Secretary WALLACE. I do not believe so.

You know most of the

criticism as to the enforcement of the act has not been that we have been too rough, but that we have been too gentle.

Mr. JONES. I understand; but there is danger of swinging from one extreme to another.

Secretary WALLACE. The fact of the matter is that our people who are charged with this administration are conscious all the time of their responsibility to the people whose business they are supervising. Let me say this, that that is true throughout my department. The longer I am here, the longer I come in contact with these people with administrative responsibilities in the Department of Agriculture and all of its bureaus, the higher respect I have for them. There is the utmost consideration for the rights of the other fellow. There is no snap judgment taken that I have ever seen. I can not believe that any organization, set up as this has been, would exercise undue authority, nor would any man in authority having supervision of the work exercise undue authority.

Mr. JONES. I was not asking the question in a spirit of criticism. Secretary WALLACE. I understand that.

Mr. JONES. I was just seeking information, as to the exercise of this power. One part of it gives general power to suspend even for a period of years, when you have become convinced, after hearing, that it is justified.

Secretary WALLACE. Yes.

Mr. JONES. And I wondered if the courtesy to the other man should be extended by not suspending for the intermediate period until a final hearing has been had.

Secretary WALLACE. It is simply a question of getting prompt action where you have a clear case of unfair practice.

Mr. JONES. You think it is necessary at some times to have immediate action?

Secretary WALLACE. It seems to me so. We think a year's experience on that point fully justifies it. I have had made up for my own information the total instance of our formal proceedings. Mr. Morrill, have you a copy of those formal proceedings?

Mr. MORRILL. Yes, sir [exhibiting volume].

Secretary WALLACE. That is simply a record of the formal proceedings under this act. People often say that we are not doing any business, not getting any action, and that volume just shows you some of the formal procedures that have been taken. Take the case of the Livestock Exchange of St. Paul, for example. We have been subject to a good deal of criticism, and those people got action, because they were not interfered with by any legal restrictions or any requirements of appeal to the courts, or anything like that. Every member pledges himself to abide by the rules and regulations of the exchange. Those rules and regulations prohibited certain things and when a man has been convicted of violating the provisions he can be summarily dealt with, even suspended or put out of the market altogether. You get action there. I do not think that we would want to be able to impose fines as they do or to do some of the things they do, but I do think we have got to have authority to deal more vigorously with flagrant offenders.

Mr. KETCHAM. Touching upon the point upon which Mr. Jones made inquiry a moment ago, do you understand that any such action

93853-24-SER N-10

as suspending a man for 30 days would be taken without previous notice of some irregularity having been given to the party involved? Secretary WALLACE. NO.

Mr. KETCHAM. Do I read it correctly, "Whenever the Secretary, after due notice and opportunity for a hearing"-doesn't that convey the notion that the act of irregularity will be called to the attention of the person?

Secretary WALLACE. Yes; but further on, on page 2, line 3

Mr. KETCHAM. I understand that; but my notion was that there was no intention of suspending an individual without having given due notice to him of irregularity, even for a period of 30 days. Am I right or wrong?

Secretary WALLACE. You are right, I think.

Mr. KETCHAM. If a man had 30 days' notice and still refused to comply with the act, some pretty drastic authority ought to be given somewhere to compel him to correct the irregularity.

Secretary WALLACE. I do not think any injustice would result. That is my opinion of it, based on our experience in administering the act. I do not think any injustice would result.

Mr. JOHNSON. Mr. Secretary, on page 2, line 1, it says, "and pending such notice and opportunity for a hearing he may, by order, suspend such registration without a hearing for a period not exceeding 30 days," which means, as I understand it, that if you serve notice to-day on this gentleman here, who is a commission merchant, you can immediately suspend him for 30 days?

Secretary WALLACE. If the case justified it, in my opinion; yes. Mr. JOHNSON. Why couldn't you put in there that these charges shall be served upon the commission man, or whoever it may be, and that he shall have five days, or a few days, within which he may make some defense? What objection would there be to that?

Secretary WALLACE. In practice, he would have all of that.

Mr. JOHNSON. I know, but it is better to put it in the law. It is all right while you are there, but we do not know who is going to follow you, and there is the law.

