author: Mr. Justice Goldberg

text:
    WATERMAN STEAMSHIP CORP. v. UNITED STATES.
    No. 245.
    Argued April 26-27, 1965.
    Decided May 17, 1965.

      John W. McConnell, Jr., argued the cause for petitioner. With him on the briefs was William H. Arm-brecht.

      Paul Bender argued the cause for the United States, pro hac vice, by special leave of Court. With him on the brief were Solicitor General Cox, Assistant Attorney General Oberdorfer, I. Henry Kutz, David I. Granger and Theodore D. Peyser.

    Briefs of amici curiae, urging reversal, were filed by Jacquin D. Bierman for National Bulk Carriers, Inc., and by George E. McMurray, Jr., Cornelius P. Goughian, H. Maurice Fridlund and Leslie C. Krusen for American Merchant Marine Institute, Inc.
   Mr. Justice Goldberg

delivered the opinion of the Court.

This case involves the tax consequences of the purchase by petitioner of a number of ships from the United States Government during the Second World War and the subsequent post-war refund by the Government, pursuant to an Act of Congress, of a substantial portion of the purchase price.

At various times during the years 1942 through 1946, petitioner purchased from the United States Maritime Commission a total of 18 ships that had been built by the United States Government. It paid a total of $46,973,167 for these vessels (after an allowance for the trade-in by petitioner of four of its own ships). The vessels purchased by petitioner were immediately chartered back, by bareboat charters, to the United States so that the Government continued to operate them. The United States paid a total of $13,430,431 in charter hire to petitioner for the wartime use of these ships during the years 1942 through 1946, which amount petitioner reported in its federal income tax returns for those years.

On March 8,1946, Congress enacted the Merchant Ship Sales Act of 1946, 60 Stat. 41, as amended, 50 U. S. C. App. § 1735 et seq. (1958 ed.), which gave American citizens the right to purchase war-built ships from the United States at statutory sales prices which were substantially below the prices at which such vessels were sold by the Commission during the war. Section 9 of the Act, 50 U. S. C. App. § 1742 (1958 ed.), provided the opportunity, upon application, for those, like petitioner, who had bought ships during the war years to obtain a downward adjustment in their sales price “by treating the vessel as if it were being sold to the applicant on the date of the enactment of this Act [March 8, 1946], and not before that time.” The details of a § 9 adjustment are complex. They consist, however, essentially of two parts: (1) an adjustment in the purchase price down to the new statutory price (§§ 9 (b)(l)-(4)); and (2) an unwinding of the transactions, including tax payments, that occurred as a result of the sale prior to 1946 (§§ 9 (b)(5), (6), (e)(1)).

Petitioner applied for a downward adjustment of the sales price of its 18 ships purchased prior to the Act. The Maritime Commission granted such an adjustment, determining that under the statute the sales price of these vessels should be $17,685,424. Petitioner therefore was credited with $29,287,743, the difference between the statutory sales price and the original price of $46,973,167.

The pre-Act transactions were then unwound, pursuant to the statute, as follows: (1) the Government was credited $13,430,431, representing the charter hire which had been paid by the Government to petitioner for use of the 18 vessels from 1942 to 1946; (2) the Government was debited $1,495,125, representing charter hire which would have been paid by the Government to petitioner prior to 1946 for use of the four ships traded in by petitioner on the original purchase; (3) the Government was debited $2,686,262, representing a return of the interest petitioner paid on the mortgages and interest income which petitioner could have earned on the cash invested in the 18 vessels prior to the date of the Act had this cash not been so committed; and (4) the Government was debited $430,206, representing an overpayment by petitioner of federal income taxes, which, under the Act, were recalculated to give effect to the foregoing unwinding. The sum of the unwinding credits and debits was a net credit in favor of the Government of $8,818,838. This amount reduced petitioner’s credit on the original sales price of $46,973,167 from $29,287,743 to $20,468,904.

