ie detemiiae, clectt-d uy .^ f 'ir acthod of selection to be approved
hy tnc -iLX-iinistrator, and foLn^ :e here- without, vote nppoiatea hy the Presi-
dent of the United States, Such ■,, >,-.;cy nay iroia time to time present to
the Acjiiinistrator reco^maendationc h s^ '. on coaditi jns in their industry
as they may develop fro, time to time which will ttad o eficctuatc the
operation of the -n-ovisions of this Code aaidne policy of th..; Hatioaal
I ndus t r i r 1 P.e c ov c r y Act."
(84) This v/as issuat in pamphlet form (3a" x 11" and 13 paacs) at the
office ef aa: Codi. Gov 'ixtce.
(S5) Omittins;'; re;:.ulations vdiich, on a liber--l interpretation, the
9838
Code ini£^ht te said to authorize, the H-ales.snd Re{nilations in effect chai^'ed
the CoL.e "by: ■ •
(a) Providing for " se^roc" tion of the shipbuilding industry," this
being tied up with special tro,de practice provisions for the
Great Lp.!:es District:
(h) providii-g for price filing (v;ith a thirty-day v;aiting period):
(c) Requiring that "material sup^-'lied hy shiprepaircrs - - - shall
he ciirrgcd at not less tlian, the prevailing delivered marlret
price plx\s" certain fixed percentages (including "10^ for profit"):
(d) Restricting hid ing: ■ . ■ ■ •
(e) Requiring the filing of hids; '
(f) Fixing maximum quantity discoxmts:
(g) Pixing raaximun cash discounts on hills for repair 'Tork;
(h) Prescrihing a formula to he used hy shiprep.^irers "in the
determination of all lump sum prices, a,nd in the hilling f
of "-'11 time uid material vrork; and
(i) Regulating outside contr ctors used on shiprep->,iring.
(86) Ihid
(87) Cover page of the "Rules".
(SB) "RuJ.es" oag. 12.
(89) Office h'anual: "10J7.12-(ll) In some cases, the Advisors will
pass upon differently dated revisions of the same named code. For exaa^le,
the Lahor Board may approve a code dated Apri^. JiOth, and the Consu-.'ijrs,'
Advisory Board, the code as revised April 25th. This is in order if the
Deputy Administrator states in^his letter (Volume II ) t'.ia.t no matoriaL
changes lia.ve heen rar.de in the Code, since the ap-oroval (or disapproval)
of the various Advisory Borrc.s."
(20) Memoranc.um, Consui'iierb ' Advisory 2o ,rd to Clinton A. Berry, re-
garding I'otor Vehicle rainter.ance Trade - InteriTretation of Article Vii,
Rule 8, April 3, 19S5: " — this rule is improperly in the Code in our opin-
ion, since it v/oe, altered and tlie vrord "secretly" deleted after the Code
was passed u-ion hy the various Advisory Board and Divisions, we are very
definitely of the opinion that the Administr tion is not in. a position to
make any decision relating to it until it is modified. We have heen assured
that it v^ill he amended on proposal of the inCustry at an earlj'- date."
(91) i.;emora.ndum to the Consumers' Advisory Bor-rd, regarding Sonc Inci-
dents Reflecting The Attitude of Deputies, et cetera, June 3, 1935: "I
cent to -the Deputy -v, complete report on the Code ,and its o.o-^endices , hxit he
immediately 23honed m.e p.sking that I delay the writing of the final report
until after he returned from a vacation hc'cpuse he wished then to read my
9838
-257-
renort ac. to cliscucG t.ac r-ciyitr ^dx,:. ,;K . -c never i^eturncd from his
vacation, 'out I Ire- 1. G,rn:;d i :-t -u: -V^.d -c'lt the Coio to Gcner?,! Johnson for
av-rovr,l h.?.lf :-=n /ic.r^ -at..:- ;ic ni-xic; -cl-i'i^^: ' -^ '^o Cel.).:;- our final reports
Corsf-qu^^tl:- t>.t iiA,:.,l r. port .-as ^icvcr "b^en Fritton."
(93) Infr-i, XI , ' : ;^n.^ o.
-258-
"■'OTIS TO CPIAPTl?. XI
(1) Cor-dn, "Basic Doctrine of Americ?.n Constitutionpl l="--.'i
12 richi .-n L^'-- Heviev 347, ?75 (1^14).
(2) Arizor?. Grocery Co. v. A. ^. "■. ^. ?. -"y Co., -^84 U. S. -^70,
3S2 (1^-2).
(o) District Court for "District of Oregon, ^-'^'^^7, Janw^-ry 24,
1934. Q-iinion by TcITary, T), j.
(4) AiTDrovecl Code Fo . 9, Ltmiber and Timber Proc^ucts, Codes of
Fair Comoetition, 1,95.
(5) Trpnr.cri^-^t of Hearing, A-.-^^e^l of the ^''ill^mette Cor^-'ony,
October 23, 19"". An intereptin.': ''^ote on the case is foijnd in "Valir-ity
of Allotment Order imder L-omber Code; Sf.s-iension of Penal Provisions
as to Litigants Challenging Order," 47. Yale L^.f Joumpl 9^7 (l^'^4).
(6) Article VIII, An-?roved Code ^"o. '^, o-o. rit., '^7-^8.
(7) Srora, n. (3).
"The r.'est Coest Division a-encies, in making their initial allot-
ments, i^ere confronted y/ith a com-^lex "oroblem, requiring considers ticn
of many factors; the -orim.e object being to distribute the -nrodu.ction
qujota allo'"ed the division so that all of the mills vould be able to carry
on operations and give emi^loyment to a raaximimi nimber of emnlovees at a
self-sustaining wage.
"In viey of the economies reaviirer' to meet the "ore'ent lov? -nrices
and market conditions, 30 hours per r'oek is the minimum o'-ierating time
necessary for the manufacture of lujiiber products. Likerise 30 hours
per week is the minimujn operating time on which mill employees can be
self-sun-^orting.
" It is evident that if the division agencies had made s-oeciol
allotments to limited grouos on the b^sis of manufacturing ca^-'acity,
productive history, or contractua.l oblir^^tions, it necessarily iTOi\ld
have requ.ired a greater limitation in o-oerating time of other mills
and destroyed un.iformity in Forking concHticns, thus creating a sit-
uation in which no scheme of distribv.tion of •nror'uction or labor has
been, to the i-iorledge of the coiirt, conceived whereby the inc'ustry
as a whole cou-lc' be vitalised throurh the oner^'tion of the Pecovery Act.
"Unfortunptely, distribution of allotments rea'ii.ires some mills
to make rreater sacrifices in productive c?^oacity than others, but this
ap-oears to be unavoidable by reason of the c'iverr.ity in m.ill o-^er^tion.
However, it is obvious that the administrative a::encies h^^vo adorited a
plan of distribu.tion which, while not nerfect, is the most likely to "ore-
vent com:->lete disaster to the lumber industr/, a TDir-n by v-hich --'ll
mills are in one classification, and i"hich '-''oes not, in the juc'rment of
the court, srbitr-'^rily discriminate ag?inst any mill unit."
9838
(8) m-i.
(^) ".'ote, "Vri.lic''ity of Allot/nent Crc'.cr Tinf-'er Lr,ml:.er Core;
Sv.s^ersion of ?en-l Provisions -" s to Litir^.nts Cmllep-ing Orr'or, "
Op. cit.
(lO) Fq-'.^ ?-i. ^'nalo oiis -M-o^ilcn peo A-n-roTed Cor^e ''o . IIP, Cotton
Gp.ment Ind".stry, Codes of F?ir ComDtitioii ITI, Art. V-A <^d:
"ITo memlDer of the Cotton G?rment Inr'-.i^try r.?i9ll 0T^cr?te r>ro-
df.ctive machinery uxed in ?,ny of the -•rocess^es em^nier^'tTr' in Flection A
of Article II, except ciittin^ m?.chinery, for more th??.n one shift of 40
hours per ^-'eek. "
Hi^h leral officirls of the ration?! 'Recovery Ar'ninirtr-'' tion recor-
nized this ■orohlei!: Smith, "Le::-?1 Prohlenr Confronting the "^^^^tion^l
Recovery Adminiptr" tion, " 2 Feder-.l "'-"^r Association Journal IP, ('A'lril
1934) ;
"For c :?nr^le, o'^erptinns in "o-Tticv-l^r e?iten^riser. m^-y he on ^
he.sis of t\7o or more shifts ^"hile i-dthin the s^:^e inrh^stry other e--^.ter-
prises will he oTere.ting on a si-^rle shift o=sis. If the allocation of
prod\iction is on the oasis of a fl?t nnmher of hoiirs of sfchiTie oT^cration
for any mill, there '.vill he ? vrstly dis'nronortiona te effect on mills
rimnin;;^: t"o or more shiftr relative to mills on single shift h^sis. "^one
of the latter may not ho redv.ced in -^enr.: sr^.ihlc o-oer^'tion to ^ny crtent
vlia.tsoever vfhile mills OT^erating sev-ral shift^s nay he reduced to ? small
percentage of the total amoimt of o--^?r^ticn i^ossihle hefore the cor'e. On,
the other hand, if m.ills o^eratin;- on a hnsis of t'-o or m.ore shifts rre
permitted to retain the same rel'-^tive -?roT-iortion of their --^revioxis time
of operations as in the c^se vith the sinrlo shift mills, several diffi-
ciilties. arise. In the first -^l^ce, the mill on several shi-fts is fiven
? crystallized leral --^'-'v^nt^: e in costs of operation over the other mills.
In the second ■olace, the am.otuit of recHiction necesserj'' in the sin^rle
shift mills on the h°sis of this theory \-'ou-lr- redu.ce the numhcr of hours
of OToeraticn helo-^ the economic minimum anr' '-.'oul^'' close \n many su.ch
mills. Due r)rocoss ->rohlcm.s are raised in c'iffici^lt form. h->^ the en-
c'cavor to cone y.dth those siti^a tions. In ""oneral it is our a'n-rofch to
the problem, that assujnin.-; the vit-'l ij^roort'^ncc of limitations of -^ro-
duction for the p!^rticul-?r industry in order to en^hle it to sustain the
lahor hurden im^Tosec' hy the code,' the miost reasonrhle formula for li'nita-
tion that can he devised in viei- of the ?hove and m.^ny other difficulties
should he the one chosen. If com-^l?ints demonstrate th'^t the method =ct-
imlly chosen has serio^^s flpvs '-h.ich can he remedied hy m.ori:^i cations of
the fcrmxila, the ar^ministration str-:"'-"? r-^-'j to coo^oerate in the en.f'e^vor
to imiorove the for.nula, administr^.tirn fle:-:ihility should do much to
eliminate th-^ extreme Cv.e -process difficulties."
(11) A-.riroved Coco ]'o. 7., ''JoqI Textile Industry, Co^^'es of "^^^ir
Coraroetition, I, Art. VII, 40.
Ap--iroved Code Vo. 21, Le^^ther Industry, '^or'os of "^air 'Competi-
tion, I, Art. IX, 294.
9838 .
-:-60-
Av-^rovec'. Ccc'c '^o. p>, L^ce rajiAif---^tiirir.f Ir'?T.rtry, '^•or'os of
Fair Co":'ieiticn I, Art. "I, 65.
(13) r. ::. A. :^\^lletin -To. 1, Ji:uie 15, l^^"^; pn;!^
(l^) PrGsidert's "^,een--lo:-i<^"t Arree"ert, P-^r, 1'^:
"'"Jhsre, "before J-an° 1'"^, 1''^'^'^, the Rn-9r'^i--=(' h^'' -ontr^ct-
ed to "-archare jvoods nt p. fixec"_ --rire for c'eli.^/er'^ .-''i^rinf-. the --erio''' of
this af;reen!ent, the iinr'erpigred i"ill me.hc ?n a-n->rn-- ri? te ar'.jti.'^tnent of
saic". fixed Tsrice to .Tieet any inr-ea'-e in cort caiired "by the seller h^'v-
ing signed this President's ree;"~'l':j^nF:nt aj^ree'ient or h'~'^''inf "^^ecor'e I'oijjir'
hy a.ny coc'e of fair corrn^tition ?---'--roved "by the President."
The exnlanation of this tp^-"s as follors;
"This agreement vill, usii^lly, increase the costs of those 7ho
sign it. The -:ur-'ore of this T?ar=; r^ph is to ^:>asr, ^ny Bv.ch incre-'^sed
costs alon,; from one sig:aer to another, and so on to the ronstir^.er.
"If yor. have a contract made "^^efore Ji^jtc 16, 1^".'^, to"Diiy -roo-^s at
a fixed -^rice, you agree to ma":e ar pi-r^r.r-=-cn-'-. '"ith yoi^ seller so th^t
you pay him for the extra cost to him causer" loy his navinr.' siri^ed this
agreement, or having come fnc'er a code a-y-'roved "by the Presidert.
"In some cases the final "buyer is the ^overn'^ent, "-hich, "Lmr'^er
existin;; lai7, is g'enerally not allowpd to -^--v more than the contract
price. The President has anrcuncec' that he ^-ill recomm.end to Con^rc-s
that a.-oproi^riations be ma.dc to alio'" the GoArernment to -olay its •o^'rt
"by -oaying Government contractors who have sig"'ed the aj-reei^ent for their
increased costs. The President has also a.-r-ealed to the ^tat°s -^nd
cities to take action permitting them to c'o li"'-:erise.
"You sho\ild have no fear that, because yov.r hiiyer h=s not signed,
you vill "be left Fith the increased cost on you. -alone. The Presi'-^'ent ex-
pects every employer to sign this artreement. "
(14) Comm.ent, "Some Legal Asijects of t'ae ^T.^tional Industrial
Recovery Act, " 47 Karvarc' La'-' '^■■evie'-' P5 (l^^r^), sug--e-t<- the following
line of thoiv.ht:
Imoossibility means cxtre-ic eco'"'omic vaste, ==""'.'""'. f'ere ore
few cases which allow this as an excuse for breach of "pntr^'ct,
Mineral Pari: Land Co. v. Ho'-'ard. l""-6 Pac. 458 ( Oal.. I^^IP) . It mi-ht
be t"nat a seller woulc offer the cefenso that a s=-les belov cost -pro-
vision of the code unfcr which he vaR o-neratin-^- ■preventer'' hi'i from
carrying out the contract, b^sed on the technical meaning of the '-ord
"sale" as not being a cor-->letcd t;-ans?ction imtil the '•oo'''s are a-o-oro-
priated. He would be correct, but th^ term a^ n.snr' in the co'c'es is
prob-bly v.sec" in its colloqv.i^.l sense of "to sell." As an example of t"^^i!
see Approved Code Fo. 11, Iron 9-nd Steel Industry. Co'-"'es of ■""^^ir
■261-
Competitioi:, Vol. I, '=chsc':alc "], Soc. "^ , ^01: "*■ * ♦ dclivo-T of ^vy
■oroc'uct r.p.fe --i-o.-^-sr-^nt to ?. cortrpct of s==le sh?ll Lc rcs-T'^er' j^p ^' s"lo
tliereo:.'^ "''.c'o rt t>.c tine of m?'.:ir.g sv.cV: contract."
"'v.t, cor.tiT , is the viRr that even if, the i-'e+"e--f,e of "hr>T'r''pVi-nii
is v.seci, it rcv.lc" "be orl^'- ^-.-■.•^•e-'ti ^.f extrporciiv^r:/ relief of ■^-neeific
-Tcrformance. Sec "'ill^:i'd v. Tnyloe, "" ■"-ll. 557 (1869). '^-'^m^.ces coi\lrl
■nrol'e.'uly he securer", in a c-r.it at lav' for hre-ch of contract.
(15) Convior-ealth v. reff, 114 Atl. ?67 (F-. I'^'^l); and
Coiv-T;b\is ?.. pQV'er A Lif^ht Co. v. Coin ■^h\\s, -^^ IT. S. "^^
(1-1?).
(lb) Bichlanc Ste^r-shJ-n Co. v. Puff air, ^^-y -"qc^:, ^^^4 ■^. PBP.
(C. C. A. nc. 1-19).
(17) ■ "^revard Tannin Co. v. ?'oPrer Co., ^PP "'ed. 7^5 (C. C .A. "-"rth. ,
191-). _ ■'
(18) Supra, n. (l4).
(19) Rele--Ee Vo. 1?, July "0, l'^'^-''-, frofn. the Code Av.thority to
all I'emhers of the Pavonn-ipe Indu^t-y:
"Shortly ?ftor the afo^^tion of our Co-'s, re fent yo\i ""vi-lletin 1,
exolaininj. the situation vith re.;^;?rd to contra'^ts. Since then \"3 h-^.ve
\'ritten to you ii;non this pitva.tion more than once. IIoT-ever, it seems
that certain inenber? of the Industry are still in some douot a^- to the
effect of the -^revisions of the co''^ on r-ontracts ^nd'^ro not co'-n^lving
Fith the Code. In or'-^cr that there nay he no fiirther dovibt on this sr.h-
ject, ifc are again advisin,;: you of the sitxiption on this stih.iect.
"Pursuant to Section la of Article I"' of the Code, all spI^s made
"by each memher of the Ind-c.r try mu^t be at the -?rir'9s and discounts then
on file as effective ^-ith the Code AutViority. In other ^-ords, at th.e
time a sale is niailc, it must be r)"r.i"^va;it to tb.e -^riccs enr"' discoiu^ts on
file Y.'ith th . Code Axitbori.ty at the time the sale is ma'de.
"A sale does not occur vmcn the rmuf'rctn-ror agrees ii^ vj-itinr-
of otr.er-dse to deliver raerchpudise in t^io future r,t cert-^in stin^.l^^tcd
prices. This is o contract of sale or an -^froement to sell. A s?le
occurs only vhon the ?ctral 5oods ar- :"iefinitely ■etnoronri^t'^d to the
contract. This riepns that the rnpvmf-ctiirer has t"he- roods a-d sets them
a-oart for the bvyer.
"If a m.anuvf^.c turer today shon.ld enter into -•^ '-o-tract to sell roods
at a cefini.te :>ricc to a buyc^r callir for r^'elivery over a -^°rio'^ of ^^cei-=
or months, it ir an-o=>rently obvio^is that no -^^le oc^n.rs ^t the tine the
contract is m?re. In such instances most o:^' the n=rch"ndise c-^lled for
"by the co-tra"t m-^y not even be Tna-mt>ctiir3d at the time the contract is
signed. Under su.ch con"'itioriS a s=le onl" occurs at the time the eoorls
have been m.pra\factur-:'d and set psi^e for delivery to the b^u'er. It is
obvious then that a sple i-'ould occur not at the time the contra -t is --^P'-'o
but many ree"'s subseoueni. thereto.
93-^8
"Therefore yo^^r attention ir. c-ller' to the :>ct tV t e'-'t'^-'^^-'r i-^to
a contract of z^-le -"o-s not o'cviete the -^eces?r_ty o" co"^:il"3 ■^^- '-ith the
proyisione of the Coc'e. If -■^t the title pierch^-'c'ipe is ^et psi-'e for the
"biTyer and shi"?nent raj^de, a m?:uifact\irsr h^^^^ on file '-ith the "c'e
Author! t;-- a differert -^rice (higher or lo^-^er) than that callec' for "b^
the contract, such sale must he at the "irice on file ^-ith the Hoc'e
Authority. To nahe sn.ch a sale at the '"on^ract nrice ^-'ould constitute
a. distin.ct violation of 'the Code.
"We thiph '--e have made this m-tter an.ite cle^'r. ~or yow^^ informa-
tion, T.'e have taken this i^-^ i-ith the "^."^.A. OT":"ici = ls in '"'--^shinr ton ^^nd
they fu.113- confirm rhat is ezzores^^ed. >.erein. In connection ^^ith -^11
provision'^ of the i^oc'e, it is the intention of the '^oc'e Autlioritv to c'c
everything: nossihle to m?-he sri-re tK-'t no one is viol=>tinf: Section 1^ of
Article 10 hy enteri-^^ into so-called contr-^cts. ^in^e ve h^ve con-
firmation from. 'Tashin ton on th^t, =? stater' herein, '-e feel con"icie^t
that the Corr-^liance "division of V . "". A. ■'-'ill assist i^s in -'prosecuting
violators.
As '-e have rea^^ested "before, should any nemher of the Indi^^try
knov that ma^'u.factn.rers are violate nr; Section la of Article 10 h-' e-nter-
in,'^- into stich contracts, please for'-'ard thir infoi'^iatio- to us -r-r" '-e
v'ill he QlsrX to act n."^on same imnediately.
'". F. I. Tu.ttle."
(20) Le^^'^l Fem.or^.nc'-uin Fo. "0, from T'laC-r-ell Smith, re '^•ontr'^cts
for F\itn.re "r^elivery in Croen Price Systems, July 2'^, 1'^''^:
"Ka-ny qn.eFtions hp^-e ^■risen concerni--!,'-: -o'-itv^rts for future
delivery -of goods in connection -ith o""en nrice -^roi^i^ion? of ^oc'es.
Typical of this situation is '-'hers a nrovisio'i in ^ co^'e nroh"-ii-s sales
at other than the effective filed --^rice. anrT -,vni-9c; no s--^e''-i:f'i<- n°-^tion
of contracts for futn.re delivery, the nuestion oeiT^.'- ■'-'hether a --^elivery
of goods at the contract -irice instead of the effective file^" -"rice con-
stitutes a code violation.
"The aueftion cannot he re^ol-ec' hy rule' of thnmh hiit only
on the hasis of a c?reful analysis of the -orevisions of the code and
the contract in each case alon"' the line in.'"icated -in any legal hemo-
randrin of hay 1"^ 1934.
"The next sten should he to arrive at a correct intej-n-ir°t=>-
tion of the core nrovision. If no amhifviity has heen cne^^t^r" therein,.
either by the lan^^-na-rce of the co^^e -provision it-^elf or hy other nro-
visions of the coc'e or "by extri-'jic frets, there is, o"f course, no need
for inte-x^oretation. If there is a-diiruity such ?s to c^-^t '■o\\bt u-non
'••;-.ether 'sales' was intended to moan or inclu-dc 'contr-^cts to pell',
such interpretation sh.oulc'' he r-r^^olved acco'^cin^- to ths wle'^ of st^tiitoi
constrtiction.
"'"here it is cle^^r th^'t the co'-'e -^^■o'"- is ion refers to ^.r-tnal
sales as dirtinr-uished from cortrr^cts, then it s>ion.ld he c"'ete:rrn.i-~er' from
9838
-c'63-
the terns of tlie contrr-ct, ^.r.^ rj^:.ch of'. 'v f-^'^i'? ■>^, ^r^- lie -^^rtin^nt,
when the 'sale' t?--.t=n -l- -o. ":""or o^T-T.^le, i-^' --^ vthi:v of s\\T;star.ce
remeins to Id;-' core vac'er the t:^r.T.r- of Qio coritri^rt toforo title may loo.ss,
such as icLentific'--.ti'^ii of tre -'r rt: cifr- r rop'"s, or ' ■^ir-r'^-^ri'^tion' of
them to the cor,t,r~-t, or rono ot-v:-- I'^c T.-^.ttor, the co'^t-^'-'^ct is not a
sale, hut is ?n ?,i,rce"'e-it to sell, ■^-•f fi-^-- r-^-^lir-hlc "ri^c if. the filed
price effective on the c^te of the ^..-tual s-^le ^nc" -^ot that of the .-''ate
of the mahin^- of the contract. It is oh-'ious that -^n ^,f;rec:T'9nt to sell
goods not j-et -.^arii.factu.red cannot ce a sale, :^or title c?nrx.t nass to
goods not in "being. It is also obvious that in such c°se th.e a-o-nli'"a''-le
Tries is that in effect vhen in fact the transaction acttiall" 'becomes
a sale. Other^-ise c^en urice lorovisions would he rendei-od mi,^?tory hy
the e:a;3edie'-.t of forward contracts.
"'"here the a-Q'^lication of the r-hovc sngrc^ tions ^-'ould res"^lt in
manifest injustice, either to -?n ir'-^'ividual Tcm.h°r of the ind-iistry or to
the entire i:''.duFtry, 'orornot frantir,;; of ererrotions vciild seem to he . _ ■
indic-'^.ted, at le="- 1. -^endin,™ amendment of the co:"e -n revisions in such
way as to m.ahe them s-oeah oro-ocrly the need ?nd desire of the inf-'ustry.
(21) !'i/;;hland v. Ihj.ssell Car ."■ Snow Plo- C^rni^.^nv. ?7<^ TT. S. 253,
261 (1929):
"It is also well est?hlished hy the decisions of this court that
such liherty (of contrr-ct) is not ahsolute or -universal, and that Cons-ress
may rerulate the mahirg end '■crforman'-'s of such contracts whcnc^rer rea'^on-
ably necessary to effect any of the great mi.roos'-^s for which the n?tioi-'al
government was created. "
(22) See Jecohson v. Kassachusetts. l'^7 U. S. 11 (1^05)". pointing
out an analogous h?la^-^.cing in the case of individual liherty and its
sacrifice for the comri.on good.
(23) Eaincs, The Revival of ''•?t\ir-?l Law Conse-nts. (f^arvard
University Press l'^30) , VI. The Fourteenth Amendment to the "^ederal
Constitution and Due Process of Law. An erccllent statement of the
court's feeling,- is fou^d in the o'-inion of i'r. Justice "^ield (not the
majority opinion) in Barhier v. Connolly, 113 U. S. "7, "1 (lS95);
Pound, "Liherty and Contract," 18 Y^le Law Journal 454 (I'^Qg) •
(24) 165 U. S. 578 (18-^7) .
$25) 208 U. S. 161 (1908).
^26) 236 U. S. 1 (1^15).
(27) Texas and ITew Orleans P.y. Co. v. Ttrotherhood of '°ail'-qy
and Stea;rishi-o Cler"-s. 281 IT. S. 548 (l^^f^O).
(28) Le -^l :'em.orardum; ]To. 28, from '^-l^C'-^-ell Smith, re 'Effect
of Code Provisions on Contr^^.cts, ''av 15, 1^34:
"T.iere are !!T?ny ill conc^iv^d qtie?-tions e"broad ?s to T^hether
codes abrogate co:itracts. Code? :.:ay or may T^.ot a>ro5^tc co*trac•^s in
'-•hole or in "o^rt, the correct a-^.-^i-oach "being ir every cape to exa.mir.e
the partir-jJar core ^rovisi-rn ?nd the "oarticv-l^r contract rith some
care to ascertain the extent to -'hich cor-rliance ^-'ith the Goc'e me?ns
"breach of the contract.
"Of cov.rse, if it is foimc' that it is irpospitle to comply
'-ith the contract to a C9rt?in e-tent if the corie is corrilied •'-ith,
then ve have a case of ^artial a"bre;-ation of the contract and the coi-irt?
may decide A-^hether this h^s the effect of releasing the -n-^OT.issor from
the contract as a whole. This m?.tter shoiiJd "be left to rjrivte counsel.
The rationale is somerhet as follo'-s:
"The federal goverrj-^.ent is li-iited vdth reference to_ the
sanctity of contr^'Cts only "by due -orocess requirements, "furthermore,
it '^'ould "be utterly imrt^ossitle to rr.rry out a -^rorram siich as that_of
j^IRAif memhers of industry could, hy estimating the coT-'.rso o"^ codifi'-^-tion,
contract themselves into situations which vould bloclc the epta'bilization
efforts of the acLministration. It is ou.r o'ninion, and has "been our
fixed "oolicy to declare, that all mera"bers of indu-stry nust comr)ly with
the codes to v-hi'^h they are su.hject, irres-'-iective of contracts. This
sometimes nieans conflict "between code provisions and con-rracts, "biit more
commonly, a close analysis of the situation reveals that the rode sim.-^l^'-
imooses more stringent reqi^irements on the mem"b.er of industrj' than
those required by his contract, without the fact annuling or affecting
the contract itself.
"There should "be no statement "by any mer'"ber of the legal ' '
Division that 'codes a"brogate •.-'rior contracts' "but i^sof^r as any general
statement is made it should "be alonr the follo"ing line:
"i,:em"'Dcrs of Industry must com:^-'ly vlth codes, notwithstanding
contracts, and tal:e the conseqtiences as to the civil situation thorc"by
created, '
"Ihren siich a ^'jcnerel st^^tement shoul':'' "be ^voi^'ec" so f^'r as
■ocs?,i"ble and the rationale herein outlined should he made clear to the
interested -:!9rties.
"In so'-e case' of "binding "bona fide contracts, w' i^^h i^ould
be affected by code com-'liance, justice might require exep-^tion from
the coc'e -Trovisions which create the conflict. "3ach such case should
be resolved on its own facts, inclu^'ing a determination of the good
fait"h of the contract, its bir':"'ing effect, anc' the results in the int^ustry
of granting the exemption. The reauirement?^ of du.e T-irocess m.ay '-'ell be
met in SLich a -orocecding. " ' '
(39) $79 U. S. 253 (1029).
(30) Do-n--ld K. Richborg, Address July 5, 1^-^.
(31) A-n-oroved Code "^^o . 4"^, Ice Ii-'.''''t\strv, Cc'es of "^^ir Co:^-ietition
I, "29.
3838
('^?) F-?.f"rocl: ii--;- . -trr" o:" t::e Ice Co'o, -^ror.: t.'ie Vi-^r-ipir^t of the
Consuj .evs ' At'v.p.-^—' ""'o^- '''.. " J^-p'■ \"', 1'""'"'.
("^) ra'cr -. -•. r-Yo.^ .
(V.) Kr. T. B. Cmtroll.
(-5) Dotf-et of the Ice Co-'o.
(■"^6) KexTdoch, op. cit., 5; Cr-Ao'oev ^•, 1^"^- to '?rcli 11, l'^"4.
(37) Itid.
('^S) This iiiform?tion w?.s {riven the ^rriter in s conversation T^ith
an emioloyee of the Cog's Hcccrc' Section in the s'^nin;;; of I'^^S.
(r^^) Su-n-a, n. ("l), A^T-)rovec^. Coc^e !To. 4"., Art. 7. ^ec. --, -"7.
(40) Ibid
(41) "fo rocord exists v-ith Coc'c -ecorc'. '^e-'-n-tv ArVii-r. ■^tr^tor __
Str^Uf^ stf.rted to have sv.ch ■?. recorr con-oiler' from, the foiTier '^e-^T'.t^- ' s
files. He Et?ted infor-'.ally that he "believed o'"-er t^-o hi\nr'r°r'' a^-niica-
tions were inforriall" handled either by the "le-^n.ty or the "Committees."
(42) Ice Indurtry Cc-'e Atitl-ority Pnlletin, "Ar'vice of the Corle
Authoritj^, "Jr:-iiv£.TY 12, l-'34.
(43) Svcnrs. n. i'^l) .
(44) Ice Inr'nstrv, A-p-Trover Coc'e-^'o. 4". oiT-cit. Art. IT, Pec.
1(4).
(45) Vr. "D. '". Dahlherg.
(46) haddoch, or), cit., 1"..
(47) Adminir tr- tive Order To . 4"-14.
(4-8) Su-ra, n. (47).
Haddock, ov. cit., 1^-13.
(4^) AdrniniFtr--tive Order, To. 4.'^-2-, A^veust 18, 1^"4.
(50) A-o-roved Cor^e "''o. 4", Ice Inc'U.'^try, o^-^. cit., Art. IT,
5-54-^.36.
(51) T'"enty-fivc a,-n-?rovals anc" six r'enials.
(3^) Eaddocl:, on), cit., 18-19.
(33) Infra. XV.
9838
-266-
(J'4) StraLis, He; ort to the I'. I. ?.. Z. April l-'j, ^ives a
full Gtrtsmsnt of ths&e cl-.=n;es.
(^3) Plac.c.ocl:, 07, cit., ?5-.n8:
"In Se: tenfoer, l'^/"^ the Loc?.l Co-rraittes of ArlDitrT^tion ?.nd
Ap'^eel in Fhilac,er:.hia requertec'. the e£ tfhlirhiPiit of ?. 'taeic or normal
market area' to ii'.cluce only the Civ ^'^ ^ il?.c.el"/..ia, in orc.er to pre-
vent an ice mc- ivaf? c ture r in "ivnrf'ice, I'ei; Jc-rsey, frcm shi-r^in^; ice
into Philac.elphia and selli;-:^ it belo- the s&t- ulisr.ed "orice of 70j^
per cwt. exif-.tin^ in Phil^Mf.er-'hia oefore the Riverside lianuiactv-rer
'invaded' the Philr.:".el-:i.ia market.
"This matter ras not -Trejeiited to the Advisory T-oards imtil
early in Janvia.ry. At the ac.vitroy conxdttee m.eetins uhen it was con-
sidered, hr. T. ". C?ntrell (a-roci?te conn';-el of the Ice Code Authority),
and Mr. Pdcnard Bircher (ch?iriV: } of the Loc-.l ConTaittee of Arbitration
and Appeal for Philadelphia) v;ere present to e:rolain to the comi-nittee
the necessity for favor^^hle action on their ap'olication. During the
discu.ssion, Mr. Tdrcher casua.lly m.entioned tlie fact that he vas also
the head of the 'Philadelphia Ice harheting Service. ' I asked vjhat
that orgsnization did, and vs.s definitely assured "both by ur. Cantrell
and Lir. Sircher that it did absolutely nothing, er.cept advertise -ice for
Philadelphia ma.nu.ffc timers. Hot being fully satisfied th^.t there \7as a,ny
necessity for favorable action on the ap;^iica tion, I requested the Deputy,
after the meeting, to defer action ujitil I coxild secure some information
from the Co:isum3rs' Con.nty Coxuicil a.t ?hilrdel-hia. He assented, and I
telepnoned the clxaiiTnan of the Cour:ty Cotuicil at Philadel-hia. ITot being
able to reach her, I got in toucl- vifith the chairriian of the Camden Coimty
ConsuTiiers Coraicil, asking him to invecti_,?te and sxipply me i,7ith informa-
tion about the Philaterohia ice sitxia.tion. I vas not av/are that he vjas
a ne^7s■oaper re-'orter XLitil the jiext day,, when the Philadelphia ne'--spa"5er^.
carried ?n item to the effect tlia.t I was m.akin^ an investi.^ation of
charges of m.onopoly in the Ice Indn.'. try there. That afternoon I received
a telegram from i.r. Jn.lien Coldocrg, attorney for the Independent Ice
Dealers' Association of Philac ehniia, stating that he had some irp/Dortant
inforr.iation to i.'.nc rt . Later in the day, I was advised by the Deputy
that the Code Authority was very much interested in knov/ing what I was
doin^;^ and v.'hy. In viev/ of these circuistances, I believed that a tri;~'
to Philadslnnia might be worth while, and I spent some si:: hours there
the next day. On my return, I prepared a •.iemoranc''tijn to Deptity Administrc" toi
Straus, dated January 21, 1935, ■ indie- tin;, the result of my investigr.tion.
Briefly stated, it oo : red tlia.t the Ice iianufacturers
of Phi lade l-^hia had entered into an agreement to fix prices and to dis-
cipline manufacturers and dealers who refused to abide by the orices
fixed by the Philadelphia Ice I.;arketing Service, which v.'ould C.vz.v-> vast
qua.ntities of ice at ridiculously low ^Trices in the territory of any
ma.nufact\i.rer or dealer v?ho refused to contribute to the Fhilac'er^hia Ice
Marketing Service, or follow its instrux'tions.
S3 38
-267-
"Ar, a ix^FV-lt of tl:i: rt^-ort, the. ''k^":vs,i too:: the m?.tter v.p
i^'ith the Coc.-j Ac.miri'- 1: :;- tion Director, v/ho r'-v'-iuvv ' c;'f. that tr.c Ice Code
Authority be cirGctii:" to r\?.::e :■•■ i" .'■•:;. ti,:/ tio.i of the .v;-?.tter. If this
investi^-'-tior. £,ubst=;'-:^i;i? ted t.:c i- cvx-tic co;:t- i;.3d in ;-ny re-.ort, the
Code Aut/iority v?'^ s 3;r;oected to r::.;?-/:; t-ie ].oc--l Conwdttee of Arbitration
and Ap-^ee.ls for the Fhil--(.el;-:-.:.r, A: ■-, --.::•.' '-/r-'oirit another committee
composed of men havir.~ no conrer'tic;- v-ita th;^ Philadelphia Ice Marketing
Service. I'othin^, fv^.rther T.'a& done after the ::;?.tter was referred to the
Code Aiithoritj'", so far as I can find out.
"Follovinv this report on the F^.il-.i el-;hia situation, De-.uty
Adxiinit tr'tor Straus refused to establish a 'b-sic or normal r.iarlcet
area' at that place, and annovjicsd his intention of establishing no other
such areas Uiitil and xmless the Ice Code ras. amended to live more
adequate wblic svnervision and co:"-trol over the indaistry vrithin st\ch
areas. Ho fra-thei- 'm.?rl-et areas' v/ere established durin^, the renain.'.er
of the life of ti.e code."
(56) Consu-vers' Advisor;^ "oard i emor^nduin to ?.. K. Strains, re
?.ecoiru:ien(..aticns — for F.evision of the Coc'e — for the Ice Inc.ustry,
Liarch 1, 1935. This raeniorrndujn, si^jned b;; C-cor^e 1. Haddod^, '::as
collaborated i:i by the \^riter.
(57) Ibid., 3.
(58) Ibid., 4-5:
"1. Is there a mono'Doly in the locality under consideration;
or do monorolii-tic -practices exist?