Secretary WALLACE. I do not think any secretary would do any different than I would.

Mr. JOHNSON. It looks to me to be a pretty broad provision of the law, and it occurred to me he might be given a few days.

The CHAIRMAN. Mr. Eaton suggested an amendment on page 5, by inserting the words "relating to rates or charges." He said if that amendment was inserted there would be no objection to it.

Secretary WALLACE. I beg your pardon, Mr. Chairman.

The CHAIRMAN. On page 5 Mr. Eaton suggested inserting the words or relating to rates or charges.'

Mr. JOHNSON. In line 3, after the word "money."

Secretary WALLACE. Mr. Morrill is more familiar with that.

Mr. MORRILL. It is my present impression we would have no objection to that amendment, because what we had in contemplation was unfair practices and not rates. Until we have more opportunity for mature consideration, I would think we would have no objection for such change.

The CHAIRMAN. It would apply only to moneys and rates and charges.

Mr. MORRILL. This relates to an exception in the paragraph. The exception now is limited to orders for the payment of moneys, and as I understand it, this is intended to include orders relating to rates and charges. It seens to me at the present time that that exception would be all right.

Secretary WALLACE. Let me say in conclusion that we have now under registration 75 stockyards in 32 different States, 4,000 dealers, and 1,100 market agencies under registration.

Mr. RUBEY. Mr. Secretary, you spoke of the splendid cooperation which you have at St. Paul. Have you had that same cooperation from all the other stockyard companies where you have gone? Secretary WALLACE. You are referring to the livestock exchanges? Mr. RUBEY. Yes, sir.

Secretary WALLACE. We feel that we have had very good cooperation from all of these marketing agencies. There has been friction, of course, with a good many, but on the whole I think the spirit has been good.

Mr. RUBEY. You haven't had any trouble with reference to their books or anything of that sort?

Mr. WALLACE. No, sir.

Mr. RUBEY. The trouble you are having now is with the packers? Secretary WALLACE. The only real break has been with the packers on the Morris-Armour merger, and, secondly, on the right to go into the books. There has been a very good spirit displayed by the marketing agencies. We have ironed out an astonishing number of difficulties and eradicated an astonishing number of little unfair practices, just as the committee hoped we would, through the action of our supervisor on the ground in getting the people together and getting the matters adjusted, matters which might have grown into very serious difficulties and cause friction. As we get more experience and as the various agencies supervised become better acquainted with the act and with our supervisors, the work becomes easier right along.

Mr. RUBEY. We sometimes put into a law a provision which we rarely ever expect to put into force, for the purpose of helping us to get enforcement. That situation might apply to the 30-day provision there. By putting that in, and by the knowledge that you had the right, you would be able to get along better than you would without it?

Secretary WALLACE. Yes, sir.

Mr. DOYLE. Have there been flagrant and numerous violations of the act which warrant this drastic action that you speak of? I judged from the way you spoke that it needed drastic action. Is there any other line of business that has such drastic supervision exercised? I have in mind when I ask that, for instance, the banking examiners who go in and examine the accounts of a bank and examine the conditions of the bank before they close the doors, and it would be practically the same thing as closing the doors of a bank if you suspend a man or a commission firm, because they have to do business on their reliability.

Secretary WALLACE. I can not speak with much knowledge as to the practice of bank examiners, but. I do know that they give the banks very often 24 hours to throw out certain paper and substitute

other good paper for it, but I think it is on the general theory of walking down the street, down Pennsylvania Avenue, and you pass a policeman. That policeman has authority to put his hand on your shoulder and take you off to jail, throw you into jail, and maybe keep you there for a week, without any chance for a hearing or a defense at all.

Mr. SINCLAIR. Oh, I do not think that, Mr. Secretary.

Mr. CLAGUE. That would be false arrest.

Secretary WALLACE. He hasn't the right, but he can exercise the authority.

Mr. JONES. He has got to have a paper from the court.
Secretary WALLACE. No; he does not.

Mr. JONES. He has got to have a crime committed in his presence or authority from the court.

Secretary WALLACE. I am talking about his actual authority. He can put his hand on your shoulder and drag you off and you can not help yourself.

Mr. DOYLE. Oh, he hasn't any right to do that.

