"(a) Supply personnel, together with that supplied by other Government agencies or outside consumer groups, to serve as consumer representatives on committees developing standards for ultimate consumer goods.

"(b) Allocate funds for research in connection with the development of standards to Federal, State or private laboratories, and funds for conducting conferences or hearings involved in the development promulgation of standards. "The Consumer Service Agency would not be expected to—

"(a) Provide the laboratory research associated with the development of standards for consumer goods.

"(b) Police labeling or other measures designed for consumer protection. * * * Responsibility for prosecuting cases of mislabeling and other cases in interest of consumers should rest either with the Federal Trade Commission or the Department of Justice, or, in the case of any particular product for which special regulatory provision is made by law, with the agency entrusted with such regulation.

"(c) Conducting research into all matters of interest to consumers, including the quality and uses of goods, prices, trade practices, consumer incomes, and expenditures.

“(d) Putting out bulletins, periodicals, or other publications, conducting radio programs, and informing and educating consumers through other appropriate channels.* * *

"(e) Advising any department or agency with respect to problems affecting the consumer interest arising within that agency. * *

With the end of the war in sight in the spring of 1945, members of the staff of the Bureau of the Budget, working on the problem of readjusting governmental organization to peacetime conditions, requested Dr. Caroline F. Ware to advise them as to the adequacy of procedures in existing agencies designed to protect consumers, and to prepare a memorandum on the whole problem of consumer services in the Federal Government. An excerpt from that memorandum follows:

2

"MEMORANDUM ON CONSUMER SERVICES IN THE FEDERAL GOVERNMENT "Need for consumer services and consumer participation in Federal Government "The primary reason for the provision of these services and for consumer participation in close identity between the consumer interest and the public interest. * * * The close relationship between consumer interest and public interest does not, however, mean that it is unnecessary to make special provision for the consumer interest because all public officials are theoretically servants of public interest. The public interest includes the interest of people in their capacities as producers as well as in their capacities as consumers. Unless special provision is made for reviewing public policy from the consumer point of view and for providing needed services to consumers, the latter may easily be overlooked. * * *

In

"A fundamental difficulty lies in the lack of technically trained personnel with time and money to express the consumer viewpoint on specific matters. contrast, business and labor organizations both focus on a specific product, have technical experts on their pay rolls, and are in a position (especially business) to assign these individuals to spend time and effort on specific problems involving Government action.

"Consumers are without funds to employ technically trained personnel to represent them. The consumer interest is diffuse. While producers need personnel with knowledge of a specific product, consumers need personnel with knowledge of all products. Obviously this presents an impossible problem. * * *

"Up to the present time the Federal Government has provided no service to consumers which would supply this lack. In a comparable case, the Department of Agriculture provides technical services to farmers. Whenever a problem arises involving the farmer interest, someone in the Department of Agriculture has the technical knowledge and is in a position to contribute this technical knowledge to discussion, either directly, or by putting the information in the hands of a representative of the farmer group. A comparable service for consumers would immeasurably increase the effectiveness of the present machinery for the review of public policies and acts from the consumer viewpoint * *

*

2 "By Caroline F. Ware, April 20, 1945, prepared at the request of the Bureau of the Budget."

"Appropriate administrative forms for consumer participation

"1. Consumer Department: The logical set-up would be a Consumer Department paralleling the Department of Commerce, Labor, and Agriculture. The consumer interest is a parallel interest. * * It seems improbable that a consumer department will be established in the near future. *

*

2. Policy advisers: There should be advisory consumer committees at the top policy level in the several agencies concerned with economic programs. "3. Services to consumers: In addition to advisory committees of the type just described, there should be a consumer service agency to provide research, information, and technical personnel to the consuming public. Such an agency should preferably (in the absence of a consumer department) be located in a 'neutral' agency, i. e., one whose main function is not to serve a particular economic group. An agency such as the Department of Interior of the Federal Security Agency might be an appropriate location.

