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ject to review in the courts, sufficient for this group representing three important industries and their advertising media to object to this measure, which certainly has been endorsed in principle sufficiently, without a very careful examination of the risks not only to the public but to the good will which those industries now enjoy in the public eye.

Senator COPELAND. Thank you, Professor. I want to thank the many persons who have attended these hearings—thank you for the attention you have given and your courtesy and temperate speeches, and your kindly and constructive criticisms.

It has been a very interesting and highly profitable hearing. If any one of you desire to file a brief, it may be sent to the Committee on Commerce. I hope to have a meeting of the subcommittee some time before Christmas in order that amendments may be considered and bills prepared for presentation to the full committee.

STATEMENT OF W. A. HINES, OF MARLOW & HINES, ATTORNEYS

AT LAW, NEW YORK CITY

Mr. HINES. The broad principles of this bill meet with general approval. No reasonable person can criticise a proposed law intended to protect the consumer against the use of poisonous materials in dangerous quantities in either foods, drugs, or cosmetics. We must register our serious objection to several provisions of the bill however, because of the ambiguity of the language used, the restrictions placed upon manufacture, sale and advertising, and the powers which it confers on the Secretary of Agriculture in enforcing its provisions. Furthermore it is vague and defective in form and its adoption would lead to uncertainty and confusion.

POINT I

REASONABLE LEGISLATION INTENDED FOR THE PROTECTION OF THE

CONSUMER IS APPROVED BUT WHERE IT APPEARS THAT ONLY A TRIFLING PERCENTAGE OF A GIVEN PRODUCT IS OPEN TO CRITICISM AND THE BULK OF THAT PERCENTAGE IS MARKETED BY RACKETEERS, LEGISLATION WHICH SUBJ CTS HONOR LE MANUFACTURERS TO UNREASONABLE RESTRICTIONS AND CLASSIFIES THEM WITH THE RACKETEER IS INDEFENSIBLE

The Federal Trade Commission announced recently that the toilet article and cosmetic industry in the United States does a business of $250,000,000 a year. This industry is in the main in the hands of people who do not manufacture any merchandise which would be harmful to the consumer under any reasonable circumstances. The business of these manufacturers depends entirely upon the approval of the consumer public and if the product is found to be harmful the net result is that the manufacturer loses his consumer and his business suffers to precisely that extent. There are, it is true, a small number of racketeering manufacturers throughout the country who indulge in all forms of misleading and inaccurate advertising, who make absurd claims as to curative and other properties for their product, and who manufacture merchandise which they must know to be harmful and even dangerous. There are but a few of this type, however, and their methods are such that they cannot be controlled, not to say eliminated, except by penal statutes. We submit, however, that a bill such as S. 1944 in its present form classifies the honest manufacturer with the criminal and, even further, places him in a position where he must prove his innocence or go out of business.

No consumer or group of consumers would welcome legislation which would eliminate the racketeer more than the legitimate manufacturer of cosmetics. The consumer, after all, is the foundation stone of every prosperous business. If the manufactured article is harmful, the manufacturer loses not one but thousands of present and prospective customers. It probably never occurred to the women representatives of consumers' organizations who testified before this committee in support of the bill on December 7 that there was anything to discuss but the unfortunate results of the experiences symbolized in the so-called “Chamber of Horrors" which had been so cleverly built up and dramatically displayed in 26 exhibits throughout the country by the Department of Agriculture as propaganda in support of the bill. We know of nothing more contemptible than this method of influencing public opinion, unless it be the use of the radio by agents of the Department to deliberately convey to millions of homes the thought that the Department had investigated, and as a result of its investigation had condemned the entire industry; the implication being that if the bill is enacted into law the Department itself will "run" the

“ business and the millenium will have arrived. An entire nation may not be indicted, and this is equally true of an entire industry. We resent the imputation that our business is dishonest; that our product is made in any part of harmful materials; that anything is used in the articles we manufacture which is not on a par with the highest standards—even higher than anything the Department now prescribes. We are willing to go further: If at any time, because of developments in the field of chemistry having to do with the public health or for any other good and sufficient reason, any responsible Department of the Government suggests a reasonable change in the components of or the methods of manufacture of any of our products, we will promptly comply with the suggestion. We will not demand a formal order from the Department. We will not put the Government to the trouble of moving for an injunction. In the light of our willingness to cooperate with the Government in the interest of public health, we respectfully submit that there is no occasion for legislation which would result in placing Government agents in our factory, stifle our legitimate and truthful advertising, and practically place the control of our affairs in a Department of the Government

Several of the provisions of the bill are so unreasonable that they seriously hamper the legitimate manufacturer in the conduct of his business and we maintain that under these circumstances, the bill is indefensible regardless of the motive behind it.

