Mr. KELLEY. Ultimately, yes. Ultimately these activities will bring down prices. Mr. FITZPATRICK. That is what I thought. I was wondering whether it brought down the price or increased it. If it increased the sales of the article, it would bring down the price. Mr. AYRES. At any rate, the main object is to enable your wife or your daughter, when she goes in to buy a sealskin coat, to know that she is getting a sealskin coat, and pay accordingly; she will know that she is not buying a rabbit fur coat, as a sealskin coat, and be deceived. That is the whole thing in a nutshell. That is all it amounts to. Mr. KELLEY. In an industry like the fur industry, which is as bad as it has been, I hope our division will be successful. I sort of have my doubts about the fur industry. We have attempted, outside of the trade-practice conferences, to correct a number of these abuses, and so has the Department of Justice. They were blocked on the facts in that case because the court held that the business of dressing and dyeing furs was not interstate commerce. We meet a lot of facts that make it extremely difficult to trace the deception and stop it. But these trade-practice rules are subscribed to by all of the industry and they will lend extreme weight in enabling us, as a legal matter, to enforce an order under a complaint, in case they violate these rules of the industry. It creates weight with the court and with everybody. Sometimes, without a trade conference practice agreement, we are up against it to enforce these rules generally in an industry, unless we have the whole industry cooperate with us and get them down in black and white on a set of rules. Mr. DIRKSEN. As an incident to any other investigation that the Commission has made, have they ever gone into the question of the effect of imported manufactured articles and agricultural commodities on the price structure of domestically produced and manufactured articles? Mr. AYRES. No. Mr. DIRKSEN. The reason I bring up the question is that Mr. Johnson, the shoe manufacturer up in New Hampshire, as you may have read in the prints, maintains that there is a tremendous effect upon the shoe industry of America because of the importation of Bata shoes from Czechoslovakia. There has been so much speculation on that subject that I have wondered whether any authoritative information has ever been adduced to show what the effect really is. Mr. AYRES. Not unless it would come through the Tariff Commission. Our Commission does not have jurisdiction over that. Mr. DIRKSEN. As an incident, of course, to the effect on the domestic price structure, your Commission would probably have jurisdiction also, would it not? Mr. AYRES. I am not sure about that; unless there is an unfair method of competition involved. ADMINISTRATIVE RESERVE Mr. WIGGLESWORTH. Mr. Ayres, did your Commission set aside a reserve, or attempt to set aside a reserve for the present fiscal year, on a suggestion from the President? Mr. AYRES. Yes. Mr. WIGGLESWORTH. What was the size of that? Mr. JOHNSON. $53,875. Mr. WIGGLESWORTH. Is that a stipulated percentage or a maximum, or what? Mr. AYRES. Originally, it was 10 percent of our appropriation. Approximately 7% percent has been released for the time being, leaving a reserve of about 21⁄2 percent, which would be $53,875. Mr. WIGGLESWORTH. How much of that 21⁄2 percent do you expect to have left? Mr. AYRES. I could not say that we can assure you that we will have any left, but we will not try to spend it. Mr. WIGGLESWORTH. Do you expect to save any of it? Mr. AYRES. We hope we can save all of the 21⁄2 percent, but I do not know whether we will be able to or not. Mr. WIGGLESWORTH. Do you think there is a chance of it? Mr. AYERS. As has been suggested, we cannot spend it, that is true. Mr. WIGGLESWORTH. That is, you could not expend it without an authorization from the Budget Bureau? Mr. AYERS. That is right. Mr. WIGGLESWORTH. The increase that you are asking is over and above that saving? Mr. AYRES. Yes. Mr. HOUSTON. Does the Pure Food and Drug Act give you very much work, in the matter of the enforcement of that act? Mr. AYERS. No, our commission does not have to do with that. That is in the hands of Department of Agriculture. ECONOMICS DIVISION Mr. WOODRUM. What is the situation of your economics division? Mr. FREER. The personnel of that division has been reduced in the past 2 years from 163 to 84 at present. Mr. WOODRUM. What is it working on? Mr. FREER. It is engaged on two investigations at the present time-farm machinery and cost of living. Also, members of the staff are presently engaged in accounting and economic analyses in