* *

"This consumer service agency should be well staffed and should conduct research into such matters as basic economic problems of income, distribution, living costs, etc., from the consumer viewpoint; characteristics and uses of goods and services; industrial organization as it relates to the ultimate consumer. It should provide informational services which will enable consumers to understand economic matters affecting their welfare, and assist them to function more effectively in the market place, in the utilization of goods and services, and in relation to public issues. It should, furthermore, make available persons with technical knowledge to serve as advisers to consumer groups, to participate in hearings or to sit on committees dealing with matters affecting consumer interests.

"4. Standards for consumer goods: There should be a standards board for the development of standards for consumer goods.

*

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At the termination of its work, the Consumer Advisory Committee to OPA, as the only group charged with considering the consumer interest in relation to the Federal Government, reviewed the problem of consumer services and consumer representation and made the following recommendations on the subject to the President (Nov. 6, 1916):

"Sound administration in a democratic government requires continuous responsibility to all the people. Economic policies must be formulated in response to the needs of the buyers, as well as the sellers of goods and services.

* * *

"It is essential that provision be made in the Federal Government for rep resentation of consumers and for services to consumers which will enable them to act.intelligently in safeguarding their own interests in order that the public interest may be served.

"We urge the adoption of the following minimum program:

"1. Provision for consideration of the consumer interest in the over-all planning and administration of measures affecting the national economy.

* *

*

"2. Provision for direct and continuous consultation between consumer rep resentatives and the agencies whose decisions and programs affect con

"3. Provision to include the consumer viewpoint in American delegations to international bodies. * * *

"4. Provision for a consumer service bureau to conduct research and to provide technical information to consumers.

"Although farmer, busines, and labor organizations are in a far better position than the consumer to provide their own technical research and information, the Federal Government makes generous provision for such services to these groups. With the exception of the limited services of a few specialized units in more or less unrelated agencies, the Government does not now provide information or guidance to the consuming public.

"In order to praticipate in national and international councils, consumers must have more adequate and more consistent service from the Government. "Expression of the consumer viewpoint in hearings of the Federal Trade Commission, the Food and Drug Administration, the Price Decontrol Board, and other agencies is even now provided by law. Yet few consumer representatives can be sufficiently informed on the technical and economic aspects of the problems involved to make statements genuinely valuable to administrators in reaching their decisions. Consumers cannot maintain a research organization that will equip them with information on all commodities comparable to that which each producer group can afford to have on its particular commodity.

"Consumers must, therefore, have a service agency which will furnish them the necessary technical data to meet their legal obligations now and in the future.

"Furthermore, consumers must have a service agency to secure enough infor mation on the supply, quality, and price of consumer commodities to perform their own individual buying function judiciously.

"A consumer service bureau should be located administratively in an agency which is not set up to serve a particular producer group, or to perform a limited function. It should not be placed, for example, in the Department of Agriculture, of Commerce or of Labor. In the absence of a Consumer Department, the most appropriate agency appears to be the Federal Security Agency, where such related agencies as the Food and Drug Administration and the United States Public Health Service are alrealy located."

The specific recommendation of a consumer service bureau in the Federal Security Agency was forwarded by the Consumer Advisory Committee to the Federal Security Administrator. In his reply to the committee (Jan. 28, 1947), Mr. Watson Miller, the Administrator, noted the consumer protection functions now carried on by his agency through the Food and Drug Administrations:

