cation of the general principle that I described. This is nothing new. It must not be confused with the rule of the criminal law that a man is supposed to be innocent until he is proven guilty.

Mr. MERRITT. There is involved a certain criminal provision, with penalties.

Commissioner LANDIS. Yes; but this section does not apply to

those.

Mr. MAPES. Mr. Chairman

The CHAIRMAN. Mr. Mapes.

Mr. MAPES. I should like to ask Mr. Landis some questions, as long as he is before the committee, about the work of the Commission. What is the personnel-how large an organization is the Federal Trade Commission?

Commissioner LANDIS. In the organization now there are five commissioners, as you know.

Mr. MAPES. Yes.

Commissioner LANDIS. And the personnel of the Commission is about 390. I cannot give the exact figures; they change day by day. Mr. MAPES. Is it your special duty to administer the securities act? Commissioner LANDIS. Well, I am technically in charge of the securities division. Action by the Commission is always full action. There is no divisional action there. Whatever the Commission acts upon is full action of the five members of the Commission.

Mr. MAPES. How large a personnel is devoted rather exclusively to the work of the administration of the Securities Act?

Commissioner LANDIS. About 65 men and women.

Mr. MAPES. Those have been taken on mostly since the passage of the Securities Act?

Commissioner LANDIS. Theoretically they have all been taken on. Actually we have moved over from some of the other divisions of the Commission, men we deemed had peculiar competence for this work. There have been about 15 or 20 of those men, accountants and the like. Mr. MAPES. I suppose others from outside have been taken on to take the places of those men?

Commissioner LANDIS. Yes; sometimes not. Sometimes the particular work they were engaged on, for instance the chain-store investigation, stopped and it was not necessary to reemploy any other men in another division of the Commission.

Mr. MAPES. Have you in mind about how large a personnel would be required to administer the provisions of this stock exchange bill? Commissioner LANDIS. I have not got in mind the numbers, but I do have in mind the personnel that will be required for the administration of this act will be very much larger than the personnel that is required for the administration of the securities division.

Our present personnel in the securities division is too small now. We had allotted to us by the Congress a quarter of a million dollars for the administration of that act. I was present-I did not actually speak; the chief of the division spoke-before a subcommittee of the House Committee on Appropriations on the necessity of more appropriations for the securities division, and he brought forth the fact that since August 15, until December, some 8,000 hours' overtime was put in by that division. We worked in that division one third of the men almost every night until midnight. The work is too much in that division. The result is we have now pending in the independent

offices appropriation bill a request for a half a million dollars of which some $300,000 will go to the securities division which will enable us to just about double that staff and it will be needed very badly.

So that you can look at the Securities Division as better organized, as embracing somewhere between 120 and 140 men.

Mr. MAPES. And, how many did you say were in the Federal Trade Commission's organization as a whole?

Commissioner LANDIS. As a whole?

Mr. MAPES. Yes.

Commissioner LANDIS. About 390.
Mr. MAPES. About 390?

Commissioner LANDIS. Yes.

Mr. MAPES. Assuming the passage of this stock-exchange legislation, in your judgment, after that is enacted and the administration of that act is well on its way, will the stock exchange and the securities legislation work overbalance the rest of the work of the Commission?

Commissioner LANDIS. I am not sure that it will overbalance, because the work is growing everywhere, that is, the the work of the Commission. We are getting a tremendous amount of work now in connection with the N.R.A. codes. We took on 40 men the other day for investigational work in that connection. Furthermore, our ordinary trade-practice work is picking up and for that reason it is rather hard to see what will be the ultimate outline of the Federal Trade Commission.

Mr. MAPES. Well, it will unless the other work expands a great deal, will it not?

Commissioner LANDIS. I think it will be true that these two acts, taken together, may represent the major activities of the Federal Trade Commission. We have also been attempting for some time to get funds for the collection of general financial statistics, of a wider character than those required to be collected under these acts.

Mr. MAPES. How do you think the duties imposed upon the Commission by the securities Act and those that will be imposed by the passage of the Stock Exchange Act will harmonize with the other duties of the Federal Trade Commission?