2. Are a::;; ai_rce-i.ent6 m e;:i::tence oetween members of the
industry with res'occt to ■■.rices; service; allocation
of routes, territory, sales or -^rocuction?
3. Are prices re-:-.sonable and ■.iroper; ?-hpt effect vould
the erection- of ns- cr.^oacity, or the denial of per-
mission to ei-3ct new ca-^r-city have o;' -^^rices?
4. Is existing- service adenuate and sr-tir factory; would
the erection of a new pla^.-t i.nrnrove existing service?
3. What is the de^'ree of obsolescence of existing, ■plants;
are they caprble of efficient o'-e-x^ation; are their cost
of o-poration re-jso'iiable a:id pro':^er?
6. Are existinc^ -plants o/ierrted at a "rofit or a loss,
and how much of either?
7. Y.'o"o.ld -^ermissic:: to erect new ca^^-^city tend to develop
new mri.rkets or deter the loss of existi:ig markets?
£. VJould the denial of the ap-lication hamroer or delay
techjio logical progress ir the industry by preventing
the installation of a new tj-pe of ice iTianufacturing
machine?
9858
-268-
9. Vhrt, 'effect co "'l?.:its, in loce.litie& su-rroxuif.ing that
V(.nd3r co"iT.sic'.er-''.tioii, h?.Vd on pi-icc-s, service, r.nd
?.v?il?'.L)le s-u.-^'T'l.-- of ice in the locrlity \mc.er considera-
tion?
(a) iTu-iriber, size and location of outside plants.
(Id) Distance from -oro;?osed plant.
(c) ri-ices charged "by outside plants.
(d) Load factors of ot\tEide plants.
(d) Cost of trans-Tcrtation of ice from
outside plants to locality under
consideration.
(f) Past and existin._ practices of outside plants with
res-^ect to sales vithin territory under considera-
tion.
ii,) Age and obsolescence of oiitside y:lants.
(h) Ovnership of outside plants.
10. VJhat vrauld "be the effect on outside plants, and "orices
throughout the entire area, if application were granted?
Hov,' large an ar -? should he considered in this coivnecticn? "
(59) Ihid. 10-11. This problem involves:
"1. Is the applicant financially ahle to construct and
oper-te the proposed plant?
2. Will the applicant "build the proposed -?lant, or will
he levy a tri"bute on existing iVipiaifacturers in con-
sideration of his decision not to use the permit? If
he constructs the plant, vifill he operate it, or will
he sell it for its nuisance value to existing nie.nu-
f^ctu.rers?
^. Is the -orooosed "olant of pro"oer size, too large, or too
small?
4. Wou.ld the proposed plant sell any of its "orodu.ct in
other localities than the one in which erected?
5. Plas the a"oplic?nt any reas.cna"ble assurety of success
in his venture, or will ho just throw his money a.way if
the "oermit is granted?
6. '."."hen two or more applications are made, which shall have
Imve precedence, or shall "both he granted,, even though
the total capacity wou.ld he in excess of reasonable
anticipated demand?
7. Shall the Administration grant permission to increase
capacity of a -olant now having a monopoly? If so, should
that action prevent the grant of a future a;o""ilication on
the ground that a monopoly exists, even thoiigh excess
capacity is shown?
,:ive -. r.o:\o'iol" to ?:•. p -■^ll'■;;•■•-t -jio .'oss not at -orespnt •
r.rvo a Vtiono'-ol;'"': If ^o, iz the Ac'jTiinistr?tion required
to ,. re.;:..t a:Ay tubsefa-.tiTLt ep"li:.".!^;.tionG. oor.-os.' c oi the
er.itter.ce of siich i.io:;o-ool:y r'!
(■60) Ibid., 13-14:
"Unc.er most forms of puolic utility rRgulation, certain c'uties
^T3 iirrposed icon the inc'-urtry for the protection of the puhlic. Among
them are the f ollorin';:
1. The utility must render rep.sonable a:.d r\denv.?te service,
serving all corners withoxit unreasonaole discri dnation.
2. For this service the utility may not ch-rtjc more than,
a rcasonahle rate.
3. This serv'ice must he rendered v-ithcut delay.
4. Rules and re^.ulations governin the eonduct' of the
tusiness must not to contrary to the -ovhlic interest.
5. Certain restrictions are ?laced upon ahandoninf the
sfx'vicc.
"' ' "Under the Ice Code as it is fr-ziec ^t :^rii-ent, the Adminis-
tration has no authority to com-^el thu indu.i:try to follo'" any of those
requirements. Y.'hethsr tlie Act itself confers sufficient authority u-;^on
the A.drainif tr-'-tion to ma":e -^ossiole such regulation is a 'luestion for
the Le^Bl Divicion to pat.s vioon.
"In retv.rn for duties imoosed ivfon the utility, certain
concessions and -protections a re given it in order that it may he ahle
to o-Torate success-fully rnd attract financial hacking to enable it to
perform the<ie duties. The m?jor gra.it mac'e cy the St-t?: is that the
utility shall he -ieiT.iitted to chr rgo ? r-^'te calcu.lC' tin" to result in a
reasonable return upon a reT.conrble invo'-tmcnt dedicated to the -lublic
use. Another grant, of nearly equal i:nort--.:"e, is m?de to many tyj^es
of utilities - th?t of .Tiono-^oly. Under puolic u.tility resail' tion, these
u.tilitics (provided they perform the duties laid u^on them) are granted
a vested right to r-?;.ain in er.iT terce, which vested .rit^:i:t is -protected by
granting virtua.l mon.o:olics in the r^quire.n.-iit that no new comoetition
may enter the field except u.-'on the issuance of a certificate of public
convenience and. necessity. T-e bs^sis of thnse certificates is not tho
needs and desires of the ino.ustry, ey.ce-^t incidentally to the major
queFtion of vhat Y:ill best serve the pu.blic rithcxit alloring wa.steful
practices or u.seless capacity, and the rearon for t::eir use stands u-on
the concept that in certain cases the ber.t and chea-^est service is not
?.fforded "oy the connetitive system.
"It T.'ill oe oL/SC-ved thr-t sxich certific- t-'s of public conven-
ience and necessity are used only \-here the -^u-v-lic interest is adequately
saf e^jUa.rd. dt by otner, positive reouirerent: . This is not true of their
C338
-270-
use in the Ice Code, which places no requirements on the industry other
than specified minimtun wages and maximum hours of employment.
"If the N.3.A. is to enter into the field of puhlic utility
regulation so far as the Ice Industry is concerned, proper administration
will require the establishment of a large, techincally skilled staff,
qualified to fix rates, supervise operation, evaluate existing plants,
and maintain a constant vigilance to prevent unauthorized agreements,
financial manipulations and other actions contrary to the puhlic interest,"
(61) Consiomers' Advisory Board Memoranda, April 10, 1935 and April
15, 1935.
(62) Infra, XV
Further details of the Ice Industry's self-administration are
reviewed.
(63) This term is used to include misfeasance and non-feasance.
( 64) Pr eund , Administrative Powers over Persons and Property ,
(University of Chicago Press 1928), 160. In referring to the Arlidge case,
the author says: "The decision settles the important principle (before
adverted to) that in administrative determinations the nominal authority
need not take actual personal or mental cognizance of a case, hut may
assume responsibility for conclusions vicariously reached."
(65) Brookings Institution, The National Recovery Administration -
an Analysis and an Appraisal. (l935), 279.
(65) Ibid, 274-278 See particularly p. 276.
(67) Ibid., 272.
(63) Office Memorandum No. 318, December 13, 1934.
(69) Legal Memorandum, No. 60, from Jack G-arrett Scott, April 4,
1935.
(70) See Deputy's files re "Bules and Regulations Issued by the
Executive Committee" of the Copper and Brass Mill Products Code treating
with uniform contracts. See memoranda of Assistant Deputy S. M. Richards
on this subject, March 22, and April 15, 1935 to advisers, and their
replies.
(71) Approved Code No. 308, Sup. No. 3, California Sardine Process-
ing Industry, Codes of Fair Competition, X 645.
(72) Code Authority Bulletins No. C. A,-l, C. A, -3, C. A,-3-A,
C. A, -27.
(73) Code Authority Bulletin No. C. A. -2.
(74) Code Authority Bulletin No. C. A. -11; No. C. A. -14.
9838
-••71-
(75) Code Anthority ilo. C. A. -10.
(76) Cost Acco-unting System for the industry, and Approved Code
No. 308, National Fishery Industry, Codes of Fair Competition, VII, 327,
Sections 1 pjid 2.
(77) Approved Code No. 19, Wall Paper Manufacturing Industry, Codes
of Fair Competition, I, 267.
(78) Art. VII, Sec. (c) .
(79) Deputy David H. Tulley; atid Assistant Deputy Administrator
Francis C. Lowthorp.
(80) "WKSREAS, those memters present at said meeting accepted "by
unanimous vote the following as a 'Schedule of Minimum "Adequate"
Differentials for Wholesalers and Retailers'.
"BE IT THEREFORE RESOLVED, That the following ruling shall "be
adopted and promulgated "by the Code Authority of the Wall Paper Manu-
facturing Industry as "binding upon the Industry and to "be o"bserved "by
gll manufacturers:
"Differentials "between wholesalers and retailers snail "be not
less than the following:
: On papers carrying list or road prices up to and
including 18-^ 10^^
On papers carrying list or road prices over
18^ and \ander 30(# 15^
On papers, carrying list or road prices from
30(^ "but under 40{# 20^
On papers carrying list or road prices
40^ and over „ individual
"For the purposes of the a"bove differentials purchasers of less
than $3,000.00 per year from all mills shall "be sold as retailers.
"The group of purchasers atove $3,000,00 while made up largely
of wholesalers nevertheless includes a num'ber of large retailers who
"because of their distributional methods are in some cases capa"ble of
rendering a wholesaling service to the manufactxirer and who cannot "be
exactly or correctly defined for the purposes of this classification.
It is therefore the opinion of the Code Authority that manufact-orers
shall esta"blish their own differentials "between wholesalers and retailers
included in this group.
"Nothing contained in this ruling shall "be interpreted to pre-
vent a greater differential to v/holesale purchasers whose piorchases
aggregate over $3,000,00 from all mills per year,
9838
-272-
" Every maiiufact-orer shpll set up within five days after the
receipt hereof full schedules oi list prices^ for retailers nnd shall file
a signed copy of such list prices with the Executive Secretary'- of the
Code Authority, This provision is to ensure the maintenance of proper
differentials "between retailers and wholesalers.
"The Code Authority, through its executive secretary, or other
impartial agency, is empowered to establish and publish an Annual Classi-
fication of Buyers — Based Upon Total Individual Purchases from All
Manufacturers, such classification to indicate "the proper classification
of each buyer only as over and under a $3,000.00 purchaser from all mills;
in no case shall the dollar amount of individual "buyers' purchases "be
pu"blished.
"With the advice and the approval of the Admiilistrator, the
' Code Authority shall "be empowered to further revise or modify this
Commercial Idling.
"This Ruling is an emergency ruling arrived at with the under-
standing on the part of "both Code Authorities that when and as such amend-
ments to this ruling are presented to and approved hy the Administrator
this ruling shall "be modified pursu.ant thereto. Furthermore, the Ad-
ministrator may at any time suspend, or cancel this ruling,"
(81) Administrative Order Wo. 19 - 17, April 18, 1955,
(82) Minutes of the Code Authority Meeting, 3eptem"ber 27, 1933, and
Commercial Ruling Ho. 2 on B^se Prices adopted at that meeting: "Until
further revision "base prices adopted by the Advisory Committee at the
Lake George Meeting shall b"e adiidred to atnd all quotations lower than
such base prices will be considered sales below cost, unless justified by
the mills malcing such quotations."
Minutes of the March 22, 1934 Meeting show how the ruling worked:
"The file of pending c'omplaints of Code Violation were received.
The executive secretary reporting that substantial progress was being made
toward the clearing and closing of all pending complaints arising in
relation to the Lake G-'eorge Schedule'. ' He 'report'ed' having received cost
figures from the following concerns:
Barnes Wall Paper
Commercial Wall Paper Co.
William Vernhold Co.
"With the exception of Commercial personal contact wpS established
in each case. This concern has submitted figures regarding which complete
agreement has not been reached. However, a letter to the trade indicating
withdrawal of all prices, below the Lake G-eorge Schedule as issued by this
concern has come to the executive secretary's attention. Satisfactory
closure of the complaint regarding Commercial is contingent upon official
verification of this letter as a general policy, or final agreement on the
cost figures,"
9838
(83) Approved Code No. 120, Paper aiid Piilp Industry, Codes of Fair
Competition, III, 115.
(84) Paper and Pulp Industry - Proposed Amendments to Code of
Pair Competition, May 10, 1935. Transcript, 85, Mr. J. M. Austin,
(Secretary, Napkin Association): "The Paper Napkin Industry is very much
in the same position as Mr. Boyce outlined. We have had a divisional
status and evei-ything except official recognition, which, as a natter of
fact, we thought we had since a year ago last January or Pelnniary, and
at that time the napkin group separated from the tissue division with
the consent of the tissue group,
"An application was made to the N.H.A. for divisional status
under the Paper and Pulp Code, and as Mr. Boyce explained, through some
slip, that was never officially granted. However, an executive authority
was elected hy the industry and it has heen functioning as a separate
division aaid as a separate entity. We have both our association and the
execiitive authoritj--, which of course has not been official because it
Was never confirmed down here, as I understand the situation."
(85) Approved Code No. 2, Sliipbuilding and Shiprepairing Industry,
Codes of Pair Competition, 1, 25.
(86) H. G-errish Smith, Chairman, Shipbuilding and Shiprepairing
Industry Committee, to Assistant Dep\ity Administrator H. Newton Whittelsey,
January 17, 1935:
" "We note your statement that special exemption from the maximum
hour provisions of the Code must be obtained either by an amendment to
the Code or by an exemption of a temporary nature.
"We note further that yoxi state no authorization e xists for
the industry to work in excess of the maximum hour provisions in the Code
on emergencies.
"This matter was taken up this date at a meeting of the Code
Authority at which Colonel W. W. Rose and yourself were present, and the
absolute necessity of working beyond the Code hours on certain emergency
work Was shown, and attention was invit-ed to the discussion of this
matter that occurred at the Code Authority meetings in 1933, the minutes
of one of which meetings dated November 8th of that year contained the
following regarding emergency works:
"'The Code Committee for several meetings was confronted
with requests from shipbuilding and shiprepairing firms
asking for exemptions in hours worked due to emergency
work. It was felt by the Committee that some letter of
instruction should be sent out covering this class of
vrork and thereupon the Chairman offered a draft of letter
and form for approval. The letter was gone over and the
following was adopted:
9838
-274-
"Tne Code Committee has not granted any general
approval of emergency vrork, and will not do so.
For the time "being the Code Committee will consider
special cases of emergency work, and will approve
them where thd facts justify such action.'
(87) Ihid:
"Kr. William H. Davis, our Deputy Administrator at that time
was present at the ahove meeting and discussed and approved of the letter
quoted ahove. That letter was sent out to the Industry under date of
Woveraber 16, 1933 and at the same time was printed as Interpretation llo. 2,
of which N. R. A. has a copy."
Advi
(88) A&sistaht Deputy Administrator H. STevfton Whittelsev to Consumers '
sory Board. January 22. 1935;
"The Shipbuilding Industry since November 8, 1933, has been
working on the supposed authority of the Shipbuilding and Shiprepairing
Industry Committee to permit such Emergency work. However, the Code was
never properly amended, nor was an Exemption requested, or granted by the
Administration. For this reason I advised the Code Committee that I could
not find adequate authority for the Industry to continue to e xceed the
maximum hours of the Code on -Smergency work. I advised them further that
the Code should be amended and while an amendment is under consideration
a temporary Exemption might be granted."
(89) Approved Code No. 15, Men's Clothing Industry, Codes of Fair
Competition, I, 229.
(go) Inter-pretations of the Code of Fr.ir Competition for the Men's
Clothing Industry ~ Men's Clothing Code Authority - 225 Fifth Avenue.
Hew York. New York;
5. The word "substantial classes" as used in
Article II subdivision (b) are to include
20^ of the total number of employees employed
in ,any establishment.
If, however, there is any individual case in
which 20^ seems inequitable, the full facts of
such case are to be communicated to the Committee
provided for in Article II, subdivision (d) for
their further consideration.
Approved September 26, 1933,
8. 1-To provision for closeouts or clearance sales
for topcoats is found in Article X. The decision
of the Code Authority is that,; topcoats, either
for the Spring or Fall, may be closed out at such
periods as the manufacturer deems desirable.
Approved September 26, 1933.
9838
•275-
Eighteen of these were issued. N. H. A. never took any official
action in regard to these, as far as a thorough check will reveal.
(91) Approved Code I'lo . 15, Men's Clothing Industry, op. cit., Art.
VIII, Clause 9:
"wo member of the Industry shall accept for credit or exchange
returned merchandise, except for defects in manufacture, delay in delivery,
errors in shipment or failures to conform to specifications. Wo returned
merchandise shall be accepted for credit if returned after ten (lO) days,
from date of receipt by the customer, except on account of defects in
manufacture not discoverable "hy reasonable inspection. iJo member of this
Industrjr shall accept for credit or exchange worn and Y/ashed garments,
except as hereinabove provided."
(92) Approved Code No, 408, Undergarment and Negligee Industry,
Codes of Pair Competition, IX, 935.
^ (93) Undergarment and l'Je>:,^li^?:ee Code Authority Bulletin - Vol. 1.
No. 2. Se-pt ember. 1954:
"It is with the last foui^ lines of this Clause (9 of Art. VIII)
that we are presently concerned. If a retailer accepts a worn and washed
garment from his customer because it is claimed to be defective either in
manufacture or material and he sends it to the manufacturer for credit,
who is to determine whether that return is justified? Hemember that we
are dealing with a garment that has been worn and washed. Is the manu-
facturer to be the sole judge of whether the return is or is not justified
on the theory that his merchandise is always right, or shall it be left
to the judgment of the retailer on the theory that his customer is alwaj'"S
right? Who is to determine whether the garment (taking price into con-
sideration) has given reasonable wear? Who is to determine whether the
garment bought was not several sizes too small, and finally, virho is to
determine whether the garment has been properly laundered.
P "It is this problem that your Code Authority is attempting to
solve. With the view of finding a method that would be fair to the
retailer, consumer, as well as the manufacturer, the Code Authority is
establishing a Bureau, at its headquarters at 261 Pifth Avenue, to receive
all returns of worn and washed garments manufactured from woven silk.
These garments will be examined by the U. S. Testing Company, and if found
de fective, the manufacturer will be asked to pass credit to the retailer.
Otherwise the carment will be returned to the retailer.
"The many retailers that have been consulted are of the opinion
that this is a constructive step in the stabilization of the Industry,
"The following is a brief outline of the plan, - full det3,ils
of which will be mailed to you in the course of the next few days.
"1, Manufacturers are to notify retailers that under
the regulation of the Code Authority they are not
permitted to accept the return of v/orn and washed
silk garments,
9838
-276-
"2. jletailers should "be advised to send parcel
direct to Code Authority, 261 J'iftn Avenue.
"3. A sticker, outlining the plan, to be used on.
invoices, will be furnished to manufacturers '
"by the Code Authority.
"4. Tlie garment will be examined and tested by the
U. S. Testing Company and a report sent to manu-
fact-^rrer and retailer.
"5. It is not contemplated, for the present, to make
any charge for the service rendered by the Code
Authority."
Undergarment and Negligee Code Authority Bulletin - Vol 1. Mo. 5 .
February, 1935.
Bureau of Returns •- Worn and Washed G-arments
"Retailers and manufactxirers are by this time aware of the very
good work that is being done by the Bureau of the Return of Worn and
Washed Garments.
"To those manufacturers and retailers who have not as yet availed
themselves of the services of the Code Authority, it msQr be pertinent at
this time to outline the procedure.
"ViFhen the retailer or manufacturer returns a garment to the
Code Authority he is asked that the return be accompanied with a statement
showing the name of the retailer and the name of the raa:nuf acturer , approxi-
mately when purchased and the price paid, also the cause of the complaint.
"This is recorded by the Clerical Staff of the Biireau aiid the
garment is then ready to be sent to the U. S. Testing Co. for examination.
The first step by the U. S. Testing Co. is the determination of the com-
plaint and the extent of the dama,ge. The result of this damage is 1-ecorded
under the heading of 'Observed Damage.*
"The technician the;n mal-ies the necessary tests and studies
covering the following items:
" 1. Construction of the fabric
2. Composition, weighted or pure dye.
3. Cut of garment, straight or biased.
4. Slippage or shifting of fabric.
5. Tjj^pe of seams.
6. Amount of fabric taken in at seams.
7. Sewing thread used in seams.
8. Color fastness to washing and crocking.
9. Price (Wholesale).
"Additional tests are made depending upon the nature of the
damage. For example, if the damage is a broken or ruptured fabric, it is
9838
•277-
necessary to detennine the tensile strength of the fabric to see whether
or not the complaint of a weal: fabric is justified. All of tne above
information is listed on the report uiider the heading 'Fabric Construction
and Workmanship' .
"Under tho heading of 'Conclusion' the report states that
either the 'Retail Store Return is Justified' or the 'Retail Store Return
is not Justified' . This conclusion is fQllowed with an explanation of the
cause of the dajnage based on the inspection, examination and tests. In
addition, the report is stamped ' G-.arment Returned t© Manufacturer' or
'Crarment Returned to Retailer', whichever the case may be.
"Standards have been established covering the construction,
tensile strength, type of seams, workmanship and all other factors, so that
after making the necessary tests and examination, the proper conclusions
may be dra\m based on facts and the garment returned to the proper party.
"Copies of the report are mailed to the retail store, manufactu-
rer and Code Authority. The garments are returned to the retail store in
cases where the returns are fo-and to be unjuctified and to the manuf a.cturer
where the complaints are justified.
"The BTireau was established Oct. 1, 1934 and our records show
that for four months up to Feb. 1, 1935, there have been examined 4192
number of garments, of which amount 2231 number of garments were returned
to the manufacturer with the notation 'Claim Justified', and 1961 number
of garments were returned to retailers with the notation 'Claim Unjustified.
(94) Approved Code IIo . 7, Corset and Brassiere Industry, Codes of
Fair Competition, Vol. I , 69 .
(95) Monthly Bulletin Corset ajid Brassiere Code Authority - 232
Madison Avenue, l^ew York. Kew York. - Vol. II. February. 1935.
" Regulations G-overniniz;' Infractions of Section (d)
Delivery, and Section (f) Dating. Discounts and
Rebates of Article IX of the Code of Fair Competition
for the Corset and Brassiere Industry
"1. Within 30 days after laiowledge of an infraction by any
customer of Code provisions as to discounts, and/or the service charge
notice of such violation with full particulars must be filed with the Code
Authority.
"2. Assignments of claims for excessive discount, unearned dis-
count and/or the service charge shall be made and delivered to the Chairman
of the Code Authority at the time of notification. Forms for assignment
purposes vail be supplied to each member of the Industry.
"3, The customer's account maj' be credited only for the amount
of the payment plus allowable discount. The unallowable deduction must
remain as a balance on the ledger account, but after assigning same to the
Code Authority the customer' s account may be balanced and the item may be
transferred to an accoimt headed 'Code Authority Assignments'.
9838
"4. At each, meeting of the Code Authority, the Chairman will
report such notices of violations and assignments and he shall take such
action ns the Code Authority may direct,
"5. A copy of these rules shall "be sent hy each suhscrihing
memher to all active customers on their hooks.
"6. All of the foregoing shall he in addition to the handling
of such violations through the machinery afforded "by the National Recovery
Admini stration . "
(9S) Memorandum "by S. W. 3rand on this subject, April 6, 1935.
The meraorandun states that the Legal Adviser thought the Code
Authority to "be "fully within its rights in adopting this plan."
(9?) Brookings Institution, op. cit,, 253.
(98) A studj^ made "by the Consumers' Advisory Board, entitled
"Experience with the Open Price Provisions of Approved Codes", offers
some excellent examples. Recommendation iJo . 3 waS "In regulating price
filing, Code Authorities should not he permitted to exceed the powers
given hy their codes over terms, of sale."
Two of the many examples are given:
"Paper and Pulp Industry (Cardhoard Manufacturers Division)
Code i"o. 120.
"Tlie Secretary of the Code Authority threatens an unpleasant
investigation of costs if filed prices are not raised.
"(The code contains an open price provision with a
waiting period and a provision against selling
helow individual cost except to meet competitionl)
"Letter of January 23, the Secretary of the Code Authority:
"tYour filed prices were roughly 10 per cent less than
those filed hy your competitors. In view of their ex-
perience in the raanufactiiring of a similar grade, they
feel it douhtful that you could justify such prices.
Consequently, I feel sure that you will want to revise
your prices so that they will hear a closer relation to
those of your competitors. They pointed out that in the
event you found yourself unahle to cooperate, it was the
opinion of some of the memhers that they might have to
resort to procedure provided. .. .hy the code. Under this
provision a memher may complain to the Code Authority
in regard to your price schedule. This will lead to an
investigation to ascertain whether this price can he
justified Such a procedure is of course unpleasant
and costly. I am sure this matter can he straightened
out without resorting to any such action.'
9838
'It was pointed out that in the event the investigation
proved that this price schedule could "be justified on
the "basis of your own ^ost, that the members ^?ould then
he forced to meet your price. This would then destroy
your existing competitive advantage and merely serve to
lower the existing price structure to no avj.il.'"
"Motor Fire Apparatus Mfg. Industry, Code No. 108
"The Code Authority sent out a list of suggested prices although
not a^ithorized to do this hy its code.
"Letter of March 1, manufacturer of fire apparatus.
" 'We have "been holding strictly to these prices for fear
they were authorized "by the Code Authority and might pos-
sihly get us in had if we did not sell at the schedule
price for extras. There are a great many items priced
in this list that wo can produce pro'ba'bly a lot cheaper
than some of the bigger corporations who have terrific
overhead. ' "
(99) Approved Code I'To . 349, Mayonnaise Industry, Codes of Fair
Competition," VIII, Art. X, 283.
See Releases of the Mayonnaise Code Authority, No. 7, 8, 10,
11, 14.
See also Transcript of Hearing, Cast Iron Soil Pipe Industry,
January 23, 1934, 25. A letter "by the National Association of Master
Plumbers, Shor eh am Building, 15th and H. Sts., N.W., Washington, D. C.
"Now we are asked to pay the Cartage of these fittings back
to Chicago which we are willing to do but we are told by reason of this
Code that we ax-e to be penali'r^id 25^ of the rrlr'e ^'hich this company
agreed to sel"i us these fittings fcrli: to be delii.cted if we return these
fittings.
"The Sell Pipe InJi^stry has always b een more or less of a
racket in the w:iy ;)f pricr fixing, but today since they have been given
a Code by the TJ-i: l;,=d States Clovernment, it is impossible to deal with
them. Tliey h?v^; ^.ot thtan&elwss on a pedestal and anybody that wants any
of their prodr-ct.& is at the mercy of that Combine v.hich exists through
the medium 01 a Code. In the enclosed copy you will note all of the
stress is laid tc the fact that they caJinot violate the rules of the Code,
but you will notice that in their letter that this rule was made by their
own comiiiittee.''
Page 29. Mr. A. C. Olson, Crane Co., 156 K. Jefferson St.,
Chicago, Illinois:
"Dear Sir: We have your letter of January 12, We note your
customer H. P. Reger & Co., seems dissatisfied with the service given on
this order.
9838
-s&o-
"It is very positive violation of the code w© are -workl-ng under
to handle this tilling or to accept settlement other than just as we have
invoiced it to j'-ou. Fnile we regret the situation as you explain' it,
still most positively our company will not loiowingly violate the code
that ',ve are vrorking under.
"The code committee in charge of its enforcement and hy authority
given them in the code have passed a resolution that any goods returned
m.ust stand a deduction of 255* and the pa^-ties returning them pay all
freight charges. Personally I am not in favor, or in accord, with the
full amount of that charge, at the same time our company will observe
until the code committee can "be persuaded to mal:e some amendment."
Page 85. "Deputy Iling: Do you think there are members in your
Industry vho , if they had a two thov.sand ton order offered them would
likely file a more attractive price if it was necessary to get the
business?
"Mr. Hamilton: We have had to sit up at nir'^ht Y;ith them to
keep them from doing that, but they have not done it yet.
"Deputy King: You mean you have used pressuire on them to keep
them from doing it?
"Mr,. Hamilton: No sir, not pressure, but we have tried to show
them the errors of their way."
to v.hom?
Page 101. "Deputy King: Those are recorninendations from' whom
"ivir. Hamilton: In the 'association:
"'We recommend that goods of manufacturer's own m;\l:e may be re-
t-urned by payment by pirr chaser of freight both v/ays, with twenty-five per
cent as a handling charge. Specials and obsolete goods may be returned
at scrap prices. Heturn of any goods to be made only if permission is
given liy the ma:iufact''arer. '
"There v/as no reason that they may not have — he is a salesman —
could not have allowed this man to take these goods out at his own expense
from the warehouse and return them at his own expense.
"Deputy King: Yes. But you are taking a refuge in the code here
in that letter to one of your customers, justifying a charge of twenty-five
per cent, when, as your own recommendation says, it is twenty-five per cent
on standard goods, and only scrap prices allowed on specirl goods.
"Mr. Hamilton: On obsolete goods, which are specials.
Those are tho fittings I was telling you were made up special
for a certain job.
"Deputy King: We have nothing to do with the ordinary trade
practices within an industry, and in the ordinary policy that any manu-
facturer wishes to piirsue in the ordinary conduct of his business.
0833
"We have no right, in the Recover:/ Administration, to question -
that, if it is an honorable Qrocedu.re in the matter of policy.
"But we are very sensitive to the actions of a;iy manufacturer
who, in the treatment of his customer, resorts to ;)-iractices, claiming he
is not -permitted to do c'ifferently under his code, when his code does
not cover that situation.
"Mr. H'^jniilton: I agree -'dth you one nimdred per cent, sir.
"Deputy King: You adnit in this case that the company was
wrong, and I assurae that you will take steps to correct the situation?
"Mr. Hamilton: I ahsolutely admit it, sir.
"It was somebody that did not understaiid, and he used a v;ord,
he used the v;ord 'code' in the place of something else, "but they are wrong,
regardless of that.
"Deputy King: This document that you Just read from here;
that is a copy of the action taken by your code authority?
"Mr. Hamilton: Yes, the minutes of the association.
"Mr. W. A. Brecht: The association meeting setting up rules
for the industry.
"Deputy King: Then you have not talcen this action under the
code; it is just an association matter, and represents recommendations?
"Mr. Brecht: That is right."
(100) Testimony of ^homas Blaisdell.
(101) Tate, Memorandum, Dated 21, 1934, on the Commercial Relief
Printing Industry pointed out that the Code Authority gave the impression
to the industry that the so-called "jTranklin" schedule must be followed
by the industry;
Hadley, Memorandum, May 29, 1935, on the Electrotypin^ and
Stereoti/ping Industry. Tiie industry followed a cost accounting system
never approved by IT. R. A.; Hadley, Memorandum, May 29, 1935, points out
a similar situation in the Photo Engraving Industry.
(102) Aijproved Code No. 237, Graphic Arts Industry, Codes of Pair
Competition, VII, 1.
(103) Hadley, Memorandum, April 3, 1935]^: on the Graphic Arts Indus-
t ries, comj-nerits upon Division Administrator George Buckley's actions in
this regard.
(104) Supra, n. (6S), Fr.ctual Basis.
(105) Brookings Institution, op. cit., 268
9838
■282-
(lOS) Mackenzie, Memorand-um re Improper Code Authority Activities
tjr i'otor Vehicle iRetailing Trade Code Authority, June 23, 1935.
(107) Approved Code No. 445, Baking Industry, Codes of Fair Com-
petition, Vol. XI, 1.
(108) The complete story is set forth in a memorandum entitled
"Baking Industry Code", June 8, 1935, "by the writer.
9838
NOTES TO CHAPTER XII
(1) Brookini^s Institution, The Hational Recovery Adminis-
tration - An Analysis and An Appraisal (1935)
See also Supra, X.
(2) Ibid., 266-267.
(3) Ibid., 267.
(4) Ibid., 260.
(5) Ibid., 270.
(6) Ibid., 270.
(7) Ibid., 267. .
(8) The basis for this discussion vms furnished in conver-
sations with Mes-srs. Howard C. Dunn add John B, Jago, both formerly
of the Compliance Staff.
(9) Ibid., particularly the statements of Mr. Jago, who was
a field adjuster.
(19) IIRA Bulletin No. 5, Regulations on Procedure for Local
NRA Compliance Ben rds, September 12, 1933.
(11) Ibid. This contains the admonition that:
"the whole tone of any notification whether
written, telephonic or personal should be
that of assuming that the employer is comply-
ing and that the complaint is due to some
misunderstanding which the employer can clear
up be erplaiining the situation to a represen-
tative of the Board. The employer should not
be gdven the name of the complainant unless
the employer requests it add the complainant
agrees."
(12) N'RA Bulletin No. 7, Manual for the Adjustment of Com-
plaints by State Directors and Code Authorities; January 22, 1934 and
amendments dated, April 6, 1934 and May 12, 1934.
(13) See Office Order No. 79, which under the heading "Field
Contacts" states:
M„ _ _ „ however, it was not intended that the
Compliance Division is to undertake the adminis-
tration of all codes for compliance and enforcement,
9838
-C84-
This remains the responsibility of a Code Author-
ity, the administrative member and the Deputy and
Division Administrator for each Code."
(14) Supra, V:
See, Federal Trade Commission v. Baltimore Paint Color
Works, 41 P. (2d) 474 (C.C.A. 4th, 1930).
(15) Handler, "The National Industrial Recovery Act", 19
A.B.A. Journal 44-0, 443 (l933).
(16) The Act, Sections 3(f) and 10(a) - Stanley v. Pea-
body Coal Co.. 5 F. Supp. 612, 614 (l933):
"It is a singular fact that the Industrial
Recovery Act provides no penalty for the viola-
tions of the Act. The only crimes. denounced in
the Act are for: (l) Violating a Code approved
by the President; and, (?) for violating the rules
and regulations prescribed by the President to
carry out the purposes of the Act."
(17) Section 3(b) and (c) -
Comment - "Some Legal Aspects of the National Indus-
trial Recovery Act", 47 Harvard Law Review
85 (1933)
(18) Brief for A.L.A. Schecter in Schecter v. U.S., 70:
"Accusations have been made, tried, sustained
and punishments 'imposed and with relatively few ex-
ceptions no effort has been made to use the methods
of enforcement provided by the Recovery Act, but
employers have been kept in line by using the coer-
cive force of Government boycott, compliance has
been enforced by depriving persons charged with
code violation; of the use of the Blue Eagle, of the
right to compete for Government contra,cts, by for-
bidding all contractors engaged in Government work
to purchase materials or suTjplies produced or furni-
shed in whole nr in part, by one who has not complied
with the code, by withliolding financial aid extended to
industry by the Reconstruction Finance Corporation,
aiid by threatening to revoke the licenses of radio
broadcasting stations which do not deny their faci-
lities to advertisers 'who are disposed to defy, ignore
or modify the 'codes established by the NRA. "
9838
(19) Blachly and Oatman, Administrative Le,^islation and
Adjudication (Brookings Institution 1934), 155:
The authors suggest th^.t the HEIA, by its
compliG,nce activities, "furnishes the most striking
and complete example of an attempt to settle diffi-
culties "by way of medirtion, conciliation, and ad-
ministrative procedure generally, rather than hy
Judicial or quasi-judicial action." Of course, as
the authors point out, the IffiA itself had no power
to enforce the Act, heing forced to rely upon the
Department of Justice or Tederal Trade Commission,
which enforcement had in the past proved inadequate
in relation to the less complex anti-trust statutes.
See also pp. 253-254. .
(20) Bearing, Homan, Lorwin and Lyon, The ABC of IIRA
(Brookings Institution 1935), 97:
"The setting for the enfqrcement problem is.
seen in the fact tliat neither the KRA nor any
agency established by it has any legal power to
coerce any business enterprise into complying with
the terms of a code. All its elaborate mechanism of
compliance is therefore designed, first, to establish
the fact of violation of a code, and second, to 'per-
sua.de' the violator to mend his v;ays and to 'adjust'
complaints. Only at the end of the procedure is the
case passed on to the Department of Justice or the
Federal Tr.ade Commission for the exercise of the
government's power to coerce. To sum the matter up,
the violator of a code is violating the law, but the
Recovery Administration has no power to enforce the
la.v/. The word ' compliance' is not therefore a mere
euphemism for 'enforcement.'"
(21) Brookings Institution, op. git. 263:
"Whatever the services of prompt justice in
discouraging crime, the customary theory of justice
does not permit legal officers to overlook the
offences of known wilful violators of law. This
is exactly v/hat has been done under HRA compliance
machinery. The out-come is a system of 'selective
justice,' under which a few violators are selected to
be made examples of, with no pretense of prosecuting
other cases of similar nature."
(22) (7211) Opinion of the Attorney General to the President,
June 21, 1934:
9838
-236-
"I have also given consideration to the question
of whether the National Recovery Act author-
izes the President to c'omjpromise civil or criminal lia-
bility arising;; thereunder, and, in ills'- opinion, it does
not do so. I find nothing in the Act which exipressly
or impliedly authorizes such action. Nearly all inroor-
tant laws contdn provisions authorizing some executive
officer to establish regul?,tions to carry out the pur-
poses therof, hut it has never been held that the
authority to compromise liability arises under such laws.