66* * * It is true that some of the functions of this Agency relate to the protection of the health and pocketbooks of the public. That the work of the Food and Drug Administration, in insuring the purity and accurate labeling of foods, drugs, and cosmetics, is a consumer-protective activity was recognized in the specific terms of the Food, Drug, and Cosmetic Act. In the formulation of regulations establishing standards of identity and quality for foods under the Food, Drug, and Cosmetic Act the Agency, through the Food and Drug Administration, seeks to obtain informed consumer opinions and testimony, and this will continue to be an Agency policy since the section of the law which authorizes the establishment of food standards provides that such action shall be taken 'whenever in the judgment of the Administrator such action will promote honesty and fair dealing in the interest of consumers.' As you undoubtedly know, the Food and Drug Administration receives innumerable consumer inquiries about the quality and composition of foods, drugs, and cosmetics. Such inquiries are answered comprehensively from the voluminous information in the Administration's files. It also invariably follows up consumer complaints about such products for the purpose of taking appropriate action if violations of the law are discovered

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RECOMMENDATIONS OF AGENCIES REVIEWING FEDERAL STRUCTURE

The need for more adequate provision for the consumer interest has also been recognized by those responsible for reviewing the organization and operation of the Federal Government.

The President's Committee on Administrative Management, in 1937 (Report p. 32) specified that one of the major purposes of the Department of Social Welfare which it recommended should be "to protect the consumer".

*

The Temporary National Economic Committee gave careful consideration to the matter of government aid for consumers as part of its assignment to determine what steps should be taken to make the American free enterprise system function effectively. The final report of the Executive Secretary of the TNEC (77th Cong., 1st sess., Senate Committee Print, 1941, pp. 328–339) states: "Because consumers transact their business almost entirely on an individual basis, they possess unequal bargaining power with other economic units, most of which are organized and are steadily extending the scope and power of their * they * organization * * therefore rely upon such assistance as Government may offer to make their bargaining power more nearly equal * * * "More and more government is being called upon to take part in the operating details of the economy, usually on behalf of a producer interest concerned primarily with the security of its income or its investment * The aid which government renders to producer groups solves some problems for them, but may create new ones for consumers. This possibility gives additional ground for recognition by government of the special problems which arise in the consumer phase of the lives of people whose government it is * *

*

* *

"Shortcomings in consumer services: * * * Itemized recital of the Government's services to consumers tends to enlarge beyond actual performance the picture of what is done *

98634-47-pt. 2- 9

"In the promotional field of service the most significant omission is that no specified agency of Government is authorized to promote consumer welfare generally or to lend such assistance to the consumer enterprise of money-spending as is furnished, with great elaboration, to the money-getting enterprise of industry, agriculture, and commerce. Every public official supposedly performs with due regard to the consumer interest, on the theory that the consumer interest is identical with the public interest which he serves. The theory, as already pointed out, it inaccurate; in practice what turns out is that the consumer interest is disregarded as a matter of course in the legislative and administrative functions of Government. Promotion of the consumer interest requires more than acting "with regard to it"; it calls for research, fact finding, and publication to the end that this interest may be helped in pursuing its purposes and in assuming its proper place in that exchange and conflict of viewpoint which is the basic fiber of democracy * * *

"Such promotion of the consumer interest as issues from Federal Government sources is for the most part provided as a byproduct of some other purpose which the agency furnishing it is designed to serve.

* * *

"Essential to promotional service are research and the reporting of current trends and developments. Fact finding for consumers by Government agencies is restricted in character and limited in amount. * * * Information on what may be taking place in the Nation's economy that affects, or will in the future affect, the problems with which consumers are coping is not prepared or published by Government, although just such reports are published regularly and in great detail for agriculture. * * *

* * *

"In the protective services which Government renders to consumers are many gaps. In the control of representations made in the sale of goods a major defect is the limited extent of policing of unfair and deceptive practices. Government activities of this kind cover a very small part of the area in which consumers are exposed to such practices * laws fail, with some exceptions, to require that consumers be given even a minimum of essential information concerning the goods they buy.

