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think so.

Mr. WADSWORTH. Can you say if it has the support of the Federal Trade Commission as introduced?

Commissioner LANDIS. Has what?

Mr. WADSWORTH. The support of the Federal Trade Commission and the Roper committee?

Commissioner LANDIS, I would not say that; but I think it would be doubtful if any member of the Roper committee, although they differ as to details, would not accept it in general.

Mr. WADSWORTH. I am not speaking of the general principles. I had in mind especially the discrepancy between the recommendations in the Roper committee and the actual provisions of the bill.

Commissioner LANDIS. Well, I am sure that some members of that committee would think their conclusions there were better than the conclusions that were arrived at in the bill, and some might not

Mr. WadswORTH. May I ask about section 2? It is not important, really

Commissioner LANDIS. Yes.

Mr. WADSWORTH (continuing): As a part of the solution of this problem, but do you regard section 2 as a proper enactment?

Commissioner LANDIS. I would, Mr. Wadsworth. I do that largely on the basis of the importance that section 3 was in the disposition of the constitutionality of the Grain Futures Act.

Mr. WADSWORTH. Section 2 really is an argument?

Commissioner LANDIS. Section 2 is an argument, and section 3 of that act, from which this is quite clearly drawn, with such modifications as make it applicable to the securities exchanges was relied on, so much, by Mr. Chief Justice Taft in deciding that that act was constitutional. In other words, he said that section represents certain judgments of fact by Congress and "We are not going to question those judgments of fact."

If you would like me, I think I can turn to the particular provisions of the opinion that are set forth.

Mr. WADSWORTH. I think that I shall not ask you to do that. That is not what I had in mind. This section is an argument and arguments are generally contained in the report of the committee. Commissioner LANDIS. Yes. That is perfectly true.

Mr. WADSWORTH. And my information is that courts in passing upon the validity of an act of Congress take cognizance of the arguments presented in the committee reports.

Commissioner LANDIS. They do.

Mr. WadswORTH. Which is just about as effective as putting the argument into the law.

Commissioner LANDIS. It is a question of degree.
Mr. WADSWORTH. This is really a sort of speech.
Commissioner LANDIS. It is.

Mr. Wadsworth. My question may be directed from the standpoint of a legislator. I do not like to see speeches put in the statutes of the United States.

Commissioner LANDIS. Now, if you will let me illustrate your point, by taking the difference between the Grain Futures Act and the Packers and the Stockyards Act (the Packers and Stockyards Act did not really have a long speech of this type). The court, in dealing with the Packers Act and the Stockyards Act, which involved very much

the same type of problem went back and quoted at length from reports not only of House committees but also from a report of the Federal Trade Commission which preceded it, and even reports of other groups, in order to bring out the factual conclusions, that in section 3 of the Grain Futures Act, were written right in the legislation itself.

It is a question of technique that is involved there. It is pretty hard to say one way is better than another. Perhaps it is a little stronger to write it into the bill rather than into a report. Sometimes, people do not see the reports.

Mr. WADSWORTH. Courts generally do.

Commissioner LANDIS. Well, sometimes they neglect them. I am sure that I have been very regretful, in connection with legal proposals as a whole, because the court did not go back to the reports and really get at the intent of Congress, rather than mouthing about the intent of the Congress.

The CHAIRMAN. Are you through, Mr. Wadsworth?
Mr. WADSWORTH. Yes, Mr. Chairman.
The CHAIRMAN. Mr. Huddleston.

Mr. HUDDLESTON. May I ask you to return to the constitutional aspect of the bill.

Commissioner LANDIS, Yes.

Mr. HUDDLESTON. You have defended it on the ground that an exchange is a throat

Commissioner LANDIS. Yes.. Mr. HUDDLESTON. Through which interstate commerce flows. Commissioner LANDIS. Yes. Mr. HUDDLESTON. Now, may I ask whether, assuming a case in which there was no interstate commerce flowing through this throat there would be power in Congress to regulate it?

Commissioner LANDIS. You would have to argue a lot harder for that case.

Mr. HUDDLESTON. I beg your pardon.