connection with the Robinson-Patman cases. These Robinson-Patman cases have required both an extensive study into the costs of manufacture, distribution and sale because that is the criterion set up in the statute for justifying discriminations and into questions of economics. Sometimes they involve important questions of economic theory and frequently questions of accounting practices, as well as examination of the records of costs relied upon in justification. The Commission has had quite an extensive number of the accountants and economists of that division engaged in work of this character. RÉSUMÉ OF THE BIDDLE CASE Mr. DIRKSEN. Mr. Chairman, I wanted to suggest to Mr. Ayres in connection with the line of questioning concerning the RobinsonPatman Act cases, that at that point in the record it might be well, due to the importance of the act to the whole country, to have a brief digest of the case, if that can be done. Mr. AYRES. I do not believe that would be in order, because that will soon be pending before the circuit court of appeals. Mr. DIRKSEN. I would not want any commitment on anything that was controversial, but if a short statement, covering perhaps 25 or 30 lines, could be put in the record, indicating the nature of the case and the issues involved, it would be interesting and informative. Mr. DAVIS. We could have the chief counsel prepare a synopsis of the issues involved in that case. Mr. DIRKSEN. I think that would serve the purpose. Mr. DAVIS. The following is a synopsis of the issues involved in Robinson-Patman Act cases. (Included statement marked "Exhibit A.") EXHIBIT A On page 8 of the justification of estimate of appropriations submitted to the honorable chairman on November 30, 1937, is a table of cases on the RobinsonPatman Act as of October 30, 1937, as follows: Of these 34 formal complaints, 24 were instituted under section 2 (a), the price discrimination section; of these cases 5 have been disposed of by orders of the Commission. The remaining 19 are in the course of disposition. Eight cases were instituted under section 2 (c), the section dealing with brokerage. One of these, the Biddle Purchasing Co. case, has been decided by the Commission and findings and order issued. The case is now before the Circuit Court of Appeals and will probably be decided about April 1938. Another case under this section, The Great Atlantic & Pacific Tea Co., will be argued before the Commission on December 14, 1937. A third case, the Procon Grocery Service, was dismissed, the corporation having dissolved; while the remaining cases are in course of trial. Five cases involve section 2 (d) of the act, which makes unlawful allowances not available on proportionately equal terms to completing customers. Five cases likewise involve section 2 (e), forbidding the furnishing of services on other than proportionately equal terms to competing purchasers. Section 2 (f) of the Robinson-Patman Act, making it unlawful for anyone to receive a discrimination in price was involved in three cases against purchasers. In addition to the formal complaints referred to above, 114 applications are now pending that have not reached a position to determine whether a formal complaint should issue. CIVIL-SERVICE STATUS OF EMPLOYEES Mr. HOUSTON. What percentage of the Commission is under the Civil Service? Mr. AYRES. All of the stenographers and the clerical force. Mr. JOHNSON. Fifty-two percent. Mr. AYRES. All except the professional employees. NEW QUARTERS OF THE COMMISSION Mr. DIRKSEN. If Congress heaps on you all of the things that are contemplated in some of the pending legislation, such as the wage-andhours bill, and so forth, you would have to have new quarters. Mr. AYRES. We hope to be in our new quarters by the 1st of April. Mr. WOODRUM. Gentlemen, if there is nothing further you wish to present, we thank you very much. Mr. AYRES. Thank you, Mr. Chairman and gentlemen of the committee. FRIDAY, DECEMBER 3, 1937. FOREIGN-SERVICE PAY ADJUSTMENT STATEMENTS OF G. S. MESSERSMITH, ASSISTANT SECRETARY OF STATE; N. P. DAVIS, CHIEF, DIVISION OF FOREIGN SERVICE ADMINISTRATION; C. B. HOSMER, CHIEF, OFFICE OF FISCAL AND BUDGET AFFAIRS; L. C. FRANK, CHIEF, BUREAU OF ACCOUNTS, DEPARTMENT OF STATE Mr. WOODRUM. We have for consideration this morning the Budget estimate of $1,500,000 for the Foreign Service pay adjustment. The item for this is as follows: Foreign Service pay adjustment of officers and employees of the United States in foreign countries due to appreciation of foreign currencies: For the purpose of carrying into effect the provisions of the act entitled "An act to authorize annual appropriations