Commissioner LANDIS. Pretty well, and I would just like to add this: We have two members of the Commission who are active in the Security Division work, primarily; that is myself and Commissioner Mathews. Commissioner Mathews is in charge of the Economic Division. Because of his extensive experience in securities, as commissioner of Securities in Wisconsin for many years, his aid is sought in the general work of the Securities Division.

Furthermore, the other members of the Commission who have had no special experience in this particular matter, but who have had experience, a great deal of experience, with the general work of the Commission, have contributed a great deal to what I would call the security work of the Commission. I say that it is a fine thing to have your own judgment checked up by them, by what might be called, not specialized knowledge, but, broadly speaking, common sense.

Mr. MAPES. Would there be any advantage in having a separate agency created that would have jurisdiction over the administration. of the stock exchanges and over the Securities Act?

Commissioner LANDIS. I do not think there would be any advantage resulting from that, and I think there would be disadvantages. You

would lose three major things that I can think of, and perhaps there are plenty more. You would lose the work that has been done so far with reference to securities, which I think is too good a work to lose. Mr. MERRITT. How would you lose it?

Commissioner LANDIS. The work that is done in the Securities Division by those men?

Mr. MERRITT. Could men be taken on?

Commissioner LANDIS. Yes; but it will almost mean putting in an entirely new organization; it is bound to mean that.

Mr. MAPES. Even though you were made a member of the new organization?

Commissioner LANDIS. It would mean the same thing, I guess; it is bound to mean the loss of a great deal of that work. And furthermore you would lose the benefit of having a commission which has traditions already in existence, and which is available to take up on this new work.

I was on the Securities Division before I became a Commissioner, for some time, in the general administrative work of the Securities Division. It was a good thing to have at your hand, men in the economic division who were expert accountants, men who like the chief counsel of the division, like Judge Healy, who, as a matter of fact, had nothing to do with the Securities Division, but you saw his knowledge of the subject, and to be able to advise with experts of that type.

With reference to the investigation of complaints under the Securities Act, what we did was to call upon examiners who had made a great many investigations for the Commission, and whose training fitted them for this work, and we had the benefit of their knowledge.

Furthermore, there is this thing that I was talking about: You have the traditions of service, of responsibility and of good work. All of those things, of course, are not built up overnight. That will not be true about any commission that is newly created. You do not get those things immediately.

Mr. MAPES. Is there any intimate relationship between unfair trade practices and the work of administration of the Securities Act? Commissioner LANDIS. You mean is there an intimate relationship? Mr. MAPES. There is not any intimate relationship, is there? Commissioner LANDIS. There is quite a bit.

Mr. MAPES. There is?

Commissioner LANDIS. There is quite a bit. Now, our entire economic investigation into the public utilities carried us into their books and accounts, and their methods of operating. We used accountants who knew a great deal about examining accounts, and we transferred some of these men to the Securities Division, which meant that their knowledge was available to us.

There is a much more intimate relationship than would be casually supposed.

Mr. MAPES. There is one special provision in this bill that I want to ask you about. On page 62, paragraph (b), line 17. Was that put in there on your recommendation, that paragraph?

Commissioner LANDIS. Yes, it was.

Mr. MAPES. Have you been taking on employees in the Securities Division of the Commission regardless of the civil-service law? Commissioner LANDIS. No.

Mr. MAPES. And regulations?

Commissioner LANDIS. No.

Mr. MAPES. You come under the civil-service law and regulations now?

Commissioner LANDIS. We come under the classification law; you recognize there is a distinction between the two.

Mr. MAPES. Yes.

Commissioner LANDIS. Civil service and classification.

Mr. MAPES. The employees generally, of the Federal Trade Commission, are under civil-service law; under the law and regulations? Commissioner LANDIS. No, not all; but they are under the classification law.

Mr. MAPES. Then what is the purpose of this provision insofar as it applies to the securities act?

Commissioner LANDIS. The purpose of that provision is just this: We have considerable difficulty, even in the Securities Division, in going and getting competent men and having them classified according to the present requirements of the civil service.