In tabular form, the computations and credits made under the Act were as follows:

Statutory Adjustments.
1. Original sales price. $46,973,167
2. Statutory sales price. 17,685,424
3. Gross sales price adjustment
(§§ 9 (b) (1) — (4) and (7)). $29,287,743
4. Credit to Government:
5. Charter hire on 18 vessels
(§9 (b)(6)) . 13,430,431
6. Debits against Government:
7. Charter hire on 4 ships traded in
(§9 (b)(6)) . (1,495,125)
8. Interest on petitioner’s invest-
ment (§ 9 (b) (5)). (2,686,262)
9. Overpayment by petitioner
of federal income taxes
(§9 (b)(8)) . (430,206)
10. Net credit in favor of Government
(line 5 minus lines 7-9). 8,818,838
11. Net 1946 sales price adjustment
(line 3 minus line 10).
$20,468,904

Neither party here disputes the accuracy of any of these computations. The issue between the parties is the effect of these determinations on the tax treatment of the ships for the years following this 1946 adjustment. In its federal income tax returns for the years 1947 through 1950 petitioner took depreciation on these vessels on the assumption that its cost was $17,685,424, the statutory sales price. In 1959, however, petitioner sued in the United States District Court for the Southern District of Alabama for a tax refund, contending that its real cost and therefore its basis for depreciation was not the statutory sales price, $17,685,424, but rather $26,504,263, the difference between $46,973,167, the original sales price, and $20,468,904, the net 1946 sales price adjustment credited to petitioner. The District Court agreed with petitioner that its real cost was $26,504,263 and that this was its depreciation basis for tax purposes. 203 F. Supp. 915. The Court of Appeals for the Fifth Circuit reversed, however, holding that, under the statutory scheme, petitioner’s real cost was $17,685,424, the statutory sales price, and that this therefore was its proper depreciation basis. 330 F. 2d 128. The difference between the lower courts’ determinations of the real cost to petitioner of these 18 ships is $8,818,838, the net credit in favor of the Government in the preceding calculations of the 1946 sales price adjustment. We granted certiorari, 379 U. S. 927, to resolve a conflict between Courts of Appeals and the Court of Claims on the issue here involved. For the reasons set forth below, we agree with the Court of Appeals in this case and consequently affirm the judgment.

Petitioner’s argument, put quite simply, is that during the war it paid $46,973,167 for the ships. In 1946, petitioner asserts, it was paid back $20,468,904. Thus petitioner concludes that its cost and therefore its depreciation basis for tax purposes in these ships is the difference between these two figures, or $26,504,263. The Government agrees that petitioner paid $46,973,167 during the war and received back $20,468,904 in 1946. It points out, however, that from 1942 through 1946 petitioner also received from the Government in charter hire for the use of the ships, a net of $8,818,838 (the net credit to the Government under the unwinding provisions of the Act), which petitioner would not have received had it not bought these ships prior to the date of the Act. The Government contends that when this $8,818,838 paid to petitioner from 1942 to 1946 is added to the amount of $20,468,904 paid as a lump sum to petitioner in 1946, it is clear that petitioner has received a total of $29,287,743 from the Government. The Government concludes that petitioner’s cost and therefore its basis for depreciation for tax purposes in these ships is the difference between the original sales price, $46,973,167, and this total refund, $29,287,743, or $17,685,424 — the statutory sales price. Petitioner cannot and does not dispute the fact that it received this $8,818,838 from the Government from 1942 through 1946. It argues, however, that this sum was received as income and thus cannot be taken to reduce petitioner’s cost. The Government, on the other hand, contends that, although the $8,818,838 was undoubtedly originally received as income, under the statutory unwinding scheme this amount must be deemed a return of capital which has reduced petitioner's cost. The only issue dividing the parties, therefore, is the proper treatment of this $8,818,838, an issue which must be determined by reference to the 1946 Act.

Section 9 of the Merchant Ship Sales Act of 1946 expressly provides that, upon application, a statutory adjustment “shall be made, as hereinafter provided, by treating the vessel as if it were being sold to the applicant on the date of the enactment of this Act [March 8, 1946], and not before that time.” It is clear that if petitioner had bought the ships on the date of the Act its cost and depreciation basis would have been the statutory sales price of $17,685,424 and that petitioner would not have received net charter hire from the Government of $8,818,838 — a payment attributable to the fact that the vessels involved were sold to it before the date of the 1946 Act.

