Long-arm reach of the 'little old lady'

Congress established the Federal Trade Commission in 1914 to rid the marketplace of monopolistic and deceptive practices. It was a cozy, comfortable agency that occupied itself with things like wool imports and foreign watchbands. Along came consumer advocate Ralph Nader 50 years later. The first report he issued around 1969 attacked the FTC. He roused interest. President Nixon asked the American Bar Association to look the agency over. The ABA issued a report on the FTC: Reform it or abolish it, it said.

And so Congress passed the Magnuson- Moss Act in 1975. Suddenly the agency, which was known derisively as the "little old lady of Pennsylvania Avenue" found itself armed, figuratively, with a sheriff's badge and twin six-shooters. It could issue cease-and-desist orders not only against individual firms but entire industries. It could establish rules, and police professional societies if their operations affected commerce. Under the Nixon and Ford administrations the FTC got busy. It investigated restrictive practices of oil, auto, cigarette , and cereal industries. It took a look at sales and credit practices of mobile home manufacturers and credit companies . Nor was this all. As consumers' defender it asked whether the rules of professional groups against advertising were in the public interest; it proposed rules for used-car dealers, and investigated the high cost of medical care. In fact in a short time it trod on a great many toes. Angry reaction came from business in the current resentment against government interference and federal "overregulation."

Chief of staff of the Senate Commerce Committee that initiated the Magnuson act was consumer activist Michael Pertschuk who in course of time became chairman of the reinvigorated FTC. Under his initiative there has developed one of the most bitter clashes of modern times between consumers and producers, industry and the public.

The FTC thought the television industry, for example, was exploiting children. Television depends on advertising revenues and currently generates over $600 million annually. Chairman Pertschuk complained that children are being encouraged to eat oversweet breakfast cereals: "Advertisers seize on the child's trust and exploit it as a weakness for their gain." he argued taht "children's advertising is inherently unfair." Court investigation upheld the authority of the FTC in some respects, but said that it was "difficult to read the record. . . without becoming disturbed at some of the commission's unique steps."

At this point a lot of congressmen heard from a lot of business interests back home. Legislators reacted sharply. The question was whether their current wrath against the FTC would go too far. Congress set the agency up in the first place and now it seems disturbed because it is doing its job too ardently. One proposal is that Congress, or the House of Representatives, or maybe a committee of one of the two bodies, should have a veto-power over the FTC's rulings. Other proposals would exempt certain industries from supervision. There are opposing voices. House and Senate don't fully agree. The Washington editor of Advertising Age, Stanley Cohen, calls the current attack the "most mindless piece of politics" that he has seen in 36 years here. Maybe the FTC has gone too far in some cases, he says, but it is an advantage to business to have commercial abuses screened out before they anger the public.

"I think there have been excesses of regulation," says chairman Pertschuk, interviewed the other day by Bill Moyers on public television. "I also think that this Congress has shown itself more willing to do more for special interest lobbies under the guise of 'regulatory reform' than any other Congress I remember."

Mr. Moyers, one-time press secretary of Lyndon Johnson, summed up his views at the end. He thought what he called "the special interests" would carry the day in Congress and "strip the Commission of much of its power," though President Carter might veto. He added: "The Federal Trade Commission itself isn't likely to be an issue in this election year. It ought to be. What happens to it will touch us all."