REORGANIZATION OF THE GOVERNMENT AGENCIES TUESDAY, AUGUST 10, 1937 SENATE SELECT COMMITTEE ON The committee met, Senator James F. Byrnes presiding. The CHAIRMAN. The committee will come to order. Mr. Ryder, you have written two letters, one dated July 1 and one dated July 28. I have those letters and we will put them in the record. (The letters referred to are as follows:) UNITED STATES TARIFF COMMISSION, Washington, July 1, 1937. Hon. JOE T. ROBINSON, Chairman, Senate Committee on Government Reorganization, United States Senate, Washington, D. C. DEAR SENATOR ROBINSON: I have your letter of June 24, transmitting a copy of Senate bill 2700 to provide for reorganizing agencies of the government and for other purposes, and asking my views on such provisions of the bill as they affect the United States Tariff Commission. I shall offer no comment at present except with respect to the omission of the Tariff Commission from the list of establishments enumerated in the definition of the term "independent establishment" in section 5 (2). I express not only my conviction but that of the entire Commission when I say that the bill should treat the Tariff Commission as an independent establishment. Before the establishment of the Tariff Commission, the Congress was generally dependent upon interested parties, or upon political sources, for information with respect to tariff questions. In order to remedy this situation, the Tariff Commission was created in 1916 for the purpose of providing the Congress with a source of authentic foreign trade and tariff information. Since its establishment, the Tariff Commission has functioned continuously as an independent agency charged with the duty of ascertaining and reporting directly, without the intervention of any political officer, to the Congress and to the President facts regarding the operations and economic effects of our commercial policies and tariff laws and pertinent facts concerning proposed changes therein. On a subject so highly complex and so much a matter of sectional and party controversy as the tariff, it is essential that the fact-finding body shall be as nonpartisan, unbiased, and as independent as it can be made. It was from a realization of this that the Congress provided that the Tariff Commission, unlike any other governmental board, be composed of an even number of members and that not more than half of them be members of the same political party. If the Congress wants to be assured of a source of objective data and independent judgment on questions of foreign trade and tariff policy, it would seem essential that the Tariff Commission be continued as an independent agency. As an extension of its fact-finding functions, the Commission, under the so-called flexible tariff provision (sec. 336 of the Tariff Act of 1930), finds differences in costs of production and in doing so exercises independent judgment and discretion in passing upon difficult questions of cost determination which at the same time involve important questions of public policy. Examples are decisions as to comparability of foreign and domestic products, as to methods of cost allocation, and cost averaging, and as to the selection of markets to be used in computing transportation costs. With respect to findings under this section, the President has only the power of approval or disapproval. In addition, the Commission has certain functions which are formally quasijudicial in character. Under section 337 of the Tariff Act of 1930, prohibiting unfair methods of competition in connection with imports, the Tariff Commission acts in a quasi-judicial capacity and its findings, before going to the President, are subject to review on questions of law by the United States Court of Customs and Patent Appeals. Its findings on questions of fact, if supported by evidence, are conclusive. I may later file with your committee a brief giving in more complete form the reasons why, in my opinion, the Tariff Commission should be designated an "independent establishment" within the meaning of the pending bill; also presenting the views of the Commission upon certain other aspects of the bill. Very respectfully yours, RAYMOND B. STEVENS, Chairman. UNITED STATES TARIFF COMMISSION, Washington, July 28, 1937. The CHAIRMAN, Joint Committee on Government Reorganization, Senate Office Building, Washington, D. C. DEAR MR. CHAIRMAN: On July 1, I wrote a letter to the late Senator Robinson, then chairman of the Senate Committee on Government Reorganization, stating the view of the Tariff Commission that the Commission should be designated an "independent establishment" in section 5 (2) of Senate bill 2700, providing for the reorganization of Government agencies. At the same time I stated that the Commission might desire to file later a statement of its views upon certain other aspects of the bill. If the Tariff Commission were designated an "independent establishment" its work might be seriously affected by the provisions of paragraph (c) of section 2. Under this paragraph the President might "transfer to an executive department any of the routine administrative and executive functions", including "the appointment of personnel and maintenance of personnel records." The purpose of paragraph (c) as set forth in section 1 is "to segregate routine administrative and executive functions from regulatory functions" (par. (f), sec. 1). Apparently this provision in the bill is based upon the recommendations contained in the report of the President's Committee on Administrative Management in the Government of the United States. It is unnecessary here to comment on the arguments for separating executive from regulatory (quasi-legislative) and quasi-judicial functions, because a brief analysis of the functions of the Tariff Commission will show conclusively that it has not by itself regulatory authority and, with one minor exception, does not exercise quasi-judicial functions. fore no need exists for taking from the Commission any of its administrative functions and, in particular, the control over the selection and promotion of its personnel. Furthermore the analysis will also show that such a course would seriously inpair the unsefulness of the Tariff Commission. There The Tariff Commission came into being during the administration of Woodrow Wilson in recognition of a need for a source of authentic and disinterested information to guide Congress in its deliberations on the tariff. Several temporary boards and commissions had been appointed from time to time from as early as 1865, and the Tariff Board of 1909-12 had published several factual reports on the wool and cotton schedules. Indeed, it was because of the sharp contrast between this information and the kind usually received from persons and corporations who are most directly interested in tariff legislation, that Congress desired to have similar studies made with respect to all commodities. The duties of the Tariff Commission have been increased from time to time and its activities as set forth in the Tariff Act of 1930 and amendments thereto are as follows: 1. Section 332 gives the commission certain general powers and duties. It must keep abreast of changes in trade, competition between imports and domestic production, and trends in commercial policies throughout the world. It must keep itself informed with respect to technological developments. Under this section the Commission publishes numerous surveys and reports, many of which are prepared under express direction of Congress. 