In order to achieve the statutory purpose of putting petitioner and the Government in the positions they would have occupied had petitioner bought the ships on the 1946 statutory enactment date and not before that time, it was necessary that this $8,818,838 net charter hire be refunded to the Government. In effect this is just what § 9 provides. As applied to this case, petitioner was first credited with $29,287,743, the difference between the original sales price, $46,973,167, and the lower statutory sales price, $17,685,424. The Government owed this amount of $29,287,743 to petitioner. Because of the unwinding of the pre-Act transactions pursuant to the statutory scheme, however, the Government was credited with $8,818,838, representing the net amount, after appropriate tax adjustments, which petitioner received from the United States Government from 1942 through 1946 over and above the amount which it would have earned had it not purchased the ships from the Government prior to the statutory adjustment date. Petitioner owed this amount of $8,818,838 to the Government.

The Government could have paid its obligation to petitioner by its check in the amount of $29,287,743. Petitioner, in turn, could have paid its obligation to the Government by its check in the amount of $8,818,838. Obviously, it makes no difference that this same result was reached through an offsetting of the mutual debts which resulted in a net credit to petitioner of their difference— $20,468,904. Thus petitioner is correct in its assertion that it only received $20,468,904 as a lump sum payment in 1946. It is not correct, however, in its assertion that this was the total amount it received in repayment of the sales price. The total it received was $29,287,743; it received $20,468,904 of this amount in a lump sum in 1946 and $8,818,838 in the years 1942 through 1946 in government payments which it would not have received had it not owned the ships during those years — an ownership which the statute unwinds. This $29,287,743 total refund must be credited against petitioner’s original cost of $46,973,167, producing a net cost to petitioner and thus a basis for depreciation of $17,685,424 — the statutory sales price.

In order to give effect to the statutory scheme, therefore, this $8,818,838 must be treated not as income but as a return of capital against the original $46,973,167 purchase price. That this is the proper way of treating this amount for tax purposes is made clear by the statutory language which directs recomputation of an applicant’s federal income taxes based upon the unwinding of the pre-Act transactions. As a condition of receiving an adjustment under the Act, § 9 (c)(1) requires the applicant to agree (1) that the charter hire actually received from the United States for the ships prior to the Act “shall be treated for Federal tax purposes as not having been received or accrued as income” (emphasis added); (2) that “depreciation and amortization allowed or allowable with respect to the vessel up to the date of the enactment of this Act for Federal tax purposes shall be treated as not having been allowable”; and (3) that the return of interest paid on the mortgages plus the income attributed to the applicant which it would have received as charter hire on the ships traded in and interest on the cash invested which it could have earned had it not bought the ships prior to the date of the Act “shall be treated for Federal tax purposes as having been received and accrued as income . . . The net sum derived from these tax computations is assigned as a credit to the party in whose favor they run, and payment of this credit is explicitly deemed to constitute payment of the tax overpayment or deficiency created by the recomputations. (§9 (b)(8)).

All of these provisions, as we have already stated, were given effect in this case. Pursuant to agreement between petitioner and the Government, petitioner’s federal income taxes were recomputed on the statutory assumptions that it did not receive the charter hire on the 18 vessels purchased from the Government from 1942 through 1946, but did receive charter hire on the four ships it traded in and interest on its investment in the 18 ships during this period. Based on this recalculation, petitioner was held entitled to a tax refund of $430,206, for which the Government was debited in the unwinding computations. See the table on p. 257, supra. The total impact of these tax provisions makes it quite clear that the net amount the Government paid to petitioner as a result of its owning the ships prior to 1946, $8,818,838, as the statute specifically states, “shall be treated for Federal tax purposes as not having been received or accrued as income,” but rather shall be treated as a repayment of the purchase price, or, in other words, a return of capital reducing basis. Moreover, the result contended for by petitioner would produce the anomaly that, due to the unwinding calculations, there is no income tax paid or to be paid on the $8,818,838 which petitioner claims is income earned during 1942 to 1946. This anomaly is only avoided if, as Congress obviously intended, this amount be treated not as income but rather as a return of capital.