As above indicated, the power to make regalations does
not include the power to a], ter, amend, or add to a law
(Merrill v. Jones supra). It is clear that a regulation
authorizing the compromise of liability arising under the
National Industrial Recovery Act would be in effect
legislation a,nd, therefore, invalid."
(22) Blachly and Oatman, op. cit,
(23) Johnson, The Blue Eagle from Egg to Earth (Saturday
Evening Post, February 2, 1935), 85:
"if an individual voluntarily agrees with the
^President to pry atandard wages for standard hours,
in consideration of being allowed to display the Blue
Eagle, statute or no statute, this difficulty has
been abated, even though the only remedj'- for violations
in intrastate commerce is removal of the Blue Eagle."
(24) 1 U.S. Law Week 49, September 26, 1933: Hews Papers of
October 31, 1933.
(25) 1 U.S. Law Week 49, September 26, 1933;
Note - "Possible Methods of attacking the N.I.R.A.-
,28 Illinois Law Review 544 (l933)
(26) In Raladam Co. v. Federal Trade Commission. 42 P (2d)
430 (C.C.A. oth, 1930) there was brought up the fact that the Chairman
of the Federal Tra.de Commission had advised newspapers that there would
be prosecution against those who assisted the Raladam Co, At pages
436-437, the Court says:
"It appears that these methods of influence, aarried
on in this case before this cross-suit for enforcement
was comraenced, and while it hB.s been pending, have
destroyed a large part of petitioner's business through
refusals to accept this advertising, and onlj?- the injun-
ction of this court is needed to make the elimination
complete. We have no occasion to deny nor, indeed, reason
to doubt, that this elimination Vfoul.d tend to the public
good; but we cannot thinlc that Congress had any concep-
tion that it was creating a tribunal for that kind of
action. "
9BS8
(27) Executive Order, Ai^ril 14, 1934.
(28) (7211) Opinion of the Attorney- General to the President,
June 21, 1934:
"The National Industrial Recovery Act does not
provide for civil penalties Section 3(f) of Title I
(c.llO) provides that a violation of a code of fair
competition approved hy the President shall he a mis-
demeanor and upoix conviction thereof an offender shall
he fined not more than $500 for each offense. Section
10 (a) (c.827) provides, inter alia, that violations
of rules or regulations made hy the- President shall . . .
he punishable by fine of not to exceed $500, or im-
prisonment of not to exceed six mo-nths, or hoth.
These provisions clearly contemplate judicial action
through criminal proceedings. A criminal statute
may not he enforced hy civil action. United States
V. Claflin, 97 U.S. 546. . .
"It is also urged hy the Administration that pay-
ment of the civil penalties to he assessed by the
Administration would be entirely voluntary. However,
criminal prosecution or permit revocation might and
probably would, result from a refusal to pay the civil
penalty, and I find it difficult to reach the conclusion
ths,t such payments would be held to be entirely voluntary.
"Viewing the matter in the light of the above con-
siderations and the above-cited authorities, I am cf
the opinion that the President has no authority to im-
pose civil penalties for violations of codes and regu-
lations, and that violators of such codes and regula-
tions may not lawfully be punished in s. manner other
than that provided oy Congress in the National Indus-
trial Recovery Act. It follows, of course, that the
President has no power to delegate such authority to
the Federal Alcohol Control Administration and that
the issuance of the proposed Executive Order would be
unauthorized."
(29) Hearing, Homan, Lorwin, and Lyon, The A3C of the NRA.
17: suggests this method of enforcement. But see Purity Ice Case Co.. Inc.
20 F.T.C. 278, Docket 2203, April 4, 1935: indicating the Trade Conmis-
sion' s refusal to follow all code provisions.
(30) Blachly and Oatman, op. cit. 172.
(31) Ibid: 8-9
(32) Frankfurter and Lendis, The Business of the Supreme Court
(New York, 1927).
9838
(?>o) The Clayton Act, however, allowed individuals to sue
to remove restrictions in commerce upon them,
(34) G-eneral Investment Co. v. Lake Shore 6 Michigan S.R.
Co., 260 U.S. 2B1 (1923). Particularly see cases cited at page 286,
and D.a. Wilder itfg. Co. v. Corn Products Co.. 2S6 U. S. 165 (l915);
lannesota v. ITorthern Securities Co., 194 U.S. 48 (l904); Paine Lumber
C0..V. Neal, 244 U.S. 439 (l917).
(35) Pro^';ressive Miners of America v. Feahody. 7 Fed. Supp.
340 (1934); Western Fowdcr ivianufacturing Co. v. Interstate Coal Co..
5 Fed. Supp. 619 (l954); Stanley v. Feahody Coal Co.. 5 Fed. Supp. 612
(1933); and Purvis v. Basemore, 5 Fed. Supp. 230 (1933). But see
Sherman v. Abeles. 269 K.Y.S. 849 (l934) contra, hut cased upon the
Nev7 York Schackno Act.
(36) Brookings Institution, op. cit., 59.
(37) U^. V. Grimaud. 220 U.S. 506 (l910); and Illinois
Central Railroad Co. v. McKendree, 203 U.S. 514 (1906).
(38) Comer, Legislative Sanctions of National Administrative
Authority (New York 1927), 126 n. 2:
There is doubt in the minds of some writers
as to the constitutionality of delegating discre~
tion to neiae penalties for criminal offenses not
named in the statute. This practice is follov/ed
in England, with the limitation of a fixed maximum
by the stfitute. On this point, see Ha;rt, the
Ordinance-Making Powers of the President of the
United States, 151~155.
(39) Sec. 3(a)
(40) Supra, VIII, n. (59) et seq. ; and Legal Memorandum
No. 39 by Blackwell Smith quoting a memorandum by Robert P. Reedcr,
on Examination of Books, June 21, 1934.
(41) Su}ora, n. 8 and 12, which furnish the basis for the
brief outline of the steps in the complaint - compliance - enforcement
proaedure.
(42) Supra, IV.
(43) See the discussion of this point in this Chapter,, supra.
It should be noted that it is rather well-established that delegated
Icgislstion should not authorize the imposition of penalties: Carr,
Dclcgat&d Legislation (Cambridge University Press 192l), 53. The basis
of this dictrine is said to rest in the Case of Proclamations, 12 Coke
Renorter 74.
9838
•289-
(44) Johnson, The Blue Eagle from E,g:^ to Earth. New York
1035 in a number of places su£f_,csts that:
"like the Draft Act the whole law v/as written to
depend on co>-operation and popular su-pport, rather
than on statutory compulsion. Tlrnt is the very "basis
of IT. I.E. A. and N.E.A. "
(45) Brookings Institution, op. cit., 263 c.t scq.
9838
-290-
CHAPTER XIII ■
(I) ThR National Industrial R^cov^r^^ Act, 48 Stat. 195, Brief
for A. L, A. Schecht=?r Corooration in Sch^chtf^r v. U. S. ^rcellentlv
analyses the pOT^ers granted in terms of the stptut°.
(?) Title I, Section 1.
(3) A. L. A. Schechter Corr). v. U. S.. 295 U. S. 495 (l935)
Panama Refinin.? Co. v. R^an, 293 U. S. 388 (l93^).
(4) Titl- I, Section PXa) , (h) and (c).
(5) Stpte V. Butler, 73 Atl. 560 (He. 1909) and State v. Poulin,
74 Atl. 119 (M-. 1909). But contra see, Carson v. I'tcLgod. 148 S. E.
584 (Ga. 19P9) ; and Cochno^er v. U. S. . ?48 U. S. 407 (l919) approving;
the pOT^'er if "the delegation - - (has) clear expression or implication."
Childs V. Stat2.. 113 Pac. 545 (Okl. 1910) approves the delegation of
porrer to fill an office createrT h^'- the legislature.
(6) Title I, Section 3.
(7) Titl- I, Section 4(a) and 7(h).
(b) Titl-- I, S^^ction 4(d). This poi^-^r ^^as never exercised, and
lapsed hy its o^n terns at the exoira.tion of a year.
(9) Title I, Section 7\c). -
(10) Title I, Section "'(h) and (c).
(II) Titl- I, Section 3(-)
(12) Title I, Section 8(h).
(13) Title I, Section 9(c). Panama Refininr Co. v. R^ran, 293,
U. S. 388 (1935) involved this section.
(14) Title I, S,-ction 9(a).
(15) Title I, Section 3(a).
(16) Title I, Section 1.
(17) Title I, Section 3(b).
(18) Title I, Sr-ction 3(a)
(19) Wiiloughhy, Constitutional Law of th- United States(New
York 1929) I, 89.
(20) 19 Ruling Case La^. Itunicipal Corporations par 75 and 106
and cases there cited. Th"^ doctrine of strict or narrow construction
of delegated vo^-^t is referred to. It is also otnted that po^^nr cannot
9838
te redelegated to private persons or to suTDordinatns iml-^ss it is
merely ministerial in naturo,
(21) KRA. Organization Studios, History Unit is pr^^T^aring a full
report upon th'^ sutjnct of Po'^'^rs. Thn I'^^rit'^r has teon ask^d to
analyze and write up th- material that has "been gathered. The lorohlem
is distinct from th^ g^n-^ral scope of this studv.
(22) Infra, XII discussion of enforcement.
(23) Infra, XII discussion of assessments.
(24) Supra, XI, 1.
(25) Barrett: "Is there a ^Tational Police Po^rnr, etc.",
14 Boston Univ^rsit^^ Ls.yr R-^vien 243 (l954) ; Dickinson, "The Major
Issues Presen-cod hy the Industrial P-ecovery Act", 33 Columhia Law
Review 1095 (l933), 1101; Brown, "The Constitution, The Supreme Court
and the K. I. R. A.", 13 Oregon Law Review 102 (l934). See also Field,
"The Constitutional Theory of the National Industrial Recovery Act,"
18 Minn-'sota Law Review 269 . (l934) ; Corwin, , "Congress' Power to Prohi-
hit Commerce: A Crucial Const itxi.tional Issue", 18 Cornell Law Journal
477 (19.'^?); Ellingwood, "The 'New Deal and the. Constitution" , 28 Illinois.
Law R-view 729 (l934); and Corwin, "T^-'ilight of the Supreme Court",
Yale University Press (l934) , 45-4S:
"It will be urged no douht .that, considered as typifying or
fore- shadowing a permanent system of legislation, Nira spells the
end, or at least the complete .suhordination, of state power over
"business and industry, and h-^nce the end of the d-aal federal prin-
ciple within this predominantly important .field of governmental
action. Nor do 1 see how this assertion can he gainsaid. But the
simpla and .sufficient answer is that in so doing the act merely
sounds the knell of a departed day, and for the reason stated hy
Professor Gulick in his address at Chicago last summer: 'Nothing
effective can he don^ in the r-"gal?tion or stahilization of econo-
mic affairs unless the area of planning and control has the spjne
boundaries as the economic structure.'".
Professor 'Corwin' s statement should not be read in the sens^^ of an
opinion as to the court's course of action, but as a criticism of its
past action.
(26) The Constitution, Article 1, Section 8 (.").
■ (27) Cravi't, The Commerce 'Clause (Bloomington, Indian.a, 1932) 47:
"Results londer commerce clause and Due Process Clauses may be the same."
Wahrenbrock, "Federal Anti-Trust Law and the II.I.R.A.", 37 Michigan Law
Review 1009. 1045-1065 (l933). , ' , .
(28) Code Revision, M.emorandum No. .3, Ife,y 27, 1935, "Some Legal
Considerations in Connection with Interstate Commerce" clearly recor
gnized this.
9838
-292-
(29) 9 Whp.at. 1 (l824).
(.30) I"bid, 189.
(?l) Ibid, 69:
"It is not int'-^nd^d to sa,v that thnso words co"rorohnnd that
coramGrca which is coraplTtily internal, which is carried on he-
t'JTG'^n man and man in a statn, or hntwnen diffornnt parts of the
same state, and rhich does not ext'^nd to or affect other states, Suh
Such a powr vroixld "be inconveni-^nt, and is certa.inlv -iinecessary. "
iZP.) 4 Wheat. "16, 415-416 (l819):
"It would ha.ve "been an unwise attempt to provide, hy immut-
ahla rul'^s, for exigencies which, if foreseen at all, must have
"been seen dimly, and which can hest he provided for as they
occur. To havf^ declared that the hest means shall not he used,
hut those alone without which the powers given would he nugatory,
would have heen to deprive the legislature of the capacitv to
avail itself of exDerience, to exercise its reason, and to accom-
modate its legislation to circuinstances. If we apply this prin-
ciple of construction to anv cf the powers of government, we shall
find it sp p-"rnicious in its op^^'ration that, we shall he compelled
to discard it." .
(3"^) Brown V. Maryland, 12 TTheat. 419, 446-447 (182?) .
(34) Ther-^ is little need to discuss for^^ign commerce as the
courts find no competition for jurisdiction there. Here Congress
has a "complete power." Weher v. Freed, 239 U. S. 325 (l915),
(35) Warran, The S^ipreme Court in United States History (Boston
1926) discusses the reaction of the Taney court,
(36) Supra n. 29 (1824),'
(37) U. S. ex rel Attorney G-gneral v. Delaware and Hudson Co.,
213 U. S. 366 (1909) ; Southern Eailway Co. v. U. S.. 222 U. S, 20
(l91l); The Minn-^sota Hate Cases. 230 U. S. 352,(l913); Pennsylvania
H. Co. V. Sonmen Shaft Coal Co., 242 U. S. 120 (l916) ; Dayton- Goose
Creek Ry. v. U. S., ?63 U. S. 456 (l924) ; and U. S. v. Michigan
Portland Cement Co.. 270 U. S. 521 (l926).
(38) Wisconsin Railroad Commission v. C. B. Q,. R. Co.. 257 U. S.
563, 589 (1922).
(39) In re D^hs. 158 U. S. 564 (l895); and Northern Securities Co,
•V. U. S.. 193 U. S.. 197. (1904).
(40) Pensacola Telefcranh Co. v. Western Union Co.. 96 U. S. 1
(1877).
(41) The PJT)-' Line Cases. 234 U, S. 548 (l914).
9838
^203-
(42) Thn Motor Carrior Act of 19-^^5, Putlic, No. 255, 74th
Congress.
(43) Cushinan, "National Police Po'-'-rs Undnr thn Comranrcr^, Clause,
5 Minnesota La^^ H-^vi-^T? ?89 (l919).
(44) Ibid, 303.
(45) bid, 381; ChPTiroion ^'. Anns, 188 U. S. ,^21 (190^^0,
lottery tick^its; Hok-^ v. U. S. ??? U. S. 308 (l913) and Canin-^tti
V. U. S. 242 U. S. 470 (191?) Whit- Slav-^^^; Broland v. U. S.. 236
U. S. 216 (1915) opium imoortation; Brooks .v. U. S.. 267 U. S. 432 (1925)
stolf^n automobiles''; and Thornton v. U. S. 271 IT. S. 414 (l926) quara-
ntining and dis-inf 'Acting cattle.
(46) Cushinan, op. cit., 400; Clark Distilling Co. v. W-^st-^rn
Maryland R. R. Co.. 242 U. S. 311 (l917); and U. 5. v. Hill. k!4B U. S.
429 (1919).
(47) F-'nns^rivania v. W'-st Virginia. 262 U. S. 553 (l922); Volley
V. Rhoads. 188 13. S. 1 (l902) ; and Public Utilities Cprnmission v.
Attolaboro Stoarn and Electric Co.. 273 U. S. 83 (l927) . But s-^^,
P-nnsvlvania Cas Co. ir. ' Public Snr^^ic-- Connission. 252 U. S. 23 (l920).
(48) In Charl-^s A. Rams?-^ Co. v. Associated Bil] Post-^rs.
260 U, S, 501, 511 (1923) a conliination of bill posters throughout the
country tried to socur--'. a monopoly ' and dnstroy como-^tition. Th^ court
says little about commnrc^. though th^ counsnl argued that preventing
salas and shipment is an interference with commerce. Said the court l
"The pur-oose - - - is to destroy comp-^titinn and s-^cure a monopoly by
limiting and restricting connerce te channels dista.ted by the confede-
rates."'
(49) Infra, XIII, discussion of labor cases. .
■ (bo) a. L. a. Schecht-^r Core, v. U. S. , 295 U. S. 495 (l935).
In_Am--rican. C^il ffci. v. Ladoga~Can-ning Cg_. , 44 F. (2d) 763 (C.C.A. 7th
tsZO) , certiorari denied 282 IT, S. 899 (l93l) a packing cora^nany was
permitted to recover tri-ole dama,p-es under the Clavton Act, although an
overwh-^lming percentage of business was intrastate, unon the grounds
that it might affect interestate busin-^ss. Brief on Anneal for U. 5.
in A. L. A. Sch-^cht-^r Com, v. U. S.. 56.
(51) 196 U. S, 375 (1905) ■
(52) 258 U. S. 495 (l922).
(53) 262U. S; 1- (1923).
(54) 259 U. S. 44 (1922).
(55) 156 U. S. 1 (1894).
(56) Federal Trade Comnission v. Pacific Coast Pauer Association.
273 U. S. 52 (1927)
9838
-294-
(5?) A-pT)alachian Coals v. U. ^. ?.88 U. S. 344 (193^0, said Mr.
Chi^f Justicn HiT:q:h^s st pa^"-^ 360.:
"In apTDlyinr this t^st (that tho cf^ntract or corah i nation
pnjudic^s th'i iDuhlio intor-^sts bv undul"'^ r-^stricting corapi^tition
or londuly ohstructing th^ courso of trpd-)), a clos^ and ohj^.ctive
sonitin?'- of particular conditions' and ■ouroos'^s is n-^c-ssary in
r^ach cas-^. H-^aliti-'S Tirast dominate thn judgraont."
(58) 291 U. S. 293 (1934)
(59) Bri^f for th-i U. S. in A. L. A'. Schncht-^r Corn, v. U. S..
23, 31, 57, 62, 63 and 71.
(60) But 3-3^ U. S. V. Calist^n'PanVqrs, Inc.. 4 F. supp. 660
(1933); and U. S. v. Spotl-ss Dollar Cl-^annrs. 6 3?. Supp. 725 (l934).
In -connection With this last cas*^ si.^, Not-^ on R^c^-nt Cas'^s, 82 Uni-
versity of Pgnnsvlvania I^a?r R-vi-iTT, 864 (l9o4)« • An int ore sting group
of cas-^s an foimd in thos^ on AAA Marketing Arnas, . On-posnd to such
agr^^m-nts s-^, U. S. v. K'^un^dorf, 8 f. Svcot). 403 (l934) ; U. S, v.
Greenwood Dairy Farms; Inc. , 8F. Supp. 398 (l9?4); Dou?las' v. Wallace,
. 8 F Supp. 379 (1934); EdfVQT^atqr Dairy Co. v. ^allaco, 7 F. Supp. 121
(1934); Columbus I'liiv Froducnrs Association v. T7allac-^, 7307 Comm-^rcG
Cl-aring Hous-, F-deral Tr^d^ Rr-gulation S-rvic-, Vol. 11 A (D. C. .1.
D. 111. 1934) and Hill v. Daig-^r, 8 F.Sutdt). 189.(l934). .Contra:
U. S. V. '.Shiesl-r, 7 F. Supn. 123 (l934). On this qu'^stion sen,
Duan'^, "Markot.ing Agr^oracnts und^r th-^ Agricultural Adjustm'^nt Act,
ThRir Contents and Constitutionality, 82 University of Fnnnsyl'yania
La^ Review 91 (l935) . , • • ;' -
(61) Illinois Central R. H. v. McKendreg. 203 U. S. 514 (l906)
intrastate quarantin-^s; F-^d-^rpl Baseball Club v. B^iltimore International
League, 259 U. S. 200 (l92l); and Blum^nstock Brothers v, Curtis Publi-
shing Co.. 252 U. S. 436 (l920).
(62) 247 U; S. 251 (l918). Sn^. Cushman, ov. cit. 452.
(G3) Hqisl-r V. Thomas Colli-^rv Co.. 260 U. .S. 245 (l922).
Bacon v. Illinois, 227 U.. S.. 439 (l915). Compare Board of Trade v.
01 sen. 262 U, S. 1 (l923).. See also, Coe v. Errel. 116 U. S. 517
(I886). Under tHe Anti-Trust Acts, the courts -have sanctioned the
-enjoining- of labor from interfering with local production, when the
sourt sa'^ a,n a.ffect upon interstat-^ commerce, Coronado Coal Co. v.
U. H. W. A.. 268 U. S. 295 (l9^5).
(64) Utah Po-^'-r and Light 'Co.' v.' Pfost. 286 U. S. 165 (l932).
(65) P\iblic Utilities Commission v. Landon, 249 U. S. 236 (l919).
(66) Wisconsin Ro,il^-av Coranission v. C. B. & Q,. Railroad Co. 257
U. S. 563 (l92?); and ^^ashville. Cha.tta.nooga & St. Louis Ry. v. Alabama,
128 U. S. 96 (I888).
(67) U. S. V. D"^^itt. 9 ^all. 41 ( 18-69).; and Illinois C-^ntral
R. R. V. Bqhr-nq. 233 U. S. 473 (l914).
9836
-295-
(68) Nqt-, York -x r"l pRnnavlvania R. Co. v. l^ni£ht., 19? U. S.
31 (1904); Paul v. Virginia. 8 Wall. 168 (l869).
(69) Kida V. F '"arson. 1P8 U. S. 1 (l888) statute prohibitinfi'
inan^actur° of linuor; £ei^ ^^. Colorado. 187 U. S. 137 "(l90?) stptutfi
regulating iirroort^.tion of cattlR; The Mayor of th^ City of ITrt York
V. Mi In. 11 P'^t. lO:? (l837) City Ordinance requiring- r-^port from shio's
raast-r as to health of pass^ngf^rs; and cases involving public high-rays;
Kan", v.. State of N°w J-^rsey. ?42 U, S. 160 (l916), and Hp.ndrick v.
State of Maryland. pr^S U. S. 610 (l915).
(70) Lemke v. Farmer's Grain Co.. 258 U. S. 5a (l922) ; .Dahnke-
-Walker Milling Cq. y. Bond-urant". 257 U. S. 282 (T921). Se- also
Hp-bhin^ v. Sh'^lby Cotrnt-V. 120 U. S. 49 (l887) holding negotiation for
sales of goods in another State is so in interstate coranerce to pre-
clude local license taxation.
(71) Corwin, or), cit.
(72) Itiid, I: I>ual Federalism' Versus Nationalism, and the Indus-
trial Process!
The language in th° Shr^veport Rs,te Cases is of particular
inter-^st: "TTherever the interstate and intrastate transactions
of carri'^rs ar-^ so related that the government of, the one involves
the control of the othpr, it is Congress, and not the state, that
is entitled to prescribe th'^ final and dominant rule, for otherwise
- Congress wo\ild be denied the exercise of its constitutional authority
and thn Stat«, tmd not the Nation, would' "be supreme within the
national field . . . ."
(73) Ibid, 49:
"Appli-^d as a r-^striction to state power, the terms of the
clause wer'^ given a liberal interpretation which became a material
factor in fiirthering the reorganization of American "business on a
national scale and its attendant subj'-ction to a highly concen-
trated management. Applied, on the other hand, as a grant of na-
tional power, thes" same terms suffered a marked contraction from
the doctrineo of Chi'^f Justice Marshall, 'commerce' being confined
to transportation mainly, and the po^'^'^r to 'regulate' it being con-
ceived as chiefly a vo-^'^v to protect and promote it by th« adontion
of measures beneficial to it '^fh^n regarded as a purely private
enterprise."
(74) Pag-" 50: "Th- Shr-yeport Cas" brusquely dismissed dual
federalism as having no longf~-r any ■oertin-'^nce to the question of
rail'^ay rat^ I'-^gislation. This •^ps in 1914. But already a decade
earlier, Holmes' opinion in th" Swift Case had laid do^n th"^ guiding
lines toward a similar r'^^sult in the field of business regulation
generally, lin-'s which wer'^ emphasized and extended in Chi^f Justice
Taft's opinions in 1922,
"And "KIPA purports to build uT)on th"s" r'^sults, extending them
9833
-256-
in r^^sponc-^ to th^- l-^ssons of th^. df^^^r'^s'jsion. .,It -oosits thp
solidarity'- of American --^oonomic lif-^, th-^ int ;'rd 'np:ndf?ncP! . of all
its phases, and it proffors a ccncrption of unfair ra-^thods of
comp-^tition ^hich is a, n-^cissary d-ducticn fr^n this solidarity
and int•=^^d'^;p■^ndonC'"'. In so?n'=; _ respects Wira is a r •evolutionary
statuto, jr^t th--^ revolution '^hich it ^mljodi^s is only th'^.l'^gal
count'^rpart of a r'volution alr9ad,v r',cr;omDlish''d ty sci'^no^',
inv=>ntion, and Imsin'^ss manaf'^m'^nt in th^ fi^-ld of coramRrco and
industry, and r^pr-smts an effort — not n'^co.ssarily th'^ "best
conc=iv"d ^f:*^ort — to ^ivi established 'cononic trends 'a socially
"benf-if icial dinction. "
(75) Ihid,, ,38, At pafl,-'-? 19, th'i author savs:
"But 1-it us suppos"^ also tha,t th-"; Court could hR convinced
that in th=: lonf run child lahor, and oth^r inr"ustria.l practices
of -^hich child lahor may he taken 'to h"^ typpia^l, injured inter-
state commerce — ■^hat, in lif'ht of the cases, '•^puld he the result?
That the official d-f -nd'-rs of the F.I.R.A. ^^ill have to ans^rep
this question, I entertain no douht,"
"In "brief, in the verv act of sef e^niardine th--^ dev^lo-oment
of interstate commerce from interruptior. by thf" states, the Court
unavoidably built up an enlarged concer>tion of th-^ subject matter
rfhicii th-e 'commerce' clause in express -ords subjects to Congress'
po-rirer to r^gul-=t<^. On th-^ other hand, it built up at the same
time a greatlv mitigated conception of the -^rord 'regula.te.' It
ceased to think of this po'^'^r in th-- terms which Marshall had
laid do-'m, as the po^-r^r to govern. Inst-^ad, it tended to view
Congress'' pO'-^er und^r the 'commerce.' clause 'in the. same light as
it did its OTvn, namely, as primarily p'O'Ver to foster, t)rotect,
and promote commerce. And so proce'>ding, the Court converted the
clause into a broad highway for business to overs-oread the co-ontry
without regard to state lines, and thus to effect an organization
which has p-iit itself beyond effective State control. Nevertheless,
when Congress, discovering what was ha-npening, endeavor='d belatedly
to follow alon^ this sam^ highway it foun' itself confron-fced at
every turn with the sign 'no thoroughfare,' erected ostensibly to
safeguard state -oow^r and the princi-ole of dual federalism."
tc, 14 Boston
As-D^cts
Adjustment
author
-present
(77) Address bv th- Administrator, I^-brua,rv 27, 1934:
"Intrasta,te commerce and industry comp"'tes. with interstate commerce
and industry, Unl'^ss wo could find som--^ rul"^ to vnt them on th"^ sara-^
basis of hou-^s and wp^^g wc, would not hav been justified in doing any-
thing- at all, beca\ise intrastat-^ o-n'^rat'ions ^'ould simpl-"- hav^ ruin'^d
interstate enterprise."
9838
-29.7-
(78) Brinf for A, L. A. Sf-.hqp.ht^r in Schechtgr v. U. S.. 77-83.
Counsel m-ntion'^d such cod-s as Infants' and Chile r«^n' s .W-ar. Funeral
Service and Retail Montmnnt; Transit Ina.ustry, cov^.rinp' ty its defi-
nition "Automotive tuses transportin.'^ passongers sol^l:"' within Stato
lin-^s, -exc^-nt '^h^n nngagnd in int'^.rstat^ coratnorc^.; " Barter Shop,,
•which covered tarher service, "boofblack service and manicare service;
Bo'^ling and Billiard Ouerating Trade, Motor Vehicle Storage end Park-
ing, Cleaning anc^ Hyeing; Shoe Sebuilding, which trade also covered
■boot-tlacks, Advertising Display, Merchant and Custon Tailoring, Real
Estate Brokerr^ge; Retail Trpde, Burlesque Theatrical Industr:''- and
Laundry Trade. The counsel also comment upon th-' fact that small
ina.ustries emploving as few as 1500 -^mroloye'^^s in th- ^ntir'^ country
could hardly h^ considered to affect interstate comm-'rce unl-^ss some
definite finding was made.
(79) Brief for the United States in the Case of Schecht^r v.
U. S., 35: In th^ concurring OT)inion of Mr. Justice Cardoza in the
Schechter Case, he shows an awar=^n-^ss of th-^ view of causation conten-
ded for hy the G-overnra°nt:
"Motion at the outer rim is communicated perceptihly, though
minutely, to r°cordinff instrura'-^nts at the center . , . ."
The Justice th=n quotes th^ ap-oroval from Lqa,rned Hand in, the
Court hf^lo-w:
"The la^T is not indifferent t" considerations of degree.
Activities local in their immediacy do not "become interstate and
national "because of distant rer)9rcussion,s. "
(so) Henderson, The Federal Trade Comnission (Yal'^ University
Press 1924), 1-6; Blachly and Oatraan, Administrative Legislation and
Ad.iudication (Brookings Institution 1934), 205:
"Years ago th^ Federal Trade Coranission, when attempting to
i introduce into the concept of 'unfairmethocls of comrpetition' cer-
tain practices now recognized as unfair "by various codes made
under -the National Recovery Act,, found itself "blocked at every
turn "by the courts, which refused to go "beyond the common la-^
doctrine, Th^^ old common la'^ standard of ' reasona"blen°ss' was
read "by the courts into the Sherman Anti-Trust Act irith such
effect as to change entirel?^ the cha.racter of the act."
• (Sl) Excellent exampl-^s -"ill "D'=' found in Federal Trade Commis-
sion V. Gratz. 2.53 U. S. 421 (:'920); and Federal Trade Commission v.
Sinclair Refining Co.. 261 U. S. 463 (l923).
(82) F^d^.ral Trade Comnissi'-n v. 'Kf.-p-o-^l. 291 U. S. 304 (l934) ;
Federal Trade Con-nission v. Alagoma Lumher Co., 291 U. S. 67 (l934) ;
and Federal Trade Commission v. Royal I'illin^ Co.. P88 U. S. 212 (l933)
(83) ApTjalachian Coals v. U. S.. 288 U. S. 344 (l933).
(84) Corwin, o-o. cit. ,, 44-45; Federal Trade Commission v. Beech-
-Hut Packing Conpany. 257 U. S. 441, 453 (l922).
9838
-29 R-
' (85) TTilliojns v. Stajidard Gil.. 278 y. S, 235 (1929); Tyson v.
Bant on, 273 U.S. 418 (1927); piio. U.S. v Trenton Potteries Co.. 273
U. S. 5S2 (1927). See Kale, "The Constitution and the Price System:
Some ?.ef lections on lehliia v. ISev Yor'c", 54 Colupibia. Law Heviev; 401
119541.
(86) 'Jarner and Giiterman, "Tvfo Aspects of LM.R.A. - Price-.
Pirdng and Labor i', 14 Boston University Law Revievj 221 (1954).
(87) Consider the Corset and Brassiere Code, Article V (c):
"No person shall Icno'.Tingly purchase materials used in
his product which have not teen made in a clean and sanitary
factory "
Of covu'se, it must te admitted that this migiit have an effect upon a
com.petitor usinf'5 a cheap and unsanitary material, hut the direct tear-
ing seems to he upon the goods sold to the consumer.
TJiien the term "historico,lly" is used it is with reference to the
past cases of our courts. It is recognized that in early England,
particularlj'-- the fourteenth century, price-fixing and restrictions hy
law upon trade and lahor more severe than those imposed hy NRA were not
uncommon. 5 Pollock and liaitland History (Ca:n"bridge University Press
1899) 581; 2 Holdsvrorth, History of English Law (5rd ed. , London,
1923) 459-466:
"Can we in the twentieth century, who lir.e in aii atmosphere
of Jfree competition, tempered "by strikes, lock-outs, and
rings, say, as decisively as the economists of the middle
of the nineteenth century, that the vie\7S lield'hy the legis-
lature in the fourteenth century were -unreasonahleT". (at
page 463) '
(88) Comment •- "Judicial Review of Administrative Orders under
ilEA aaid AAA" 45 Yale Law Journal 599 (1954).
(39) T:/son V. Banton, 275.U.S. 418 (1927); TTilliams v. StaJidard
Oil Gom-oany. 278, U.S. 235 (1929); and Wolff -Packing Co. v. Court of
Industrial Relations; 262 U.S. 522 (1925).
(90^ 94 U. S. 113, 126-127 (1877).
(91) Hamilton, "Affectation with Puhlic Interest", 59 Yale L. J.
1089 (1950); Adler, "Business Jurisprudence", 28 Harvard Law Review,
155, 158 (i914): ■ .
"Under si., true interpretation of the common law all husiness
is puMic, and the phrase 'private "business' is a contra-
diction in terms. Whatever is- private is not "business,
aiid that which is business is not private. Every man engaged
in business is 'engaged in a public profession and a public
co,lling. The parties to business are the merchants on the
one ahnd and the public on the other. "
9858
Of course the conce-ot is not so undnsirable if fre-^ciori is l^ft in pla-
cing; "business fro-i on° class to th° oth^r "^v legislr-tiv^ ■"ill. Even
Chi'^if Justine Waite's qxiotntion fro-^ Lord Kale illustrates this. At
•D. 127, r^ferrins; to -ouhlio 'vharves, it is suggested' tliat they seem
to have that essential oharact'^r ""beopuse th^y ar« the Yfharfs onlv
licensad, "by the Q;ae-^n _ _ or because ther=^ is no other '-harf in that
port."
Soe also The Pipe Line Casfis, 2:^4 U. S. 548 (l914). On the
-^hol° problem,' see Canoenter, "Constitutionality^ of the National Indus-
trial Recoverr Act and the Agricultural Adjustment Act" , 7 Soiithern
California La.^ ReviQr,T 135 (l9g4).
(92) Supra n. 89. Even legislation that is ap-^roved is discussed
in terms of "affectation "dth a public inter°st." 3udd v. He^ York.
143 U. S. 517 (1892); Noble Bank v. Hask°ll. 219 U. S. 104 (l91l);
and Peopl^ V. Nebbia. 291 U. S. 502 (l9?4) .
(93) Warner and Guterman, op. cit., n. 86; Eld<=r, "Some Consti-
tutional Aspects of the Na.tional Industrial Recover^r Act, " 28 Illinois
La^ Royj p.vr 636 (l934); and Hal^, "The Constitution and the Price System:
Some Reflections, on ^ebbia v. Hew York." op. cit. n. 85.
(94) Ibid. ■
(95) People V. Nebbia, supra n. 93, at p.- 523.*
"Under o\ir form of government the use of prop^rtv and the
making of contra.cts ar" normally maters of private and not public
concern. The general rule is that both shall be fr°e of govern-
mental interferorce. But neither property ri^-hts nor contract
rights aro absolute; for government cannot erist if the citizen
may a.t his will use his property to the detriment of his felloe's,
or exercise his freedom of contract to ^rork them harm. Eaually
fundam='ntal ^ith th=^ private right is that of the nublic to regu-
late it in the common interest."
(96) The language of People v. Nfibbia. "ibid. . is in marked con-
trast with that of Mr. Justice Field in Barbier v. Connolly. 113 U. S.
27, 31 (1885) :
. "As in our intercourse -rrith our fello'^-men certain principles
of morality are assumed to e?:ist, without which society would be
impossible, so certain inherent rights lie at the foundation of
all action, and upon a recognition of them alone can free insti-
tutions be maintained. These inherent rights have never been more
happil-'- =>xpressed than in th"^ Declaration of Independence, that
new evangel of liberty to the people; 'Wr hold these truths to be
self-evident' — that is, so plain that their truth is recognized
upon their mere statement — ' tha.t all men are endowed' — not by
edicts of Emperors, or decrees of Parliament, or acts of Congress,
'au-t '"3:^1 ijheTiT Creator with certain inalienable rights' — that is,
rights which cannot be bartered away or given away, or taken away
except in punishment of crime — 'and that among these, are life,
9838
-300-
liberty, and the pursuit of happiness, and to secure these' — not
graoit them, hut secure them — 'governments are instituted BHiong
men, deriving their just powers from the consent of the governed,'
Among these inalienable rii-^^hts, as proclaimed in that great
document, is the right of men to pursue their happiness, by which
is meant the right to pursue any lawful business or vocation, in
any manner not inconsistent with '-,he equal rights of others, which
may increase their prosperity or develop -'their faculties, so as to
give to them their highest enjojonent,
"The common business and callings of life, the ordinary trades
and pursuits, which are innocuous in themselves, and have been foil
i'.owed in all communities from time immemorial, must, therefore, be
free in this countrj' to all alike upon the same conditions. The
right to pursue them, without let or hindrance, except that r^hich
is applied to -all persons of the .same age, sex and condition, is
a distinguishing privilege of citizens of the United States, and
an essential element of that freedom which they claim as their
birthright."
Or the Court in Allgyer v. Louisiana, 155 U. S, 578 (1897); Adair v,
U. S. , 208 U, S. -161 (1908); .and Coppage v. .Kansas. 236 U. S. 1 (1915).
(97) People v. Nebbia, supra n. 93, at p 536:
"It is cleSir that there is no closed class, or category of
business affected rith a public interest, and the function of courts
in the application of the Fifth and Fourteenth Amendments is to
determine in each case whether circumstances vindicate the- chal-
lenged regulation as a reasonable exertion of government authority
or condemn it as arbitrary or discriminatory . The phrase
'affected with a public interest' can mean no more than that
< an industry for adequate reasons, is subject to control for the
public good."