Secretary WALLACE. But he can do it just the same.

Mr. PURNELL. He hasn't any legal right.

Secretary WALLACE. Yes; I know that.

Mr. JONES. The right of a hearing is a fundament of the American Government.

Secretary WALLACE. He is clothed with that authority and if you resist him he will beat you over the head.

Mr. DOYLE. There has been some talk of rates, services, and commissions. Do you wish to say anything on that subject?

Secretary WALLACE. No; I think not. I think our people have been in conference with people who have different views, and from what I was told they were coming to some understanding.

Mr. DOYLE. It has been mentioned at the previous hearings here and that is the reason I asked the question.

Secretary WALLACE. I haven't given much attention to it. I would like Mr. Morrill to follow me on this and to go into more detail with regard to some of our experiences in administering the act. The CHAIRMAN. We thank you very much, Mr. Secretary.

STATEMENT OF MR. CHESTER MORRILL, ASSISTANT TO THE SECRETARY OF AGRICULTURE, DEPARTMENT OF AGRICULTURE, WASHINGTON, D. C.

Mr. MORRILL. Mr. Chairman and gentlemen, I am assistant to the Secretary of Agriculture, in charge of the packers and stockyards administration. It is my understanding that it is desired that I discuss the amendments to the packers and stockyards act contained in H. R. 6424, introduced by Mr. Haugen, and to go into some of the details which the Secretary has not discussed in his general statement. I might say that I personally recognize the very drastic character of the power that this first section of the bill will give to the Secretary of Agriculture.

Mr. SWANK. Mr. Chairman, may I ask the witness a question here? I wanted to ask it of the Secretary, but did not want to take the time. The CHAIRMAN. Do you yield to the question, Mr. Morrill?

Mr. MORRILL. Certainly.

Mr. SWANK. Of course the authority, if given, would be somewhat drastic, as you suggest, and as has been stated by others around the table, but it isn't any more drastic than the general law of injunctions. You can go into court very often and get an injunction without any notice of any kind.

Mr. JOHNSON. But you give a bond for damages. That is the difference. You don't give anything here.

Mr. MORRILL. Of course the application of the licensing principle to commission men is not novel, because there are other businesses that are subjected to licensing under State laws. For example, as a lawyer I can not carry on the practice of my profession if a board or committee decides that I am not of good moral character. I do not know the methods by which they reach that conclusion.

Mr. SWANK. The point I was making was that property is tied up in court without notice, and I have seen times when I thought the court abused its powers in issuing an injunction, but then that is the general law.

Mr. MORRILL. Ever since the beginning of the administration of the packers and stockyards act we have been faced with the question why we did not refuse to permit certain people to carry on their business in the stockyards. The act, as you gentlemen probably fully understand, is predicated upon the theory that every man has a right to enter into business and to continue in that business as long as he behaves himself and that the action of the Secretary of Agriculture should be limited to the removal of the misbehavior and not the removal of the man who is guilty of the misbehavior, and that that could be accomplished in most cases by the cease and desist procedure. In some few cases it would be possible to go directly into the Federal courts and prosecute him for a departure from his schedule of rates and charges, for example, or a false report to the Government or failure to open his books or doing business without having registered at all. In those few cases you could go directly into court, but in the bulk of the cases the Secretary is limited to the cease and desist procedure, and that was understood by the committees of Congress when they were passing on this legislation. But many people have not understood that and they have criticized the Secretary very vigorously for not exercising the power which they supposed he possessed. Fortunately, we have had a good deal of cooperation with respect to irregularities in the yards. The St. Paul case is an illustration. There the stockyards company cooperated with the exchange and the Government quite vigorously; the stockyards company took the position that where people were untrustworthy they endangered the credit of the market, and it was not desirable to have such a condition of affairs existing on the market, and in a recent case taken into the State court of Minnesota, with respect to the exercise of their authority, they were fully sustained by the State court, the court holding that they had the right to do that.

Prior to the beginning of the Packers and Stockyards Administration, the exchanges in certain cities where there were exchanges, passed upon the qualifications of people who sought admission to the exchanges and who wanted to do business with members of the exchanges. The stockyards companies did likewise and in so far as