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BOSTON PUBLIC LIBRARY 



3 9999 06317 515 

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 






-' R E 7 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 - "D elegata 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 Hu mphrey'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 



-12- 

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 Insti tute 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 . 
Pauldin g (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 To y 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 ultr a vire s 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 To y (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 c or )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 

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 generi s. (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 inte r 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 Nitr ogen 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 N i trogen 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 Cas e (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 ^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 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 .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. A rlid.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 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 R efining 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 t ies 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 Panam a 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^ii a (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 
"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 



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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 " dele gata potestas ncn -potes t d ele, 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 potes t 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 



-114- 

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 



-US- 



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 P anama 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 



-116- 



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. 



9838 



-117- 

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 



-119- • 

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 



-120- 

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. Ta ylor (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. llitchel l (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°^- 1 009. 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 L e gal 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 (1 92'l); Surprise is expressed at prevalence 
of the rigid separation of powers theory. 

(5a) Committee on ivanister ' s P o wers 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) Eingng ji 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." Maynar d 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. 'l awaii , 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' je rs 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'^giFlatio n and Ad.j-gticatio n 
(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 Lan d a nd 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, Admi nistrative 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 Englis h 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," 4 5 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 'fu rter a . d Davison, "Cases on Administrative La w (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, Collec ted 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 G ood 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) l Airray' 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. Lockwoo d 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 P aci fic 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. I n ■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. 2 53 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. Tn iteley . 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. Un ion 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) Silve r v. Fe deral 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 T r ade 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. A ndrews . 25 F. (i:d) 80 (C.C.A. 3d. 1928). 

(80) So uthern Railway Co .. v. V irginia . 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 Con nission v. 1-T olso n Brot hers, 2o9 U.S. 26G 
(1533). Ei.Trlo y ers 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 Cc t^F Supp. S;2 (D.C. S.F. 111. 1933.) I Chicr£0, 
Ful. C: P. Up. Co . V. Strte Hi' ::r,Ty Con;-i isEion 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 (1911); Petersen Fakinp Co. v. :>:ran, ,290 U.S. 57O (193'+)- 

(91) G-ol rsnith v. U.S. F ogydof 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 Clai n to th e 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) L ouisian a v. licAdco, 234, U. S. 627 (1314). 

(23) Eisne r 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 Fores t 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. Unite d Land Association, 142 U. S. 161 (1891); 

U. S. ex rel Riverside Oil G c. 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. H ichcock, 190 U. S. 316 
(1903). 



9838 



(37) 234 U. S. 569, 710 (1914) 

(33) St. Lcuis Sr.e ltinA- 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) Ifewha ll 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) Ih u-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) uilwauk ee Publishin.f^ Co. v. Biirlescn, 255 U. S. 407 (1921). 

(58) ivs FmijS: Ho V. -Jhite , 259 U. S. 276 (1922). 

(59) Van Vleck, Administr ati ve 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) Ha nson 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) lalwaT ikee 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 Bus in ess 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) I nterstate 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. C o., 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. De laware, 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 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 A dmin istrative Orders under 
NRA and AAA . " 43 Yale Law Journal 599 (1 934), 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 ComnuE Sion (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 C o. . 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 Fe d eration of Labor v. Federal Radio Com- 
mission , 41 F. (2d) 422 (1950); S trawbridge & Clothier v. Federal 
Radio Commission . 57 F. (2d) 434 (1932). 

(126) White v. Federal Radio Commission , 29 F. (2d) 113 (1928). 

(127) Great Lakes Broadca sting Co . v. Federal Radio Commission 
37 F. (2d) 993 (1930). Certiorari denied, 281 U. S 706 (1930); 
Journal Co . v. Fe deral 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 C o. v. McCall . 245 U.S. 
(1917). 

(142) Dickinson, op. cit., 195. 



9838 



■ -171- 

(143) Ohio Valley Water C o., 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) P hiladelphia & 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'/', 8 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 vire s 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 (193 4'^; sop Vochl v. Indemnity Insu.rance Company of 
North America , 288 U.S. lo2, Ibo (l'^-'3). 