to meet losses sustained by officers and employees of the United States in foreign countries due to appreciation of foreign currencies in their relation to the American dollar, and for other purposes," approved March 26, 1934, and for each and every object and purpose specified therein, $1,500,000. JUSTIFICATION OF ESTIMATE Mr. WOODRUM. We have present with us Mr. Messersmith, the Assistant Secretary of State. Mr. Messersmith, I suggest that we insert at this point in the record a copy of your justification of this item. Mr. HOSMER. The justification also gives the legal background for the appropriation, and shows the history of it. Mr. MESSERSMITH. That is correct. This appropriation is required for the purpose of carrying into effect the provisions of the act entitled "An act to authorize annual appropriations to meet losses sustained by officers and employees of the United States in foreign countries due to appreciation of foreign currencies in their relation to the American dollar and for other purposes," approved March 26, 1934 (48 Stat. 466) (U. S. C., title 5, sec. 118c) and quoted hereunder, and the Executive order issued pursuant thereto under date of March 27, 1934, as amended. "Be it enacted by the Senate and House of Representatives of The United States of America in Congress assembled, That there are authorized to be appropriated annually such sums as may be necessary to enable the President, in his discretion and under such regulations as he may prescribe and notwithstanding the provisions of any other act and upon recommendation of the Director of the Budget, to meet losses sustained on and after July 15, 1933, by officers, enlisted men and employees of the United States while in service in foreign countries due to the appreciation of foreign currencies in their relation to the American dollar, and to cover any deficiency in the accounts of the Treasurer of the United States, including interest, arising out of the arrangement approved by the President on July 27, 1933, for the conversion into foreign currencies of checks and drafts of officers, enlisted men, and employees for salaries and expenses: Provided, That such action as the President may take shall be binding upon all executive officers of the Government: Provided further, That no payments authorized by this Act shall be made to any officers, enlisted men, or employees for periods during which their checks or drafts were converted into foreign currencies under the arrangement hereinbefore referred to: Provided further, That allowances and expenditures pursuant to this Act shall not be subject to income taxes: And Provided further, That the Director of the Budget shall report all expenditures made for this purpose to Congress annually with the Budget estimates." The appropriations which have been made to give effect to the provision the foregoing Act have been as follows: Fiscal year: 1934-35 1936 (including deficiency). 1937. 1938_ Amou $7,438, 5, 383, 11, 800, 1,745, 1 Plus unexpended balances of 1934-35 and 1936 appropriations. While the allocations which were set up for the several departments and est lishments for the fiscal year 1937 reach a total of $3,066,307, as shown in "Actual 1937" column of the accompanying schedule of obligations, actual counts paid will probably not exceed $2,300,000 for that fiscal year. The rea that expenditures fell so far below original estimates is found in the curtailm of exchange relief payments in certain countries where currencies were deval in September and October 1936, notably France, Switzerland, the Netherlar and Italy. In the "Estimate 1938" column of the accompanying schedule are shown a cations made to the several departments and establishments, but it is to remarked that the further reduction in the exchange value of the French fr early in July 1937, to a point below 3.92 cents resulted in the complete cessat of exchange relief payments in France and French possessions; therefore allocations to the several departments and establishments, having been ma just prior to the change in the value of the franc, are perhaps somewhat grea in most instances than will actually be needed. BASIS FOR 1939 ESTIMATE In support of the estimate of $1,500,000 for the fiscal year 193 there is submitted a photostat copy of a statement showing t number of officers and employees of each interested department establishment and the totals of basic salaries and basic allowanc and of estimated losses, country by country. The following table includes footnotes 1 to 6 inclusive in heading: Mr. WOODRUM. We shall be glad to have a general statement from you, Mr. Messersmith, on this item. |