My office drafts the complaint embodying that direction of the Commission.

Mr. REECE. But the Commission does consider the case in a preliminary way and determines if a complaint shall be issued?

Mr. KELLEY. It must, under the statute; yes. Under the statute only the Commission can direct the complaint.

Mr. REECE. I was familiar with that provision of the statute and I assumed that that was the case. This question, of course, is leading up to questions which I expect to propound later on; which go in the direction of the common suggestion that the Commission does sit as complainant, judge, and jury. I was laying the groundwork for development of the whole procedure.

Mr. KELLEY. I thought that was the purpose. There was an administrator at the review in the early stages of the administrative-procedure bills that thought that Congress ought to delegate the power to issue a complaint to persons in the agency other than the ones that decided the case.

Well, that is a matter that did not get very far, I do not think, with the Judiciary Committee on the Senate; but the point is that, as far as the Federal Trade Commission is concerned, it must direct the complaints itself because that is a mandate of the statute.

Mr. O'HARA. Mr. Kelley, in that connection, is it a pro forma matter or do the Commissioners actually-or do the attorneys from your office present to the Commission formally any record made of the fact that the Commission passed upon it, so that there is a record of it in each case?

Mr. KELLEY. Oh, yes; there is a direction in writing in each case; and not only that, but a final report regarding the facts in the case. The point that was considered to be unlawful in violation of law also. Mr. REECE. That is before the complaint?

Mr. KELLEY. Before the complaint issues; yes.

Mr. DAVIS. The Commission meets every morning and is in session generally until about half past 12, when we are not otherwise engaged, and we keep complete minutes of everything, with votes recorded, and all that.

Mr. REECE. Mr. Chairman, while we are diverted, and not by the way of a question but simply for a verification of the record, with reference to Dean Stason's testimony, I did not have his transcript immediately before me.

Now, the dean suggested, as I interpret his testimony, that with the adoption of the McCarran-Sumners bill, and then if the procedure of the Federal Trade Commission should be changed in certain important respects, the purposes and objective of H. R. 2390 would be attained. But then, in response he outlined what the changes are that should be made in order to accomplish the objectives which the bill itself seeks, and then, toward the conclusion of the dean's testimony, Mr. Rabin asked him this question:

Doctor, when you gave us the language, you would suggest that the McCarranSumners bill was adopted. Let us suppose it were not adopted. Are you satisfied with the phraseology of this bill, H. R. 2390?

Dean STASON. If it were not adopted and if the Commission did not effectuate the procedures in some other way, then I think the language of the bill has merit.

Mr. DAVIS. Well, I know that he was examined and an effort made to get him to make a stronger statement, but the fact is on page 14, in response to a question, he says: "No; I do not agree that a trial de novo is the solution."

And he says on page 18 that Reece bill would give a trial de novo. He also said that he did not think that the preponderance of the evidence was a proper rule. Then on pages 33, 34, and 35, he explains his objections to de novo trial on appeal.

Mr. SADOWSKI. Proceed with your statement, Judge.

Mr. DAVIS. Now, gentlemen, of course, every time I have to get back to what I was discussing the procedure of a case before the Commission.

Now, we will take up the question of stipulations. Mr. Horton is the chief examiner, and I have a statement here which he prepared the other day, in which he says:

In normal times this office receives a large number of applications for complaint relating to the various laws administered by the Commission. Naturally, by a careful process of study and sifting, many of these applications are disposed of without further investigation or corrective action on the part of the Commission. It is estimated that from 750 to 1,000 such matters are handled each year, which are disposed of without further Commission action for numerous reasons, such as lack of jurisdiction, lack of public interest, private controversy, and so forth. All these matters require study and consideration.

Now, those cases are not even docketed. In his division, he says they average about 750 or 1,000 a years, where complaints are received and disposed of-dismissed or closed.

Following that up, I am taking this from the annual report: The total disposition during the year was 644-that is, leaving out that 750 or 1,000 which are not docketed and upon which he makes no report to the Commission. Those which went to complaint were 142. Those settled by stipulation, were 248; closed, 247.

Mr. O'HARA. Was that the report for the last current year, Judge? You did not refer to what year it was.

Mr. DAVIS. Yes, sir; this is '45. I have both here, as far as that is concerned. That was '45, and here is '44. The total disposition. during the year, of the cases from the chief examiner's division, were 735; to complaint, 173; settled by stipulation, 271; total, 444; closed, 281; consolidated, 10.

Now, I say all these figures are smaller than they were prewar, because we have lost about a fourth of our staff to the armed forces. The number of our cases that we are handling are naturally not as much as they were before.

Mr. REECE. Only those cases that go to trial would be eligible for appeal?

Mr. DAVIS. Yes.

Mr. REECE. Under 2,390?

Mr. DAVIS. Yes. Those were by years. Now, here are reports from the acting chief trial examiner, in which he reports that since the enactment of the Wheeler-Lea amendment to the Federal Trade Commission Act, March 21, 1938, on up to February 21, 1946, the number of stipulations prepared in their division was 2,698, and the number of those executed by the respondents were 1,964, and those not executed were 734.

On other words, 72 percent of those that were offered the privilege of settling a case by stipulation did so and signed the stipulation admitting the facts, and in other words admitting liability and agreeing to cease and desist and not resume the practices.

We have a Radio and Periodical Division which reviews advertising, both in periodicals and over the radio, and I have a chart here which I will give each of the members of the committee, and also the reporter, please, and request that it be inserted in the record.

I would like for you to see how these matters are gone over and how they are winnowed down to a relatively few cases. During 1944, in which they handled more than they did the next year, because they lost just about half of them in that Division, being mostly young lawyers who went to war: Advertising surveyed; newspapers, 1,792 issues; magazines, 967 issues; and they read 298,970 ads.

The next column shows the number of those marked for further consideration. Out of the 298,970 there were marked for consideration, 21,781.

Then the chart gives the figures on almanacs, mail-order catalogs, and radio continuities; in other words, radio advertisements. They call them continuities, but they are radio advertisements. You see, during that year they read 1,527,500 pages of radio advertisements. By the way, the broadcasters are all very cooperative, and they furnish us these advertisements.

Now, out of the 1,527,500 pages read, they marked for further consideration 19,512, which, as you see, is a very small percent. The total commodities involved in all that survey amounted to 1,902.

Then they winnow this all down to 299 for final investigation. There were 299 investigations instituted. Then they sent a questionnaire to the ones that they finally marked for investigation, asking various questions, as to the formula, and various other things.

If you go still further, 27 resulted in complaint. That is 9 percent out of the 299 finally marked for further investigation; 113 were settled by stipulation, and 159 were closed or otherwise disposed of.

Mr. O'HARA. Would you mind my asking you the difference between the complaints issued and those settled by stipulation and closed or otherwise? Some of us are not familiar with that.

Mr. DAVIS. Well, of course, if a case is stipulated, that is just like you might say an admission answer. They plead guilty and agree to cease and desist, which is all that you could do if you went through a trial.

Mr. O'HARA. I see.

Mr. DAVIS. And with respect to matters closed or otherwise disposed of, that represents cases which upon further investigation it develops that they were either not engaged in interstate commerce, that it was too trivial to give further consideration to, that it was simply a private controversy, or for various other reasons we would just close it.

Mr. O'HARA. Judge, could I ask just a question there, so that we can dispose of it: When it is settled by stipulation, does that mean a complaint was issued?

Mr. DAVIS. No.

Mr. O'HARA. That is just merely upon the investigation of the charges made?