POINT II

OUR FORMULAE ARE PROPERTY RIGHTS. IF WE ARE REQUIRED TO

DIVULGE THEM TO AN AGENCY OF THE GOVERNMENT OR TO PUBLISH THEM BROADCAST BY ANY MEDIUM, IMITATIONS OF OUR PRODUCTS MADE OF INFERIOR MATERIALS AND SOLD UNDER A NAME SIMULATING OUR REGISTERED NAME WILL BE MARKETED BY RACKETEERS, SOLD AT A LOWER PRICE AND CAUSE US SERIOUS LOSSES.

There seems to be no doubt that the real purpose of the framers of the bill is to vest arbitrary and dictatorial powers in the hands of the Secretary of Agriculture. Fears have been repeatedly expressed and the statement has been made in one or more of the radio broadcasts by agents of the Department of Agriculture that one of the purposes of the bill is to require that the label covering cosmetics shall set forth the formula of the contents of the package. This, if true, would be absolutely destructive of the property rights of legitimate manufacturers in the duly registered names of their products. If this requirement becomes the law, it would be but a matter of a very short time before the racketeering manufacturer would be simulating such registered products, using inferior ingredients and marketing his product at a comparatively small price under a name sufficiently similar to the original to deceive the consumer public. If and when this state of affairs comes about, the legitimate manufacturer may just as well go out of business. The proposed law would then be playing into the hands of the very class responsible for the conditions which have brought about the fanatical attempt at reform which the bill symbolizes.

The Government may at any time analyze any of our products, We do not manufacture any product containing harmful or poisonous materials. At any time after such analysis of any merchandise made by us, if and when it is found to contain any substance which the Government believes to be harmful, we will discontinue its manufacture.

It is respectfully submitted, however, that requiring us to make formulae of our products a matter of public knowledge, formulae which are unquestionably a property right, and particularly in the absence of any attack on the purity of our merchandise by a Federal department, is a dangerous proceeding and destructive to our property interests. When and if the Government can show that any merchandise produced by any manufacturer contains deleterious or poisonous substances, a provision in the bill for a cease-and-desist order along the lines of the Federal Trade Commission Act would give ample power to the Government to enforce its findings. The proposed bill, however, takes the opposite course and in effect places the burden on the manufacturer of proving his innocence. It is therefore much worse than a penal statute.

80390—34-26

POINT III

ILLUSTRATIVE OF THE PREVAILING TENOR OF THE BILL, SECTIONS 12

AND 13 PROPOSE IN EFFECT THAT THE GOVERNMENT TAKE OVER AND RUN THE ENTIRE INDUSTRY AS A FEDERAL HEALTH MEASURE

Under section 12 (a), (b), (c), and section 13 (a) of the proposed bill, the Secretary of Agriculture is vested with power to make regulations covering the conditions of manufacture, processing, and packing as he deems necessary to protect the public health and requiring manufacturers to hold permits for such manufacture, etc. These provisions obviously mean that all manufacturers of cosmetics, good as well as bad, shall be subjected to constant supervision by Government agents. Section 12 (a) is as follows:

Sec. 12. (a) Whenever the Secretary finds that the distribution in interstate commerce of any class of food, drugs, or cosmetics may, by reason of conditions surrounding the manufacture, processing, or packing thereof, be injurious to health, and such injurious nature cannot be adequately determined after such articles have entered interstate commerce, he is authorized, after notice and hearing, to make such regulations governing the conditions of manufacture, processing, or packing as he deems necessary to protect the public health, and requiring manufacturers, processors, and packers of such class of articles to hold a permit conditioned on compliance with such regulations.