Furthermore, petitioner’s argument is necessarily predicated on the theory that, although the original acquisition cost of the ships should, under the statutory scheme, be adjusted to the lower 1946 price, nevertheless, petitioner’s cost as a basis for depreciation should remain the higher one determined on the assumption that the ships were purchased not in 1946 but at the time of their original acquisitions, dating back to 1942. It could only be under such a theory that the $8,818,838 net charter hire received by petitioner from the Government could be considered to be income and not a return of capital. But the Act vitiates any such theory in its express statement that the statute treats “the vessel as if it were being sold to the applicant on the date of the enactment of this Act, and not before that time.” Nothing in the language or legislative history of the Act supports petitioner’s contention that this statutory treatment was to apply to give petitioner a lower actual cost of acquisition but that the contrary treatment sought by petitioner was to apply to give it, at the same time, a higher cost basis for depreciation purposes.

Indeed, our conclusion derived from the plain words of the statute is confirmed fully by the legislative history of the Act. As originally reported out of the House Committee on the Merchant Marine and Fisheries, see H. R. Rep. No. 831, 79th Cong., 1st Sess., and the Senate Committee on Commerce, see S. Rep. No. 807, 79th Cong., 1st Sess., the bill contained petitioner’s assumption that the sale took place not on the date of the Act, but at its original date and at the lower statutory sales price. On the floor of the House, however, a committee amendment was proffered and accepted which rejected this assumption and premised the operation of § 9 on the contrary assumption that the sale took place on the date of the enactment of the Act and not before. 91 Cong. Rec. 9281. This committee amendment is the version of the Act that was enacted into law. See H. R. Conf. Rep. No. 1526, 79th Cong., 2d Sess., 17.

Representative (now Senator) Henry Jackson, the manager of the committee amendments on the House floor, explained it as follows:

“Section 9 of H. R. 3603 provides for a refund to operators who purchased vessels during the war, at war cost, back to the statutory sales price contained in section 3 of the bill. Such an adjustment is fair. We do not want to place the wartime purchaser at a disadvantage with his competitor who acquires a similar vessel under the provisions of this bill.
“However, section 9 contains many loopholes which in my opinion places the wartime purchaser in a far better position than future purchasers. For one thing, the wartime purchaser, under section 9, would be allowed trade-in allowances far in excess of those provided under the committee amendment to section 8.
“If there is to be equality between past and future purchases there must be comparable terms and nothing less. . . .
“I have proposed certain modifications to section 9 of H. R. 3603 which has been accepted as a committee amendment. The effect of this amendment is to treat prior sales as having taken place on the date of the enactment of this bill. The operator is compensated for all actual money investment to date by an allowance of 3½ percent interest thereon.
“The committee amendment treats all of these prior sales as being made on the date of the bill’s enactment and not before that time, so that the previous purchaser and a future purchaser will be put on exactly the same basis. In order to accomplish this result it is necessary to ‘unwind’ a previous transaction, and most of the provisions of the committee amendment which appear complicated are the provisions describing how this unwinding is to be done.
“These are the provisions which the amendment includes for the purpose of unwinding the previous transaction. The basic principle of the amendment is very simple — the previous transaction is to be looked upon as having taken place not when it actually did but as taking place on the date of the bill’s enactment and subject to all of the bill’s provisions. . . .” (Emphasis added.) 91 Cong. Rec. 9182, 9185, 9282.

Treating pre-Act and post-Act purchasers as having the same tax basis in the vessels — the statutory sales price — serves the congressional purpose of putting the two groups “on exactly the same basis.” Otherwise, pre-Act purchasers, with a higher basis for federal income tax purposes, would have competitive advantages over post-Act purchasers in the ability of pre-Act purchasers to take higher depreciation deductions from income, thus paying lower taxes on the same income than their post-Act purchaser competitors. In fact, this advantage over post-Act purchasers is exactly what petitioner seeks in this case. Both petitioner and a post-Act purchaser of comparable ships would pay a statutory sales price of $17,685,424. Yet petitioner seeks a depreciation basis of $26,504,263 while the post-Act purchaser would only have a basis of $17,685,424. This varying result is prohibited by the statute.