(98) Ibid., 532 and 539:
"The thought,, seems nevertheless to have persisted that there
is something peculiarly sacrocanct about the price one may charge
for that he makes or sells, and that, hov;ever able to regulate other
elements of raan^ifacture of trade, with incidenta.1 effect upon price,
the state is incapable of directly controlling the price itself.
This view was negatived many years ago."
"price control like any other form of regulation is unconstitu-
tional only if arbitrary, discriminatory, or demonstrably irrelevant
to the policy the legislature is free to adopt, and hence an -un-
necessary and unwarrented interference with individual liberty,"
(99) at page 537.
(100) at page 525:
9838
-301-
"They (the fifth and fourteenth amendments) merely condition
the exertion of the admitted pover, "by securing that the end shall
"be accomplished by methods consistent with due process. And the
guaranty of due process, as has often heen held, demands only that
the lar' shall not be unreasonable, arbitrary or capricious, and
that the means selected shall have a real and substantial relation
to the object sought to be attained. It results that a regulation
valid for one sort of 'business, or in given circumstances, may be
invaJ-id for another sort, or for the same rusiness under other cij^-
cumstances, because the reasonableness of each regulation depends
upon the relevant facts,"
(101) Brief for A. L. A. Schechter Corp. in Schechter v. U. S, ,
34: Counsel suggests to the Court the po'-rer of the government to regu-
late fields of natural or actual monopoly, such as railroads and radio
broadcasting, the implication being that other lorivate businesses cannot
be regulated. This has considerable basis in the public utility concept
and development thereof, but vhen considered as a limitation upon the
povrer of Congress to regulate commerce, it appears to be another exajnple
of judicial legislation.
Again at page 148 in treating the relation of wage and hour
-provisions of codes to the Fifth Amendment, counsel says:
"Interstate shipment of poultry is purely private
. business."
To their mind it seems that this means that the liberties of contract
outweigh the Government need for regulation. This, of course, brings
up that peculiar doctrine in American Lav of affectation with the public
interest,
(102) Carpenter, op. cit., 134; and Maggs, "The Constitution ajid
the Hecovery Legislation; The Roles of Document, Doctrine and Judges,"
1 University of Chicago Law Review ^665 (19S4).
(105) Johnson, The Blue Eagle from Egg to Earth (Saturday Evening
Post, January 26, 1935), 85:
"I must call attention here to another fundamental of
NEA. In vie'Tf of an uninterrupted course of Supreme Court
decisions, we did not believe . anybody could write the labor
provisions of that Bill into substantive law to be enforced
by pains and penalties. Like the Draft Act, the whole law
is written to depend on popular support rather than on sta-
tutory compulsion. That is the very basis of NIEA and NRA.
It is what is being forgotten today. It must not be forgotten
• unless KRA is to fail. Those provisions can no more be con-
stitutionally included in this Act now than they could then,
and even if they could, they would be even more futile now
than then."
(104) Ray and ^ienke, "Hot Oil on a Sea of Delegation of Power,"
29 111. Law Review 1021 (1935); "SoGtlon 7(a) of the N.I.R.A. : An attempt
-302-
to Equalize Bargaining Po-vrer," 34 Colum'bia Lav Revierr 1529 ( ); "The
Effect of Section 7(a) upon the Closed Shop," 30 Illinois Lavr Bevien
199 (1955); and Majority Rule in Collective Bargaining Under 7(a)," 29
Illinois Law Review. 275 (1954).
(105) Texas & Kevr Orleans R. Co. v. Railway Clerks, 281 U. S. 548
(1950); Co-oT)age v. Kansas. 23t. U. S. 1 (1915); and Adair v. U. S.. 208
U. S, 161 (1908).
(106) Hammer v. Da^enhart , 247 U. S, 251 (1918); Eailey v. Drexel
Furniture Co. . 259 Uo S. 16 (1922); Texas & Pacific Ry. Co. v. Rig soy,
241 U. S. 53 (1916); and Second Employers' Liability Cases, 223 U. S.
146 (1911).
(107) Bedford C\it Stone Co. v. Stone Cutters Association, 274 U,
S. 37 (1927); Coronado Coal Co. Case, 268 U. S. 295 (1925); Loe^e v.
LarOer, 208 U. S. 274 (1908); and International Organization of United
Mine ¥orkers of America v. Red Jacket Consolidated Coal and Coke Co, 18
F. (2d) 839 (CoC.A, 4th, 1927).
(108) Local 167. etc. v. United States. 291 U. S. 293, 297 (193):
"It may he assumed that some time after delivery of car-
load lots "by interstate carriers to the receivers, the move-
ment of the poultry ceases to he interstate commerce.
(Citing cases.) But we need not decide ^■'hen interstate
commerce ends and that '"hich is intrastate hegins. The con-
trol of the handling, the sales, and the prices at the place
of origin, before the interstate journey begins, or in the
State of dest inaction where the interstate movement ends may
operate directly to restrain and monopolize interstrte com-
merce. (Citing casesO The Sherman Act deno\mces ever^r con-
spiracy in restraint of trade including those that are to
be carried on by acts constituting intrastate transactions,"
Texas, etc. E. Co. v. Railway Clerks, 281 U. S. 548 (1930)
(109) Supra, n. 108.
(110) Supra, n. 108, 158:
"In the case at bar, the receivers did not warehouse the
poultry or commingle it with local goods before disposing
of it. They were merely a conduit through V7hich flowed the
daily stream of commerce from shippers to marketmen. It was
clearly contemplated by the shippers that the poultry should
pass through the reseivers to the marketmen, for the shippers
paid the charges for unloading, cooping, and cartage to 'Test
Washington Market, and the price paid the shippers depended
on market price made by resale to the marketmen,*** ?e be-
lieve the situation is analogous to that involved in the
livestock cases already discussed, and we hold that the poultry
remained in interstate commerce until sale by receivers to
marketmen. "
9838
(111) Hearings "before the Committee on Tfays and Mesus, House of
Representatives, May 18, 19 and 20, 193S:
"Page 114, Senator Wagner:
"The courts have also said that intrastate business
cannot be conducted in a Fay rhich may burden interstate
commerce; and thus, if an intrastate business indulged in
unfair competition to the extent that it would be a burden
upon interstate commerce, such, for instance, as to a cer-
tain scale cf wages, I am confident that under this nen con-
cept the courts will say we have a right to reach that kind
of an industry, ******* in our economic growth there is such
an interdependence that State lines are no longer economic
barriers, and we have to deal with the whole subject more
intelligently, because nothing can be affected in the way
of the readjustment of our economic activities unless the
rules have universal application. Congress is recognizing
that more and more each year, and so are the courts."
(112) Brief for the U. S. in Schechter v. U. S. 52. See also
quotations at pp. 62-63:
"Senator Waigner: Otherwise we may talk as we like,
but what has dragged industry doTi more than ajiything else
is the exploitation of labor, cutthroat compe.tition. If
you inquire of business men all through the coTintry, the
thing they will tell you is that particularly during these
days of unemployment .they have suffered because their com-
petitors were able to secure people to work for them for
long hours and starvation wages (Cong. Rec, vol. 77, pt, 6,
p. 5236).
"Mr. Samuel B. Hill: The antitrust law does not tal:e
into consideration \mfair competition resulting from the ex-
ploitation of labor. It has developed that that -is the
greatest factor in unfair competition that confronts industry
today."
(115) Brief for the U. S. in Schechter v. -U. 3. in lower federal
couJ:t,
(114) The National Industrial. Recovery Act , 48 Stat, (Part l) 195;
The Agricultural Adjustment A£t, 48 Stat. (Part l) 31; and Elder, "Some
Constitutional Aspects of the National Industrial Recovery Act, 28 Ill-
inois Lav Review 636 (1934). . .
(115) A. L. A. Schechter Corporation v. U. S. . 295 U. S. 495 (1935);
Pajiaiia Eefinlni; Co. v. Ryan, 293 U. S. 388 (1935); and U. S. v. Butler
et al. Receivers of Hoosac Kills Corporation, U. S. Supreme Court, Jan-
uary 6, 1936.
(116) Brookings Institution, op. cit., 134. Lincoln, in the
, Emancipation Proclamation:
9838
-304-
"I felt that mp.asures other\'?is^ i3TQ.coTict.'i.-v,-at ional might
"become lawful "by becoming indispensa'ble to the preservatioii
of the Constitution through the preservation of the nation,"
Kote 74, p. 219 - J. G. Randall Constitutional Problems under
Lincoln (Mew York, 1926), pp. 378, 514.
Willis, Parliamentary powers of English Government Departments (Harvard
University Press 1932) 29,179 represen s the English view:
"The clearest justification for the employment of the
exceptional type of delegated legislation is, of course, the
existence of an emergency; but there still remains the dif-
ficult question of what is an emergency, a question discussed
with some bitterness during the crisis of 1931, The Committee
vfere fully conscious of the difficulty, and although they
stated that 'emergency and urgency are matters of degree,'
that 'the measure of the need should be the measure alike of
the power and of its limitations,' they did not express an
opinion how far the Acts of the autumn of 1931 measured up
to their standards (that would have been to enter upon pol-
itics),' nor did they lay down any general rules about the
delegation by Parliament to the executive of por'er to legis-
late on occasions of emergency." (at page 179),
See particularly the opinion of Scrutton, L, J. in Rotinfelt v,
. Phillips, 35 T. L, R, 46, 47 (l918) vhere he said "a war cannot be carried
on according to the principles of magna charta. "
(117) Block V. Hirsh, 256 U. S. 135, 155 (1921) Justice Holmes said:
"Plainly, circ-amstsnces may so change in time or so dif-
fer in space as to clothe vdth such an interest what at other
times or in other places would be a matter of purely private
concern."
Harcus Brown Holding Co. v. Feldman, 256 U, S. 170 (1921); and
TTilsonv, New, 245 U. S. 332, 348 (1917):
"Nor is it an answer to this view to suggest that the
situation was one of emergency, and that emergency cannot be
made the source of power - - - The proposition begs the ques"
tion, since although an emergency may not call into life a
power which has never lived, nevertheless emergency may af-
ford a reason for the exercise of a living power."
(118) Avent V. U. S. . 266 U. S. 127, 130 (1924):
"We must take it that an emergency contemplated by the
statute existed, as foiuid by the commission (I.C.C. ) - - -
That in such circumstances Congress could require a prefer*-
ence in the order of purposes for which coal should be carried,
consistently with the Pifth Amendment, is clear - -"
See also, Highland v. Russell Car & Snow Plow Co., 279 U.S. 253 (1929).
9333
(119) Field, op. cit.- 271:
"The declaration of an emer.^ency is of importance only
as showing that the conditions obtaining in intrastate ""ous-
iness are affecting interstate business to an unusual degree,
to such a degree that the whole, or a major part, of com-
mercial activity must be subjected to ne^tional regulation in
order to save interst-nte commerce."
(120) Comment, "National Recovery Cofe Assessments", 44 Yale Law
Journal 84-9 (1955).
(121) Institute of Patent Agents v. Lpck^-^ood, A. C. 347 (House of
Lords, 1894).
(122) Willis, op. cit., 67. '
(123) Comment, supra n. (147), 854.
(124) Infra, XV.
(125) McCulloch V. Maryland. 4 TJheat 316,410 (lalg); Slaughter
House Cases, 16 Wall. 36, 64 (1873); and Smith v. Kansas City Title &
Trust Co. 255 U. S. 180>
(126) Copley v. Board of Uardens of Philadelphia. 12 Hor. 299 (1851);
Willard v. Presbury. 14 Wall. 676 (1871); The Head Money Cases. 112 U, S.
580 (1884); Hagar v. Reclamation District. Ill U. S. 701 (1884); Charlotte.
Columbia & Augusta --. R. Co. v. Gibbes, 142 U. S. 386 (1892); Nerr Yorl: v.
Squire. 145 U. S. 175 (1892); i'lOrgan's L. & T, .ny. and Steamship Cp. v,
Louisiana, 118 U. S, 455 (1885); Patapsco Guano Co. v, llorth Carolina
Board of Agriculture. 171 U. S. 345 (1898); St. Louis Consolidated Coal
Co. V. Illinois. 185 U. S. 203 (1902); McLean v. Denver & Rio Grande P..Y.
Co., 203 U. S. 38 (1906); St. Mary's Pranco -American Petroleum Co. v.
West Virginia. 203 U. S. 183 (1906); Red "C" Oil iuanufacturing Co. v.
Board of Agriculture, 222 U. S. 380 (l91l); Savage v. Jones, 225 U. S.
501 (1912); Standard Stock Pood ^o. v. Vfright, 225 U. S. 540 (1912);
Kansas City Southern Ry. Co. v. Road and Improvement District. 256 U. S»
658 (1921),
(127) Legal Research Memorandum, "The Legal Sanctions upon which
assessment provisions in codes of Pair Competition Rest, August 6, 1954,
127:
"There are numerous statutes providing that certain ex-
penses connected with a particular industry or business shall
be borne by members of that industry or business. Thus, the
expenses and salaries of the members of the Federal Farm Loan
Board are paid by banks deriving benefits from activities of
the Boacd (Act of March 4, 1925, c. 524, s. 3, 12 U. S, C. A.
657), The Federal Reserve Board may assess member banks in
order to pay its expenses (Act of Dec, 23, 1913, c. 6, s. 10,
12 U. S. C. A, 243). The Federal Coordinator of Railroads
must be paid in part by the carriers (Act of June 16, 1933,
c. 91, 73rd Congress 1st Session.)"
(128) Legal Research Lemorciidum, supra, n. (154),
(12S) Executive Order No. 6678, and Adrainistrative Order X-33,
(150) Note, 2 George Washington Law Review 436, ^^--4 (1934).
(131) 21 Wall, 73 (1875).
(152) In International Railrray Co> v. Davidson, 257 U. S. 506 (1922)
it was held that the Secretary of the Treasurjr did not have the poner to
force the company to pay the compensation of Custom Officials on Sunday,
although he did have the porrer to issue special permit for immediate un-
loa,ding of conveyajices, and also to make rules and regulations as to such
bridges.
In the testimony of NEA' s General Counsel, Donald Richherg,
heiore the Senate Finance Committee, he repudiated mandatory or compul-
sory "assessments,"
9838
507-
ITOTSS TO C:iAPTERXIV
(1) Diiff and Ihitosido, "Delo'A'.t,n. Potostas Yon Potest Dole ,:,ri:
A :r^"-i:- of .I'lcrican Constitutional L-^"", 14 Cornell La-? 'Miartoi-1 IGC
(1929): -.nilouglity, Constitution of t^.e United Stot..:s, 2d. od. , III,
1S36.
(d) Aiio tiler form is " dele.g:atis non potest deloearo" .
(3) C-orvrin. Twiliglit of the Supreme Court (Yale University Press
1934), 140-146.
(4) Duff and !?,1iiteside, "Delegata potestas ?on Potest Dele.':-ari, A
I.;a;:ini of A.erican Constitutional La ■^" , op. cit.:
"7e - - learn tliat tlie maxim vdiich was to serve
tile turn of Coke, to co.T.mand tlie respect of Kent and
Story, and to leave its mark on the Constitutional
history of the United States, owes its origin, and its
vogue in the co.vuaon la^^? to the carelessness of a six-
teenth ccnturj' printer."
3racton, De Legil^us et Consuetudinihus An liae (.Yale
University press 1932) II, 157
(5) iraff and 'Thiteside, op. cit., 173
(6) GaiT, DelegP/te^ Le.::islation ( Camhrid-o University Press 19-31);
50:
•'If we cannot na.i^j the earliest instance of dele-
■;;ation, wo cbp. at least say .Thicli y'&.s the most, strikin;-;
of early instances. It is tac Statute of proclarc.tions
passec' in 1539, t..ie 'Act that Proclamations ..-au:- by i:.-e
I'lin;-- sha.ll he oheyoL..' Tlie aain provision of tids lex
regia was that \7-.iic.'- empowered Plenry VIII with the advice
of a raajorit^'" of liis Council, to set forth proclanations
under such penalties and pains and of such sort as to
His hajesty aii" his said couiicil should seem necessary
and requisite, the said proclamations to be oheyed,
oh served '-.nd..kep.t as though they were made hy Act of
Parliament unless the King' s ^-^igliness dispense with any
of them lander his reat seal. In addition to various
sections as to the penalties and procedure under the
Act, there is -^ clause which prescribes that every
sheriff or other officer to whom ''■as : ajesty' s proclaiiia-
tions are directed, shall, -vit-in fourteen days proclaim
them in market-toims, other towns or villages and" post
them up 'openly upon places convenient! therein. Here
then are all the ele.'ients of a dele':ation of legislative
power hy Parliament and the elements of a Rules Publica-
tion Act as well. And, as a second exami^le of dele :ated
9838
-SOS-
legislation from the same reign, three or four years
later there va.s another Act of Parlianent— of less notor-
iety and of narrower application, yet equally significant
for our purpose — v/hich empowered tne King to alter
the laAvs of '.7ales and to make la^/s and ordinances
for ^Tales, such alterations anc, now laws and ordinances
to be published ^ander the great seal and to be of as
Cood strength, virtue and effect as if made by the auth-
ority of Parlisjiient .
"This latter Act remained on the statute book for
nearly a century. The Statute of Pxocla.iations -yas re-
pealed as soon as Henry died."
(7) Gorwin, op. Git. 140-146 quotes from Locke, Treatise on
Civil Govenruent;
"The legislature cannot transfer t.ic power of
mal-ring laws to any other hands, for it being but a
delegated power from the people, they who have it cannot
pass it over to others."
(3) Ibid, op. cit., 140-146.
(9) Ibid, op. cit., 143.
Go 0 dno w , The Frinci-ples of the Administrative Law of the
United States (iTew York 1905), 42.
(10) Allen, Bureaucracy Triumiphant. (new York, 1931); Willis,
Parlia..ientary Powers of Fnglish Government Departments (Harvard Univer-
sity Press 1932). 170:
"Parliajiient has - — - empowered a department
to make a code, a Cremation Code, an Air Code, a High-
way Code,"
See the Cremation Act, 1902, 2 Ed. 7, c. 8, sec. 7; the
Air iIr',vi:;r,tion Act, 1919, 9 Geo. 5, c. 3, sec. 1; the l.iotor Car Act,
1903, 5 Ed. 7, c. 36, sees. 2 and 7; Road Traffic Act, 1930, 20 & 21
Geo. 5, c. 43, sec. 45. Of course, the extreme examples of executive
governr.ient were the Defense of the Healm Acts. Here, of course, the
inherent power of the nation to meet the emergency of war ...ust be
reco.i'nir:ed as di stinguishin;- these Acts from the otaers mentioned.
However, examples of great delegations are found in our First
Congress, v/he re some thirty-three delegations were made: Comer, 1,6,'^! si a-
tive Functions of National Adimini strative Authority (Hew York 1927), III,
52-5G, 70. One of the most broad waq;:
"The chief of each department to,s autnorizcd
to 'prescribe rules and regulations, not inconsis-
tent with law, for the government of his Department,
9838
-309-
tlie conduct of its officers, the distri'bution of its
"business, the custody, use, and preservation of the
records, papers and property appertaining thereto.'"
(11) Hart, The Ordinance-Making Powers of the President of
the United States (Baltimore, 1925), 127.
(12) For example see, :;arpenter, "Constitutionality of the
National Incloistrial Recovery Act aid the Agricultural Adjustment Act,"
7 Souf-iern California Law Review 125 (1934); Bl?.ck "The national Indus-
trial Recovery Act and the Delegation of Legislative Power to the pres-
ident," 19 Cornell Law Quarterly 389 (1934); Dickinson, "The Major Issues
Presented "by the Industrial Recovery Act," 53 Columbia La.w Review 1095
(1933), 1100; and Rashbaum, "Delegation to Administrative Agencies miCiev
the IT.I.R.A. and the AAA." '19 ^t . Louis Law Review 46 (1935).
(13) r/ayman v. Southard, 10 i/iheat, 1, 25 (1335).
(l-'i) . aggs, "The Constitution nnd the Recovery Legislation;
The Roles of Document, Doctrine and Judges," 1 University of Chicar'^o
La- Review 665 (1934). 673.
(15) Supra n. 12; and Chcadle, "Delegation of Legislative
Functions," 27 Yale Law Journal 892 (1918) . One writer entitled an
article "Delegation of Legislative Powers: The Decadence of a Funda-
mental Consitutional Maxim, 37 Harvard Law Review 1118 (1927).
(1.6) Supra, H, 3.
The court in Field v. Clark. 143 U. S. 649, 694' (1392)
quoted \Tith approval the following:
"'The legislati-ire cannot delegate its power
to make a law; but it can make a la.w to delegate
a power to determine some fact or state of things
\ipon which the law raglces, or intends to malvo, its
own action depend. To deny this would stop the
wheels of government. There are many things upon
vj-hich ase and useful legislation must depend \7hich
cannot be known to the law-making pouer, and must,
therefore, be a subject, of inquiry outside of the
halls of legislation.'" Locke's Appeal. 72 penn. 491.
(17) Comer, Legislative Functions of National Administrative
Authorities. (!Tew York, 1927), 30, 36; and Carr, op. cit., 10, 15-18
illustrates the same problem in Engl an : . There this type of legisla-
tion is refferred to as "appointed day clause" legislation. Examples
are found in: Car to of the Brig Aurora. 7 ::ranch 382 (1813); Field v.
Clark. 143 U. S. 649 (1892); and Hampton v. U. S.. 276 U. S. 394(l92S).
(IC) Ruttfield v. Stranahan. 192 U. S. 470 ' (19'~'-.^) ; Union Bric-e
Co. V. U. 's. 204 U. S. 36- (1907); Hckiiiley v. U. S.. 249 U. S. 397
(1919); U. S. V. Orimaud. 220 U. S. 506 (1910); and U. S. v. Shreveport
Grain and l^levator Co.. 287 U. S. 77 (1932). Willis op. cit., 106-115
offers the suggestive term "Sl-:eleton Legislation" which is the counterpart
9838
-310- ■
of this tyrie ?.s used in Iln;jland, .
(19) Trevnid, Acijiiini strati ve Pov.-ers over Persons and Property
(University of Chicago Press 1?28)[, 218:
"It can be -understood tliat even so basic ? n?.tter as
the principle of valxiation should be referred to c conmission,
althov^h the difficiiltj' of the ins,tt3r is reflected in the in-
conclusiveness of the dele;;ation; horever, it cannot be re-
garded as other than an anomely that Congress shovJ.d Imve
left it to the Interstate Commerce Comniission to determine for
th.e futu-re the percenta^-e rate of a fair return, tenpered
thoTJ^h the delegation vas by the initial fixing of the rate by
Congress itself, thu.s setting a standard for the guidance of
the Comn'dssion. A point of such vital iDioortar.ce ought to be
matter of direct stattitory regfl^tion. It is also doubtful
rhether the above suggested principle of delegation can be
verified in the matter of' railroad accoLinting. In America,
both in the Interstate Commerce Act and in I'lev York, there is
out and out delegation to the commission, while in Ungland
there is an elaborate procedure for the settlement of sys-
tems, on the basis of cons'altation v.dth representative bodies.
The relation of some phases of accounting (allocation to
principal or income) can lir-.rdly be regarded as purely techni-
cal or non-controversial, nor is it too obseciire for clear
formulation; and in the absence of freedom of private choice,
direct stft'O-tory regu.lation might seem appropriate. It may-
be, hovever, tlia.t after the practice of delegation l:ias once
become as firmly established as in the regulation of public
utilities, its continued and even expanded application vdll
come to ?ppcar politically preferable to the perils of
sectionally influenced legislative intervention; thus the
railroad conrpanies themselves oppose the substitution of
statutory for acjninistretivo handling of the long-and-short-
I'lzv.l problem (defeat of the Gooding Bill in 1926)."
Such powers are given to the Tariff Comraission \mCcr the Flexible
Tariff Act, The I'ederal Tr^dc Commission, and the Interstate Commerce
Conaission. It is more a cuestion of adenvacy of the standards, infra.
'^.ilroad Coi-.-jnission Cases. IIG U. S. 107; The i.innesot? ?^,te Cases, 330
U. S. 332 (1913); Intermountain Er-tc Cases, 234 U. S. 476' (1914).
Sec ITotc, "The Delegation of Tederal Legislative Power to ::xecutive
or Aojninistrative Agencies," 31 ilchigan Lav Review 736 (1935).
(20) Ibid, 84 c:cpresscs the opinion th-- 1 where the. sublegislation
involves mediation more than crTcrtizc, the delegation is not -Dro^Der,
:838
-312-
unciialified a dele/-o.tion v/ould present ti.e constitutional
cUfficiilty inmost' ac\ite form."
, (^■..■) 1434 U. S. G49 (1892).
(2j) : onongahela Brid.'se Co. v. U. S.. 216 U. S. 177 (1909).
(26) : -at-aal Film Corporation v. Inrlustrial Com.riii. sion, 236
U. S. CO (1915),
(■^7) ::ew York Central Securities Cor-p. v. IT. S., 287 U. S.
12, 2v (1932).
( ■) 265, U. S. 127 (1924).
. '.'. (29) 2"72'u. S..1 (1926).
(50) ••'aite v. Wacy, 246 U. .S^. 506 (1918); -Tillougliliy , Con- .
stitutional .La^? of ;txie United States (V"ew York 1929), 1568-1570 offers
an e:7;lan:',tion for broad dele ations found in ti.;:e of v¥ar. In tae
. exercise of such po-.-:ers Congress lias been allov/ed to make a nunber of
unusual statutory provisions, such as confiscation- acts, once re ula-
tion, ;-,nd th.e commandeering 'of a ios, factory -oroducts, tele rrap>. anh
railway' lines,
(31) laittfield v.. Stranohan. 192 U. S. 470 (1904).
(32) hay ajid '?ienlce, "'Vot Oil on Uncharted Seas of- Delegated
Powers," 29 Illinois 1021 (1955)
(33) Uiclcersham, " dele;::ation of Po'ffcr to Legislate," 11 Vir-
ginia Law Iteview 185 (1925); and Note - "Validity of Delectation of Pov/ers
under hecovery Act," 19 Iowa Law Review 583 (19'34); and Treund, O'- . :it.,
211:
"There is the recognition of the .-i'eneral -principle
that the leffisls.ture may not delegate its legislative
pov/ers to the noint of abdication; on the other hand
there is the fact of an extensive practice of delega.ti-
. . on."
miff and 'Tniteside, op. cit., 191--192, ProfesGor •.V.iteside co--clur.e
txiat; 1. Le--islatures can't abdicate or delegate le -islrtive power.
2, Str.tiites become effective upon a contingency are proper. 3. Legis-
latures cr.n delegate powers not essentially legislative ir-Mch theg :ii-;.t
the'selves exercise; and '4. Legislatures maj'' '.'rant extensive oowers of
local self-jove;:nment to municipalities and other political, subdivisions.
{3<':) "ickershara, ot:i. cit. suggests t iC following in a well-
considered rnd scholarly article, that is unusual in not following the
tacl: adopted by most ya-iters:
First. Trie subject .aattcr be one that is wit-in
9838
513-
f-ie legislative power,
Second. Tl.e legislature must not aodicate itr, ovra
-oowers, "but must act, - must announce the "oolicy or, in
ot. er words, express and clearly ' efine the legislative
v;ill or intention, thus establishing^ the general rule.
Third. The 'oower felegated ,Tiust be v.-ithin the
lir-iits of the object to he effected.
Fourth. The measures taken thereuiider ..lUst he rea-
sonably designed to acconr^lish the le^-islative v;ill.
Frohphly no court would uphold a bizarre or Uiireason-
able requirement.
Fift.i. iluch will depend upon the court's, own
views of the necessities and requirements of the sit-
uation,, of the needs of the community. But, in this
respect, the courts have E:hov.Ta a disposition to he
liberal .
Sixtii. Penalties must be imposed by the le isla-
tive and not by tie aoministrative body.
Delegations of i-o^^er to legislate falling "ithin
these rules are likely to be utiheld,
(55) Government's "^rief in Schechter v. U. S.. 119.
■(35) M.R.A., Title I, Section 3(a).
(37) Supra n. 35.
(38) "".I.H.A., Title I, Section 1.
The possible standards embodied in t/.e "Declaration
of Policy" --ere divided in a very effective manner in the Brief for the
Schechter Brothers in A. L. A- Schechter Corporation v. U. S. The brief
merely ruotes this portion of the Act, but sets each part off seoarately:
"It is hereby declared to be tl:e policy of Con-
gress to remove obstructions to tlio free flow of
interstate and foreign commerce which tend to diminish
the amount thereof;
"aJid to provide for the general welfrre
"by promoting the orsajiisation of industry for tb.e
purpose of co-operative auction aiiong trade groups,
"to induce and raaintehn united action of labor and
management under adequate 2;overnmental sanctions and
supervision,
9838
--314-
"to promote the fullest possilile utilizatlou <>f *^,.q
present productive capacity of industries,
"to avoid undue restriction of production (except as
may be temporarily required) ,
"to increase the consumption of industrial and agri-
cultural products by increasing purchasing power,
"to reduce pjid relieve unemplojnnent ,
"to improve standards of labor,
"and otherwise to rehabilitate industry
"and to conserve n?i,tural resources."
(3S) Pa.nama Refinin.'^ Co. v, ]]yan, ov. cit, n, (22)
(40) Committee on i.inisters' Povers, Report, Grad. 4060 Presented
by the Lord Chancellor to Parlianent in April, 1932, 31, sets forth the
exceptional instances of deleg? tion found in England:
i. Instances of powers to legislate on matters of
principle and even to impose taxation;
ii. Instances 6f poi-fers to amend Acts of Parliament,
either the Act by irhich the poners are delegated,
or other Acts;
iii. Instances of powers conferring so v;ide a discretion
on a Minister, that it is almost impossible to know
what limit Parliament did intend to .impose;
iv. Instances where Parliament, without formally aban-
doning its normal practice of limiting delegated
powers, has in effect done so by forbidding control
by the Courts.
(This can also be found quoted in "illis, op, cit,, 177.)
Continues the Committee:
"When Parliament has resorted to any of them, it has
generally been on account of the special nature of the
subject matter and without intention of establishing a
precedent,"
(41) Buff and Whiteside, op. cit., 195.
(42) Duff and Whiteside, opl cit., 195-196:
"Far from being a principle of constitutional law, it seems
that the maxim has little, if any, application to the distribution of
the v.'Ork of government by the legislature. There is no mention of it
in any American Constitution, nor any remote reference to it. The
v;hole doctrine, insofar as it is asserted to be a principle
9838
-315-
of corLstitution.<i.l In.-', ic tail t upo;; the
tliinnest of ;l ,iplication, or is the )roduct of the
unwritten constitution."
(45) Freund, ov. cit. n. ( ■. -C-O ; Freund, Adnini strati ve
FoYjers over Tersons and I-roue: t>' (ijiiiversity of Gnicp.ii'o press 19 3S), 31S:
"V/hile it is extremely difficult to formulate a
generally valid principle of legiti'nacy of delegation,
the observation may "be hazarded, that with regard to
major .natters the appropriate sphere of delegated author-
ity is where there are no controverted issues of policy
or of opinion. Hence a liberal delegation may he expect-
ed, and is actually found, in safety legislation, in
which arrangements of a purely technical character nec-
essarily pla.y a conspictious part."
(4--.) Supra n. (23).
Duff and -yhiteside, op, cit. , 169:
"In other words, delegated authority caivnot he
re-delegated unless there is" some reason why it should
he. This is :iot altogether self-evident and might determine
tl.-e burden of proof in a particular case; but a maxim
weighed down with such a lar,-ce exception, needs strong
sxipport if it is to pose as • a primal a::iom of juris-
prudence, '"
(45) Fanpma Eefinine Co. v. Hyan . 293 U. S. 388 (1935)
(46) Ibid at parses 433-433.
(47) Schechter v. U. S. 295 U. S. 49..:, 552
9838
TOTES TO CHAPTER XT
(1) Sv^rx-a, XIII.
(2) rretuid, Ad:ninistrr tive Pouors Over Persons and Pror)erty
(Universit;^ of Chicago Presc, 192S), 31.
"In the adrainistrfftion - rhere control or determination consti-
tutes a -orincroal or the exclusive 'business of the office (Patent Office,
Federal Trn,de Coimnission, Corrotroller of the Currency, Interstate
Commerce Conuission), the- amount of determinative iDusiness manifestly''
exceeds the personal capacity of the noninr.l authority, necessitating
st3.ff assistance, v/ith the effect that the chief in the main supervises,
and porsonall^r determines only in e>:ce-otionsl cases,
"In other words, total].y dii-.''erent methods or T^rinciples of official
action 'orevail in the tno services: judicial action is personal, rhile
adijiinistrative determination is normally, as a matter of fact, delegated."
ITillis, Parliamentary Po\7ers of En^clish G-overnnent DeTiartments
(Harvard Universitj'- Press 19S2) , 52:
"One of the reasons for delegating ~oower to make rules to the
departments is, put shortly, to enal)le auestions of deta,il to "be ■i'eraoved
from the consideration of Parliament."
(3) T7ilcor, v. Jackson. 13 Pet. 498 (lS39).
(4) Preiijid, op, cit., 32: ;,
"Provisions for delegation vary. Occasionally they relate to the
entire range of powers exercisable under a given statute— so in section 5
of the Trading nith the Enemy Act of 1917 (Stoehr v, Wallace, 255 U.
S. 239); in the act of March 3, 1927, nermitting delegation by the
Secretary of the Treasury to the Comnissi oners of Customs and of
Prohibition; and in section 82 of the English Hail^7ays Act of 1921, which
provides that 'anything by this act atLthorizcd or reqmred to be done
by the Board of Trade majr be done b;r the President or a Secretary or
Assistant Secretary or any -oerson authorized in that behalf by the
Presi6.ent.' Btit tnis is uncommon."
(5) Ibid.
(6) Hrool'ings Institution, The r'ational aecovery Administration - An
Analysis and An A-Q-prslssl (l935), IIG:
Suggests that the re'oort of t^io Deputy to the Administrator
actually became final bece-use its recommendations "ere usiially carried
out, that is, cualifications and stays in the executive order of final
arjioroval •'.rere usually those reco;im''3ndod by tho interested deputy.
(7) Title I, Section 2(b).
9838
-317-
(8) ::i."cl:ly and Oo.tuan, Aclninisti-ative Legislation and Ad.iudication
(Brookin::s Institution 1934) 21 at scq. :
It is suy'jcGtcd that resulti:-/; :'Ton the autho-..'ization in the ITIHA.,
there nas ostal)lishrd 'oy the Pi-Ksident the hUC, a Science Advisory Board
under the national Research Council, a Central Statistical Board, a
Federal Co-ordinator of Tranrroortation, a Federal ']ner::;ency Adjnini strati on
of Public Uorks, an Executive Council, a Public T7orV:s Emergency Plousing
Corporatio:--, and a Cpmnodity Credit Cornoration; a Federal Civic Works
Administration, a Federal Alcohol Control Administration, etc.
(9) Dearinr:, Honan, Lor-in and Lyon, The ABC of IIEA (Brookings
Institution 1935), 35:
Sneaking of the national Labor Board, the autJiors say:
"The e:-:act status of ths board in relation to the National
Recovery AcUiinistration is ill-defined. It is an agency created under
the Recovery Act, but it is not an integral part of the Recovery
Administration Wliilo it is not a part of the enforcement
machinery of ISA, its nork is in sone degree complenentary to that
of the Conpliance Division."
