Mr. WILLIAMS. Their report and their recommendation would go directly to the President?

Mr. HENDERSON. That is correct.

Mr. WILLIAMS. In other words, the authority under this act would be distributed among a number of different agencies of Government? Mr. HENDERSON. I think the bulk of it, however, would be in the commodity price regulating authority.

Mr. WILLIAMS. Just one other phase of the matter in connection with the administration of this bill. What would be the rights of the individual who feels aggrieved by any order or regulation issued concerning his industry or his activities?

Mr. HENDERSON. Could I ask Mr. Ginsburg to explain that?

Mr. WILLIAMS. Yes. I think that we might go into that briefly, although I do not want to take up too much time.

Mr. HENDERSON. I think that it is very important.

one.

Mr. GINSBURG. The procedure set up in the bill is a very simple The first important safeguard is that every regulation or order which establishes any ceiling price must be accompanied by a statement of the considerations involved in the issuance of such regulation or order. That is designed to notify the person who is subject to the regulation, notify the persons involved, the public, and the Congress, of the considerations which underlie the regulation, why that particular price was fixed, and the information on which it was fixed.

Within 60 days after the issuance of any such regulation or order, any person who is subject to any ceiling regulation may then file a protest setting forth his objections, why it hurts, why it is wrong, and so forth. In addition, he can accompany his protest, in order to expedite the proceeding, with written evidence, or affidavits of any kind that he wants to file with his protest.

Then, within 30 days after that, the Administrator or the President, as is set forth in the bill, must act on that protest, either grant it or deny it in whole or in part or set it down for a further hearing. He then has an absolute right, an unqualified right, to proceed to an emergency court of appeals.

The idea generally was to provide an expeditious method of review in an expert court that could deal with these things rapidly.

The record that goes up to that court is composed in the first instance of the statement which accompanied the regulation, of the protest that is filed, of the evidence submitted in support of the protest, and of any other information obtained in connection with any hearing had on the protest.

Then, the court takes that record and, unlike reviews which are given to an ordinary administrative agency where there are findings of fact supported by substantial evidence and where the question before the court is whether there is substantial evidence to support the findings, sits as a trial court to exercise its own judgment. The test that the court must apply is whether the action went beyond the statute or is arbitrary or capricious.

The net result is that this court considers a record expeditiously prepared, and then makes up its own mind as to whether the action of the Administrator or of the President, as the case may be, in issuing the regulation, was arbitrary or capricious.

Then, if the decision of the court is against the person complaining, that person has a further right to file a petition for a writ of certiorari with the Supreme Court of the United States, and obtain a review of that record.

Mr. WILLIAMS. In this hearing in the court that you referred to, the record would go up?

Mr. GINSBURG. Yes, sir.

Mr. WILLIAMs. All the record that has been made in the case goes before the court?

Mr. GINSBURG. Everything.

Mr. WILLIAMS. And you say that the court considers that as an original proposition?

Mr. GINSBURG. Yes, sir. There are no findings of fact in this kind of proceeding. This court is, in substance, sitting as a trial court, as a nisi prius court.

Mr. WILLIAMS. Do they decide, independently of the order that has been issued, but on all of the evidence before them, whether or not that is a fair and equitable decision or not?

Mr. GINSBURG. That is exactly right, sir.

Mr. WILLIAMS. And from that, they have certiorari to the Supreme Court?

Mr. GINSBURG. That is exactly right.

Mr. GIFFORD. As I read this bill, they could pass only on the validity and not on the fairness of the decision.

Mr. WILLIAMS. That is exactly what I just asked him.

Mr. GINSBURG. May I read the provision that I think is involved? It is on page 12, subsection (b), and it reads:

No such regulation or order shall be set aside, in whole or in part, unless the complainant establishes to the satisfaction of the court that the regulation or order is not in accordance with law, or is arbitrary or capricious.

As I understand it, the effort here was to subject this regulation to precisely the same test that any other legislative act would be subjected to in any court.

If, for example, a statute of Congress were taken into a district court by way of an injunction, the issue before the court would be whether the action of Congress was arbitrary or capricious. That test is designed to be put into this picture.

Mr. WILLIAMS. Would that not be the same thing that is generally done under the law now, when applied to the findings of an administrative body upon appeal?

Mr. GINSBURG. No, sir,

Mr. WILLIAMS. I do not see any difference, because in either case, unless they find that the finding is capricious or without evidence, they have to follow it.

Isn't that what this means?

Mr. GINSBURG. No, sir. This is an enlarged and different scope of review. There may be some question as to the desirability of accepting it, but it does enlarge it.

It enlarges it in this way, that the ordinary order of the usual Federal administrative agency-Federal Communications Commission, for example-when it goes into the circuit court of appeals, brings before the court the question not whether the action of the

Commission was arbitrary, or unreasonable, or not in accordance with the law, but whether there is any substantial evidence to support the findings of fact of that Commission.

That is not true here. There are no findings of fact. It is not a question of whether or not there is substantial evidence. The court does not go through the evidence to see whether there is sufficient evidence in support of the Administrator's determination. The court takes this record as a whole; it takes the evidence put in by the protestant, and the evidence put in by the Government, and it makes up its own mind without regard to any findings of fact, because there

are none.

Mr. WILLIAMS. In other words, they do find, do they not, that the findings of the administrative body, the fact-finding body, are capricious and without any substantial evidence to support them?

Mr. GINSBURG. That is a different test of review. In the one case, the sole issue before the court, is whether the findings of that Federal agency are supported by any substantial evidence. The court may feel that the action taken has been arbitrary and unreasonable, but if there is any evidence in the record to support that decision, the court must uphold the decision of the Commission.