Commissioner LANDIS. I say, you would have to argue a lot harder for that case; but I think this is true, that as exchanges are organized today, interstate and intrastate commerce of that type is so inextricably intertwined that in order to effectively control the interstate commerce, Congress would allow you to go ahead and control what might be intrastate commerce, just in the way in which Congress did in handling the problem of interstate commerce under section 15a of the Interstate Commerce Act, the recapture clause there, which applied also to revenues derived from intrastate rates as well as interstate rates. There Congress said that they were so tied up.

Mr. HUDDLESTON. Your answer deals with a situation as is? Commissioner LANDIS. Yes. Mr. HUDDLESTON. A concrete case. Commissioner LANDIS. Yes. Mr. HUDDLESTON. Instead of an abstract case. Commissioner LANDIS. Yes. Mr. HUDDLESTON. Now, if we may assume that the commerce which is flowing through the exchange is purely intrastate, would there be power in Congress to regulate it then?

Commissioner LANDIS. I think the power then would have to be based upon such conditions as possibly underlie the National Indus

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trial Recovery Act, which as you know, has not yet been tested, namely that the securities exchanges are so intimately related to consumer credit that regulation of that is necessary in order to fostre and maintain buying power over the country at large. It would have to follow some argument of that type.

I just took the easiest argument, namely, the argument that there is interstate commerce in the handling of these securities.

Mr. HUDDLESTON. Undoubtedly there are transactions on every exchange in which citizens of a State other than the one in which the exchange is situated are not involved.

Commissioner LANDIS. Yes.

Mr. HUDDLESTON. And as to those particular transactions, assuming that they are not intertwined or comingled with interstate transactions, what power has Congress over that?

Commissioner LANDIS. It would have to rely upon such power as I suggested there; namely, I do not believe myself, that the mere fact that securities are dealt in on the exchange are securities of companies who ship goods in interstate commerce, is in itself sufficient to give the power or the right to Congress to regulate transactions in those securities. I have my doubts on that.

Mr. HUDDLESTON. I was coming to that question.

Now, we have in the Interstate Commerce Act, provisions for the regulation of securities of interstate railroads, and that is a regulation of interstate commerce.

Commissioner LANDIS. Yes.

Mr. HUDDLESTON. And, do you think that that is proper? Would you be able to differentiate between the regulation of the securities of concerns engaged in intrastate commerce and those which were not so engaged? Has Congress had power to regulate the securities of concerns engaged in interstate commerce, which it would not have over the other concerns?

Commissioner LANDIS. It might be argued, but I do not think so myself. I never thought that connection was quite close enough.

Mr. HUDDLESTON. Now, this bill is not addressed, as I get it, to that aspect.

Commissioner LANDIS. No.

Mr. HUDDLESTON. It does not assume any power in Congress to regulate the securities of concerns engaged in interstate commerce because of that fact.

Commissioner LANDIS. It does not rest on that.

Mr. HUDDLESTON. And, I wonder whether or not it would not add something to the strength of its constitutionality to include that aspect. If Congress has power to regulate the securities of interstate railroads, it has the power to regulate the securities of other concerns engaged in interstate commerce; would you not say so?

Commissioner LANDIS. Well, I do not think that necessarily follows. Mr. HUDDLESTON. Why not?

Commissioner LANDIS. Because obviously Congress's powers over interstate carriers is much larger than Congress's power over manufacturing concerns who ship their goods in interstate commerce.

We may take, for example, the illustration shown by the childlabor cases. In the child-labor cases, there the Supreme Court said to Congress, “You cannot regulate wage conditions or labor conditions in industry, which ship their goods in interstate commerce."

Now, on the other hand, I do think there is a power on the part of Congress to regulate hours and conditions in railroads. It was established in the Wilson Act case, Wilson v. New (243 U.S. 332), that the regulation of hours and wages of railroad employees was within the Congressional power.

Mr. HUDDLESTON. As I understand the Dagenhart case, it was pitched on the ground that the production in that case was not an act of interstate commerce.

Mr. LANDIS. Yes.

Mr. HUDDLESTON. It was not an attempt to deal with an act of interstate commerce.

Now, let us assume that the corporation is engaged in interstate commerce and nothing else. Why does not Congress have the same powers over securities of that corporation as it would have over interstate carriers?

Commissioner LANDIS. Well, I wonder if you do find that situation, where it is engaged in interstate and nothing else.

Mr. HUDDLESTON. You evade me by taking the concrete instead of the abstract. I am trying to assume a situation.