(10) The follo\7ing is a list of executive orders delegating
power .under the IIIRA:
Code-naking -iDO-rer, etc., delegated to the Presi dent-Hat ional
Industrial Recovery Act, June 16, 1933; Administrator appointed and
authorized to ap'ooint personnel on a temporary basis, conduct hearing
and other ^Tork as authorized under Title I - E. 0. 5173, June 16, 1933;
Secretary of Agriculture delegated certain powers (except ; hours of
labor, u^ugcs) - President reserves -oovier to anprove or disapprove
provision of any code - E. 0. 6182, June 26, 1933; Secretary 'of Interior
delegated "oorrers under Section 9(c) -• 0. 6204, July 14, 1933J Adminis-
trator authorised to ap-ooint -oersonnel on a permanent basis, conduct
hearings, exercise ftmctions as of Title I, except approval of codes,
making of a-greementsj issuance of licenses, and exercise the powers in
Sec. 3(e), 6(c), 8(b); Sec. 9; Sec. 10-E.0.6205-A, July 15, 1933;
Administrrtor authorised to stay application of codes - S.O. 6205-B,
July 15, 1933; continuing in effect powers delegated to Secretary of
Agricultiire - E..0.,6207, July 21, 1933; Secretary of Interior to be
administrator, for tlie Petroleu:n Industry - E. 0. 6260-A, August_29, 1933;
Administrator authorized to prescribe rules and regulations for the PEA
and codes o.nd for use of insignia, and to delegate to personnel such
TDOwers as ne^y be deemed necessary to accomplish the pui'poses of this
order - E. 0. 6537, Oct. 14, 1933; Secretary of Agriculture delegated
additional powers — E, 0, 6345, Oct. 20, _ 1933; Adjninistrator empowered
to make preliminary investigations under Section 3(e)'- E. 0. 6353,
Oct. 23, 1933; Administrator to adopt II. R. A, seal and to appoint
certification clerk - S, 0. 6439, ITov. 18, 1933; Certification clerk
authorised to excLwlify copies - A, 0. X-1, ITov. 20, 1933; Administrator
authorized to modify and grant exemptions from agreements - E. 0. 64^3,
Hov, 22, 1933; Administrator authorized to approve codes, amendments and
exem-otions, except codes for major indxistries and codes imposed under
Section 5(d), E."0, 5543-A, Dec. 30, 1933; Delineation of authority of
9838
ii-dninistvator anc" Secretary of Agriculture, po^-'ers heretofore delegated,
to Sec. of Agriculture and tra:nsferr.e(5 to Adjninistrator v/ith exceptions ~
S. 0. 6551, Jan. 8, 1934; Administrator authorized to prescrilie rules
and regalr.tions governing araen^jnents, exemptions and stays - E. 0. 6590-A,
Feb. 8, 1954; Administrator authorized to prescribe rules reposting of "
provisions - E. 0. 6590-B, Feb. 8, 1934; Administrator may malce
exceptions re government contraats i,7hen, in judgment of Administrator,
justice or public interest will best be served thereby - E. 0. 6646,
I'arch 4, 1934; Heads of emergency agencies established under illRA
authorized to make certain expenditures - E. 0. 6660, -.liarch 27, 1934;
Deputy Adi'.iinistrator of the Distributing Trade Section, Division 4, to
a-onrove local code authorities - 0. 0. 80, liarch 29, 1934; Deputy
Administrator of Service Trade Section to ap-oroye trade areas - 0. 0. 84,
April 9, 1934; Ao^ninistrator authori-^.cd to suspsnd certain provisions
of service trade codes - E. 0. 6723, liarch 26, 1934; Administrator
authorized to ap-orove territorial agreements pursuant to Sec. 4(a) of
Act - S. O; 675b-A, June 27, 1934; Secretary of Labor authorized to
T)rescribe rules and ro.gul8.tion& re aTo-orentice training programs - E. 0.
S750-C, Jime 27, 1934; Joint arj-oroval of agricultural codes by Secretary
of Agriciature and Administrator - E. 0. 6764., June 29, 1934; Administrator
authorized to reduce tolerance of 15fj on government contracts but not
below 5^ and is directed to mahe a studj'- of effects of this order upon
maintenance of standards of fair comt)etition in sales to public and
private cvistomers - E. 0. 5767, Juno 30, 1934; Secreti^ry of Interior
delegated powers under Sections 9(a) and (b) - E. 0. 6785, June 30, 1934;
Federal Alcohol Control Administration del ega-ted .certain functions - E. 0,
6829, Aug. 21, 1934; Textile Labbr Relations Boa,rd delegated certain
functions - S. •Q, 6858, Sept, 26,- 1934;' IIIHB .created but not authorized
to exercise pov/ers heretofore conferred on Adrainistra.tor - E. 0. 6859,
Sept. 27, 1934; Duties of . Industrial Emergency Committee - E. 0. 6860,
Sept. 27, 1934; Authority conferred f.pon G-. A, Ljmch as Administrative
Officer - A. 0. X-93, Sept. 28, I934;"lh.ities of llational Emergency
Council - Donald Ilichbe;rg aut.horized' to execute the f^mctions and perform
duties vested in the Council by President through such ;oerson as
Executive Director shall designate - E. 0. 6889-A, Oct. 29, 1934;
Authority conferred uiDon '7. A.,Harrinan as Ad.iinistrative Officer - A. 0.
X-107, llov. 7, 1934; Duties of .Federal Prisqn Industri-s, -Inc. - ^-. 0.
6917, Dec. 11, 1934; Powers delegf-tGd t'o deputy administrator for
Hawaii - 0. I.i, 348, March 19, 1935; Reconstituting the ITIHB,' continued
appointments of Messrs. Whiteside, Hillman, Marshall and H&milton -
ap;oointed Messrs. Witherow and Murray as 'members - E. 0. 6993,
March 21, 1935; ' Charles Ed3.son member of i'lIEB ~ S. 0. 7025, April 29, 1935;
Powers cl,elGgrted to deputy s.dministrator for territory of Alaska - 0. M.
356, May 5, 1935; Termination of iTIKB and' reorganization of 1©A -_ E. 0.
7075, Juiie 15, 1935; Continuing in effect .Exsctitive, Orders issued under
KRA - E. 0. 7076, June 15, 1935;- Continuing Textile Labor Pielations
Board until Jiay 1, 1935 - E. -,0, 7084, June ^4,. 1935; Continuing
national Steel Pelatij^ns Board until July 1, 1935 - E. 0. 7085, J\ine 24,
1935; Extpndijig Te^.tile Labor Relations Board uiatil iui'ther order - E. 0.
7089, June 29, 1935; Ext.ending national Labbr Relations' Board until
Aug. 1, 1935 - E. 0. 7090, Jijne 29, '1935; 'Extending rational Steel Labor,
Relations Board until further order ^ E. 0. 7091, Jum^ 29, 1935.
—519-
(11) Ofj'ice Hcinoranox-un, To, S'lG, iiarch 19, 1935. |
(12) Office l.:i>vioraiiLn;-i, I^o. ^56; Ilay o, 1935.
.(15) Office Order, '-o. 84, Aoril 9, 1934.
(14) Office Ordor, No. 80, liarch 29, 1934.
(15) The question of the t^'-po of pov/ers redelegated and the
controls provided is discussed, infra.
(16) This term is usnd to include "Code Committee", etc«, as the
term "Code A'at^iority" "became the standard term.
(17) But see Adminictrative Order, I-Tov. 28, 1933, approving
recommendatiou of Cotton T-^ittile Indtistr^ Committee, roadin/; inter alia:
"It is , . . recommended tart to provid-^ procedure for nocessary
temporary changes in the limitation of hours of operation of productive
machinery iDrovided in the Code to meet particular conditions arising
in particxUar grouns in the Industry and to nreserve a "balance of
production activity irith consura-otion reqjairements, the Code Authority
with the concm-rcnce of the Government representatives on the same may
hereafter, for -oeriods of not more than ninety days, require a temporary
shortening of the hours of such machine operation \Tithin any group
from those otherwise permitted "by thy Cotton Textile Code."
This is quoted in Kayers, A Eandhoolc of IIEA. 2nd ed. (Hew York, 1934),
Paragraph 3G1, Iss-oa-nce of orders a.nd regulations.
(18) Oemeiit. Indus try Code Ko. 128, Article IV-B-2, "K.H.A. Codes
of Fair Competition," III, 332:
"The Code Authority may designate the Institute or such other
committees or agents, and may-delegate to thorn siich of its powers as it
may deem necessary for the administra.tion of tliis Code; orovided,
however, that the Code Authority shall not te relieved of final responsi-
hility with respect to any such delegated leowers."
(19) Strpra, n. (lO).
(20) U. S. V. Warfield, 170 Ted. 43, (1909) illustrates 'the practice
although the point is not involved in th"e case.
(21) Selective Draft Case. 245 U. S. 355, 389 (1918).
(22) Transcript of Hearing, Ruhher I Manufacturing Industry,
Januarir 12, 1934, 33. One raemher of the industry shows an acute
awareness of these diverse allegences. He says:
9838
"I tliiiil: that tj.is is im-oortant. I feel that th^y are placed "by
the very provisions and the machii:':5ry of the Act perhaps ty the necessities
of the sit-aa.tion, in a.n extremely difficalt 730sition, 'because they are
in a thrce-T7£.y fiduciarj'- position, — not only in dr^af ting this thing,
but also in all of its future activities, and those three-way fiduciary
positions may T/ell bo adverse. In the first, i^lace , as members of the
code authority, and as members of tho Steering Committee r?hen the thing
was drafted, they had a duty to -oroceed Trith the utmost impartiality.
Tliey, perhaps better tlian anyone clse,.];ner; of these tvro tjrpos of
manufacture, pnd thej'- had to proceed forgetting who they were, but
taking the industry, academically and saying what is best for the
industry in conform! tj'- with the lew.
"Tliey had a second duty, a duty which every officer owes to his
company, and his directors, the people whom he represents, a duty to
promote their interests.
"Tliey had a third duty, — to themselves, their family and dependents
to see to it that that v/hich they ha.d done does not cost them their
■oositions.
"It is a very difficult -oosition for anyone to be in. It may well
be necessary in industry that that shoiild happen, but I would venture
the prophecy that the criticisms of codes, when this is all wor]ced out,
will not come as a criticism against the United States Government, as a
criticism a£:ainst the -ourposes of the nodes, as s. criticism of
stabilizing hours, or filling the price of labor — those provisions
will not be criticized. It is already wor]cing otit, piirticuLarly in
our coimnvjiity to the tremendous advantage of the mc^nufacturers. The
criticism vjill. come because industr:;-, in many cases ta.kcs this thing
and uses it as a means for dominating factor in thp industry to write
a law governing their cora-oetitors which will inevitably work to the
ruin of their competitors, and in their own interests, and they write
the law V7hich the other one is 5;overned by,"
(23) Title I, Sections 2 and 3. See Legal licmorrndnm To. 32, by
Blackwell Smith, ITon-Association He-oresontation on Code Authorities,
Hay 24, 1934 suggesting that Congress may have contemplated such
administrative activity. , ' . ,
(24) Brookings Institution, op, pit., 206-209, disc^isses Code
Authorities and trs-de associations. The study shows that the relationship
differed, 'ov.t in some instances the Code Authority was merely the alter
egos of the trade, association.. Sometimes thp code v/as used to force
members of the industry into the trade association.
(25) As an example see the Commercial Resolutions, of the Steel
Castings Industry. See also.', the Conswners' A6.visory Board Memorandum
from L. B, Lovell to J. B, Fr-.uiid, Hay 16, 1936.
(26) Brookings Institution, co. cit., 168. The Code fior the Gear
Ife-nufacturing Industry, ITo. 117, Article VII, Section l(a), "KRA Codes
of Pair ComDOtition", III, 73, orovides:
9838
-"21-
"Tne Codo Authority shrll conr.ist of lIx lo-ibers of the ssr.ociation
(no tv'o of "honi shall r ror'.-sent the sr ::: •T.imfocturor) , n.T)r)ointGd hy and
suh.iect to the direction of th-; ~^-:cctitivo CoHmittGo of the Association,
one rcTjrosrntative of ncRiDors of the Inchistry ^'ho rre not memhers of
the Association (orovidin;-; the;-.- d.oniro such roprcsontation, and signify
their willingness to T)ay their "oro rata shrro of ths cost of e.dninistering
this Code) ."
(27) Office I.icraoranduin llo. 33S.
(28) Lege.1 iiemorandtun iTo. 32, saTjra n. 23, suggested the advisability
of careful rttontion to the tr\aly representative requirement. See the
discussion of control over exorcise of Code Authority powers, infra.
(29) Concrete Kirsonry Industry, i:ir.TDroved code IIo''. 133, "IIRA Codes
of Frir Cov.roctition" , III, 417 Article VI, 16.
(30) Trp.nsit Industry approsred code Uo. 28, ihid, I, 378,
Article VI (A) (5).
(31) Automatic Sprinl^er Industry, Cods ITo. 50, ihid, I, 610,
Article VI (f) providing for strndard forias of license agreement upon
administrative ap-oroyalj Complete TTire and Iron Tence Indu.stry,
approved code ITo. 84, SiipTDlcmont ilo. 38, ioid, XII, 555, Article V, 2;
a,nd Conveyor and Ilaterial Preparation 'Tloui-oment Hanufacturing Industry,
approved codo ilo. 347, Supplenont !Io. 22, ihid, XII 455, Article VII (a).
(32). Prper and Pulp Industry, approved code To. 120, ihid. III,
125, Article VII, 4.
(33) Reinforcing 'liaterials Paoricating Industry, approved code
llo. 127,. ihid, III, 294-295, Article VI, Section 7.
(34) StrLict-ujGl Clay Products Industry, approved code lb. 123,
ihid, III, 205, Article VII:
"Prior to the increasing of existing production capacity in the
industry hy starting the operation of existing plants within amy hranch
of the industry that have heen shu.t do'-^n continuously for i. period of
three years or more prior to the effective date of this Code, or
starting the operation of plants not heretofore in operation within any
hranch of the industry, a certifier tc rmst he procured hy the owner
thereof from the hi-anch committee of such hranch of the industry,
suhject to review hy the Code Authority or the Adninistrctor, certifj'-ing
that the operation of su.ch plant is consistent vith the, policy of the
Act, In case of a denial hy a hrt.nch committee of the certificete
mentioned herein, or refusal to decide within sixty (60) d.oys Such
owner may rpperl to the Code Authority or the Administrator for a final
decision,"
(35) lotion Picture Laoorrtor^-, approved code ilo. 22, HSA Codes
of Frir Competition, I, 507, Article VI, Section 2:
9838
-322-
"By the Associrtion. Th 5 provisions of this Code, other than the
mandatory- provisions under the i:.I.2.A., -nry 'be, modified or amended "by
the concirrrin;'; vote of rt least t^-o thirds of t]ic nonoers of the Asso-
cirtion at a meoting cal?.;d for such v\vc-oos:, -orovid:d that notice of
suhmission of th.D propos.d raodif icrtion, or amendjncnt , has 'b.^•Jn given
in till notice of nootin,^ and -orovidod further, that rny modification
or amcnd:-.icnt adonoted hjr the Associrtion shall not h .Gorac "binding or
effective uiilrss and iintil norovcd oy the Pr isidcnt J'
(36) rioor rnd Wall Clav File L'rnufrcturing Indiistry, ariprovcd
code TTo. 92, 420, Article VI, V B-11:
"Th. Cod; Authority shall ho the generrl -olannin-'^, coordinating
rnd acanini storing agency of this Cod^:. It rary raa] •-. ; rules and regula-
tions for the £ dministration of this code."
Bro-ohings Institution, op. cit., 279,
(37) Ihid, 164-165, 225-227.
(38) i'or r -oartial statoni^nt of the prohlom soe Mcmorrndum from
L. A. liorrifion to Cod. Advis::rs of Consumers' Advisory Board, Methods
of Handling Trrde Practice CovTol-'^ints, Jiuie 13, 1934,
(39) Office ilanual: Code Adi-iinistration III-100'O. Code Authority
Orgcni zat ion II 1-1412 . 4 (d) Reports to i'xLA..
( 40) I'.cgss , ' Th"; Constitution and the P.ecovjry Legislrtion:
The Holes of Docui:i .nt. Boctrin:, and Judges. 1 University of Chicago Law
Hoviev?. 665. 659 (1934); Congr-ss delegated vast legislrtivc poners . . .
(in effect) to associations of ousiness men." It is doubtful if this
is quite accu.rrte,' for Congress v;;" s not fully avrrre of how the II.I.R.A.
woiild he acUiinisterod. ■ ' ■
(41) 3roo'':ings Institution, 0-0. cit,, 280: The authors point out
"the ahsencc frem the minds of certain persons with ahusiness background,
even wh-n plrced in officio.l oosii ion, of any set of conCDpts wherewith
to consider the relations of government to busin ss enter-orise other
than the hachn:>yed thought that th^ less government supervision there
is the hettcr."
(42) loid, 199 sets forthi tJie' clr ssif icrtion used here.
(43) Ihid, 201: discusses th;; u.s ;• of industry insriectors to
secui"" compliance. The instance of the luraher industry with two
hundred field rgonts is given, rnd a singl.. division of the retail solid
fuel indxistry pro-oosed to use f if t'z-tvro .
^44) The functions or. rcis. r" ''ill he discussed, infra.
(45) Gio.-.nv^lt V. Bury-ai ot al Censors of ^:h Colle.ce of Physicians.
1 L. D. ?.cyMond 454 (1691). , , .. ,
(46) Ihid, :.G7.
9838
(:?) Ibid., 167.
(•:-8) G-c,2:c V. C-.nsors of V:-\' ::r.aoEhir-' 3cl.;ctic i;.:6icrl Society,
63 IJ. H. 92, 93 (inBO) :
"Tiio str-tt\tr. requires ovory modicr.l society, orgcnizod -under the
laws of this stcto, to :loct a laofrrd of censors consisting of throe
mcmhors. Authority is conferred u-oon the "bor.rd to examine and license
persons to practice medicine, surgery or mid-nifery . . ."
(49) State -?: rc-1 Hilwaukoe liodical College v. Chittcnd^. 107 II. W.
500 (Wise. 1906); and Scholls v. State, 90 lid. 729, 7^13 (1900).
(50) llcvada Corro. Lo.ws, 1929, I, Sections 5':0-590; Laws, of
California, 1927, Chcpter XXXIV; ITorth Carolina Code of 1931, Chapter
IV, Article 6, Section 215; and revised- statutes of Utrh, 1933, Title 6.
For cases on this sc-. In re Scott, 292 P. 290 (iTov. 1930); and State
Ear of California v. Sunerior Coiu-t, 278 P. 132 (Calif. 1929).
(51) l-icchia v. Pe£ol_i, 25-i U. S. 228 (1930); Feoule. ex rcl.
W,st Bay v. Delaney, 130 IT. Y. Siro^el. 853 (Sue. Ct, 1911). See also:
13 A. L. H. 828, a previous similar statute had te :n h'ld invalid,
though not u:oon due process gro-iands or the qujstion of d legation to
a private agency. Fox v Kohavjl; & H. H. Humane Socioty. 165 H. Y. 517
(1901).
(52) Laws of Oklahoma, Chapt.r 25, P "hruary 11, 1932.
(53) Cham-olin H-^fining Co. v. Coriporation Commission of Oklahoma.
286 U. S, 210, 250, 231 (1932).
(54) Snith V. Kansas City Title and trust Co.. 255 U. S. 180 (l92l),
(55) rirst ratio-nal Bank of Bay City v. Fellows ex rel Union
Trust Co., 24-:. U. S. elG (1917).-
(55) 232 U. S. 531 (I91e ) . '
(57) Ihid, 545:
"It is to he pr sumed, until th contrary aiepears, that the
administrative hody would have act,.d with reasonahle regard to the
property rights of plrintiff in error" . . .
(58) 210 U. S. 281 (1908). ' ■ "
(59) 27 Stat, at L. 531.
(60) rt pages 295-296.
(61) Souse. V. Thom-Dson. 81 T, E. 1109 (111., 1907).
(62) Johnson C:m tery Association v. Parker 16 li. Y. Supp.
1015 (1897).
9838
(53) State v. Crawford, 1C4- Kansas 141, 145, 177 P. 360 (1919).
(64) Schlosser v, Welch, 5 F. Supp. 993 (1954).
(65) Callajn Co-unty, ffashinj^ton v. U. S. 263 U. S. 341 (1923);
Gilles-oie v. Ol.lahoraa, 257 U . S. 50 (1S22); and Indian Territory Ill-umi-
nating Oil Co. v. Oklalioma. 240 U. S. 522 (1916).
(65) Dwcan v. U. 3. 34 Ct . CI. 458 (1899).
(67) Pan American Fetrole-um CoiT- v. Ala"bama, 57 P. (2d) 590
(1933); and Feox)le v. Standard Oil, 22 P. (2d) 2 (Cal. 1933). But see
Panhandle Oil Co. v. Knox. 277 U. S. 218 '(1927) holding a State Tax void
which applies to sales of gasoline to federal instrtuientalities .
(68) Lucas v. Reed, 281 U. S. 699 (1930).
(59) 269 U. S. 514 (1925)
(70) at page 520 . '
(71) JBA Legal Research reraorandtiin of La.w on the Tax Liahility of
Code Authorities, Pehruary 14, 1935. Ls^-^al Research Ileraorandum No .771
Karch 27, 1935 sta.tes: "Code Authorities were e:-:enpted from taxation as
"Business Leagues" !)-'• the Bui'eau of Internal Revenue."
(72) IJRA Legal Research; "Legal Position of Code Authorities,"
June 11, 1934.
(73) U. S. V. I -onat . 124 U. S. 303 (1808); U. S. v. Smith. 124
U. S. 525 (1GS8); U.S. v. Geri.iaine. 99 U. S. 508 (1379); and Scully v.
U. S., 193 7ed. 185 (1210).
(74) The terra "legislation" is -ased in the "broad sense of inclui5.ing
constitutions. State v. Cole, 148 Pac. 551 (h'ev. 1915).
(75) Fergus v. Russell, 110 II. E. 150 (ill. 1915); and Eliason v.
Coleman, 86 H. C. 235 (18C2) . But holding that power to create offices
can't he delegated. See, State v. Smiley, 253 S . ¥. 825 (ilo. 1934).
(75) For a discussion of the prohlon suggesting that puhlic officers
should discharge sovereign functions- see, Sta.te v. Cole, 146 Pac. 551
(Nev. 1915).
(77) People v. Brady, 135 IT. E. 87 (111.1922).
(78) Brookings Institution, op. cit., 162:
"A.iong its longer run objectives the Recovery Act was
intended to furnish the "basis for contifLuing forn^ of
collective action uy "business groups."
(79) I"bid, 251.
(80) Orel e.r-,iment of Ron. Dor.rld Richberg on behalf of the
United States in A. L. A. Schechter Coro. v. U. S.
(ni) Carr, Sele^-tated Legislation ■CCambridinie University Press 1921), 37:
"More than loiir centuries ago Farlia:nent too^c notice of the fact
that the ordinances of craft f elloTVships, gailds and fraternities were often
■unlawfiil and imreasonalDle. These minor la.w-making "bodies were forbidden
to make statutes without first submitting them for the approval of the
Chancellor, Treasurer ajid Chief Justices of either Bench (or any three
of them) on the circuit judges of the shire concerned."
(82) Brookings Institution, The ITational Recovery Aajninistration
Analysis and an A-p-praisal (l935) , 253; and Consujners' Advisory Board
Study, "Si'Toerience with the Oxien Price Provisions of Approved Codes.":
"Pire Ibitinrmsher Ap-oliance Ivifg. Industry. Code #98
"Letter of I.iarch 6,, fire e:-:ting\iishing ap-oliance manufacturer.
"Je are taking the liberty of enclosing a co-oy of telegram received
from , on the Code Aixthority, in iThich he threatens ■
prosecution if we do not accept the cost arbitrarilj"- set by the Code
Authority. We believe that this was a very unfair procedure as we
were never given, in our opinion, the right consideration in the filing
of our costs. It is our opinion that to arbitrarily set a ridiciolous
cost on this coranodity is to gradually stifle the industry. One of
the most ridiculous things in the whole set-up is the fact that you
are allowed to qu.ote distributors your cost. This "in itself, we believe,
is a direct violation of the Code and shows absolutely that the cost,
as set by* the Code, is not authentic,
"Letter of Kerch 10, small manufacturer of apolianc§s.
"The o-oen "orice "orovision in our Code, couoled with a minimum cost
for the Industry, '.7ill unauestionably result in all prices being the
same. ' It -oractically is the ssTae as if the Code had ordered price,
fixing,
"¥e did file a -orice list with 1 quart extinguishers at $12.2^, but
the Code Authority did not send them out and vre later withdrew them
because we could see that it wouldn't help us -any."
See also, Ilenorandum to Corwin D. Edwards from Group V, Consiomers'
Advisory Board, on Preliminary Rules about Cost contained in Codes
assigned to G-roiip 7.
(83) Sivora, XI 3 and Menorana.iun to 0, K. Hamill from Consumers'
•Advisory Board, re Commercial Resolution ITo. 15 issiied by the Code
Authority of the Wall Par)er Manufacturing Industry,
9838
an
"326-
(84) I.irr-ers, Consumers' Advisory Board Stixdj-, siipra n. 82:
■ A -Hia:i][BooK OF :niA
(llevr Yorh 1954)
"Par, 380, Studies and recommendations
"Virtually all the code authorities are erarioi^ered to reouire
statistical reports from the members of the industry, in order to make
possible studies looking to recomuendations for modifications of, or
additions to, the code. In many codes is found a -orovision reauiring
that the iiiiTorrmtion obtained be held as 'confidential' by the authoritj?-,
a requireuent vhich must be read in the light of the fact that the
members of the raithority are themselves, in most cases, actively
engaged in the industry."'
"Cast Iron Soil Fi-pe Industry. Code #18
"Letter of I.Iarch 15, fittings manufacturer,
"'A feu vfeel's ago the writer called on one of his customers and the
customer diiring the course of the conversation told ne the monthly
production of several manufacturers and explained that he Imew our
[production, sales, etc. This information is given confidentially to
the Soil Pipe Association, and according to the code is keiot in
confidence,"
(85) transcript of Hearing Machine-Applied Staple and Startling
Machine Industry, August 29, 1934. A -orice sheet filed to be effective
July 2, 1934 uas not distributed until' August 8, 1934, The Manager of
the Code Authority admitted that "the list (filed by the E. H. Hotchkiss
Company) uas . . , withheld from distribution -nending a discussion . , .
with the nanufacturer who filed the list. Contact was made for this
purpose," the llanager wrote, "but the President of the Company was out
«f town and delay ensued. It was not until August 1st that we were
finally brov.ght to the realization that our efforts were hopeless, and
then the lists were sent out" (Transcript page 9), The Manager,
Mr. I. B, HrJ.1, stated at the hearing that he kjiew he was without au-
thority to withhold the price list, that he acted on his own responsibility
and that during the time that the price list of the Hotchkiss Company was
being' kept confidential, "the Code Authority kne^- nothing except for the
chairman" (Transcript, page 17). What was done "was not done throTigh
carelessness; it was" not carelessness or negligence," ilr, Hull declared
later in the hearing, "I did it advisedly, because I felt it was to the
best interest of the Industry not to have a low price like that go out"
(Transcript, page 34). The high motive just indicated vra.s the principal
basis of Lr. Hull's defense, although certain somewhat technical reasons
for withholding distribution of the price list were also advanced. The
Administration took no a'cti'on in the matter subseou.ent to the hearing,
Mr. Hull rer.igned as Manager; the Code Authority continues to function
undisturbed..
9838
(86) Sirvr.-, VIII
A nenoxcziCvn "by Francis A, Staten to Ruth W, Ayres on this protlem
sets forth the follov/ing points:
"1. The code authorit;"- shoiold "be given no blanket authority to
require any information for vrhich it wishes to call. In other words, the
code should not authorize fishing expeditions into private records.
In the afejinistration of the code, the requirement of general uniform
reports shoiild lie authorized, Preferahly the code should designate
the kind of information which can he required, such as total sales,
units prod\i.ced, total wages, etc. Hovrever, in some cases it may he
imprac'ticahle to designate specifically the information vhich is
authorized to he required. In any case whether or not the specific
type of infornation is described, the report or questionnaire forms to
he used should he submitted to the Administration for approval, together
with the forms stibmitted there should be a description of the use to
which the information is expected to be t)ut, the method of compilation
which is to be followed, and a description of the manner in which the
information is to be submitted to the code authority or to members of
the industry. Tlie administration can thus a,ssui-e itself that publication
will not be ur.de in such a way a.s to reveal the identity of individual
firms. The general re-ports so authorized should be sxibraitted as sworn sta-te~
ments. I can think of no reason why the code authority should have the
Toower to reqxiire s-oecia2 re-oorts from individual members of the industr;?-,
but there ni;iht be occasion when such authority might be needed, ITo
special rer)ort should be required until after SDecific approval by the
Administration,
"'2. All statistical information required should be submitted to a
confidential a^ent. By a confidential agent, I mean one other than a
member of the industry and someone other than an employee of the code
authority — 'probably a firm of independent accof-ntants. Reports
should be made to the confidential agent and the summaries made by this
agent, I have no doubt that in most instances code authority secretaries
who have been designated as confidential agencies have discharged their
duties conscientiously. However, it apoears clear that the code
authority secretary and other code authority members are in a great many
instances too much influenced by the inside political situation in their
code authorities to exnect them to function with absolute inde-oendence.
"3, Ulien information is prepared in summary form and copies of
such summary su.bmitted to the code authority or to members of the industry
copies also should be submitted to 11. R. A, in order that such information
may be available as a guide to the Administration. I think it particu-
larly importajit thai; the large mass of material available in industry
be channeled into the government. The submission of these summaries
would also give the n.E,A, further check on the use of material
collected from industry members.
-328-
"4» rield OAidits should "be mads only "hy the confidential agent.
Under the Y.,'-\mA, to date, there has "been a large amotiht of field
auditing 133- code authority employees, and raany instsaices nhich have come
to my personal attention, I knovr that these' audits have re.stilted in a
kind of fishins er-oedition nhich the Federal Trade Commission, rrith
all of its pov;er to suhpoena duces tecujn and vyhat not, could never lout
over."
(87) Ihid. See the last p?rt of this nemorand-ujn.
(88) Sr:ora, XI 2.
(89) The Code Authority's Reiily Brief to Heoort of Demity
Administrator, P.ohert K. Strc';.us, on Acninistretion of the Ice Code
submitted Aoril 2. 1955;
"Mista]-os --ere made here and there, and some of the records
disclosed inept or prejudiced, hs-ndling, hut the record is one of
accompli slxment of the purposes to ^-hich the C-overnraent and the Industry
set themselves to serve, 3.nd i-re are reluctant to have the period of
this service of these men terminated vdth the general and unchallenged
imr)lication that they vrere guided \7h0lly hy selfish motives even to
the ejitent of variDing facts to their selfish ends."
(90) EXCERPT PROLI L^j¥ YOHIC H3HALD EIIBUImS, Wednesday, April 3, 1935
"K.R.A. TiCEATEl-S T.IUCK PAliilEP.
T3YIEG TO VJCiS ICE FOR OWi: USE
i'iL;uSi: SULLIVAII TSLLS II0".7 1iB]TJ deaL AGEFCY BEARS
DOrTxT or VIRG-IIIIAi: T.:iO STARTS TO BUILD PLAITT
WITHOUT GETTIIia A PEHIIT
'3y Hark SuJ.livan
"Washington, April 2 - In Princess Anne Countjr, Va., Mr, P. D. Halstead
is a farmer. He raises mainly sioinach and herries. He ships them to msA-':et
in carloa>d lots. The cars need to he iced. The ice, hought from des-lers
and manufacturers, costs ahout $4 a ton. lire Halstead figures he could
make' his o'Tn ice for mu.ch less, he thinks for as little as $2 a ton — and
so he started to huild a little ice -olant on his farm. It \7as very
small— its capacity ten tons p. day.
"After he had partly constrvicted his "building and laid out about
$2,000, he got, on December 22 last, a telegram. The telegram was from
an official of IT.R.A. U.R.A. has a great mfimy officials, departments and
committees having long names. Tlie one vho signed this telegram was
"chairman of the Committee of Arbitration and Aiopeal for the
Virginia ice indu.stry."
9838
"i:,r.,A. Orders Cn^'.striictinn Sto-oned
"The teleigrrrn sent "by this official to Farmer Ilalstead tegan:
'This connittee is advised you are Isiying foimdation -pre-oaratory to
construction ice-inaving -olant.' The telegrGra rent on to inform
Mr. Halstead that H.R.A. foroids o.iiy one to "biiild an ic:' -olant without
first apiplying for and getting a -oerrait froTa the iT«H«A. code authority
for the ice industry. The cora;.!ittee further ua.rned Parmer Halstead that
he must cease "building his ice plant. Othervrise-— so the telegram con-
cluded:
"'This committee will take such action as may he necessary to
enforce the le.v .... Your imriediate coranliance is called for.'
"Farmer Halstead did not reply. T\70 days later he received a
letter from the seme IT. 3. A. official. The letter repeated the substance
of the telegram, r/arning Mr. Halstead that he must -ccet a nermit from
Iv.R.A. hefore he could huild an ice -olant 'whether for individual or
TDUblic xise. t
"Again i,:r. Halstead did not reply. Five days later, Decemher 29,
he received ohother telegram fr'^^m the same l",'R,A. official. In part
it read: 'Lacl'ing any resiDonse, I e::tend opnortunity to indicate to
me on or oefore Monday that you agree .... Your non-response Trill
he accepted as refiisal, which -.all result in such action as necessary
to enforce la\;,*"
It will he noted that Mr. Siillivan calls the code authority
renresentative a KUtl .official. On the other hand ITHA would have
protahly hotly denied this.
(91) The letter in -oart reads:
"The showdov.'n came on Aioril 15, -jhen the Code Authority appeared
hefore the national Industrial Recovery Board and for a full half day
presented the merits of Article XI, and reauested the Board to direct
that further distu.rhance of the -orovision he stopped and that it "be
administered c^ggressively and firmly.
"The Recovery Board has complied with this request. We'have heen
given asstijrancc that Article XI will not he disturhcd, at least until
the new illRA has hecn passed hy Congress, when it is prohahle that all
Code Torovisions will come up for reviewing, and The Board has directed
all KRA Agencies to go ah::ad and administer the provision with
firmness and vigor,"
Shortly aft-r this letter was written the II.I.R.B. issu.Gd an
order practically defeating the r:ff octiv^ncss of Article XI.
MomoraneAm for the N.I.R.B. hy Dr. L. C. Marshall, May 13, 1935.
Applications ^'ith the r' commendations of the Divisional and Darouty
Administrator rerc to ho sent directly to the oxed.itive secretary of the
N.I.R.B. If a denial were recommended, the matter was to he referred to
the Advisory Covmcil* The effect of this procedure wotad have heen con-
traryto the ina-ustry' s desires as hoth the H.I.R.B, and the Advisory
Council v/ere sxispicious of Article XI,
9838
(92) '.ionoro-ndi-m form Con-fin D, Eduards to Walter i.ip.n^^uia, re Code
Administrc.tion Provisions of Iiodel Code, A-oril 26, 1935;
"In too ur.:iy casa those agencies hav'e. (a) exceeded' their porrers
and misinter-preted their codes; (t) sought to coerce- and o-opress part's
of their ii-Ldustry; (c) failed to distinguish hetv-een their status as
memoers of a trade association or as -orivate husiness nen o.nd their
status as code officials; (d) given inac'. squat e recog-.-.ition to the _
interests of consumers and lahor; (o) let their code 1)0001/16 ineffective
hy inattention a.nd la.ck of inter -^st; (f) sought to htiild up a
hureaucrac" of johs and salaries regardless of th-^ indr.stry's need."
(93) 4 7ords and Phras.^s 37C3 and cas-s ther- cited.
(94) Di:j-s v. Grand Junction Canal. 3 K. L. C. 759, 793 (1852)
Lord Carrohell said: "This is not to he confinr^d to a cause in rrhich
he (the jixdge) is e party, hut a-D-oli"s to a cause in -fhicli h-. has an
interest."
(95) Zex V. Sunderland Justic-s. 2 I'l.B. 357 (l90l).
(SS) Ihid, and s-^e Report of tl--^ Co.jnitte-; on Minister's Fo'.7ers.
(Cmd. 4060, Prosent-d hy th'" .Lord Chancellor to Parlianent on Arjril,
1932), 76-79.
(97) r.e-oort, ihid 76-79, "Th- first and most f\uid?,ra-ntal
principle is that a man may not he a judge in his orrn cause,"
(98) Peo-ol-: v. Brady. 135 II. "i. 87 (ill. 1922).
(99) Legal ?Lesearch Memorandum, "Legal Position of Code Authorities",
June 11, 1934.
(100) Legal Uemorandruii llo. 18, hy Blac^CT^ll Snith, quoting
Mr. liclxaty. Standard Clause for Uniform Cost Accoiuiting as Set Forth
in Office H.-norand-um of January 29, 1934:
"Th' Office :>raoranduTi of January 29 recorriends the folloF^ing
as a standard. clause for uniform cost accounting:
'Tiie Codo Authoritjr shall caupe to he formulated an accounting
system and methods of cost finding and/or estimating capable of use hy • .
all memhers of the ino.ustrs: After such system and methods have heen
formulated, full details concerning them shall "be made availahle to all
memhers. Thereafter all memhers shall determine and/or estimate costs
in accordance i-ith the iDrinci-oles of such methods'.
"In t'.TO or three a-o-Drovd codes and a large, r.u.ih-r of important P^©-
possd c^d-s this clav.se has h^^ji ceu-'?led nith a -orovisien forbidding sales
helow cost ^-ithotit a further m^ans of determining cost or, h^low cost as
determined oy a formula to he devised hy the Code Authority in accordaiice .
with such clause. Since the accounting systemand m^th-^ds of cost finding
and/ or estimating contemplated under this clause ar^ not s\ihjoct to the ,
aiDproval of the Aajiinistyator its us'^ in conjunction r^ith a sales h^lon
cost TDrovision raises a question nf major im-portance.
"TJ" lir,v to.ltrn th*" -^nsition thc.t -omvisionr. \7hich cinstit\itc d-^t"!--
minations ^f ■'.cj'^T cu-^stions of il.'R.A, -o^licy can 'on 'vnlvnd only ■and'^r
govornn-iit sv ^^rvision after dun n-.tic^ and an ^p^^-)^t^^nity t'^ to hoard.