(174) State ex rel ::ilwuakee i.edical Colleg e v. Chittenden, 
107 N.W. 500 (1906 vVisc.) Employers' In s urance 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," 4 1 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) Orige t 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 C o. v. Virginia, 290 U.S. 190 (1933); ■ 
Sabre v. Rutland K. Co :. 85 At] . 693 (Vt. 1913). 

(194) State Railroad Tax Case s, 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. S tate Board of Equal - 

i gat io n. 239 U.S. 44 (1915). For cases raaJning the requirement 

see Kunt z v . Sumotion , 19 N.ii. 1 (ind. 1888); Londone r v. D enver . 

210 U.S. 627 (1914) 

(195) Lander v. Mercantile Ban k, 136 U.S. 458 (1902); San 
Diego Land and Town Co . v. Natio nal City , 174 U.S. 739 (1899); 
Pittsburgh etc. R. Co . v. Backus . 154 U.S. 421 (1894).- • 

(196) E rie R. R. v. C ity 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 Inves t ment 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 Chi cago 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 Appeal s. 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, Adrninistrati ve Justice and Su"oreniacy of Lav/ in 
the United States , op. cit., 106, n. 3. 

(208) llorwe-rian Nitrogen Froi Oicts 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?- 

NOTJ j; 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) T he King v Minister of Heal th (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 Ea rth, 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 acto r 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, A dministrative J ustice 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 
(C hicago 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, D aughert y, 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-o vernment 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^- P ac ific Ry. Co . v. St ate 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 Ad ministration III-4000 En forcement 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, J udici.l C o ntrol of. tho Jeder-.l Ti- ^.de Comidsc-ion 
p.nd the Intcrst-Qc Coip..:iercc C orn. '.i s '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. IT illiaras , 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 Anal ysis 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 , Sche chter 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 Pow e rs 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 A l'^D iU/'EI-ID Iv.£lJT II-2nno P ROCEDU RE 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 or e he a d 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 , Roc k I ' ^land A Pacif ic 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) Garfiel d 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 F ederal 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 '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. He nkel . 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 Commissio n. 32 F. 241 (1887). 

(63) Kr, Justice Holmes in Harriman v. I nterstate 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 
R eview, 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.; Sa n Diego Land and To- t i 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 
c omparati -£ ly minor importance, or is one ."-Jhich would not requirp f-grther 
investlg -tion t o 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-ier c e Comini ssion (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 Fed e ral Trade Coiii:-.ii ssion,_ (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 L eg;! slatiii)n_aM-AdJMii: 
catio n, (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 & ^ on s. Inc . v. Federal Trade Com irdssion. 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) G arfield 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) A merica'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 Pennsylv ania L av^ Eevip-w 378 (195 2) 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 Refini ng 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 Bro s. , 289 U. -S. 266 (1933); see also Willough- 
by, Constitutional Law of tne Unite d States, (iTew York 1929) 

(34) Freiind, Adia inistrative 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. Ba ltimore dc Ohio R.R. Co. . 293 U. S. 454, 55 Sup. Ct. 
268, (1935). 

(38) Ibid, at page .'72. 
9838 



-^26- 

(39) VJiliis, Parliamentary P owers o f 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__& "Souther n 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 n ot satisfactorily estab - 
lished their objecti ons 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) Panam a 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. In c. . 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 Philadelphi a & 
Trenton R. ~. . v. Stimnson , 1^. ^e\. 448, 458 (l8-'"i). 

(80) ^Tichita H. 1. ._ Light Co . v. P ublic Utility Co mmission , 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) ComTiJit ee on ''inisters' Powers ^e-nor t ( 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) I rief 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: Readi ng ^^.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 fe r 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, La bor Rel ations B oards (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 t o 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 Sup re macy 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, Administrati ve 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 & Llo o rliead 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) Chi n Yow v. U. 3. . 208 U. S. 8 (1908). A party has a 
ri^ht to procure evidence before hearing. 