Mr. WILLIAMS. You claim, then, that this provision gives this court the right to pass on the weight of the evidence?

Mr. GINSBURG. I do not know that I would put it just that way. This court must make up its own mind, from the evidence shown in the record and in the light of whatever applicable presumptions of validity there may be, whether or not the action taken was arbitrary or capricious.

Mr. WILLIAMS. Well, it strikes me that there could be a feeling on the part of this court that the action of the administrative body was not sustained by the greater weight of the evidence, and still the court might not find that the action was arbitrary and capricious. There could be some evidence to support the findings of the administrative body, and still the action taken might not be in accordance with what the court thought ought to be done.

Mr. GINSBURG. Well, that is a wholly different standard. As I understand the situation in administrative law as it exists today, there are really two standards by which a court may act. The one is the usual standard in dealing with Federal agencies, that is, that the agency is directed by law to make certain findings of fact, and the court must sustain those findings if there is any substantial evidence in the record to support them.

But this is a broader and different type of review. As I said before, there is a question on the merits, as to whether it is desirable to broaden it. Assuming that it is, this device leaves the court free to apply the same rule that it would apply if it were testing the constitutional validity of any statute of Congress or if it were testing the validity of a regulation of any other administrative agency. But the question is not whether there is substantial evidence. The question is whether the action of the agency is arbitrary or capricious, or whether the administrative agency has exceeded its jurisdiction.

The court looks then at the statute and at the standards laid down by the statute, and decides whether the action, in the light of those standards, is arbitrary or capricious.

Mr. WILLIAMS. I am afraid that I do not see the difference. I think that I understand the general rule, which is that there are just two things before a court on an appeal from an administrative ruling, the first of which is, Did the administrative body follow the law laid down in their procedure; and, second, Was there any substantial evidence to support their findings?

Mr. GINSBURG. That is the usual rule.

Mr. WILLIAMS. It seems to me that that is this rule.

Mr. GINSBURG. No, sir. I have tried to make myself clear, that the provision here is different and broader. It allows the court to review the record, the entire record, and then to make its own decision as to whether or not the action taken is arbitrary or capricious.

Mr. WILLIAMS. Then this does not go any further than the administrative procedure?

Mr. GINSBURG. No. I think that it goes just the other way.

Mr. HENDERSON. It certainly was so intended.

Mr. GINSBURG. It was intended to give the court a different and broader scope of review, and I believe that it does.

Mr. WILLIAMS. I have taken entirely too much time, Mr. Chairman, for which I want to apologize.

The CHAIRMAN. I think that your questions were very helpful. (Thereupon, after an informal discussion as to whether to resume the hearing in the afternoon or adjourn until the following morning, it was decided, at 11:45 a. m., to adjourn, to meet again at 10 a. m. Friday, August 8, 1941.)

PRICE-CONTROL BILL

FRIDAY, AUGUST 8, 1941

HOUSE OF REPRESENTATIVES,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee met at 10:15 a. m., Hon. Henry B. Steagall (chairman) presiding.

The members present were: Messrs. Steagall, Williams, Spence, Ford, Brown, Patman, Barry, Sacks, Gore, Mills, Monroney, Kopplemann, Boggs, Hull, Wolcott, Gifford, Crawford, Gamble, Kean, Miss Sumner, Messrs. Smith, Kunkel, Rolph, and Dewey.

The CHAIRMAN. The committee will come to order. Mr. Henderson, the committee will be glad to have you resume your statement and, if you desire, we shall be glad to have you insert the charts you referred to. I presume you have them now.

STATEMENT OF LEON HENDERSON-Resumed

1

Mr. HENDERSON. I have here, Mr. Chairman, the table on the relative importance of wages in 100 of the largest manufacturing industries, which was requested by Mr. Williams yesterday and which we agreed to supply this morning. It is a computation of labor costs as a percentage of value added by manufacture, and I notice that the percent of value of the product, that is, the final value of the product, represented by wages is 16 percent. That is the figure which was the basis of the quotation from the article in the A. F. of L. Monthly, which Mr. Williams cited. The percent of value added by manufacture is 36.8.

There is an accompanying memorandum with it, which I ask leave to have inserted.

The CHAIRMAN. That may be done.

(The matter above referred to follows.)

DEPARTMENT OF LABOR,

BUREAU OF LABOR STATISTICS,
Washington, August 8, 1941.

To: Mr. Henderson.

From: Miss Aryness Joy.

Subject: Relative importance of wages in the 100 largest manufacturing industries.

The attached table is submitted for insertion in the record in accordance with the request made to you by Mr. Williams of the House Banking and Currency Committee. It shows wages, value of products, and other general statistics in 1939 for the 100 largest industries as defined by the Census of Manufactures.

In 1939, cost of materials amounted to 56.5 percent of the total value of products for all manufacturing industries; wages were 16.0 percent, salaries 4.5 percent, and other costs 23.0 percent. The value added by manufacture, including wages, salaries, and other costs, but excluding cost of materials, amounted to 43.5 percent of the value of all manufactured products. Of this total or value added by manufacture wages represent 36.8 percent.

The relative importance of wages varied greatly among the 100 industries included in the study. The proportion was largest, 36.4 percent, in the manufacture of full-fashioned hosiery and smallest, 2.5 percent, in the cigarette industry, which is highly mechanized. Wages represented more than 20 percent of the value of products in 36 of the industries and less than 10 percent in 23 industries.

Table 11.

64300-41-pt. 1--12

165