W" hav" n-^t !■ -n xmd.til;- cuuti^us in s- -onco'-'ding, Tlic '">:-^rciso of fan
"broad -r^uci- confcrrod on tho pr^sid'^nt by tlio II.I.H.A. is so alcin to
logisla.tion that tto s-o"£:c of cod"s a.s 'str.tutos' and the d.rafting of
c^dos as 'I'^^iplPi.ti'^n' . Tho r^siilt of tho use if tho claus'^ in question
in cnjitiiction \7ith a sal-'S IdoIott cost -orovision vith-ait a fiirthor
d'-^finition of cost r/hich is subject to tho Administrator's apr)roval
is to pornit th- Codo A\ithority to d^tormin^ th- cost TdoIott \7hich
ono may n^^t s'll. This is a.n administra.tiv^ -r-.t'-jirion of tho H.I.R.A,
so" important as to "do "oro-oorly call' d 'I'^gislation' in thn atovo
s^nso,
"It is n ^t difficiilt to d^m^nGtrato that a d"- termination of th^
■•DriC'-^ h'^lov- -/,ich on- rnay not s'-ll affects the -oronorty rights of
thos^ to •-'hou it -o-^rtains. Du-^ -orocss of lai7 r'--quir-s that such a
•orovision, "b-foro it h-com-^s laiT, Fh-'Uld "b^ suhj^ctod to th- scrutiny
and a-Toroval -f an im-oartial t gov-rnm-ntal agency. A Cod^ Authoritjr
is neither in-Dcrtial nor ^-v^rnn-^ntal. Its )7i^m'b^rs are c">m"o'^titors
'•'n'^^ rith an~thor end nith ot'.i-r ■-^l-n-uts in th^ industry, and their
int^r'^sts ar- rntrgonistic to tn-s- -'f c^nsum^rs and -li-^rsons ' "ngag^d
in other sti^-DS -f th.- economic -oroc"ss'.
"It is a.r'-u^'d that a suffici-nt clieck is "orovided by the inclusion
of th- Zichh-rg po.ragraph contain'-d in Offic'- I.i-morandum ^f January 27,
but it uu3t 0- ron'^nh"r'--d that undor the clause in auosti'^n the system
formulated hy th- Cod- Authority h-c-'in^s -ff-ctiv^ as so-n as 'full
details' are 'mad- available t- all ra-nb-rs'. Property rights are
soriously aff-ctod instantly. In ?,uch a. situation the r-servati^n of
the pow-r to r-nedy fails to fulfill the roquir-m-nts of due proc-ss
and in practi-ce -i/ould not bo efficacious.
Conclusion
"Th- clause in qu-sti-n nh-n j-ined to a ^erohibition of sal-s
b-low est as c.eteri.iined by the; system to be fomuJ.at-d delegat-a to 0.
iDrivate and -:)artial agency a ^oTTor so d-rastic that th- delegation is
unr-asonable and in violation of due rjroc-ss ''•■f Ian,"
Legal h-norand-'om, "T^i- Legal Sanctions upon vrhich Assessment
Provisions in Cod-s of Pair Com-o-tition R-st"', Ar^ust 28, 1934, 9:
"It ch-iv-ld be noted that rr- have not dioscrib-d the m-mbors of the
Code Authority as ^oublic officers. ?fe believe a Code Authnrity is
sui iFceneris - a legal s-o-cies -o-culior to th- administration of the
Kati^nal Ir.dustrial Recoverj'- Act. U- cannot her- attempt to classify
its 1-gal status fm-th-r than to determin- that it is some sort of
an agency authorised t'^ administer the -our-ooscs of th- National
Industrial r.ec-very Act."
(101) Su-ora, V.
9838
(102) S-o AdTTiiniPtrrtive Order "o. X-29, TTnere tlie Administrator
soii,';;lit to '■it--c"jrr.r certs.in ■DOi"ers fron code r.uthorities.
(105) lIirool:ings Institiition, op. cit., -291, r.nd at 272 vhere the
authors scrj:
"Sinjervicioii of Code Authorities. It jaay "be tr;:en for granted that
the activities of code authorities have to "be supervised. Contention
to the contrary "blinks all the relevant facts, ffiiat they acijninister is
a "body of la\7. Being interested parties to the "bod;'- of the law i.7hich
they administer, their imoartiality is o"bviously not uholly to "be relied
on. Their po'"ers are "built upon the disci-olinarjr and coercive porrers of ■
governnent. It is therefore inconceivable as a matter of riublic policy
that they shor2d "be given full authority either to administer the
definitive terns of codes or to exercise the discretionary legislative
andjidicial ;T0T7ers contained therein."
(104) 292 U. S. 495 (1935). Tliis decision -'as handed doTO Hay 27.
Brookings Institution, otd. cit., 255:
"It is adding emphasis to the pu"blic character of their
responsi"bilities« This was illustrated "by the removal of members from
the cotton garment code authority, "because they rere parties to a
legal action r^gainst the government to prevent the executive imposition
of an amendraent to the code. However appropriate such action, a "body
of persons thus limited cannot at the same time "be in any real sense
representative of the mem'bers of an industry. There arise tests of
loyalty as "between o"bligations as a ouasi-pu'blic official and as a
representative of an industrial group,"
(105) At page 537.
(106) S-'-'pra, XIII discusses what standards were set tip "by the
Act, and their adequacy.
(107) S-.vora, III.
(108) r.vles that are -orescri"bed "by a higher administrative "body
have the sa:.:3 force as law, upon a subordinate body. Ex rjarte Eun.ji Une.
41 ?. (2d) 239 (1930).
(109) An excellent but soLiewhat unusual exam-ol;; is found in
the Iron and Steel Code ho. 11, "1I3A Codes of Pair ComDetition," I, 199,
200, Sched-nlG E.
(no) Pivip Lo.nuf.actixring Industry, aiD-oroved code Fo. 57, ibid,
679, Articl? IIU
"Every ora-oloyer shall use an accounting system '-'hich conforms to
the T)rincipl:s of and is at lea.st as detailed and co;.rp].ete as the
uniform nd standard method of accountin:''; and the uniform and standard
method of costing to be formulated or approved by the Supervisory Agency,
with such vcriations therefrom as ma.y be reqtiired by the individual
conditions affecting any employer or group of employers and as may be
9838
-333-
approved "b:" the Surjervisory Agency and made supnlenents to said
formulated or ?,-oproved methods of accounting and costingj'
Corset c:ic. Brassiere Industry, approved code ITo. 7, "IISA Codes of
Frir Conpotition" , I, 75, Article IX. See also, Oil Burner Industry.
AT)proved Code ITo. 25, ibid,, I, 341-345. Section 5 nhere the
Administratnr retained an approval ■oo"Ter, vhich v:as t'a'^ most common
form.
(111) Lrrjidry and Dry Cleaning l.iachinery Manufacturing Industry,
ar,-Droved coc.o I'o. 34, Ihid, I, 444, Article XII:
"I'o e:.n?.oyer shall rao-ke rny allorrance for aniparatus, machinery,
or anpliancos tc.::=.:n in trade in excess of the a.Tnou-n.t fixed in standard
list of trr:.e-in allowances ap-oroved from time to time hy the
supervisory r,:,'oncy and filed in the office of the Secretary of the
Laundry anc Dr;- Gleaners liachinery Ilanufacturers' Association."
(112) Cotton Garment Ind\istry, fo-oroved code 'Jo, 118, ihid, 124,
Article VII, 2:
"The Ziiecutive Authority of rnir division v\Pi'', from time to time,
Y7ith the ap-oroval of the Pa'oer Industry Authority, change in respect
of all or any of the products of such division the -oeriod of time
which shall elrpse between the date of filing and the effective date
of any such schedule; "orovided, however, that svich period shall not
be less tha... t-.:enty-f our (24) hours or more than five (5) days; and
provided fui-t::er, that loending the holding of a meeting of the Paper
Industrj^ Authority the chairman thereof mpy grant an interim approval
of such action."
(115) Iron and Steel Industry, approved code "o. 11, ibid, I,
Section S:
"The Board of Directors by the affirmative vote of a majority of
the whole Borrdaay establish maximum rates of ciscount and maximum
periods of free credit, other thon those specified in Schedule G- of
the Code, T-hicli mry be alloved by an-' member of the Code with resnect
to the sale of any product or -oroducts to jobbers for resale as
permitted b- the -provisions of Section 4 of this Sc/ odtile i. The
Secretar3- sl.all :j.ve notice in ^.-rriting of any action taken by the
Board of BiL&ctors in accordrnce "ith the -orovisions of this Section 6
to each -le'iber of the Code --^ ich at the time shall be engaged in
producing the hind of loroduct in the srle of --hich nny such other rrtes
or periods c.'.:.air. have been established by such action,"
(114) Iron end Steel Industry/, an-oroved Code ho, 11, ibid, I, 189,
Article X, S ction 3:
9838
-334-
"It-ce-ot ill cr.ses for rrhich liauidated danic-ges are fixed in the code
and in ccsoa -.'l-ich slir.ll give rise to actions in tort in fe.vor of one
or more }.ie?iDers of the code for dr.ma^f^es suffered by it or then, the
"board of directors shall have -DOFrer fron time to tine to establish the
Emouiit of lictiidated da,-nages pajrahle "oj rnj^ member of the code upon the
commission b;- such member of any act constitutin': aii iijifair loractice
under the c-iCe and. a list of the anouiits so fi::ed shall from tiflie to time be
filed "ith t>.3 secretrry.
(11") I'or e^zarrole see Wall Par)er Ilanufacturing Industry, a-n-oroved
code r. IS, iuic., I, 272, Article VII (c).
(115) S-vora, n. (113)
(117) Cotton Garment Industry, r.-Q-oroved Code " o 118, "llEA Codes
of Fair Con^tition" , III, 101, Article' XII .
(113) :;illinery and Dress Trinnin.'^, Braid and Textile Industry,
approved code "_o. 69, ibid, II, 15d Article II, (S) (4).
(lis) Drosr, Lantifact-un-'in::; I:idustry, a-Q-oroved code To. 64, ibid,
II, 32, Article VI (i) :
"Tne Code -i-uthority shall provide r\il2s and re.;ulations by lyhich
the disti.-.ccr.on betvreen 'higher-priced garinents' as hereindefined, rnd
'lower-priced garments shall be determined. In so doing, the Code
Authorit;;- shall be guided by the ifnolesale -orices prevailing on
August 15, 1S33, or thereaboiits, as representing the intention of
the franers of this Code."
(120) d:iectrical iipnuft.cturing In6.ustry, approved code Ho, 4,
ibid, I, 4S:
"If tde supervisory rgency shrll deternine that in o.ny branch or
subdivision 'f the electrical nanufccturing industry not nof selling
its -orodiict ^n the basis of -orice lists v/ith or \Tithotit discount
sheets irith fined terns of paj-rnent the distribiition or marketing
conditions in said branch or subdivision are similrT to or the same
as the d.istribution or marketing conditions in a brai^ch or subdivision
of the industr:/ vjhere the use of -orice lists TJith or without discount
sheets is rell recognized, and that a system of selling on net price
lists or -orice lists and d_isco-unt sheets should be put into effect
in such branch or subdivision, each mrnufa-ctiirer of the -i^roduct or
products of such branch or subdivision shall trithin t- -enty (20) days
after notice of such determination file 'rrith the su-oervisory agency
net price lists prprice lists and discount sheets, as the supervisor^/
agency nay direct."
(121) C-er,r lian-ofacturing Industry, a-D'oroved code ro. 117, ibid,
III, 74, _-rticle VII (2)(j).
9838
-3^.5-
(122) TJc.ll Pr.-oer Manufacturing Industrj'-, c-nproveo. code ITo. 19,
ibid, I, 271-272, iirticle VI; rind Cemont Industry'-, aijoroved code llo. 128,
ibid, III, 0-1-5, Article XIII:
"All Portl'-'iid Ceiaent ~iri-':eted by me.abers of the industry shall
comply r.'ith the strndord .s-oecif icctions for Portland Cement of the
American Society for Testing i.feterials, and the American Standards
Associe-tion, .and/or the Federal Spscif ication Board. I.fembers of the
industry no.y sell cement under modified Portland Cenent specifications
that are designed to meet special or unusual conditions not adequately
or properly covered by the s-oecifications hereinrbove referi^ed to,
provided, honever, that the price at T7aich such modified Portland
Cements are sold shall be filed with the Code Authority,"
(123) 71oor and ¥all Clay Tile Manufacturing Ind'astry, approved
code ITo, 92, ibid, II, 454, Article X, Section A; anc' Underwear and
Allied Products Manufacturing Indu.stry, sp-oroved code i'o. 23, ibid, 320,
Part V, Section 2:
"All standards already formulated in coot)eration -ith the Bureau
of Standards of the United States Department of Corrierce and ap-oroved
by the I:idT\5try or standards '-rhich shall be so formlated and
aiDTDroved shall become the standards for the Industry. rJ.1 merchandise'
raanufa.cttired after the effective date shall be plainly and visibly
marked by an i:-delible stam-o or firmly sewn label 'substandard', where
such nerchar-"ise cones below the minirrom standards. Every
manufacturer shall plainly mark with an indelible stamp or firmly sewn
label the sizes of measurements of his product tliereon. However, any
merchandise nanufactured -orior tft the date of adoption of a standard
for such r.:srcha::dise shall not, in any case, be classified as
'substandard' nerchandise, rnd the Secretary shall notify all Icnown
interested persons in the Industry of each new standard ador)ted and
the effective date thereof."
(124) Cleaning and Dyeing Trade, A-oproved Code To.. 101, ibid,
558, Article VI, 3(h):
"To establish and prescribe fair and reasonable minimum wholesale
and retail -prices by regions and/or local areas, for the several
services comprised within the definition of cleaning and dyeing; such
minimum wholesa.le a-nd retail prices to be sufficient to provide for
carrying out the ;ourpose of the 'Act, to-be consistent with maintenance
of the niniraL.i standards of a^ia.lity Torescribed by the Code Authority,
to enaJble the trade to maintain the payment of at least minimum wa^es
herein established and other wages -oroperly based thereon, the
furnishing of stable employment necessary to ma-intain the trade, and
such other considerations reasonably pertinent thereto.
"Any niniiirj-n -orices thus esta-blished nay from time to time be
increased or decreased by the Code Aiithority according to changing
conditions.
."Immedic.tely. after any such Tjrices, increases, and/or reductions
have "been c:o-rro\-e6. hy the Administrator, the Code Authority shall take
such steps as are reasonably calculated. to .notify c.ll raenhers of the
trade thereof. Such prices, increases, 'and/or reductions shall go into
effect r-pon such date or. dates as the Code Authority shall fix."
(125) Panama Refining Co. v. Ryan. 293 U. S. 388 (1935).
(l?6) Dr. C. T/. Putnaiii has made such an extended analysis which
is very interesting and sugj^-estive. It has served the nriter
materially in the preparation of this problem.
(127)" Retail Custom Millinery Trade, Code V.o, SOD, "IIRA Codes of
Fair Competition", XXI, 502, Article V, Section 2(1)).
(128) R-tail Trade, Code ITo. 60, ihld, II, 40, -Irticle X,
Section (c).
(129) Pahricated Metal Products L'anufacturing and Tetal
Pinishin/;; and Lletal Coating Industry, Code Ho. 84, ioid, II, 336,
Article IV, Soction 6.
(150) Cotton Textile Industry, Code Ko. 1, ihid, 1, 16,
Article Y, Section (c).
(131) Supra VIII.
. (132) B.arher Shop Trade, Code I^o. 398, "ITRA Codes of Fair
Competition", IX, 343, Article VI, Section 8(e).
(133) Oiitdoor Advertising Trade, Code To. 304, ihid, VII, 280,
Article VI, Section 14.
(134) Ax'.tomohile Hot Water Heater I.Ifg. Industry, ibid, XII, 484,
Article TV, .Section 15.
(135) Suora XII and XIII. '
(136) Lr^foer and Timber Products Industry, Code Ho. 9, "NRA Codes
of Fair Coupetition" , I, 119, Article III, Section (d).
(137) BarJ-ers, Code ITo. 47, ibid, I, 580, Article VII,
Sections 4(c) and 5,
(138) TTnolesale Automotive Trade, Code Ho. 163, ibid, IV, 193,
Article VII, Section F.
(139) Pawner Distributing Trade, Code Ho. 176, ibid, IV, 387,
Article X, Section 14,
(140) Electrical Manufacturing Industry, Code Hn. 11, ibid, I, 49,
Article IX.
9838
-357-
(141) r.estr-tirant Industry, Code No. 202, itid, VI, 515, Article V,
Section 5(d) .
(142)' Dress Ilfg, Industry, Code Uo. 64, ibid II, 90, Article IV,
Section 11.
(143) :;.-n»s Clotliin.5 Inc-ustry, Code Vo. 15, itid, I, 232,
Article IV.
(144) Dress ufg. Industry, code Fo. 64, itid, II, 88,
Article III, S-ctions 1, 2 and 3.
(145) ^rr.a-.ine- Industry, Code ^lo. 278, ioid, VI, 439, Article VII,
Section (2) (e).
(146) Cotton Garnent Industry, Cods 1-To. 9, iliid, III, 77,
Article IX, Section E.
(147) r.etr.il Solid Fu.el Industry, code ¥.o. 280, Toid, XV, 386,
Article IX, Section n.
(148) C-i\-phic Arts Industry, code ITo. 287, ioid, VII, 20,
Article I, Section 5.
(149) Legal i.Ieraorandur.i, Eeviev of Code Authority Pov;er,
November 27, 1953:
"1 - The nei-iorandura of Novenber 22nd to the Legal Division
was directed to stopping an arbitrary requirement by members of the
Legal Divisio:i th.at there must be incorporated in every code a
general -oovjer given to the Adrainistrator to 'revise and modify'
actions taheii by a Code Authority. Tlie effect of such a demand
would be to i::Gist upon final authority in the Ac^ministrator to
substitute his jxidginent wherever desired for that of the Code
Authority. Tl:is vould impose an impossible burden on the Administrator
and at the sane time take away from industry the fundamental power of
self-government .
"2 " It '.'as not intended by this memorandujn, on the other hand,
to indicate that Code Authorities should be left free to govern an
industry without regard to necessary limitations and checks to
xirotect private and public interests, which the government must
maintain,
"3 - Tor r^r-iample, a.ny exercise of power by a Code Authority in the
nature of -jric- fixing, even in the determination of minimum prices to cover
costs of -oroouction, must be subject to the power of government revision,
or else there Is grave danger of violating a primary requirement of the
law, -miich is that codes shall not be designed to promote monopolies or to
eliminate or oppress small enterprises and will not operate to discrimi-
nate a-gainst then - and also that the codes shall not permit monopolies
or monoTDOlistic -oractices.
9838
"4 " Therefore, there niust Ve exitliorit"/ reserved in the representatives
of the goverir.icnt to disapprove of any actions of the Code Authority v/hich
might violate the purposes of the Recovery Act,"
(150) L3{^al Ileinorandum, To. 32 "by B1pc'':'-"^11 Sr.ith, Ton-Association
Representatio.i on Code Authorities, Lay 24, 1934:
"The Act does not ejrpressly provide for Code Authorities. It raay he
that in the consideration of this suhject, Congress contemplated performance
of the accjinistrctive functions of industrsr hy trade associations. It rras
provided that trade associations must he truly representative of their
industries in order to ohtain the code ap-olied for, and in Section 5(h) it
was provided that a trade association in order to he entitled to the hene-
fits of thT act should meet the requirements of the President that they he
truly repr-:sontative. Any requireraente along this line o.s to a trade
association sho-^dd reasonable he aiDiolied to Cods Authorities, and inasmuch
as the contents of a code rrith reference to a Code Authority rest nithin
the aajninistrative discretion of KBA ;7e should insist on high standards
of true representation for Code Authorities as uell as for associations.
If an association only partially covers an industry, unless the -oortion
uncovered is a negligible factor, the f'^re^oing rationale uouLd seem to
req_uire representation on the Code Authiority of the non-trade association
members of the industry. This is p?-.rticularly true in cases vrhere knorm
conflicts enist between trade association members on the one hand and
non-trade association members on the other,
"It nay also be that representation of non-trade association members
is necessary as a reasonable insurance against discrimination against small
enterprises, inasmuch as those vho are not member? of the trade association
are likelj- to he the sm.aller enterprises in the industry,
"Fnere fi;idings of true representation and of no inequitable restric-
tions of th s-oonsoring group raay be based on incomplete or unsatisfactory
evidence, cr.refnj. insistence upon the truly re-oresentative character of
the Code A.-atl..ority may go far to'.7ard curing this nossible defect."
(151) Consu:ners' Advisory Board memorandum ~oy J. Li. Kadley, G-ra-ohic
Arts Ind.ustries, A-oril 3, 1935:
"Code Authority Organization:
"Coordinating all of the code authorities and ac!ninistra.tive agencies
of the Code, is the national Arts Coordinating Committee v/ith very limited
powers of control,
"Tne ;orincipal industry (A^l) under Graphic Arts is Commercial
Relief Prii-ti:.-.;^-, for which the United Typothetae of America is designated
in the Code rs the national Code Atithority. Local agencies have no direct
responsibilit-- to the United Tjnoothetae of America as National Code Author-
ity; the rep jrcussions reaching Washington are the only direct evidence to
the K.R.A, of tneir activities. The United Typothetae of America is
divided into 17 zones and 116 regions, II.R.A". 's contact nith them is
through the ITational G-raphic Arts Coordinating Committee, the national Code
Authority for Industry A-1 (United Typothntae of America), thence to the
9838
Relief Printiivj Clonal code o.uthorities and finally to the individual
estatlishi.ieiits in such manner, forn and time as the rogi^nal mr.y determine.
It is little v'onder that II. II, A. cannot "be sure hon cn.refully its instruc-
tions are connuiiicated.
"The U:\'ited T^roothetao of America is controlled tjy its local chapters,
which for cof-exJ-nTjoses they have or^^ani^ed into zona.l and regional code
authorities. The netional has little po^^er to relcct the local agencies;
as a matter of fact, the 17 zonos appoint the 29 national directors, nho,
in turn, :lect the national Adjninistrrtive Gomnittse of 7 members througli
which the t.ssociation deals '.-'ith N.H.A, Since the Code actually names the
United Tj-pothetae of America as the Code Authority, it is technically
true thc.t al^ the nem'bers of the association are iiembars of the Code
A\ithority - a i;::nican array consisting entirely of generals.
"The result, bitterly opposed'by this Board in all of our dealings, is
tha.t no o:v- is directly responsible to II. R. A,, and no matter what a
de-Duty may rule, they ma'ce their own laws regardless of the mandate of
the code i^'^.tder ■..■>ich they opera.te."
(152) IZIA Press Release Ho. 2251, December 13, 1933:
"As ::-:preGsed bj^ the Administrator, the Administration members of
Code Authorities, carefully avoiding the fact or appearance of dictation
or coercion will function a.s co-T/orkers in an undertaking of public interest,
concerned onl-- in the faithful administretion of the Codes,
"Specifically, their chief duties may be summarirred as follows:
"1. Refer with recommendation to the Administrator through the divi-
sion administrator tho^e matters mentioned in the oode as being subject
to review and/or the^proval of the Administra.tor.
"2, Rcconmend to the division administrator such other matters as in
his judgment are important to the welfare of the indn.stry, or to the ptiblic
interest, or to the cons-umers or employees affected by the provisions of
the code,
"3. TL.ough the code authority secure complete assent to and compliance
with all provisions of the code by each unit of the industry.
"4, Assist the code au.thority in conn'^ction with; the preparation
of recorni-i-ndations for necessary interpreta.tions, mo6-if ications, a.nd
additions o:r the code. Consult with the division aiiinistrator in refer-
ence thereto.
"'5, Uarn and guard against threa^tened deviations from the code or
non-observance of its terms or action contrary to tho principle of II.I.R.A.
"6. Constantly scrutinize the operation of the code and see that it
does not peruit or Tjromote monopolies nor tend to eliminate or oppress
small ente^^-^rises.
9838
"7. Advise rith the code authority in seeing thrt its affairs are
handled in a cooToerative and fair manner with respect to all -units under
the code, v.c'r.iiiQ store that the provis ions cf the co6.e rre strictly o.dhered
to with an eouitahle and fair settle^ient of all raatters covered by the
code TDertainins to the interests of the general public, consumers, or
employees,
"8, Assure himself and the division adninistrator that the
industrial nemhers of the code 2.uthority are truly re^oresentative of the
entire iiidustry and elected by a method folr end equitable to- all
concerned,"
(153) Ibid,
(154) Sroolrin^s Institution, op, cit,, 272, et seq.
9838
-341-
IIOTES TO CHAPTEH XVI
(1) Corwin, TTTili:?ht of the Supreme Court, (Yale University Press,
1934), 184:
Professor Corwin suggests that the back-to-the-Constitution move-
ment may not be so concerned with any meaning of the constitution other
than "certain doctrines, also sanctioned by the Court at times, which
were conceived with the idea in mind of putting the future in cold stor-
age . "
(2) Laski, "Book Review", 45 Harvard Law Review, 754. 756 (1932):
"Parliament has been led to experiment with' departmental jurisdic-
tion because judicial review of social policy has been reactionary in
temper and clumsy in execution. It has failed 'to appreciate the ele-
ment of policy which is involved in finding the facts wherever quasi-
judicial problems emerge. Until the courts are willing to look upon
these issues with something of the temper which Mr. Justice Brandeis has
brought to their examination, they are not likely to add to the respect
in which it is desirable they should be held."
(3) U. 5. V. E. C. Knight Co. > 156 U. S. 1 (1894)
. (4) 288 U. S. 344 (1935)
(5) 295 U. S. 495 (1935)
(6) 293 U. S. 388 (1935)
(7) 295 U. S. 602 (1935)
Corwin, op.cit., 130. 'Speaking of the then pending Humphrey ' s Case,
Professor Corwin suggests this decision would be of extreme significance
in the decision in this case, and indicate whether the court intended
to clamp down executive power. Apparently that was the intention of the
Court, and so we can assume they do have some significance in the de-
cision in the Schechter Case.
9838
NOTES TO CHAPTER XVII
(1) Quoted in Co'-nission of Inquiry on Public Service Personnel,
Better C-overnr.ent Personrael (:'e\7 York, 1935), 54,
(2) iTDid, 15:
"The success or fo.ilure of ths-t govermient, an.d the kind of service
which it renders, rill rest in the last anal3^sis upon the capacity and
character of the men and rromen '^Tho constitute it. T7e must therefore
maintain a govermaental systen under which the governnent attracts to the
public service its full share of the capacity and character of the man
po\7er of the nation. This vre do not accomplish in the United States
under existing conditions."
Again at page 54 the Report sttites:
"Governmental reform in the United States has directed its attention
prinaril3'- to the structure of the governnent. This attitude arose natvir-
ally because of our great faith in v/ritten constitu-tions, "
(3) Ibid, 67:
"In an emergency, men must be c^a-a-fted for \7ork rapidly ajid in large
numbers. During the process of organization, men v/ho cr,n organize and
drive aheo»d, who can mrJ:e decisions and develop policy, are needed sud-
denly and in large numbers. The Com-iission is convinced it would have
been utterly impossible to meet this need without permitting the greatest
possible freedon for which the present powers of the Civil Service Com-
mission are inadequa-te, "
(4) Dickinson, Administrative Justice and the Suprenac- of Law in
the United States. (Harvard University Press, 1927), 341:
"TiJliat he really needs to see, beyond the range of the particulars
with which he has to deal, are not such phantom abstractions but rather
a wealth of other particu-lar facts, eqxially concrete, historical facts,
economic facts, social facts, psychological facts, — stretching awas''
to the boundaries of Iniowledge before the realm of ultimates begins
ever to be reached, "
See also Ibid. Xll, 333-358, The Supremacy of the Law and the Prob-
lem of Legal Education,
(5) Commission of Inquiry on Public Service personnel, op, cit,,
44, Spea'iing of the t;-pe of examination to be given the Report says:
"The exam imr-t ion should determine primarily what the candidates are,
not -what they know about the ^'ork for ^rhich they are to be trained in the
future, "
(6) il, R, A, did set up a training school. Its curriculum v/as not
as full or systematic as the scheme the writer has in mind.
9838
-343-
(7) Uillis, Farliaiientary Povers of Bnp-clish Cjoverrjient DeTpartraents^
(Harvard University press, 1932), 35-S6, :
(7a) Committee on I'inisters' oovrers Re-oort (Cr.id. 4060, presented "by
the Lord Chancellor to parlianent in April, 1932) 76-80, 98-98, 108-109
The Conuittee lists certain safeguards. It savs that jurisdiction
should oe in the High Court of Justice to revieij, and to quash the pro-
ceedings on the ground that a Minister or Hinisterial Tribunal had ex-
ceeded statutory powers and acted uitnoiit jurisdiction. It is essential
that the three principles of natural justice listed should Tse o'bserved
ty the :;inister or I'inisterial Trihuiial, and the fourth principle should
he ooserved er.cept in ey.ce-otional cases where puhlication would he against
the puhlic interest. A right of appeal to the High Court of Justice upon ,
any question of law sho-'oJ.d he available. Throu:hout the listing of these
safeg-aards the Corir:ittee insists that sinple procedure should prevail.
The principles are: ,
1. A man may not he a judge in his own cause;
2. As to quasi- judicial proceedings "no party ought to he
cond.enned unhean'-c.; .and if his right to he heard is to
he a reality, he must know in good tine the case which
he has to meet; "
3. A part"- is entitled to know the reason for the decision;
and
4. Tihere the statLite requires a puhlic inquiry the inspec-
tors' re:)ort3 should he available to the parties heard.
The Connittee felt that appeals upon questions of fact are highly
\mdesirahle, though it suggests an appeals tribunal for this purpose,
(S) Johnson, The 31uo Eagle from Egg to Sarth, (Saturday Evening
post, Pehruary 9, 1S35) , 84;
"In the A'oril open forum I pointed out fau.lts or indicated inprove-
ments in ISA, viz.:
"10, Adequate labor and. conswier representation in an advisory
capacity, "
"11, UniforKity of governnental representation on Code Authorities."
* m «
"In ad.dition to this, as I see my principal blunders, they were;
"S, The 31iie Eagle should never have been withdrawn in cases where
the Deparfcient of Justice foxuid no sufficient grounds for prosecution."
"14, A full-tine and aggressive G-overniient menber, with an assist-
ant each for Labor and Cons-uraers, should have been appointed to each Code
A^lthority the moment the Cod.e w?,s approved, and he should have vigorously''
pressed its organization and administration in strict accordjance with
ilSA policy, "
9838
(9) U. S, Lan ?eek, March 12, 1935, 1
The article quotes Richherg as "suggest ing to Senate S'inance Com-
mittee:
1, Linit codification to interstate industries and those so suV
stantially affecting it that must he req_ulated to protect interstate
com^-.erce,
2. I.iore clear definition or policy and e:olicit authorization of
administrative activity.
5, president should he required to raaice findings that the stand-
ards of Congress have heen met»
4, proponents should he able to ijithdran fron codes so modified as
to he unacceptahle,
5. and S, dealt 'rith insignia and ljiti-tru.st -laiTs,
(10) Su.pra, IX . ' .
(11) Supra, I, n.2.
9838
•345-
TAELE OF CASES
284 U.S. 370 (19S2)
274 U.S. 37 (1927)
Adair v. U.S., 208 U.S. 161 (l908)
Allgeyer v. Louisiana, 169 U.S. 978, (1897)
American Can Co. v. Ladoga- Canning Co., 44 F. (2d) 763'(C.C.A. 7th 1930)
American Foundries v. ?ri-City Council, 257U.S. 184 (l92l)
American School of Magnetic Healing v. McAnulty, 187 U.S. 94 (1902)
American Stores Co. v. U.S., 58 Trers. Dec. 643 (l9S0)
Angelus v. Sullivan, 246 Fed. 54 (l917)
Appalachian Coals v. U*S., -288 U.S. 344 (l933)
Arizona Grocery Co v. Atchison Topeka & Santa Fe Ry.
Auffmordt v, Heddin, 137 U.S. 310 (l890)
Avent V. U.S., 266 U,S, 127 (1924)
Bacon v. Illinois, 227 U.S. 439 (l915) • •
Baldwin v. Missouri, 281 U.S., 586, 595 (1930)
Barbier v. Connolly, 113 U.S. 27
Bartlett v. Kane, 16 How. 26g (1853)
Bates & Guild Co. .v.. Payne, 194 U.S. 106 (1904)
Barlow h. U.S. 7 Pet. 404 (l833) (1885)
Bedford Cut Stono Co. v. Stone Cutters Association,
Berizz Co. v. Zransz, 146 !T.E. 436 (N.Y. 1935)
Bi Metallic Investment Co. v. State Board of Equalization,
239 U.S. 441 (1915) " ■■ .
Bingham v. Miller, 17 Ohio Rcoi 4-^^5 (l848)
Blslce V. U.S., 103 U.S, 227 (l88l)
Block V. ::irsh, 256 U.S. 135 (l92l)
Blumenstock Bros. v. Cul'tis Puhlishing Co., 252 U.S. 436 (l920)
Board 6S Ldmcation v. Rice, A.C. 179 (House of Lords 1911)
Board of Trade v. Olsen, 262 U.S. 1 (1923) ' ' '
Boitano v. District Board, Northern District Ko. 3, Saciramento, Calif.
250 F. 812, (1918)
Bradley v. City of Richmond, 2.:7 U.S. 477 (1913)
Bratton v. Chandler, 260 U.S. 110 (1922)
Brevaxd Tannin Co. v, Mosser, 288 Fed. (C.C.A. 4th,
Broland v. U.S., 236 U.S. 21-6 -(1915)
Brooks v. U.S. -.^S? ( 1925)
Brougham v. Blanton Wg,, 249 U.S. 495 (l919)
Broune v. Zushi-ick, 45 F. (2d) 931 ( C.C.A. Stl
Broun v. Epps, 27 L.R.A. 676 (Va. 1895)
Brown v. Varyland, 12 T*"heat, 419 (l827)
Budd V. New York, 143 U.S. 517 (l392) - - : ' '
Bunji Une, Ex Parte, 41 F. (2d) 239 (S.D. Cal. 1930)
Burke V. So. Pacific E.R. Co., 234 U.S i 669 (l914)
Buxfenning v. Chi,, St. Paul, etc. R. Co., 163 U.S. 319 (l095)
Buttfield V. Stranahan, 192 U.S. 470 (1904)
Butterworth v. Hoe, 112 U.S. 50 (l384)
Cochnower v. U.S., 243 U.S. 407 (l919)
Caldcr v. Bull, 3 Dall. 386 (l798)
Caminetti v. U.S., 242 U.S. 470 (1917)
The Cargo of Brig Aurora, 7 Cranch 382 (iSls)
Carson v. McLeod, 148 S.E. 584 (Ga. 1929)
Carey v. Curtis, 3 How. 236 (l845)
■1923)
1930)
(9838)
Chamber of Commerce of Llinn. v. Federal Trade Commission, 280
Fed. 45 (CCA. 8tli 1922)
Champlin Eefiniriti' Co. v. Corporation Commission of Oklahoma,
285 U.S. 210 (1932)
Chajq^iion v. Ames, 188 U.S. 321 (l903)
Charles A. Ramsay Co. v. Associated Bill Posters, 260 U.S. 501 (l923)
Charlotte, Colunbia & Augusta R.K. Co. v. Gitbes, 142 U.S. 386 (1892)
Chicago Federation of Labor v. Federal Radio Commission, 41 F. (2d)
422 (1930)
Cliicago Junction Case, '264 U.S. 258 (1924)
Chicago Jaiwaiiteee & St. Paul Ey. v. Minnesota, 134 U.S. 418 (l890)
Chicago R.I. & P. Ry. Co. v. State Highway Commission of ^!issouri,
17 S.!'"'. (2d) 535 (Mo. 1929)
Childs V. State, 113 Pac. 545 (Okla. 1910)
Chinese Exclusion Case, 130 U.S. 581 (1889)
Chin Yow V. U.S., 208 U.S. 8 (1908)
Cincinnati, Wilmington R.R. v. Commissioners, of Clinton County,
1 Ohio State 77 (1852)
Clark Distilling Co. v. Western' Maryland R.R.Co. , 242 U.S. 311 (l917)
Coe V. Errol, 116 U.S. 517 (l886)
Cold Storage Co. v. Chicago, 211 U.S. 306 (1908)
Columbus Light Co. v, Columbus, 249 U.S. 399 (1919) . ,
Columbus Milk Producers Ass'n v. Wallace D.C, IT.D. , 111. (1934)
7303 Com. Clearing House, Federal Trade Regulation Service Yo, 11a
Colyer v. Skeffington, 265 Fed. 17 (D.C. Mass. 1920)
Commonwealth v. Ileff, 114 Atl. 267 ( Va. 1921 )
Cooley V. Board 6f Wardens of Philadelphia, 12 How. 299 (l85l)
Cooper V. Telfair, 4 Dall. 14 (l800)
Coppage V. Kansas, 236 U.S. 1 (1915)
Coronado. Coal Co. v. U.M.W.A. 268 U.S. 295 (l925)
Caurier -JoumpJ. Co. v. Federal Radio Commission, 46F (2d) 614
(Ct. of App. D.C 1931)
Crane v. Nichols, 1 F. (2d) 33 (l924)
Crenshaw v. U.S., 134 U.S. 99 (1889)
Crowell V. Benson, 285 U.S. 22 (1932)
Dahnke, Wallcer Milling Co. v. Bondunant, 257 U.S. 282 (l92l)
Davidson v. Federal Radio Commission, 61 F. (2d) 40,1 (1932)
Dayton-Goose Creek Railway v. United States, 263 U.S. 456 (1924)
Debs, In Re, 158 U.S. 564 (l895)
Decatur v. Paulding, 14 Pet. 497 (l840)
De Forest v. Lawrence, 13 How. 274' (1851 )
Dimes v. Grand ^Tunction Canal, 3 H.L.C. 759 (l852)
Donlaw v. Carr, 125 U.S. 518 (l887)
Douglas V. Wallace, 8P. Sup-o. 379 (H.D. Okla. 1954)
Dred Scott v. Sanford, 19 How. 393 (1857)
Dugan V. U.S., 34 Ct. CI. 458 (1899)
Dunlap V. Black, 128 U.S. 40 (l888)
Edgewater Dairy Co. v. Wallace, 7 F. ' Supp. 121 (F.D. 111. 1934)
Eisner v. Macomber, 252 U.S. 189 (l920)^^
Eliason v. Coleman, 8.6 N.C. 235 (l882)
Ellis V. Interstate .Coiomercc Commission, 237 U.S. 434 (l915)
Employees Insurance Corporation v. Industrial Accidqnt,
151 Pac. 423 (Cal. 1915)
9838
Erie R.R. v. City of paterson, 76 Atl. 1065 (N.J. 1910)
Evans v. Gore, 253 U.S. 245 (l920)
FariBers' Elevator Co. v. Chicago R.I. & Pacific Ry. Co.,
107 H.E. 841 ( 111. 1915)
Eedcral Baseball Club v. Baltimore International League,
259 UoS. 200 (19S1)
Federal Ra.dio Commission v. -Nelson Bros. , 289 U.S. 266 (1933)
Pcderal Trade Commission v. Ala-oma Lumber Co., 291 U.S. 67 (l934)
Federal Trade Commission v. Jbiierican Tobacco Co., 264 U.S. 298 (l924)
Federal Trr/Ie Commission v. Baltimore Paint Color Works, 41 F (2a)
474 (] 330 )
Federal Trf-de Commission v. Beech--iut Packing Co., 257 U.S. 441 (1922)
Federal Trr ie Commission v. Claire Furnace Co., 274 U.S. 160 (1927)
Federal Trf.de Corniiiissi on v. Curtis Publishing Co., 260 U.S. 568 (l923)
Federal Trade Commission v. Goodgrape Co., 45 F. (2d) 70 (C.C.A. 6th 1950)
Federal Trade Commission v. C-ratz, 253 U.S. 421 (l920) v
Federal Trade Commission v. Hammond Snyder & Co., 267 U.S. 586 (1925'^
Federal Trade Commission v. Kennel, 291 U.S. 504 (l934)
Federal Trade Commission v. Klessner, 280 U.S. 19 (l929)
Federal Trade Commission v, !viayno.rd Coal Co., 22 F (2d) 873 (Ct. App.