2. Section 336 is the equalization of cost-of-production provision. Here the commission exercises the function delegated to it by Congress of ascertaining and reporting to the President the rate of duty that will equalize the differences in cost of production in the United States and in the principal competing foreign country. The President may change the rate of duty, in accordance with the Tariff Commission's findings, to the extent of 50 percent of the rate specified in the tariff act. The activities of the President and the Tariff Commission, taken together, under this section are quasi-legislative as was recognized by the Supreme Court in Norwegian Nitrogen Products Company v. United States (288 U. S. 294), but the Commission cannot act by itself in the matter, and its work under section 336 is primarily fact finding. 3. Section 337 authorizes the Commission to investigate unfair acts or practices in importation and sale. The functions of the Commission under this section are quasi-judicial. It makes findings of fact and law, and its findings of fact, if supported by evidence, are conclusive. Its findings on questions of law are reviewable by the Court of Customs and Patent Appeals. 4. Section 338 charges the Commission with the responsibility of keeping informed as to discriminations by foreign countries against the commerce of the United States and of reporting its findings to the President, who may in his discretion take certain action thereon. The function of the Commission under this section is essentially fact finding. 5. Under section 350 (added to the Tariff Act of 1930 by the Trade Agreements Act of 1934), the Commission assists the interdepartmental committees that are engaged in the preparation of trade agreements. It has been assigned the task of preparing all economic analyses and reports on the basis of which a decision can be reached as to the extent of change that without injury to American industry and agriculture can be made in United States rates of duty. It will be noted that the only strictly regulatory or quasi-judicial power conferred upon the Tariff Commission is under section 337. Even in this case the Commission itself does not issue any order. It merely makes findings of law and fact upon which the President is authorized to prohibit the importation of certain commodities. The work of the commission under 337 is of minor importance, and less than 1 percent of its time or appropriations is spent in carrying out its jurisdiction under section 337. In its two last annual reports the Commission recommended that jurisdiction under 337 "so far as it concerned cases of unfair competition other than patent cases, be transferred to the Federal Trade Commission, and that all cases involving violation of patent rights be under the exclusive jurisdiction of the Federal courts." The Commission pointed out in its report that its duties "under section 337 differ fundamentally from its general duties and functions," and that "the Commission is primarily an agency to collect complete and scientific information concerning tariffs for the purpose of aiding the President and the Congress," and, "its functions are purely economic." The Commission is primarily an agency for the collection of reliable and unbiased information that is needed for a full objective consideration of tariff questions. Although the mere existence of a vast body of factual data is not a guaranty that all tariff action will be determined on a factual rather than a political basis, it is certain that without such information the Congress in adopting legislation, and the President in exercising the authority granted him regarding tariff matters, will be deprived of the best means of judging the merits of various proposals for tariff changes and the merits of information submitted in relation thereto by pressure groups. Facts relative to tariff making, in order to be of use to the President, to the Congress, and to the public must fulfill the following requirements: (1) The data must be gathered and developed impartially. The reports of the Tariff Commission have earned a high reputation in this respect; the public and all political parties have confidence in them not only because of the bipartisan membership of the Commission but also because of its nonpolitical and objective approach to tariff questions and because of the caliber, training, and experience of its economic, technical, and statistical staff. According to our experience, the only satisfactory way of obtaining such a staff has been by our own selection. (2) It is not sufficient merely to gather facts; they must be interrelated so as to show in their proper perspective the various factors affecting the competition between imported and domestically produced commodities. Other governmental bodies gather some of the date pertinent to tariff problems, but none of them is equipped to present the data in such a way as to throw light on the various elements entering into this competition. To do that is the special province of the Tariff Commission. It uses all the official statistics of the Departments of Commerce and Agriculture, and the Census Bureau, but uses them only as a starting point in its analytical studies. Nearly always it finds it necessary also to obtain special information on its own initiative by field work and by questionnaire. In this way, it obtains data as to costs, prices, and many aspects of the competitive situation. The objective analysis of problems as complex as those which relate to tariffs involve a steady succession of qualitative judgments. If these judgments are made on a thoroughly disinterested basis and if the facts are fully developed and interrelated