* *

"To make such a requirement of law feasible, standards would be necessary. To date most standards evolved through Government process are designed for use in Government purchases, or in a manufacturing process, or in wholesale transactions * * ** the Federal Government has left wholly to State and local governments the application and enforcement of the customary weights and measures. Throughout large areas of the United States practically no effort is made to see that consumers get pounds when they pay for pounds or yards when they buy yards. * * *

*

"Finally, among the protective services, should be the provision for specialized personnel to represent the interests of consumers in governmental procedures. * Many governmental agencies render services or administer regulations for the general public welfare, without specialized attention to the consumer phases of that welfare. Ultimate consumers are not, for example, deemed parties at interest in a proceeding before the Interstate Commerce Commission on the raising of railroad tariffs. Nor does any Government agency appear on their behalf. * * * Farmers, however, as shippers or receivers of railroad freight may be represented in ICC hearings by the Secretary of Agriculture or his agent, because Congress has specifically authorized such representation of farm interests.

"As there is no one Government agency charged with the duty of giving independent representation to the interest of consumers in administrative procedures, likewise there is no source to which Congress can turn for informed counsel on the consumer aspects of proposed legislation, should it desire to do so."

In presenting this record at this time, we are not suggesting that this committee propose specific legislation for the expansion or coordination of consumer services in the Federal Government in connection with the legislation now before it, although we should like to see such legislation. We have presented this record in order that you may see why we are (1) opposing a bill, S. 140, which precludes from the new department the services whose need has been so widely recognized, and (2) urging specific mention of consumer protection in the bill, S. 712, which we support.

If the committee should consider S. 140 favorably, we would recommend the addition of a fourth division and fourth under secretary, for consumer protection, placing the Food and Drug Administration in this division, spelling out the elements of an expanded consumer-protection service, and adding consumer protection to the title of the department.

We hope, however, that the committee will choose the simple creation of a department to perform the Federal Security Agency's functions, by approving S. 712, and that it will accept our recommendation for expressly enumerating consumer protection among the powers and future functions of the department.

The CHAIRMAN. Thank you, Dr. Ware. Our next witness will be Stanley H. Ruttenberg, assistant director of research, Congress of Industrial Organizations.

STATEMENT OF STANLEY H. RUTTENBERG, ASSISTANT DIRECTOR OF RESEARCH, CONGRESS OF INDUSTRIAL ORGANIZATIONS

Mr. RUTTENBERG. Mr. Chairman and members of the committee, I have a very brief statement.

On behalf of the Congress of Industrial Organizations I wish to record the support of our organization for legislation which will coordinate Federal functions dealing with health, education, and security, and establish an executive department covering these Federal activities.

American wage earners, more than any other group of the population, will benefit by strengthening Federal participation in the fields of health, education, and security, by coordinating these related activities and by elevating these functions to Cabinet status. Certainly the agency of the Federal Government administering programs that directly affect our most precious asset-the American people-should be accorded top-ranking status. Therefore, the Congress of Industrial Organizations is in accord with both S. 140 and S. 712 insofar as the main objective of both bills is the establishment of an executive department dealing with education, health, and security.

Going beyond this point, however, we find ourselves in agreement with those who favor the simple transferral of the functions and powers of the Federal Security Agency to a new department as proposed in S. 712 and oppose S. 140 because of restrictive and inflexible provisions written into that bill.

This committee has already received detailed testimony with regard to the superiority of S. 712 over S. 140. The Congress of Industrial Organizations is in agreement that the latter bill is undesirable because:

(1) It unduly and arbitrarily provides specific statutory divisions which will make efficient departmental administration difficult. While we favor statutory establishment of Divisions of Health, Education, and Security in the new Department, we believe that the Secretary must be given the widest possible discretion to allocate units within Divisions and to coordinate the activities of the various sections of the Department. Human needs can be better served by flexibility rather than by too stringent a plan to freeze the organizational pattern of the Department.

(2) We also oppose the effort of S. 140 to prescribe by statute that Secretaries and Under Secretaries be specialists representing the professional groups interested in the three Divisions of the Department. These officials should be representatives of the general public and should hold office to represent the policies of the administration elected by the majority of the American people, as is the case in already existing Departments.