D.C. 1927)
Federal Trade Coianission v. Miller's Nationa.l Federation, '23 F. (2d)
968 (ct. Ap-;. D.C. 1927)
Federal Trade Commission v. Pacific Coast Paper Association,
273 U.S. 52 (1927)
Federal Trade Commission v. P.oyal billing Co., 288 U.S. 212 (l933)
Federal Trade Commission v. Sinclair Refining Co., 261 U.S. 463 (l923)
Federal Trade Commission v. Smith, 34 F. (2d) 323 (S.D.N.Y. 1929)
Federal Trade Commission v. 7/estern Meat Co., 272 U.S. 554 (1926)
Federal Trade Commission v. Baltimore Paint & Color Works, 41 F. (2d)
474 (C.C.A. 4th, 1930)
Federal Trade Commission v. Stand3.rd Education Society, 14 F. (2d)
947 (C.C.A. •7th 1926)
Fergus v. Russell, 110 N.E. 130 (ill. 1915)
Field V. Clark, 143 UiS. 649 (,1892)
First -National Bank of Bay City v. Fellows ex rel Union Trust Co.,
244 U.S. 416 (1917)
Florida & East Coast R.R. Co. v. U.S., 234 U.S. 167 (1913)
Fox v. Mohawk & H.R.' Eumane Society 165 N.Y. 517 (l90l)
Fox River Butter Co. v. U.S., Treasury Decisions 44667; 20 C.C.P.A.
38; certiorari denied 287 U.S. 628 (l933)
French v. Iryan, 93 U.S. 169 (l876)
Frischer & Co. v. Balcelite Cor^^., 39 F. (2d) 247 (Ct. Cust.& Pat. 1930)
Frischer & Co., Inc. v, Elting, .50 F. (2d) 711 (1932)
Gage V. Censors of II. H. Eclectic Medical Society, 63 N.H. 92 (1884)
Garfield v. U.S. ex rel Spalding, ?>^ A^?p. D.C. 153 (l908)
Gegiow V. Uhl, 239 U.S. 3 (l915)
General Broa,dcasting System v. Federal Radio Commission, 47 F. (2d)
426 (1931)
General Investment Co v. Lake Shore & Michigan S,R. Co.,
260 U.S. 261 (1922)
9838
Georgia Railway and Power Co. v. Commission, 262 U.S. 625 (l923)
Gibbons v. Ogden, 9 ¥hcat. 1 (1824)
Gillespie v. Oklahoma, 257 U.S. 50 (l922)
Goldsmith v. U.S. Board of Tax Appeals, 270 U.S. 117 (l926)
Gonzales V. Zuxbrick, 43 F. (2d) 934 ( C.C.A. 6th 1930)
Great Lakes Broadcasting Co. v. Federal Radio Company, 37 F. (2d) 993
(1930);' Certiorari denied, 281 U.S. 706 ( 1950)
Groenvelt V. Burwell, et al, Censors of the College of Physicians,
1 L.D; Raymond 454 (l69l)
Hagar v. Reclamation District, 111. U.S. 701 (l884)
Haven v. Foster, '19 .Am. Dec 353 (Mass 1829)
Heath v. Wallace, 138 U.'S. 573 (1891 )
Hegcman Farmers Corp. v. Baldwin, 293 U.S. 163 (l934)
Hale v.-Henkel, 201 U.S.- 43 (1906)
Hamilton v. Dillin, .21 Wall. 73 (l875)
Hammer v. Dagenhart, 247 U.S. 251 (l918) '
Hamptin v. U.S. 276 U.5. 394 ( 1928)
Hanson v. Haff, 291 U.S.. 559 (l934)
. Harriman v. Interstate Commerce Commission, 211 U.S. 407 (l908)
The Head ^Wey Cases, 112 U.S. 580 (l884)
Heiner v. Donnan, 285 U.S. 312 (1932)
Heisler v. Thoma.s Colli eny Co., 2GC U»S. 245 (1922)
Hendrick V. State of Maryland, 235 U.S. 610 (1915)
Hennen ex parte, 13 Pet,. 250 (l859)
Highland V. Russell. Car & Snow Plow Co., 279 U,s. 255 (l929)
'Hill V. Dafger, 8 F. Sup-o. 189 (D.O.S.D. Cal. 1934)
Hill V. Wallace, 259 U.S.- 44 (l922)
Hoke V. U.S., 227 U.S. 508 (1915)
Honolulu Rapid Transit Co. v. Hawaii, 211 U.S. 282 (1908)
Houck V. Little River Drainage District, 259 U.S. 254 (l915)
Huling V. 'Ehrich, 55 N.E. 656 ( 111. 1899) . .
Humphreys Executor v. U.S. 295 U.S. 502 (1955)
Hurst & Son v. Federal Trade Commission, 263 Fed. 874 (l920)
Illinois Central R.R. v. Behrens, 255 U.S. 475 (1914)
Illinois Central R.R. v. McKcndrec, 205 U.S. 514- (l906)
Indian Territory Illuminatinc Oil' Co. v'. Oklahoma 240 U.S. 522 (1916)
Institute of Patent Agents v. Lockwood, A.C. 547. (House of Lords) 1894
Intermountain Rate Cases, 254 U.S. 476 (l914)
International Organization of United Mine Workers of America v.' Red
Jacket Consolidated Coal and Coke Co., 18 F. (2d) 839 (C.C.A.
4th 1927)
International 'Ey. Co. v. Davidson, 257 U.S. 506 (l922)
International Shoe Co. v. Federal Trade Commission, 280 U.S. 291 (l930)
Interstate Commerce Commission v, Brimson, 154 U.S. 447 (1894)
Interstate Commerce Commission v. Goodrich Transit Co., 244 U.S. 194
(1912)
Interstate Commerce Comraission v. Alabama Midland. R. Co., 168 U.S.
144 (1897) . ,
Interstate Commerce Commission b. Humbolt S.S. Co., 224 U.S. 474 (l912)
Interstp.tc Commerce Commission v, Illinois Central R.R,, 215 U.S. 452
(1910)
Interstate Commerce Commission v. Delaware L. and 17. R. Co., 220 U.S.
235 (1911)
9838
- 349 -
Interstate Commerce ContTiission v. Delaw.ire L. nnd W. H. Co., 220 U. S.
235 (1911)
Interstate CoiTTTierce Connic^ion v. Union Pacific H.H. Co., 222 U. S.
541 (1912)
Intel-state Cominerce Coin.nission v. Louisville & Nashville R., 227 U, s.
S8 (1913)
Jccolison V. iJasGachusetts, 197 U. S. 11 (l905)
Joixii Bene & Sons, Inc. v. Federal Traie Coinnission, 299 Fed. 468 (l924)
Johiison Ceraetery Association v. Parker, IS r.Y. Supp., 1015 (1397)
Johnson v. Towsley, 13 'Jail 72 (1871)
Jo-urnal Co. v. Federal Hadio Commission, 43 (2d) 461 (Ct. of App.
Dl C. 1931)
Kane v. State of New Jersey, 242 U. 3. 160 (l916)
Kansas Association v. Wiiaer, 23 Pac.,1061 (KaJisas 1890)
Kaiisas City Southarn ?.y. Co. v. Rono. Improvement District, 255 U. S.
558 (1921)
Keller v. PTtomac Elec. Power Co., 231 U. S. 428 (l923)
Keller v. U. S., 213 U. S. 153 .(1909)
Kelley v. Hioads, i88 U. S. 1 (1902)
Keim v. U. S.177 U. S. 290 ( 1900)
Packet Co. v. Keolaik, 95 U. S, 80 (1877)
Kendall v. U. S. ex rel Stokes, 12 Pet. 52 (1838)
Kidd v. Pearson, 128 U.S. 1 (1883)
Kilboiirne v. Thompson, 103 U. 3. 168 (1880)
The King v. Minister of Health, Ez parte Yaffe, 2 K. B. 98 (l930)
Knight V. United. Land Assn., 142 U. 3. 151 (l89l)
Kn'j-xville v. Knoxville Water Co., 212 U.S. 1 (1909)
KoDi Co. V. Federal Trade Coir^nission, 23'F. (2d) 41 (CC.A. (2d) 1927)
Kolick, Sx parte, 165 U. 3. 525 (1897)
Kuntz V. Sumption, 19 N. S. 474 (ind. 1388)
Kwock Jan Fat v. Tnite, 253 U. S. 454 (1920)
Laiider V. Mercantile Bank, 186 U. S. 458 (l902)
Lawton v. Steele, 'l52-U. S . 133 (lS94)
Leach v. Carlile, ,258 U.S. 138 (1922)
Leimlce v. Farner's Grain Co., 258 U. S. 50 (1922)
Local Government Board v. Arlidge, A. C. 120 (House of Lords, 1915)
Little V. Barreme, 2 Cr. 170 (l804)
Loan Assn. v. Topeka, 20 Wall. 655 (1875)
Local No. 1S7 v. U. S., 291 U. S. 293 (l934)
Londoner v. Denver, 210 U. S. 373 (l908)
Loewe v. Lawler, 208 U. 3. 274 (l908)
Louisiana V. McAdoo, 234 U. S. 627 (1914) •
Louisville & N. R. Co. v. Gn.rrett, 231 U. S. 298 (1913)
Lucas V. Reed, 281 U. 3. 699 (193-;^)
Luther v. Borden, 7 How. 1 (l8i-9)
Luther v. Sagor, 3 K. B. 532 (l92l)
Manufacturers R. Co. v. U. S. 246 U. S. 457 (l918)
Mahler v. Etay, 264 U. 3. 32 (l924)
Maillaxd v. Lawrence, 15 How. 251 (1353)
Maa-bury v. Madison, 1 Cranch 137 (1803)
Marcus Brovm Holding Co. v. Feldman, 256 U. S. 170 (l92l)
Marouez v. Fristie, 101 U. S. 473 (1879)
Marquette University v. Federal Radio Commission, 47 F. (2d) 406 (l93l)
Majmard v. Hill, 125 U. S. 190 (l387)
Merchants Exchange v. Missouri, 248 U. S. 305 (1919)
Michigan Central R.R. v. Powers, 201 U. S. 245 (1905)
Miller v. Horuon. ,^6 N. E. 100 (Lass. 1891)
Milwa-okee Publishirii; Co. v. Burltson, :? .5 U. S, 407 (1921)
Mineral Land Park Co. v. Howard, 1.j6 ?cc. 4dS (1916)
The kinnesota Rate Cases, 230 U. ^. 352 (1915)
Iviississip-::)! v. Johnson, 4 Vi^all. 175 (1857)
McChord v. Louisville & Nashville Ky. , 133 U. S. ^^83 (1902)'
McDonald v. Board of Street Comaissioners, 167 N. E. 417 (Mass. 1929)
McEadden Publications Inc. v. Federal Trade Corarassion 37 F. (2d) 822
(Ct. App. D.- C. 1930)
McGrain v. Da.ugherty, ■^73 U. S. 135 (1925)
McKinley v. U. S,, 249 U. S. 597 (1919)
McClung v. Sillim-n, 16 Vfceat 598 (1821)
McCulloch V. Maryland, 4 *'heat. 516 (1S19)
McLean v. Denver & Mo Grande Ey. Co., 203-11. 3. ZB (1906)
Metcalf & Eday v. Mitchell, 259 U. S. ^14 (1925)
Milwaukee Puolishing "-^o. v.^ Burleson, 255 U. S. 407 (l92l)
Minnesota v. Horthern Securities Co., 194 U. S. 48 (l904)
Monongaliela Bridge Co. v. U. S., 216 U. S. 177 (1909)
Morgan's L. e; T. Ey. ic Stea.iship Co. v. Louisiana, 118 U. S. 455' (1885)
Munia V. Illinois, 94 U. S. 113,' (1877)
Murray's Lessee v. Hoboken Land io Improvement Con-nany, 18 How. 272 (1855)
Murray v. Schooner Charming Betsy, 2 Crancy 54 (1804)
f-'utual Film Conoration v. Industrial Commission, 233 U. S. 230 (l91o)
Myers v. U. S. ^72 U. s. 52 (1926) 53
Fathan v. Louisiana, B How, 73 (I8u0)
National Harness Manufacturers' Association v. Federal Trade Commission^
261 Fed. 170 (C.C.A. 6tn, 1919)
Nashville, Chattanooga ^ St. Louis Ey. v. Als'oajna, 128 U. S. 95 (188)
National Life v. National Life, 209. U. S. 317 (1908)
Neff v. Paddock, 26 Wis. 0^6 (1870)
New York Central Securities Corp. v. U. S. 287 U. ^. 12 (1932)
New York ex rel Peni.sylvania E. Co. v. Knight, 192 U. 3. 21 (i904)
New York ex rel Liherman v. Van Be Carr, 199 U. S. 552 (1905)
The Mayor etc., of the City of Hew .York v. Miln, 11 Pet. 102 (1937)
New York v. Squire, 1-^5 U. S. 175 (1.892.)
New York i Queens Gas Co. v. t;cCall , 245 U. S. 345 (1917)
Nev;hall v. Sangr-r, 92 U. S. 761 (1875)
Niccnia v. People of State of Hew York, 254 U. 0, 2-'8 (1920)
Ng Fung Ho V. White, 259 U. S. 276 (1922)
Nishinura Ekiu v. U. S., 142 U. S, 55l , 559 (1892)
Noble V. Union River Logging Eailroad, 1-7 U. •'3. 155 (1893)
Noble State Bank v. Haskell, 219. U. S. 104 (1911)
Horth German Lloyd v. Hedden, 43 Fed. 17 (1890)
Northern Securities ^q . v. U- S., 193 U. S. 197 (1904)
Norwegian Nitrogen Products Com^oany v. U. S. 288 U. S. 294 (1933)
O'Bonohue v. U. S., 289 U. ^ .' 515 (1932)
Oetjen v. Central Leather Co., 256 U. S. 297 (1918)
Ohio Valley -/ater Co. v. ?en Avon Borough, 2c3 U. S. 287 (1920); in
the Su-oreme Court of Pennsylvania, 103 Atl. 744 (1918)
Origet V. Hedc.en, 155 U.- S. 228 (1894)
Pacific Ey. Commission, in re, 32 Fed. 241 (l8'7)
Pacific States Telephone & Telegraph Cq. v. Oregon, 223 U. S. 118 (1912)
Packet Co. v. St. Louis, 100 U. S.423 (I88O)
Padgett V. State Highway Commission, 1-8 S.S. 548 (Go. 19^9)
Paine Lumber Co. v. Neal , 244 U. ,S. /•i39 (1917)
9 838
-551-
Palm-r v. liciiahon, 133 U. S. 560 (1890)
Panr-.Tia Eeiini.ig Co. v. Ryan, 255 U. o. 388 (1935.)
Pan Aiaerican Petroleum Cortoration v-. Alabama, 67 Fed. (2d) o90 (1933)
Panhandle Oil Co.' v. Knox, 277 U. S. 218 (1927)
Patarisco Gu:mo ^o, v. Morth Carolina Board of Agriculture, 171 U. S.
5-5 (1S9?)
Paul V. Virginia, 8 w,-ll. 168 (1869)
Pensaccla Tele5rar)li '^o. v. V/estern Union Telegraph Cq., 95 U. S. 1 (1877)
Pennsylvania 3. Co. v. Sonnian Shaft Coal Co., 243 '^ . S. 120 (1916)
Pennsylv?jiia v. West Virginia, 252 U. S. 553 (l922)
People ex rel , West Bay v. Delavey, 130 IT. Y. Supo. 853 (Sun. Ct. 1911)
Peoi^le V. Brrdy, 135 N. 'E. 87 (llln- L922)
People V. Bitoell, 19 Illinois 229 (1857)
People V. Neubia, rj91 U. s. 502 (1934)
People V. Public S^rvic-: Comnission, 195 N..Y, 157 (1909)
People V. Standard Oil Co., 22 Pac. (2d) 2 (Cal. 1933)
People V. Ti-eniam-, 168 ¥. ^. 817 (N. Y. 1929)
Peterson BaXing Co. v. Bry.'n, 290 U. s. 570 (1954)
Petit V. Minnesota, 177 U. S. 154 (1300)-
Philadelphia Co. v. ^timson, '-23 U. S. 505 (1912)
Pniladelphi- c, Heading 'Ry. v. DiDonrto, 255 U. S. 527 (1920)
Philadel-ohia '^ Trenton H. R. v. Stimpson, 14 Pet. 448 (1831) ".
Phillips V. Comrr.i 3si oner, 283 U. S. 589 (l93l) . ,
Pittsburgh C, C. c: St. L. R. Co. v. Backus, 154,U..S. 421 (1894)
Plymouth Co'--l Co. v. Pennsylvania, 232 U. C . ' 531 (1914)
Postum Cereal Co. v. California Fi^^ -"^ot- Co . , -^72 TJ. S. 593 (1927) ,
Prentis v. Atlantic Coast Line, 21l"^. S.-210 (190G)
Progressive ^''dners of America! v. Peaocdy-, '7- P. Su-^-t. 340: (1934)
Public Clearing House v. Cjyne, 194 U. S-. ^?>7 (190>-)
Public Utilities Comiiiissioh v. Atoleboro Ste-am c-- Electric Co., 273 U. S.
(1957) : .
Public Utilities Conuuission v. London,' 249 U. S. 235 (1919)
Purvis V, Bazemore, 5 F. Sapp. 230 (-1^33)
Railroad CoVmnission Cases, 115 U. S. '507 (18,85)
Railrofd Commission of Wisconsin -v. Cnicf.^go, Burlington ex: Quincy R. Co.,
257 U. 5. 563 (1922)
Ealadaan Co. v. Federal Trade .Com^rdssion, 42 F, (2d) ^i30 (C.C.A. 5th, 1930)
Ramsey (Charles A.) Co. v. Associated Bill Posters 25:' U. S. 501 (1923)
Reading Broodc-^sting Co. v. Federal Radio Commission, 48 Fed. (2d)
458 (195.)
Reagan v. Farmer's Loan and Trust Co., -154 U. S. 352 (1893)
Reagan v. U.'ii., 182 U. S, 419 (1901)
Red "C" Oil Manufacturing Co. v.- Board of Agriculture, 222 U. S . 380
(1911)
Reid V. Colorado, 187 U. S. 1-37 -(1903)
Rex V. Sunderland Just ice- s, 2K.'"3.' 3:>7 (19^1)
Rhode Island Hospital Trust Co.- v. Coram.is si oners of Internal Revenue,
29 F. .(2d) 559 (l928) '
Ricnland ^teamship Co. v. Buffalo Dry i^ock, 254 Fed. 558 (c.C.A. 2d 1918)
Hiker v. Federal Radio Commission, 5d7 F. (2d) 555 (1951)
Robbins v. S.ielby County, 120 U. S, 49 (I8S?)
Ronnfeldt v. Phillips, 35 T.L.H. 46 (1918)^
Rouse V. Thompson, £1 N. E. 1109 (ill. 1907). '
Royal Baking Powder Co. v. Federal Trade Commission, 280 U. S. 572 (1929)
9838
Saore v. Rutlend R. Co., 85 Atl. 695 (Vt . 1913)
San Diego Land ci Town Co. v. J^soer, 189 U. S, 439 (1903)
San Li ego Land and Tov/n Co. v. National .City, 174 U. S. 739 (1889)
Sarlo V. Pulaslci County, 68 S. W. 953 (Ark. 1905)
Savage V. Jones, ^2b\]. S. oCl , (1912)
A.L.A. Schechter Poultry Coro. v. U. S., 295 U. S. 49d (1935)
Schiosser v. T/elsh, 5 F. Sudtd. ^"93 (1934)
Scnolls V. State 90 i'."'d. 729 (1900)
Scott, in re -.93 p. 290 (Nev. 1930)
Scully V. U. ^. 193 Fed. 185 (1910)
Sears Roebuck & Co. v. Federal Trade Commission, 258 F. 307 (1919)
Second Employees Liability Cases, 223 U. S. 1^6 (1911)
t^elective Draft Case, 2^5 U. S. 365 (1918)
Sherman v. Abeles, ^69 N. y. S, P49 (i''K.-)
Shurtleff v. U. S., 189 U. ». 311 (1905)
Silver v. Federal Trade Commission, 289 Fed. 985 (1923) (1st case);
29? Fed. 152 (1925)
Slaughter blouse Cpses, 16 'ffall. 56 (1875)
Smith V. Hitchcock, 225 U. S. 53 (1912)
Smith V. Kansas City ^itle and Trust Co., 2.j5 U. S. 180 (1921)
Smith V. "<Vhitney, 116 U. S. 167 (1885)
Southern Railway Co. v. Virginia, 290 U. S. 190 (1935)
Southern Railway Co. v. U. S., 222 U. 3. 20 (l91l)
Southern Pac. Co. v. I.C.C., 219 U. S. ^33 (1911)
Sparhawk v. Sparnpwk, 115 i''ass. 515 (1874-75)
^proles v. 3inford,'285 U. S. 574 (1952)
St. Louis 6. OTallon Ry. v. U. S., 279 U. S. 'iSl (1929)
Stafford v. Wall-ce, 258 U. S. -9b (1922)
Standard Stock Food Co. v. «V right , 225 U. S. 540 (1912)
Stanley v. Peabody Coal Co., 5 F. Supn. 512- (1955)
State V. Cole, 1-.8 Pac. 651 (iTev. 1915)
State V. Crawford 177 p. 540 ■ (Kan. 1919)
State 3ar of California v. Superior Court 378 p. 432 (Calif .1929).
State Board of Health v. f.icCoy, 17 N. E.- 766 (ill. 1888)
State V. 3utler, 73 Atl. 560 (fie. 1909)
State V. Poulin, 74 Atl. 119 (L'e. 1909) . .
State V. Smiley, 263 S. V^. 825 (Mo. 1924)
State ex rel Milwaukee Medical College v. Chittenden, 107 N. Vif. 500
(Wise. 1906)
State R. R. Tax C-ses, 92 U. S. 575 (1876)
Strawbridge & Clothier v. Federal Radio Commission, 57 F. (2d) 434 (1932)
Steel V. St. Louis Smelting Etc. Co., 106 U. S.- -^47 (1882)
Stephanson v. Binford, 287 U. S. 251 (1922)
Stock V. Central Midwives Board, 3 K. 3. 756 (1915)
St. Louis Consolidated Coal Co. v. Illinois, 185 U. S. 203 (1902) .
St Louis Smelting etc. v. Kcmn, 1C4 U. S .• 536 ■(1882)
St. Louis Iron Mountain & Southern Hy. Co. v. Taylor, 210 U. S. 281
(1908)
St. Mary's Franco -American Petroleum Co. v. W. Virginia, 203 U. S. 183
(1906)
Stoehr v. Yfallace, 255 U. S. 259 (1921) ■
Storrs V. Barker, 10 Am. Dec. 317 (iJew York 1922)
■Sturges & 3urn Mf^. Co. v. Beauchamp, 231 U. S. 320 (1915)
Swift V. U. S., 196 U. S. 375 (1905) ■ ■
9838
Tagg 3ros. u. ...oorhead v. U.. S . „ '80 U. S. 4,?0 (lOoO)
Texas 3tc. I. Co. v. Hr.ilu,-..^ Cl-rks, o81 U. S. 643 (1930)
Texps <f,' ?ac. v. Inbernunte Comitrrco Comnission, 1 ^2 U. S. 197 (18.96)
Texas <i P.xific -w. Co. v. uigsby, 2il U. S. 3o (i:i'5)
x'horton v. U. S. , :71 U. S. '..1^^ (l9:;o)
Tol V. v'-ilc'jirn, 235 U. 3. 115 (l9o )
TuUii.i V. c. S., r:,70 U. S. b6C (i:-:'33)
ryson v. 3fiiton, -70 U. S. 'i-lB (19>,9)
Ung-i.r V. Seamaii, -i F. (2i) 80 (193-. )
United Railway of Baltimore v. \iest, ^,?0 U. S. ;S4 (1930)
U. S. V. iibilene & So. Rv. Co., 255 U. 3. r.7'-^ '(1924)
U. ^'. V. ir:jcoc.i', 250 U. S. .328 (191''0
U. S. V. 3"ltimore & Ohio R. ?: . Co., l-S U. S. 454 (l9:;,o)
U. S. V. ?utler et al , Eoceivers oi\ Hopoc ?.ills Corr^oration, , U. S.
Supreme Coiirt , J:;,n. 5, 1^36
U. S. V. Chemical rouiidation. Inc., 272 "U. S. 1 (193S)
U. S. V. Pisaer, 109 U. 3. 1^:5 (if ^3)
U. S. V. Shreve-Toort Grain Co., 287 U. 3. 77 (1932)
U. 3., ex rel Goynton v. Llaine, 129 U. 3. -06 (l89l)
U. S. ex i-el Bilokumslq;^ v. Tod, 25o U. S. 1.9 (19,-^4)
U. 3. ex rel Mc3ri:le v. Schurz, 10.: U. 3. 378 (1S79)
U. 3. ex rel Zedfield v. V'in^om, 137 U. S. 5;;,S (1891)
U. 3. ex rel Zoo-p v. Douglas, 19 D. C. 99 (1890)
U. 3. ex rel Riverside Oil Co. v. Hi tchcock, ' 190 U. 3. 315 (1903)
U. S. V. Caliston Packers, Inc., '. F. bup-i". 360 (1933)
U. 3. ex rel International ContraCGin-^ '-'o., v. Lament, 16cj U. S. 303
(189-)
U. 3. V. Ger.naine, 99 U. 3. 508 (l'^79)
U. S. ex rel Ps^f v. D:'y, 45 F. (2a) ^35 (i) .0 .3 .0.x^ .Y. 1930)
U. 3. V. Griiiiaud, •;20 U. S. uOS (I'^'IO)
U. 3. ex rel ^tty. Gen. v. Jelawpre & Huison ^o., :':13 U. 3. 353 (1909)
U. S. V. Devitt, 9 '^alL '^1 (1S5.>')
U. S. V. Greenwood Dairy Farms, Inc., 8 F. Sup^3. 398 (l93'-±)
IJ. 3. V. Louisville t Fashville ?.. Co., 235 U. 3. 314 (1914)
IT. S. V. Hill, ^48 U. 3. 429 (1919)
U. 3. V. E."C, Knight, 156 U. ^. l'. (1394)
U. 3. V. I'iichig^m Portland Cerr.ent Co., 270 U. 3. d21 (192S)
U. 3. V. :.yers, 272 U. S. 52 (l92S)
U. ^. V. Ju ■^ov, 198 U. 3. 2c5 (l90u)
U. i. V. 200 Chests nf Tea, 9 '•heat 430 (183-.)
U. S, V. 112 Casks of Sugar, 8 Pet. 277 (12::4)
U. 3. V. Manat, 124 U. S. 303 (iSe'O
U. 3. V. ITeun-dorf, 8 F. 3uDp. -=03 (1934)
U. 3. V. Passavant, F. 159 U. 3. 13 (1898)
U. 3. V. 3chisslr-.r, 7 F. ^upi. 123 (1934)
U. 3. V. S..:ith, 12'-x U. S. 5 35 (1888)
U. 3. V. Sijotless Dollar Cleaners, 3 F. 3upp. 725 (1934)
U. 3. V. 3wift & Co., 270 U. 5. 124 (1952)
U. 3. V. Warfield, 170 Fed. ^i3 (1909)
U. 3. V. ■.Villif.ms, 194 U. S. 279 (l90^i)
Union Bridge Co. v. U. 3., 204 U. 3. 364 (1907)
Utah Power & Lig.,t Co. v. Pfost, 2S3 U. 3. 155 (1932)
Vance v. Burbcnk, 101 U. S. 514 (IS^O)
Waite v. Macy, 24:6 U. S. 605 (1918)
9838
Warner Vrdloy Stock Co. v. Smith, 135 U. S, 35 (1F37)
Wqymaji V. Southai-d, 10 ..'ae----.t 1 (1^25) 5 I. Zd. 2oS
lever v. 7re^d, -39 U. S. 3-^5 (l3i;.)
Western Indemnity Co. v. Fillsbur;-, \IA P.-c. .v.-?8 (Ct.1. 192'.) •
western Powder la'iufncturin;-^ v. Interstate Coal Co., 5 P. Svoo. 519 (1954)
Wheeling Corragating Go. v. f 'c: .rnit:al , -1 -^ . ( 'd) c95 (1P30)-
White V. Federal Radio GonLiiission, 39 ^e-'.. (2d) 115 (1938)
Whitney v. California, 374 U. S. 353, 575 (1937)
Wichita H. R. " Li^jht Co. v. Public Utility Conm.ission, 360 U. 3. ^iS
(1922)
Viilcox V. Jackson, 13 Pet. -i98 (lc59)
Wilcox V. People, '.•C 111. 183 (1S75)
Wilder, D. :.-.. Mffe. Co. v. Corn Products Co., 355 U. S. 155 (1915)
Willard V. Pres^oury, 14 Wall. 573 ■ (1871)
Williams V. Standard Oil Company, :-:73 U. S. '^'Sb (1939)
Wilkinson v. Leland, 2 P-t. 837 (1839)
Wilson V. i'ew, 3^:3 U, S. 352 (1^17)
Wisconsiii I.ailroad Comniissioi; v. C. 3. & Q,. pLailroad Company, :;57 U. s.-
565 (13 '3)
Chas. \^:olff Pachin^,, Co. v. Court of Industrial Relations, 362 U. K. 522 (
(19^3)
Yamataya v. x^isher, 189 U. S. 35 (1905)
Yates V. ;;ilwruicee, 10 Wall. -97 (1S70)
Yudelson v. Andrews, 35 I. (2d) 80 (l^"'33)
Zayos V. Lat„ro-5, Luce- & Co., 331 U. S. 171- (1915)
Carl Zeiss, Inc. v. U. S., 75 Fed. (3d) .12 (1935)
9838
TABLE OF
THIATISES, BRIEFS, REPORTS, ETC.(*)
Allen, Bureaucracy Triumphant
(Hew York, 1931)
America's Recovery Fro,g:ram
(Oxford Press, 1934)
Beard and Beard, The Atiericgn Leviathan
(lew York, 1930)
Bentham, Frincipli^s of Morals and Legislation
(Oxford University Press, 1879)
Blachley and Oatman, Adninistra.tive Leigcislation and Adjudication
(Brookinr^s Inntitntion, 1934)
Bl a i s de 1 ]- , T ' e Federal Trade Commission
(C'jl'jmbia University Press, 1932)
Brae t on , De Lea;i'bus et Consuetudini'bu.s AnQ.iae
(Trave^-s Twiss ed. London, 1B78)
B on dy , Separation of G-overnraental Povfers
(iTew York, 1893)
Brief for A. L. A. Schechter Corp. in
Schechter v. U. S.
Brief for the U. S. in
U. S. V. A. L. A. Schechter Corp.
Brief on Appeal for U. S. in
A. L. A. Schechter Corp. v. U. S.
Brookings Institution, The National Recovery Adjiiini strati on - an Analysis
and an appraisal
(1935) :
Carr, I)ele,3:ated Le;S:islation
(Camhridge University Press, 1921)
Comer, Legislative F-jnctions of National Administrative Authority
(New York, 192?)
Commission of Inquiry on Putlic Service Personnel, Report of Better
Gc vernment personnel
(; cGraw, Hill Book Co., InC , 1935)
(*) This tahle is not complete hut cites the authority mainly relied
upon.
Committee on Administrative Law, Report of Ar:ierican Bar Association
(Baltimore, lSS7-19o4)
Committee on Ministers' Po'Ters llcport _
(Cmd. 4060, Presented "by tJie Lord
Cliancellor to Parliament in April, 1932)
Cooley, Constitutional Limitations Sth Ed.
(Boston, 1927)
Corwin, Twili':;ht of the Supreme Court
(Yale Universit;'- Press, 1934)
Dearin:;r, Homan, Lovviin and Lyon, The ABC of N?A
(Brookings Institution, 1954)
Dicey, The Law of the Constitution
Sth ed. (London, 1929)
Dickinson, Administrative Justice and the Supremacy of Law in the United (
States
(Harvard University Press, 192?)
The Pederalist, Hamilton, Hadison, Jay
(Chicago, 1894)
Field, The Effect of an Unconstitutional Statute
(Liinneapolis, 1935)
F rankf ur t e r , The Public and its Government
(Yale University Press, 1930) . ,
Frankfurter and Davison, Cases on Adninistrative Law
(Chicago, 19.32)
Frankfurter and Landis, Business of the Supreme Court
(New York, 1927) ^ . (
Preund, Administrative Powers over Persons and Property
(University of Chicajco press, 1928)
G-avit, Tiie Commerce Clause
(Bio on in -'ton, Indiana, 1932)
Gray, Nature and Sources of the Lavf
2nd cd.'"(Kew York, 1927) "
Goodnow, Princi-iles of the Administrative Law of the United States
(New York, 1905)
Goodnow, Comparative Administrative Law
(New York, 1903)
Haines, The Revival of Natural Law Concepts
Harvard Univ. Press, 1930)
9833
Hart , The Ordinance MakinjP: Powers of the President of the United States
(Baltimore, ig.^S)'
Henderson, The Federal Trade Coinmission
(Yale University PresK, 1924)
He wart, The Wcw SesTOtisrn
(New York, 1929)
Holdsworth, Histonr of Enpilish Law
(London, 192S)
Holmes, Collected Legal Papers
(New York, 1920)
Johnson, The Blue Sajgle from Ef?:^ to Earth
(Saturds^r Evening Pest, Jan. 19, 26, Eeb. 2, 9, 1935)
Luce, Le.5;islative Proced-gre
(Boston and Hew York, 1932)
iuayers, A Han-dhood of I^fliA Snd ed.
(Nt'^7 York, 1954)
McFarland, A^'-ninistrative Af^encies in G-overnment and the Effect Thereof
of ConstiT:utional Linitations
(A-nericaji Bar Association Ross Award, 1934)
McFarland, Judicial Control of the Federal Trade Commission and the
Interstate Coumerce Commission - 1920-1930
(Harvard University Press, 1933)
National lawyers Committee of the American Liberty League, Constitutionality
of the National Labor P.elations Act Report on the
(1935)
Pollock and Maitland, History of English Common Law before Edward I
(Cambridge Univ. Press, 1923)
Ritchie, Natural Ri-^ts
(New York 1895)
Sharfman, The Interstate Commerce Commission
(New York, 1931)
Sho rt , National Administrative Organization
(Johns Hopkins Press, 1923)
St eph en s , Administrative Tribunals and the Rules of Evidence
(Harvard University Press, 1933)
Thayer, A Preliminary Treatise on Evidence at the Common Law
(iJston, 1898)
Van Vleck, Administrative Control of Aliens
(New York, 1932)
9838
558-
Willis, Parliamentary Povrers of Engjlish (jovernment Departments
(Harvard University Press, 1932)
Willoiighby, Constitutional La^ of the United States
(New York, 1929)
9838
-359-
TABLE OF
LAW K3VISW ARTICLES, NOTES AND COM.IENTS (*)
Adler, "Business Jurisprudence",
38 Harvard Lay- Review 135 (1914)
Alberts^orth, "Judicial Rfiview of Administrative Action,"
35 Harvard Law Review 127 (1921)
Barrett, "Is there a National Police Power, etc.",
14 Boston University Law Review 245 (1934)
Berle, "The E:-qDansion of American Administrative Law",
50 Harvard La?; Review 430 (1917)
Black, "The National Industrial Recovery Act and the Delegation of Legis-
Irtive Po'ver to the Presicent",
1.1 Cornell La^7 quarterly 359 (1954)
Borchard, "The Constitutionality of Declaratory Judgments,"
31 Colui^.bia Law Review 561 (1931)
Brown, "The Constitution, the Supreme Court and the NIRA" ,
13 Ore:-^on La.w Review 102 (1954)
Brown, "Boo.'; Review",
41 Harvard Law Review 125 (1954)
Carpenter, "Constitutionality of the ^ National Industrial Recovery Act and
the Agricultural Adjustment Act",
7 Southern California Law Review 125 (1954)
Cheadle, "The Delegation of Legislative Functions",
27 Yale Law Journal 892 (1918)
Corwin, "The Supreme Court and the Fourteenth Amendment,"
7 Hjchigcan Law Review 645 (1909)
Corwin, "Basic Doctrine of American Constitutional Lavr, "
12 i,Iichi;;an Law Review 247 (1914)
Corwin, "The 'H^igher Law' Bsckground of American Constitutional Law,"
42 Harvard Law Review. 149-135. 565. 409 (1928 )
Corwin, "Congress's Pow^r to Prohibit Commerce a Crucial Constitutional
1 3 sue",
i;- Cornell Law Journal 477 (1955)
Corwin, "Social Planning under the Constitution - A Study in Perspectives,
26 American Political Science Review 1 (1952), 8.
(*) This table is not complete but states the authority mainly relied upon.