by experienced and competent analysts, the conclusions usually are unmistakable. The unprejudiced and sound exercise of these judgments requires a board rather than an administrative head of the organization, and a nonpartisan composition of that board. Since its establishment 20 years ago the Tariff Commission has organized a corps of experienced economists and technical experts, and developed a technique of assembling and analyzing tariff information. The problems with which it is concerned are exceedingly complex and each year's experience adds materially to the effectiveness of the staff and of the Commission itself. Whatever party and administration may be in power, and whatever may be the future vicissitudes of tariff policy, there will be no lessening of the need for a reliable and an unbiased factual basis for tariff making. The Commission is convinced that, in order to continue to supply such a factual basis, it must be assured of a continuance of its present independent status, of its control over its personnel, and of its right to report directly to the Congress and the President without the intervention of any political official. The statements and conclusions set forth in this letter represent the views of every member of the Tariff Commission. Very respectfully yours, RAYMOND B. STEVENS, Chairman. The CHAIRMAN. Mr. Ryder, do those letters set forth your views with reference to this bill? STATEMENT OF OSCAR B. RYDER, COMMISSIONER, UNITED STATES TARIFF COMMISSION Mr. RYDER. They set forth not only my personal views, but they set forth the unanimous view of the Tariff Commission. The CHAIRMAN. Is there anything you desire to add other than the views set forth in those letters? Mr. RYDER. I might state this: The Tariff Commission's functions are quite different from that of any other commission that I know of. It has no regulatory functions as such. It has no functions in the way of administration, external administration, such as the Customs Bureau administering the tariff, collecting the duties, and all that sort of thing. The Tariff Commission was originally established in order to enable Congress to have unbiased and objective information on tariff questions. Congress had found it very difficult to get such information. It usually had to act upon facts, or alleged facts, supplied by interested parties. The Tariff Commission was organized unlike any other commission. It was provided that not more than one-half of its members would be of one political party. It was given an even number of members. We feel strongly that the Congress, and the President, for that matter, could not obtain the unbiased and objective information required on tariff matters except from an independent organization that does not have to function through a political official of any sort. The CHAIRMAN. What do you mean by "political official"? Mr. RYDER. I mean such as a cabinet officer, who is, frankly, a political official. The CHAIRMAN. He is appointed by the President? Mr. RYDER. He is appointed by the President. The CHAIRMAN. By whom are the Tariff Commissioners appointed? Mr. RYDER. They are also appointed by the President. The CHAIRMAN. And you say they are appointed because of their politics, one-half of each party? Mr. RYDER. The provision is that not more than three of the six should be in more than one political party. The CHAIRMAN. Then they must have some political views? The CHAIRMAN. And they are appointed by the President? Mr. RYDER. They are appointed by the President, but they are not appointed at one time, they are appointed for staggered terms. It is not usually that we have a commission composed entirely of appointees by one President. I should add that the tendency, particularly under the present administration, has been to appoint people who are more or less nonpartisan. Not that they do not have political affiliations, but they have not been actively engaged in politics, and are appointed because of their special knowledge of tariff questions. The CHAIRMAN. Mr. Ryder, we are very glad to have had you present your views. Mr. Madden. STATEMENT OF J. WARREN MADDEN, CHAIRMAN, NATIONAL LABOR RELATIONS BOARD The CHAIRMAN. Mr. Madden, you were asked by Senator Robinson, the former chairman of this committee, for your comment upon S. 2700. You were asked by reason of your position as chairman of the National Labor Relations Board, to present your views. You submitted a letter under date of July 2. Did you submit any other communication to him? Mr. MADDEN. That was the only one. The CHAIRMAN. I want to put into the record the letter you wrote with reference to the bill. (The letter referred to is as follows:) Hon. JOSEPH T. ROBINSON, NATIONAL LABOR RELATIONS BOARD, Chairman of the Senate Select Committee, Senate Office Building, Washington, D. C. MY DEAR SENATOR ROBINSON: In reply to your letter of June 24, 1937, requesting the Board's views on any provisions affecting it in S. 2700, being a bill to provide for reorganizing agencies of the Government, extending the classified civil service, establishing a General Auditing Office and a Department of Welfare, and for other purposes, I am pleased to write you concerning those portions of the bill which seem of particular importance as affecting the work of the Board. S. 2700, by section 2 (a), authorizes the President to transfer, regroup, abolish, and designate the functions of any agency, subject to the limitations of subsection (b) which, among other things, excludes from the power granted the authority "to abolish any of the functions of any independent establishment, or to transfer to any other agency any of the functions of any independent establishment except as provided in subsection (c)." The National Labor Relations Board is clearly an independent establishment and is expressly recognized as such by section 5 (2) of the bill. This independent status was conferred upon the Board by Congress after extended hearings and in full recognition of the necessity of such a status if the Board were successfully to discharge its functions. The conference report on S. 1958 (the National Labor Relations Act) which approved a House amendment eliminating the designation of the Board as an independent agency in the executive branch of the Government described in the situation when it said: "The Board as contemplated in the bill is in no sense to be an agency of the executive branch of the Government. It is to have a status similar to that of the Federal Trade Commission, which, as the Supreme Court pointed out in the Schechter case, is a quasi-judicial and quasi-legislative body." |