Commissioner LANDIS. I was trying to think of the basis of the distinction that lies between Hammer v. Dagenhart (247 U.S. 251) and Wilson v. New (243 U.S. 332).

With reference to interstate carriers, the Supreme Court has recognized Congress's power to regulate the conditions or what might be called the products of interstate commerce.

But, in Hammer v. Dagenhart, as you pointed out, the Supreme Court was not willing to recognize Congress's control over conditions of production of goods to be moved in interstate commerce.

Mr. HUDDLESTON. Of course, interstate carriers, perform many acts which are not part of interstate commerce.

Commissioner LANDIS. Yes.
Mr. HUDDLESTON. So that incident does not control.
Commissioner LANDIS. No.

Mr. HUDDLESTON. But, I can conceive, as a concrete illustration, of a distributor of goods who does nothing but an interstate business.

Commissioner LANDIS. Yes.

Mr. HUDDLESTON. A shipper of goods who does nothing but ship them across State lines, and I would like to know why Congress does not have the same power over that kind of a concern as it has over interstate carriers.

Commissioner LANDIS. Would you think there that Congress would have the power to regulate the hours that he made his clerks who mail the packages work?

Mr. HUDDLESTON. Not by any means, because the court has decided to the contrary in the Dagenhart case.

Commissioner LANDIS. Yes. Mr. HUDDLESTON. But, when it comes to dealing with securities of that concern, or the legal set-up of that concern, it may be quite a different thing. Just as I do not think that the Congress can regulate an act of an interstate carrier where the act has no relation to interstate commerce. If it is assumed that it is not an act of interstate commerce-not burdensome to interstate commerce-has no bearing upon it-it seems pretty obvious that Congress cannot deal with it.

Commissioner LANDIS. You see what my fear is. It is the fear of the Dagenhart case.

Now, just how far that is to be carried and will be followed in situations of this nature, I do--perhaps I did not express myself clearly—but, I do seem to see there is a difference in extent of Congressional power over carriers, and people of that type, and over corporations who simply produce goods to move in interstate commerce, and for that reason, you may argue that even though Congress does have power to regulate the securities of common carriers, it does not have that power to regulate the securities of corporations engaged in interstate commerce; but beyond that, the power that is called for here is not a power simply over the issuance of those securities under the Interstate Commerce Act. All Congress has regulated is power with reference to the issuance of securities by railroad companies. It does not and has not regulated trading in those securities.

Now, the control that is asked for here is not control over the issuance, necessarily, but control over trading in an interstate manner.

Mr. HUDDLESTON. Of course, that comes back to the question of what is "regulation."

Commissioner Landis. Yes. I mean, it is that of which I really have a very genuine fear. I may be wrong as to Congress' power in matters of that kind, but I do have a very genuine fear of resting it all on that. That is one of the primary theories of this act, to rest it on cases like the Board of Trade case and the Packers and Stockyards case, namely, to conceive of the exchange as being a very essential instrumentality in the large streams of commerce that are moving in this country and one of those streams of commerce is trading in securities.

Mr. HUDDLESTON. Assuming the Congress has power to regulate the stock exchanges. It does not follow by any means there is no limit to that power.

Commissioner Landis. No, of course not.

Mr. HUDDLESTON. It must be a real regulation and a proper regulation. Commissioner LANDIS. Of course.

Mr. HUDDLESTON. A regulation which does not extend and go further and exercise more than a reasonable power.

Commissioner LANDIS. And, I think when you come to a detailed consideration of this bill you will have to think very clearly and very hard about certain features of this bill in order to satisfy yourselves that those features, even though the main purpose of the bill is constitutional, that those particular features meet all our constitutional tests.

Mr. WOLVERTON. May I ask a question, Mr. Chairman?
The CHAIRMAN. Mr. Wolverton.

Mr. WOLVERTON. I rather gather from your remarks, especially in answer to Mr. Huddleston's questions, that the main basis upon which this bill is drawn, is the power of Congress to regulate interstate commerce.

Commissioner LANDIS. Yes.
Mr. WOLVERTON. Is that the only basis on which it is placed?

Commissioner LANDIS. No. The other powers have been dragged in incidentally. Of course, you try to get as many props as you can to support a particular matter.

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