9838
-c60~
Corwin, "The Progress of Constitutional Theory Between the Declaration of
Independence and the Ileetings of the Philadelphia Convention",
30 American Historical Review 511 (1925)
Corwin, "The Spending Power of Congress,"
56 Harvard Law Review 548 (1923)
Corwin, "The Doctrine of Dae Process of Law Before the Civil War,"
24 Harvard Law Review 366 (1917)
Cousens, "The Delegation of Federal Legislative Power to Executive Offi-
cials,"
33 Liichigan Law Review 512 (1955)
Cusliman, "National Police Powers Under the Commerce Clause,"
3 Kinnesota Law Review 289 (1919)
Dickinson, "The Hajor Issues Presented by the Industrial Recovery Act, "
53 Columhia Law Review 1095 (1955)
Dickinson, "Review of Administrative Deterriinations of Questions of 'Con-
stitutional Fact' " ,
80 Pennsylvania Law Review 1055 (1952)
Duane, "Marketing Agreements under the Agricultural Adjustment Act, Their
Contents and Constitutionality,"
82 Pennsylvania Law Review 91 (1953)
Duff and Whiteside, "Delegata Potestas Hon Potest Delegari: A Maxim of
Americaxi Constitutional Law,"
14 Cornell Law Q,uarterly 168 (1929)
Ehrlich, "wiontesquisu and Sociological Jurisprudence,"
29 Harvard Law Review 582 (1916)
Elder, "Some Constitutional Aspects of the "National Industrial Recovery
Act,"
28 Illinois Law Review 656 (1954)
Ellingwood, "The Kew Deal and the Constitution,"
28 Illinois Law Review 729 (1934)
Dickinson, "Political Aspects of the Bev/ Deal,"
28 American Political Science Review 197 (1954)
Fairlie, "Administrative Legislation,"
18 Michigan Law Review 181 (1920)
Faris, "Judicial Notice by Administrative Bodies," '
4 Indiana Law Journal 167 (1928)
Field, "The Constitutional Theory of the National Industrial Recovery Act,"
18 Liinnesota Law Review 269 (1934)
Finklestein, "Judicial Self-Limitation,"
57 Harvard Law Review 558 (1924)
9838
Pranlcfurter.. "The Task of Aduiinistrrxtive Law,"
7(3 University of Venn. Law Review 614 (1927)
Frankfurter and Landis, "A Str.dy in Separation of Powers,"
57 Harvard Law Review IQlQ (1924)
Pranlrfurter and Landis, "Power of Congress over Procedure in 'Inferior'
federal Courts" - A Study in Separation of Powers
37 Harvard Law Review 1010 (1924)
Glassie, "Some Legal Aspects of the Flexiole Tariff,"
11 Vir-TJnia Law Review 329 (1925)
Grisv/old, "Goveriuneiit in Ig;no ranee of the Law - A Plea for Better Publi-
cation of Executive Legislation,"
48 Harvard La" Review 198 (1954)
Hale, "The Constitution and the Price System; Some Reflections on llebbia
V. II. Y="
54 Colunoia Law Review 40 (1954)
Hough, "Due Process of Law - Today,"
24 Harvard Law Review 566 (1911)
Hamilton, "Affectation with Public Interest,"
59 Yrle Law Journal 1039 (1350)
Handler, "J-irisdiction of the Federal Trade Commission over False Adver-
t-'sing,"
5\ Columbia Law Review 527 (1955)
Handler, "The National Industrial Recovery Act,"
19 Anerican Bar Association Journal 440 (1935)
Harriman, "The Development of AdiTiinistrative Law in the U. S.,"
25 Yale Law Journal P56 (1916)
Lerner, "The Supreme Court and American Capitalism,"
42 Yale Law Journal 668 (1933)
Langelutting, "Constitutional Li'nitations on Administrative Power of In-
vest i.cat ion, "
28 Illinois Law Review 508 (1955)
Lilienthal, "The power of Governjnental Agencies to Compel Testimony,"
59 Harvard Law Review 694-700 (1926 )
Laski, "The Limitations of the Eicpert,"
Ha.rpers, Dec. 1930
Laski, "Book Review,"
45 Harvard Law RaTJew 754 (1952)
Maggs, "The Constitution and the Recovery Legislation; The Roles of Docu-
ment, Doctrine and Judges,"
1 University of Chicago Law Review 665 (1934)
9838
".563-
i.iaiircr, J.ouert A., "Sone Conctit-ational As-;.octs of IIIA and AJlf^. , "
,■2 C-eorr:etonn Lg- Jour-ial L07 (HZ^
?'"-illrD£, "a Pre.ctic?.! iiethod foi' tl.o determination of Lu-siness Fact,"
S Pennfi::lvp.ni; Lav 'evie-- :;""Q (1934)
roi;au., '"lool: i'.eviev;, "
41 Ilrrvarc. Lar^ :;:evie',- 115 (l''S7)
Tov-iC, "Liberty and Contract,"
IC Yale La- Journal 454 (190.-') ' ,
?^shoa-ux.i, "Delegation to Ac'ini- istrative A:;encies Under the ITIEA
?nd the MA",
IS St. Louis Lav.r ?,eviev; 46 (1935)
?.ay cj 5'ienl:e, "Hot Oil on a Sea of 5ele£;ation of PoY-er, "
,:29 111. Lev ::eviev- 10:!l (1955)
P.oss, "Ay^licahility of TIulos of 7]A''idence in Procoedinfs Before jorl-nien' s
COiiTpensation ConiLdf. eions, "
56 Harvard Lr.y- 5evic'.- 265 (15:7:5)-
Stephens, "ALjiiinistrrtive Trihinials and the Z^ules of Evidence,"
52 University of Pennsylvania La.v; devie'- 564 (1954) ■
Van Vleck, "Administrative Justice in the Zhaforcement of Ouasi-Crininal
Law," " .■
I G-eor^:e ',7ashin,%ton La.v deviev.f IC (1952)
d'anrenorock, "^federal Anti-Tru.st La.v' and the I'IdA,"
57 hichi.^an Lav Levi ev IOC" (1955)
VJai-ner ?.nd C-uteman, "5v,-o Aspects of '.'l?Ji - Price Tixin^' and La.hor, "
- 14' Lo^:ton University La^.- devie- 3.31 (1954)
VJichershai.:, "Delei^-ation of Peer!, to Lbi^.islatc, »■
II Vir;inia Lav :■Hvie^■ 1C5 (1935) ~ •
■jijnore, "Adxiinistrative Loard hules,
17 Illinois La-.-- deviev 365 (I9j2)
dote - "iX'.e Process Herniirementr. of ilotice and hearin('-,s in Administrative
Proceec'inG's, "
54 Colur.foia La-- ?Levie'.- 553 (1954)
dote - See 7(a) of the dlPA An Attenpt to Zavr.li7.e Bar^'aininfa Pover,
54 Colurahia Lav deviev,' 15' 2 9 (l-'54)
dote - "Constitutional Lav.' - Delegation of rovers"
33 C-eorr;etovn La--- Jovu-'nal 100 (1^55)
"dote - "Gone Constitutio-nrl r.c'oects of tj.o drtio:v;.l In'^^.uc trial decovery
Act and the Agricultv.ral A'ju'-jtvont ..(.5.ii vuctration"
53 C7eor^<etovm ls.\! Journal 307 (l'"'54)
Co. u.ic'.-it - "Some Le^:al Asvects of the ratio-nal Industrial decovery Act"
47 Harvard Lav deviev G5 (l d;^)
Ilote - "Tlie ?dght to ?. Ken.rin:, p.efoi-e Ac>.ini£tr?.tive Tritvme.ls"
rS K?.rvard Lp.v ?.eviev 133 (iSl-l)
note - "Delegation of Po'vcr "b;- Co'i^a-c£.£-"
■^-S I-:rrvard Lav l-levievj 798 (1955)
Cori.v3-it - "?o'"cr of CoT'i^ross over ProcecVo.re in Criminal Contcrnpts i:~i
'IniDi-ior rcc.eral Coui'ts' - A Study in 'Separation of Po'-ers,'"
C7 T:c.t\^vC Lav; :dcvie--' 1010 (19 J4)
JO to - "Eelc. ^tion of Legislative ?o--ers: The Decadence of a rundanontal
Co..stitiTtion?l liaxim. "
£7 j :arvarc- Lav: Icvie'v lllG (l9.^7)
l^ota - "Delecat:.o;i of Legislative lor'or - 3'lexiole Trriff Act,"
57 Illinois La-j Zeviev g02 (19:^2)
ilote - "Porcr of Federal D.adio Coriirrission, "
99 Illinois Lav Deviev- 409 (i933)
iTote - "PcLr-i'ble ilothods of AttacVin , the I'lPA,"
28 Illinois La- Tteviov 544 (19^5)
Conii'nent - "llajoi'ity Patle in Collective Dargainin;: Under 7(a),"
29 Illinois La^-^ Peviev 275 (1994)
iTote - "Vrlidity of Pele;^-ation of Po'-'ers under Pecovery Act,"
19 Io-.7a Lay- Pevier 535 (1934)
ITote - "AdiTiinistrative Lav - Prcliativo VaLac of Plearsa.y TestiiMony, "
94 :.:iclii;;an Lav P.o\-iov 851 (1926)
ITote - "Peqv.isitcs of an Aexiinistr-: tive Hearing,"
80 P. L. P. 979 (1932)
ITote - "Phe Lelegatioji of Pec.cral Lcu^islative Pover to Pxccvitive
or Acininistrr.tive Agencies,"
31 Pichiran Lav Psvicv; 796 (1993)
ITote - "The P CGssity cf a ITotice and Hearing in Administrative
De 1 1 : nrd na t i on s , "
80 9.iivcrsity cf Penns:avania Lav Peviev,- 96 (1931)
Co;.r.ient - "Judicial Peviev of Ac rai^iistrative Orders under I'PA and .AA_A.",
43 Yale Lav Journal 599 (1934)
Comment - "The Federal Longshore.aen's and Hartor WorPers' Compensation
Act,"
43 Yale Lav Journal 940 (1934)
ITotc - "Validity of Allotment Order under Luj.iTDer Code; Eu-spension of
Penal Provisions as to Litigant Ch?i lending Order,"
43 Yale Lav Journal 827 (1954)
Comment - "Prtional pecovery Code Assessments,"
44 Yale Lav.. Journal 949 (1935)
9838
-364-
( Tliis note, written by a revie-'er of 'Ir. Ai'tens reanuscri-ot.
r.eserves niniecgraphin-j: elc>n';- ';7ith the nanus criot)
There are tr?o contradictorv theories re.^'aro.ing the Code raalring
po^7ers of the National P.ecovery Adrunistration.
The first goes on the ground that the process was quasijudicial
in nature and that therefore the detailed "due nrocess of la.v'i' procedure
was applicable to it. As thit; thesis is c'evelcped fully in this study,
it will not be necessarj;- to discuss it further here.
According to the second theory the Code raaJcing process is legis-
lative in nature and as a conseqiience it was not necessary that all of
the detailed procedxires required to inrure "due process of law" should
be complied with. However desirable a more adequate procedure mijht
have been frori the viewpoint of sound administrative oractice or econom-
ic and social ex.3ediency, it vcs not required as a matter of law.
The arguments advanced b-^'- the proponents of this second theory
go on several groimds.
The first of these had to do with the broad purpose and princi-
ples of the National Recovery Administration. One of the basic prin-
ciples of the national Hecovery Aojuinistration was "self-government in
industr--". The President in his message of Hay 17, 1933, asked Cong-
ress for the machinery necessary "for a great cooperative move'aent".
Section 1 of the National Industrial Recovery Act stated that it was
the purocse of Congress to provide for the generrl welfare by promot-
ing the organization of inc ustrjr for the purpose of cooperative action
among trade groups, to induce a.nd maintain united action of labor and
manage/ient under adequate govern-iental sanctions and supervision.... "
In the sts-tenent of the President outlining the policies of the nation-
al Recovery Administration (iTlo/i. Bulletin ilo. 1. pi.) it v;as said; "It
is a challenge to industry \.'hlch has long insisted that, given the
rijjht to act in unison, it coulo do niuch for the general good which
has hitherto been unlawful. From today it has that right." This "as
the vieTooint taken bv those most closely associated v/lth the fon.iula-
tion of the policy of the lloti'.'nal Recovcrv Adrn.inistration, G-eneral
Johnson ?jid ilr. Richberg.
A fev; quotations will show hov>.- strongly the idea of self-govern-
ment x.'as in the minds of those responsible for this Administration. In
Bulletin "Jo. 7 of the lOA ve find the following e^rpressions:
"The aim of the IIRA is to give industr^r, through its
Code Authorities, the widest possible range of self-
government, subject to the ultimate responsibility
of the Adininistrat'-.-r"; "It is fundamental, within
both the letter and intent of FIRA....that as much as
possible of both aspects of Code Administration (Planning
9838
and Progress and Ccrapliunco'' be effected by industry
itself"; "for an industry sufficiently orf'anized
to have a,greed upon a Code of Jair Coraoetition, there
usually will be no need for Government administration
in the 'planning and progress' field."
lu his oral arf-Ti.^j.icnt in the Schechter Case, Don.'-.ld Eichberg said:
"The Faticnal Recovery Act reccf;ni7,ed e;-rplicitly the need of
orr:anizing a Hation-Wide Cooperation. It recognised the
utter impossibility and impracticability of seeking to vrite
a single code of fair practices for .s,ll business, or of- seek-
ing to enforce a single set of ri^id standard',--, of business
conduct. It proceeded upon the sound theory that thousands
of business men themselves should know better than any small
group of laT/makers \ihat improved practices would stimulate a
business revival, what the prohibition of unfair practices
.woi.ild do in promoting fa.ir business, and whe.t would sub-
■ stitute an orderl:/ advance for a disorderly retreat. So the
law provided tiiat codes of fair competition should be drawn
up by those truly representative of trades and industries and,
after passing thr.;'U;.^:i en a,cljninii- trative test as to whether
they effectuated the public policy laid down by Congress, then
these codes would provide the rtaadards of fair competition
under which trade and inoustry might be stimulated and im-
proved." (*)
iir. Hichberg also pointed out the fact that the Codes were of the
type called "voluntary" i.e.. Codes broa;;ht forth voluntariljr by re-
presentative of the trade and indastrioR £.ffected.
"It is perfectly clear that the fundamental basis of the Code is
is the agreement of a truly reTsresentative group of a trade
or industry as to what constitutes fair competition."
In his recent book "The Rainbow" Mr. Richberg says:
"In the :'irst stages of cur endea^vor we were fearful of any-
thing even flavored with governmental die taction. We sought
diligently to provide the reality'- of 'self-government of
industry' ." (p 120*)
In a monorandum issued on ITcvembcr 22, 1933 to the members of the
Legal Division (as quoted from "the Rainbow" (p 12'")) Richberg said:
"It is not required .aiid it is not proper, except in special
instances to grant in a Code any general power to the Admin-
istrator to review and. modify actions taken by the Code Author-
ity. If anyone insists upon incorpcrf.ting such a clause, you
may refer to this memorajtdum as a statement of policy to pro-
mote self-government of industry, as distinguished from polit-
ly^ The ITKA CaseT! llo. 354 and iT-o. 8G4. IK THE SUPREIiE COURT
OF THE Ul^TED STATES
9838
-566-
ical government of industry, which should guide the Legal Division." _)
"The inclusion of a few compulsory requirements and criminal penalties
in the Recovery Act should not ohscure the dominant intention 'to provide
for the general welfare "oy promoting the organization of industry for
the purpose of cooperative action, ' Kor was there ever a deliberate
departure from this orL^inal intention."*
Further the Administration took the view that "It is not the func-
tion pf the National Recovery Administration to prescribe what shall
be in the Codes to be submitted by associations or groups. The initia-
tive in all such matters is expected to come from within the industry
itself." (K3A Bulletin No. 2 Sec. (6)).
Another indication of the cooperative nature of the Code making
process is found in the fact that although often at the hearing of the
proposed Code it might be "modified at the suggestion of the Administra-
tion or otherwise" it was further provided: "and as so modified if it
is agreed to by representatives of the Association or group presenting
it and ratified by such Association or group under such conditions as
the Administration may prescribe, it will be presented to the President
for his approval or disapproval or suggested modification..." (NRA Bul-
letin No. 2 Sec (3)). It will thus be seen that Congress, the President,
industry itself and those primarily responsible for National Recovery
Administration regarded the Code making process as fundamentally an
attempt at industrial cooperation and at self-government of industry
rather than a mere regulatory procedure, such as exists where the govern-
ment regulates and controls the manufacture and sale of foods and drugs,
the use of navigable streams, foreign coimerce or the use of the public
domain. In all such cases the sanction of law results without attempting
to secure the participation, in the making of the law, of the real re-
presentatives of those regulated, without asking them to initiate the
regulations, without securing their cooperative action in the formula-
tion of rules and regulations, and without requiring their approval be-
fore the law goes into effect. Whatever one may think of the validity
of such a process of la^v making the fact remains that it actually existed.
Of course, it was agreed by all that the final sanction to the Codes
was in the President.
The next factor to be taken into consideration is the nature of the
Code making p:'ocess. The process involved the making of complicated
sets of adjustments rather than merely laying down rules, standards and
norms. The first of these adjustments resulted from the very difficult
problems involved in the classification of industry under Codes. Waat
industries should be included within certain codes; in other words what
industries fell within a -paj-ticular comoetitive field? ^That factors
constitute an industry?
Adjustments had to be made between different kinds of concerns with-
in competing groups, because of volume of output, different sales methods,
different purchasing methods, different advertising methods. Adjustments
had to be made betwe^^n large companies and small companies; between
(*) "The Rainbow" Donald R. Richberg. (I936) p.llS
9S3S
-367-
inter-industrial competition and inter-industrial competition in various
levels; between large coinoaaiies and small compinies; 'betT?een quasi-mo-
nopolistic concerns and others. Adjustments had to be made in Codes
to prevent injurj-- to consumers, and likewise to protect the interests
of labor, and to adjust the relationship between organized and unorga-
nized labor. Other adjustments had to be made on account of geographi-
cal location of industries. Others had to be made in relationship to
the Anti-Trust laws.
In this process of adjustment it was not always possible to know
who were interested parties, how particular pro'/isions would affect
different industries, what authorities were representative. It is main-
tained that this process could not in any possible way be reduced to a
judicial pr.cessc 3y its very natixre it involved bargaining, dickering
and giving pnd taking. It would have been impossible by merely taking
testimony to get at the truth of the contentions of va.rious groups, for
facts and statistics to back up these contentions did not exist. Those
who made the Codes were not dealing in any manner with individual rights;
on the contrary they ':yerG formulating general policies.
In respect to the contents of Codes even greater difficulties are
encountered, 'iThether or noo advertising allowances, price fixing, price
filing, resale r>rice maintenance, cost accoiinting provisions, loss
leaders, limitation of machine hours, etc. are desirable are matters
largely of opinion. Some of these provisions may be advantageous to
certain concerns vi'ithin a Code, and. disadvantageous to others. In or-
der to find out the effects of such provisions, a season of experimen-
.tation would probably be necesssrj and after that elaborate studies. A
quasi — judicial process would probably come no nearer to a correct so-
lution than a process of bargaining and agreement. In all of this pro-
cess there were separate and distinct interests involved but they were
non-justi cable interests.
Let us now turn to the strictly legal situation. The first ques-
tion that should be answered from the standpoint of law is what is the
nature of these codes? Did they involve rules of future application
governing a v;ide range of action, or were they specific orders such
as might be made by the Interstate Commerce Commission or the Federal
Trade Commission. Manifestly they were the former.
The next pertinent question is, what authority was ultimately res-
ponsible for the formation of the Codes? The answer is the President
of the United States; (*) an authority coordinate with the legislature,
and not merely an administrative authority.
Again, what kind of power was the President exercising? It was
cleraly a delegated legislative power, as has been well recognized in
the Panama Refining Cora-oany Case and t he Schechter Case. In fact, in
the latter case, the whole Code raal:ing process was declared unconsti-
tutional on the gro-'jud that there \-as an improper delegation of legis-
lative power. The court said; "Such a sweeping delegation of
(*) See Schechter vs U. S., where the Court says that the Codes "have
no sanction beyond the will of the President, who may accept, mo-
dify or reject them as he ple-'-ses."
9838
-368-
legislative power finds no sup-oort in the decisions uoon which the
Government especially relics."
ThP next question that may te asked is whether there were present
in the Code hearings the factors necessary to a judicial or qaasi-judi-
cial hearing. These factors may "be said to he parties, controversy over
rights, an authority capable of passing judgment and some method' of en-
forcing the decisions of the judging authority. None of these factors
were present in the Code hearings. ■kUhile there were a good many people
with divergent views and different interests they were in no sense partie;
to a suit. Uor were any rights involved, as is the case where an adminis-
trative hody is making an orii^r. The interests involved were of the sane
nature as those present when any le^aslat; on is passed. The President
was not an authority which msJe a O-uci^ioM or issu.ed a rule governing
specific cases, bui; was an authority issuing ruJ.es of future application.
Farther the subject ms.cter of these rules and regalations was as wide
or wider and equally significant as those issued by Congress itself.
TO SUiviJViABIZE: The Code making process consisted (a) in organizing the
business of the co-'intry into coiTr3e titive groups, (b) in passing judgment
upon the business and labor rr ^.o'^ices vf ■'.'cese groups which they them-
selves, the Adrainistrav.ion, labor reprer.bntati ■■'•ss and representatives
of the consuming public consioe i-od j-',iiMion,l to the welfare of' business
and the public and (c) in iovia^ Liiir^p, tnc';:;> jud,?-ia£nts into Codes. This
process took place through the p--.^'U:jipaticn of raal represoi tatives of
industry who initiated cedes, coopers^.t ed in the process of foraralating
these suggestions into law, and apiDroved the law before it went into
effect. The passing of jxxdgraent upon the great mass of practices in-
volved in the manufacture, advertising of, sale and distribution of goods,
as well as upon laDor lolr.ti oii^hips in respect to hours and conditions
of work, and wages, yr-i^r. In no s-i-ni-^e a judicial or quasi- judicial process:
it was a process of f o-v'-'.l a+ -in,?- ^nryjftl and eccnoi'iic policy. However
desirable it might hav^ DO':r,, to h:\ve lal far '.-'ider inv3-tigations for
the formulation of t,hi l; _jolic,y, this was not rei[uired from the viewpoint
of "due process of law"; for ■'due process of law" is not a test of ex-
pediency but a test of legality.
5?33#
OFFICE OF THE NATIONAL RECOVERY ADMINISTRATION
THE DIVISION OF REVIEW
THE WORK OF THE DIVISION OF REVIEW
Executive Order No. 7075, dated June 15, 1935, established the Division of Review of the
National Recovery Administration. The pertinent part of the Executive Order reads thus:
The Division of Review shall assemble, analyze, and report upon the statistical
information and records of experience of the operations of the various trades and
industries heretofore subject to codes of fair competition, shall study the ef-
fects of such codes upon trade, industrial and labor conditions in general, and
other related matters, shall make available for the protection and promotion of
the public interest an adequate review of the effects of the Administration of
Title I of the National Industrial Recovery Act, and the principles and policies
put into effect thereunder, and shall otherwise aid the President in carrying out
his functions under the said Title. I hereby appoint Leon C. Marshall, Director of
the Division of Review.
The study sections set up in the Division of Review covered these areas: industry
studies, foreign trade studies, labor studies, trade practice studies, statistical studies,
legal studies, administration studies, miscellaneous studies, and the writing of code his-
tories. The materials which were produced by these sections are indicated below.
Except for the Code Histories, all items mentioned below are scheduled to be in mimeo-
graphed form by April 1, 1936.
THE CODE HISTORIES
The Code Histories are documented accounts of the formation and administration of the
codes. They contain the definition of the industry and the principal products thereof; the
classes of members in the industry; the history of code formation including an account of the
sponsoring organizations, the conferences, negotiations and hearings which were held, and
the activities in connection with obtaining approval of the code; the history of the ad-
ministration of the code, covering the organization and operation of the code authority,
the difficulties encountered in administration, the extent of complianv.e or non-compliance,
and the general success or lack of success of the code; and an analysis of the operation of
code provisions dealing with wages, hours, trade practices, and other provisions. These
and other laatters are canvassed not only in terms of the materials to be found in the files,
but also in terms of the experiences of the deputies and others concerned with code formation
and administration.
The Code Histories, (including histories of certain NRA units or agencies) are not
aimeographed. They are to be turned over to the Department of Commerce in typewritten form.
All told, approximately eight hundred and fifty (850) histories will be completed. This
number includes all of the approved codes and some of the unapproved codes. (In Work Mate-
riais Nfi^ i§. Contents of Code Histories, will be found the outline which governed the
preparation of Code Histories.)
(In the case of all approved codes and also in the case of some codes not carried to
final approval, there are in NRA files further materials on industries. Particularly worthy
of mention are the Volumes I, II and III which constitute the material officially submitted
to the President in support of the recommendation for approval of each code. These volumes
9768—1.
-ii -
set forth the origination of the codes, the sponsoring group, the evidence advanced to sup-
port the proposal, the report of the Division of Research and Planning on the industry, the
recommendations of the various Advisory Boards, certain types of _ official correspondtnce,
th2 transcript of the formal hearing, and other pertinent matter. There is also much offi-
cial information relating to amendments, interpretations, exemptions, and other rulings. The
materials mentioned in this paragraph were of course not a part of the work of the Division
of Review. )
THE WORK MATERIALS SERIES
In the work of the Division of Review a considerable number of studies and compilations
of data (other than those noted below in the Evidence Studies Series and the Statistical
Material Series) have been made. These are listed below, grouped according to the char-
acter of the material. (In Work Materials No. 17, Tentative Outlines and Summaries of
Studies in Process, the materials are fully described) .
Industry Studies
Automobile Industry, An Economic Survey of
2-:t.;n;inous Coal Industry under Free Competition and Code Regulation, Ecnomic Survey of
Electrical Manufacturing Industry, The
Fertilizer Industry, The
Fishery Industry and the Fishery Codes
Fishermen and Fishing Craft, Earnings of
Foreign Trade under the National Industrial Recovery Act
Part A - Competitive Position of the United States in International Trade 1927-29 through
1934.
Part B - Section 3 (e) of NIRA and its administration.
Part C - Imports and Importing under NRA Codes.
Part D - Exports and Exporting under NRA Codes.
Forest Products Industries, Foreign Trade Study of the
Iron and Steel Industry, The
Knitting Industries, The
Leather and Shoe Industries, The
Lumber and Timber Products Industry, Economic Problems of the
Men's Clothing Industry, The
Millinery Industry, The
Motion Picture Industry, The
Migration of Industry, The: The Shift of Twenty-Five Needle Trades From New York State,
1926 to 1934
National Labor Income by Months, 1929-35
Paper Industry, The
Production, Prices, Employment and Payrolls in Industry, Agriculture and Railway Trans-
portation, January 1923, to date
Retail Trades Study, The
Rubber Industry Study, The
Textile Industry in the United Kingdom, France, Germany, Italy, and Japan
Textile Yarns and Fabrics
Tobacco Industry, The
Wholesale Trades Study, The
Women's Neckwear and Scarf Industry, Financial and Labor Data on
9768—2
Women's Apparel Industry, Some Aspects of the
Trade Practice Studies
Commodities, Information Concerning: A Study of NRA and Related Experiences in Control
Distribution, Manufacturers' Control of: Trade Practice Provisions in Selected NRA Codes
Distributive Relations in the Asbestos Industry
Design Piracy: The Problem and Its Treatment Under NRA Codes
Electrical Mfg. Industry: Price Filing Study
Fertilizer Industry: Price Filing Study
Geographical Price Relations Under Codes of Fair Competition, Control of
Minimum Price Regulation Under Codes of Fair Competition
Multiple Basing Point System in the Liiae Industry: Operation of the
Price Control in the Coffee Industry
Price Filing Under NRA Codes
Production Control in the Ice Industry
Production Control, Case Studies in
Resale Price Maintenance Legislation in the United States
Retail Price Cutting, Restriction of, with special Emphasis on The Drug Industry.
Trade Practice Rules of The Federal Trade Commission (191^-1936): A classification for
comparision with Trade Practice Provisions of NRA Codes.
Labor Studies
Cap and Cloth Hat Industry, Commission Report on Wage Differentials in
Earnings in Selected Manufacturing Industries, by States, 1933-35
Employment, Payrolls, Hours, and Wages in 115 Selected Code Industries 1933-35
Fur Manufacturing, Commission Report on Wages and Hours in
Hours and Wages in American Industry
Labor Program Under the National Industrial Recovery Act, The
Part A. Introduction
Part B. Control of Hours and Reemployment
Part C. Control of Wages
Part D. Control of Other Conditions of Employment
Part E. Section 7(a) of the Recovery Act
i\{aterials in the Field of Industrial Relations
PRA Census of Employment, June, October, 1933
Puerto Rico Needlework. Homeworkers Survey
Administrative Studies
Administrative and Legal Aspects of Stays, Exemptions and Exceptions, Code Amendments, Cor
ditional Orders of Approval
Administrative Interpretations of NRA Codes
Administrative Law and Procedure uilder the NIRA
Agreements Under Sections 4{a) and 7(b) of the NIRA
Approved Codes in Industry Groups, Classification of
Basic Code, the — (Administrative Order X-61)
Code Authorities and Their part in the Administration of the NIRA
Part A. Introduction
Part E. Nature, Composition and Organization of Code Authorities
9768—3.
- iv -
Part C. Activities of the Code Authorities
Part D. Code Authority Finances
Part E. Summary and Evaluation
Code Compliance Activities of the NRA
Code Making Program of the NRA in the Territories, The
Code Provisions and Related Subjects, Policy Statements Concerning
Content of NIRA Administrative Legislation
Part A. Executive and Administrative Orders
Part B. Labor Provisions in the Codes
Part C. Trade Practice Provisions in the Codes
Part D. Administrative Provisions in the Codes
Part E. Agreements under Sections 4{a) and 7(b)
Part F. A Type Case: The Cotton Textile Code
Labels Under NRA, A Study of
Model Code and Model Provisions for Codes, Development of
National Recovery Administration, The: A Review of its Organization and Activities
NRA Insignia
President's Reemployment Agreement, The
President's Reemployment Agreement, Substitutions in Connection with the
Prison Labor Problem under NRA and the Prison Compact, The
Problems of Administration in the Overlapping of Code Definitions of Industries and Trades,
Multiple Code Coverage, Classifying Individual Members of Industries and Trades
Relationship of NRA to Government Contracts and Contracts Involving the Use of Government
Funds
Relationship of NRA with States and Municipalities
Sheltered Workshops Under NRA
Uncodified Industries: A Study of Factors Limiting the Code Making Program
Legal Studies
Anti-Trust Laws and Unfair Competition
Collective Bargaining Agreements, the Right of Individual Employees to Enforce
Commerce Clause, Federal Regulation of the Employer-Employee Relationship Under the
Delegation of Power, Certain Phases of the Principle of, with Reference to Federal Industrial
Regulatory Legislation
Enforcement, Extra-Judicial Methods of
Federal Regulation through the Joint Employment of the Power of Taxation and the Spending
Power
Government Contract Provisions as a Means of Establishing Proper Economic Standards, Legal
Memorandum on Possibility of
Industrial Relations in Australia, Regulation of
Intrastate Activities 7ifhich so Affect Interstate Commerce as to Bring them Under the Com-
merce Clause, Cases on
Legislative Possibilities of the State Constitutions
Post Office and Post Road Power — Can it be Used as a Means of Federal Industrial Regula-
tion?
State Recovery Legislation in Aid of Federal Recovery Legislation History and Analysis
Tariff Rates to Secure Proper Standards of Wages and Hours, the Possibility of Variation in
Trade Practices and the Anti-Trust Laws
Treaty Making Power of the United States
War Power, Can it be Used as a Means of Federal Regulation of Child Labor?
9768—4.
THE EVIDENCE STUDIES SERIES
The Evidence Studies were originally undertaken to gather material for pending court
cases. After the Schechter decision the project was continued in order to assemble data for
use in connection with the studies of the Division of Review. The data are particularly
concerned with the nature, size and operations of the industry; and with the relation of the
industry to interstate commerce. The industries covered by the Evidence Studies account for
more than one-half of the total number of workers under codes. The list of those studies
follows:
Automobile Manufacturing Industry
Automotive Parts and Equipment Industry
Baking Industry
Boot and Shoe Manufacturing Industry
Bottled Soft Drink Industry
Builders' Supplies Industry
Canning Industry
Chemical Manufacturing Industry
Cigar Manufacturing Industry
Coat and Suit Industry
Construction Industry
Cotton Garment Industry
Dress Manufacturing Industry
Electrical Contracting Industry
Electrical Manufacturing Industry
Fabricated Metal Products Mfg. and Metal Fin-
ishing and Metal Coating Industry
Fishery Industry
Furniture Manufacturing Industry
General Contractors Industry
Graphic Arts Industry
Gray Iron Foundry Industry
Hosiery Industry
Infant's and Children's Wear Industry
Iron and Steel Industry
Leather Industry
Lumber and Timber Products Industry
Mason Contractors Industry
Men's Clothing Industry
Motion Picture Industry
Motor Vehicle Retailing Trade
Needlework Industry of Puerto Rico
Painting and Paperhanging Industry
Photo Engraving Industry
Plumbing Contracting Industry
Retail Lumber Industry
Retail Trade Industry
Retail Tire and Battery Trade Industry
Rubber Manufacturing Industry
Rubber Tire Manufacturing Industry
Shipbuilding Industry
Silk Textile Industry
Structural Clay Products Industry
Throwing Industry
Trucking Industry
Waste Materials Industry
Wholesale and Retail Food Industry
Wholesale Fresh Fruit and Vegetable Indus-
try
Wool Textile Industry
THE STATISTICAL MATERIALS SERIES
This series is supplementary to the Evidence Studies Series. The reports include data
on establishments, firms, employment, payrolls, wages, hours, production capacities, ship-
ments, sales, consumption, stocks, prices, material costs, failures, exports and imports.
They also include notes on the principal qualifications that should be observed in using the
data, the technical methods employed, and the applicability of the material to the study of
the industries concerned. The following numbers appear in the series:
9768—5.
Asphalt Shingle and Roofing Industry Fertilizer Industry
Business Furniture Funeral Supply Industry
Candy Manufacturing Industry Glass Container Industry
Carpet and Rug Industry Ice Manufacturing Industry
Cement Industry Knitted Outerwear Industry
Cleaning and Dyeing Trade Paint, Varnish, ana Lacquer, Mfg. Industry
Coffee Industry . Plumbing Fixtures Industry
Copper and Brass Mill Products Industry Rayon and Synthetic Yarn Producing Industry
Cotton Textile Industry Salt Producing Industry
Electrical Manufacturing Industry
THE COVERAGE
The original, and approved, plan of the Division of Review contemplated resources suf-
ficient (a) to prepare some 1200 histories of codes and NRA units or agencies, (b) to con-
solidate and index the NRA files containing some 40,000,000 pieces, (c) to engage in ex-
tensive field work, (d) to secure much aid from established statistical agencies of govern-
ment, (e) to assemble a considerable number of experts in various fields, (f) to conduct
approximately 25% more studies than are listed above, and (g) to prepare a comprehensive
summary report.
Because of reductions made in personnel and in use of outside experts, limitation of
access to field work and research agencies, and lack of jurisdiction over files, the pro-
jected plan was necessarily curtailed. The most serious curtailments were the omission of
the comprehensive summary report; the dropping of certain studies and the reduction in the
coverage of other studies; and the abandonment of the consolidation and indexing of the
files. Fortunately, there is reason to hope that the files may yet be carec" for under other
auspices.
Notwithstanding these limitations., if the files are ultimately consolidated and in-
dexed the exploration of the NRA materials will have been sufficient to make them accessible
and highly useful. They constitute the largest and richest single body of information
concerning the problems and operations of industry ever assembled in any nation.
L. C. Marshall,
Director, Division of Review.
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