Mr. MAPES. Then there is a distinction in the two groups

Commissioner LANDIS (interposing). The classification act is what they are subject to.

Mr. MAPES. Yes, they are under the classification act.
Commissioner LANDIS. Yes.

Mr. MAPES. But you would have to employ them according to the civil-service law and regulations?

Commissioner LANDIS. Not experts.

Mr. MAPES. Not experts?

Commissioner LANDIS. No.

Mr. MAPES. Well, do you have to classify them according to the classification act?

Commissioner LANDIS. Yes.

Mr. MAPES. Even though they are not employed under civil service?

Commissioner LANDIS. Yes.

Mr. MAPES. Or its rules and regulations?

Commissioner LANDIS. They do not have to take the civil-service examination, but when you go out to employ an attorney you have got to pay them either $3,800 or $4,600, or something like that. It cannot be $4,300; they have to take the proper grade, P-4 or P-5, whatever the classification law requires.

Mr. MAPES. Now why should any different rule apply here than any other organization in the Government?

Commissioner LANDIS. The answer to that is that what you say is not quite the case. This section, of course, has parallels in existing legislation. The original Federal Trade Commission Act had a provision of this nature.

Mr. MAPES. The statements have been made in a letter which I have received that all legislation passed since the 4th of March 1933, has contained the provision taking employees out of the civil-service law and regulation of the Government.

Commissioner LANDIS. That is not true, I think.

Mr. MAPES. Why has that been done?

Commissioner LANDIS. I cannot answer with reference to the other. legislation; I can only answer with reference to this.

45381-34-58

Mr. MAPES. Do you not think that shows an insistent tendency on the part of Congress to tear down the civil service?

Commissioner LANDIS. Well, I should not think so-to tear it

down?

Mr. MAPES. Yes, to tear it down, if in every bill that we have passed for a year or more we take the employees out from under the civilservice laws and regulations.

Commissioner LANDIS. I do think that is true. When you are dealing with a situation where you have got to provide immediately for experts, as you have to here, you do not have the the opportunity to create them, as the Interstate Commerce Commission had. You must be able to pay the price to get them.

Mr. MAPES. That argument could be made with reference to every agency of the Government, could it not?

Commissioner LANDIS. Perhaps it could. The argument is made here for what it is worth.

Mr. PETTENGILL. What is your understanding about the provision on page 31, line 14 "An undertaking by the issuer, to comply, and so far as within its power to enforce compliance by its officers" and so forth.

Commissioner LANDIS. What is the reason for that?

Mr. PETTENGILL. Yes.

Commissioner LANDIS. That provision is a common provision that is now used by the various exchanges.

Mr. PETTENGILL. That is a common regulation, so far as the issuer is concerned?

Commissioner LANDIS. Yes.

Mr. PETTENGILL. That is as far as I think it should go.
The CHAIRMAN. Are there any further questions?

Mr. Landis, do you have anything else you want to add? Commissioner LANDIS. There is one word I would like to add. Of course, I have taken up the various sections of this bill at different times with members of the commission. We have never formally approved this bill, as a commission, though its principles have generally the approval of the commission. With reference to Commissioner Mathews, I think I can speak his thoughts on this bill. I have had, as I said a moment ago talked frequently with Commissioner Mathews who has had a great deal of experience in these matters; we have worked out problems together, and I think I speak his thoughts concerning this bill.

Mr. HOLMES. May I ask a question?

The CHAIRMAN. Mr. Holmes.

Mr. HOLMES. Commissioner Landis, may I ask you if you can tell me how many new securities have been issued since the Securities Act was passed; can you give me an idea on that?

Commissioner LANDIS. I cannot give you the exact figures.

Mr. HOLMES. Well, about the number.

Commissioner LANDIS. About 800.

Mr. HOLMES. About 800 have registered?

Commissioner LANDIS. Registered, and only about 500 of them have become effective. Many of them are still pending examination. Mr. HOLMES. I have never heard the figure given how many there had been registered.