This provision is susceptible of only one construction. It simply means that if manufacturer A makes a cold cream under the conditions which this subdivision recites, that manufacturer B, C, etc., who make the same class of merchandise under absolutely healthful conditions, will nevertheless be required to hold a permit issued by the Secretary quite the same as manufacturer A.

This subdivision is in absolute harmony with the spirit of the entire bill. It means that the honest manufacturer is to be punished for something the racketeer has done. The proposed remedy is so obviously unfair and unreasonable that it is indefensible.

POINT IV

CONCLUSION AND RECOMMENDATIONS

We have indicated under Point II that anything in the bill requiring us to disclose the formulae of our products in any manner whatever would amount to a deprivation of our property rights and we submit that, in view of the many ambiguities of the bill, an express provision should be incorporated therein to clearly dispose of this question. For this purpose, we suggest a paragraph in the appropriate place as follows:

Nothing in this Act shall be construed as requiring that manufacturers of cosmetics shall disclose the formulae of their products, either on the labels of the container or elsewhere or to any officer of the government.

As it is our desire to assist the committee in charge of the bill as much as possible in its revision, we respectfully submit the following further suggestions as to the various sections of the bill relating in whole or in part to cosmetics, which in our opinion and for the reasons set forth herein should be amended before the subcommittee makes its report. In the first column we show the section in which we are interested and in the second column the amendment which we suggest.

SECTION 6 (a)

If its labeling is in any particular false or by ambiguity or inference creates a misleading impression regarding any food, drug, or cosmetic.

If its labeling is in any material partticular false or ambiguous.

(NOTE.—Inferences and misleading impressions on the consumer are too nebulous for serious consideration.)

SECTION 9 (a)

An advertisement of a food, drug or An advertisement of a food, drug or cosmetic shall be deemed to be false if cosmetic shall be deemed to be false if in any particular it is untrue, or by in any material particular it is untrue. ambiguity or inference creates a mis- (NOTE.-Inferences and misleading leading impression regarding such food, impressions on the consumer are too drug, or cosmetic.

nebulous for serious consideration.)

SECTION 10 (a) If the Secretary finds that the pres- If the Secretary finds that the presence of an added poisonous or added ence of an added poisonous or added deleterious substance in or on food or deleterious substance in or on food or cosmetics is or may be injurious to cosmetics is injurious to health, then health, taking into account other ways the Secretary shall by regulations proin which the consumer or user may par- mulgated after notice and hearing protake of or be exposed to the same or

hibit such added substances in or on other poisonous or deleterious sub- food or cosmetics or establish tolerances stances, then the Secretary shall by limiting the amount therein or thereon, regulations promulgated after notice to such extent as he may deem necesand hearing prohibit such added sub- sary to prevent such injury to health. stances in or on food or cosmetics, or (NOTE.—The phrase "taking into acestablish tolerances limiting the amount count other ways in which the consumer therein or thereon, to such extent as he or user may partake of or be exposed to may deem necessary to prevent such the same or other poisonous or deleinjury to health.

terious substances” opens the door to contingencies which no legislation should or could provide for; circumstances for which the manufacturer should not be held responsible, such for example, as mistaking one tube for

another in a drug cabinet.) SECTION 12 (a) (b) (c) AND SECTION 13 (a) (b) These sections should be stricken from the bill and substituted by appropriate provisions giving the Secretary of Agriculture reasonable power under a finding that any of the acts provided in the said sections are injurious to the public health, to serve a cease and desist order on the manufacturer; if such cease and desist order is not obeyed, to move for an injunction in a Federal court against such manufacturer.

SECTION 16 (a) Approved subject to the excision of the following words in lines 16, 17, 18, 19: “The operator of which did not, at the time of manufacture, processing, or packing hold a valid permit if so required by regulations under section 12,”

(NOTE. — We have recommended that section 12 be stricken from the bill.)

SECTION 16 (d) Approved subject to the excision of the following words on lines 20, 21, 22, 23: Any article condemned by reason of the manufacturer, processor, or packer not holding a valid permit when so required by regulations under section 12 shall be disposed of by destruction.'

(NOTE.—We have recommended that section 12 be stricken from the bill.)

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