■ (25) Bi-Metallic Inve stment Co . v. Stat e Bocrd c f 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-i iment o f the first hearing to a defini te 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 wli ere ra dical 
de-par tures are effec ted . ' 

"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 (?) day s 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_._ 
IT otice "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 rersonab le notice in every case where 
such course is practicable. It sho uld ta':3 convi ncin;'; r easons as to 
im-practic a bilit:/ t o lead the Legal Divi sion tj rel ax its re commen dation 
for notice as to a ny 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. Fainti ng, Faioerhajfiging and 
Decorat ing Industry - Araend ments to Cocie of Pair Cora-oetiti on, Mini mum 
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. 
Th e absence ^f evid e nc?- alone , or the mere statemen t of the fact that 
it i s truly representative with o ut more, is not sufficient, as I see . 
itj^ to_ base s uch a fi nding . 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 inter preta tion has no effective 
vitality in itself. The effectiveness flows from the c ode or other 
le^al document interpreted. The date of efi ectiveness of the pa r- 
ticular doc-ument interpreted is the only efiective da.te. 

" A serious question does arise howe ver as to fairness and justice 
of enforcing li abi lity g,s:a.inst i:idividi.a ls u nder the terms of any 
inter p reted docvjnen t e^s_tp_ t he period -prior to the announ cement 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, 
ra t her than as a qu e stion 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 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. An drews . 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-rai n 
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::cepti ons ..'.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.iher s 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 C ode Author i 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) 3 y 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. South ern 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) W or. s -u^ Phrases , G-CS (\7cst Pul^lish-ia ■ Co., St. Paul 1905), 7. 
See Brow n 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 L i f^ht Co. v. Coin ■^h\ \s, -^^ IT. S. "^^ 
(1-1?). 

(lb) Bichlanc Ste^r-shJ-n C o. 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 Class i- 
fication of Buyers — Based Upon Total Individual Purchases from Al l 
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&sistah t 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 •- W orn 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 App a ratus 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, T he 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 Colo r 
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 C o.. 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 C o. 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. L ake 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. I Torthern 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 C o. v. Interstate Coal Co .. 

5 Fed. Supp. 619 (l954); Stanley v. Feahody Coal Co .. 5 Fed. Supp. 612 
(1933); and Purvi s 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 I llinoi s 
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 C orr). 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) ; S outhern Eai lway 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); V olley 
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. S potl-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 Mayo r of t h^ 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. Farm er'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 Un iversity 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. 2 91 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 63 6 (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. Loui siana, 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); Te xas & 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. R ed 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 Coa l 
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 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 State s (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 Re view 46 (1935) . 

(13) r/ayman v. Southa rd, 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, T he 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.ec o vjry 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 Co lle.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 Territor y 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) Fergu s v. R ussell , 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 H arvard 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, B ureaucracy Triumphant 
(Hew York, 1931) 

America's Recovery Fro,g:ram 

(Oxford Press, 1934) 

Beard and Beard, The A ti ericgn Leviathan 
(lew York, 1930) 

Bentham, Frincipli ^s of Morals and Legislation 
(Oxford University Press, 1879) 

Blachley and Oatman, Adninistra.ti v e 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-overnra e ntal 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 Appea l for U. S . in 

A. L. A. Schechter Corp. v. U. S. 

Brookings Institution, T he 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 Limitation s 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 Con sti tution 
Sth ed. (London, 1929) 

Dickinson, Administra tive Justice and the Suprema c y of Law in the United ( 
States 
(Harvard University Press, 192?) 

The Pederalist , Hamilton, Hadison, Jay 
(Chicago, 1894) 

Field, The Effect of an Unco nstitutional Sta tute 
(Liinneapolis, 1935) 

F rankf ur t e r , The Pu blic an d its Government 

(Yale University Press, 1930) . , 

Frankfurter and Davison, Cases o n Adnini strati ve Law 
(Chicago, 19.32) 

Frankfurter and Landis, Business of the Supreme Court 

(New York, 1927) ^ . ( 

Preund, Administ rat ive Powers over Persons and Proper ty 
(University of Chicajco press, 1928) 

G-avit, Tiie Commerce Clause 

(Bio on in -'ton, Indiana, 1932) 

Gray, Nature and Sourc es of t he Lavf 
2nd cd.'"(Kew York, 1927) " 

Goodnow, Princi-iles of the Administrative Law of the United States 
(New York, 1905) 

Goodnow, Comparative Admini stra tive La w 
(New York, 1903) 

Haines, The Revival of Natural Law Concept s 
Harvard Univ. Press, 1930) 

9833 



Hart , The Ordinance MakinjP: Powers of the Pr e sident of the United States 
(Baltimore, ig.^S)' 

Henderson, The Federal Tr a de Coinmission 
(Yale University PresK, 1924) 

He wart, The Wcw SesTOtis rn 
(New York, 1929) 

Holdsworth, H istonr 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^' -ninistrat i ve Af^encies in G-overnment and the Effect Thereo f 
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 Tribu nals 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 Harv ard Lay- Review 135 (191 4) 

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 (193 4) 

Berle, "The E:-qDansion of American Administrative Law", 
5 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 L a^7 quarte rly 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 La w Review. 149-135. 565. 409 (1928 ) 

Corwin, "Congress's Pow^r to Prohibit Commerce a Crucial Constitutional 
1 3 sue", 
i;- Cornell Law Journa l 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 (1 923) 

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 65 6 (1 954 ) 

Ellingwood, "The Kew Deal and the Constitution," 
28 Illinois Law Review 7 29 (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 Rev i ew 269 (1934 ) 

Finklestein, "Judicial Self-Limitation," 

57 Harvard Law Review 558 (1924 ) 
9838 



Pranlcfurter.. "The Task of Aduiinistrrxtive Law," 

7(3 U n iversity of Venn. Law Review 614 (1927 ) 

Frankfurter and Landis, "A Str.dy in Separation of Powers," 
57 Harvard Law R eview 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 (195 4) 

Hale, "The Constitution and the Price System; Some Reflections on llebbia 
V. II. Y=" 
54 Colunoia La w Rev iew 4 (1954) 

Hough, "Due Process of Law - Today," 

24 Harvard L aw Review 566 (1911 ) 

Hamilton, "Affectation with Public Interest," 
59 Yr le Law Journ al 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 Ane rican Bar Associa tion 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 Illino is 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; La v '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" (195 5) 

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-.-- dev iev 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: I cvie'v lllG (l9.^7 ) 

l^ota - "Delecat:.o;i of Legislative lor'or - 3'lexiole Trriff Act," 
57 Illinois La-j Zev iev g 02 (19:^2 ) 

ilote - "Porcr of Federal D.adio Coriirrission, " 
99 Ill inois La v 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 (193 2) 

ITote - "Phe Lelegatioji of Pec.cral Lcu^islative Pover to Pxccvitive 
or Acininistrr.tive Agencies," 
31 Pichiran Lav Psvicv; 796 (199 3) 

ITote - "The P CGssity cf a ITotice and Hearing in Administrative 
De 1 1 : nrd na t i on s , " 
80 9.iivcrsity cf Pe n ns:avania Lav Peviev,- 96 (19 31) 

Co;.r.ient - "Judicial Peviev of Ac rai^iistrative Orders under I'PA and .AA_A.", 
43 Yale Lav Journal 599 (19 34) 

Comment - "The Federal Longshore.aen's and Hartor WorPers' Compensation 
Act," 
43 Yale Lav Journal 940 (1 934) 

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, writ te n by a revie-'er of ' I r. Ai'tens reanuscri-ot . 
r.eserves niniecgraphin-j: e lc>n';- '; 7 ith the nan us 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 M ate - 
riais Nfi^ i§. Contents of Code His to ries , 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, Te ntative O utlines and Summaries of 
Studies in Process , the materials are fully described) . 

I ndustry 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. 

Labo r 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 

Adminis t rative Studie s 

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 SERI ES 

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.