Petitioner argues, however, that the Senate predecessor to § 9 of the 1946 Act contained an express provision that, if an adjustment in the purchase price is made for a pre-Act purchaser, for purposes of federal income taxes, “the vessel shall be considered as having been acquired at the adjusted purchase price [the statutory sales price] . . . .” See §9 (e)(1) of H. R. 3603, as amended by the Senate Committee on Commerce, 79th Cong., 1st Sess., 91 Cong. Rec. 11535. Petitioner states that this provision, which would confirm the result here contended for by the Government, was eliminated from the version of the Act that was finally adopted. From these facts, petitioner would have us infer that Congress rejected the notion that the statutory sales price should be the cost basis of the ships for depreciation. This contention of petitioner, however, completely overlooks the fact that the provision upon which petitioner relies was in an early version of the bill which at that time was premised not on the assumption finally accepted that the sales took place on the 1946 statutory enactment date, but rather on the contrary theory that the sales took place at the statutory prices but on their original dates. On this latter assumption which the bill then contained, the express provision of the Senate bill was necessary to prevent the very result for which petitioner now contends. However, as we have already pointed out, in the legislative consideration of the bill as finally enacted, the early version of the bill premised on the assumption that the sales took place at their original dates was rejected and the bill revised to embrace the contrary assumption that the sales took place at the date of the enactment of the Act and not before that time. See pp. 264-266, supra. Once this revision in the bill’s basic approach was made there was no longer any necessity to provide, as the earlier Senate version had, that for tax or any other specific purpose “the vessel shall be considered as having been acquired at the . . . [statutory sales] price . . . .” For in the bill as finally enacted, it was expressly provided that the vessel is to be treated “as if it were being sold to the applicant on the date of the enactment of this Act, and not before that time,” and explicit provision was made for unwinding all pre-Act transactions, including taxes. We therefore reject this argument of petitioner.

Finally, petitioner argues that the congressional history subsequent to the enactment of the 1946 statute supports its interpretation of the Act. In 1950, Congress passed an amendment to the 1946 Act, designed to provide precisely the tax result here contended for by petitioner. This amendment, however, was vetoed by President Truman. While both House and Senate Committee Reports contain statements that this amendment was deemed simply a clarifying one which expressed the intent of the original Act, see H. R. Rep. No. 1342, 81st Cong., 1st Sess., 1; S. Rep. No. 1915, 81st Cong., 2d Sess., 1, it was vetoed by President Truman on the ground that, on the contrary, he considered it to vitiate the intent of Congress in enacting the 1946 Act. The President’s veto message stated:

“[OJther provisions of the Merchant Ship Sales Act already provide that for certain purposes the cost basis of the vessels owned by prior purchasers shall be the statutory sales price. The consistent pattern of treatment provided in the act would be destroyed by granting in this one subsection the concession on cost basis entailed in this measure. Finally, the benefits accruing to prior purchasers, if they are allowed to capitalize these amounts above the statutory sales price, would afford them the special operating advantages which arise from the higher depreciation allowances possible under this measure.” 96 Cong. Rec. 15792.

Thus, it is apparent that the President and Congress disagreed over the meaning of a law passed by a prior Congress, and that the President, deeming the amendment to depart from the purpose of the original statute, refused to approve it so that the amendment was not enacted into law. This Court has pointed out on previous occasions that “the views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one.” United States v. Price, 361 U. S. 304, 313; United States v. Philadelphia National Bank, 374 U. S. 321, 348-349. This is particularly true where a President (the same President who signed the original Act) vetoes a “clarifying” amendment on the grounds that, in his view, it does not clarify but rather vitiates the intent of the Congress that passed the original Act. As this Court held in Fogarty v. United States, 340 U. S. 8, in considering a similar situation, the abortive action of the subsequent Congress “would not supplant the contemporaneous intent of the Congress which enacted the . . . Act.” Id., at 14. See also United States v. Wise, 370 U. S. 405, 411.

For all the reasons set forth above, we conclude that, under the statutory scheme which unwinds the pre-Act transactions, petitioner’s real cost and thus its basis for depreciation was the statutory sales price of $17,685,424. Consequently, the judgment of the Court of Appeals is

Affirmed.

APPENDIX TO OPINION OF THE COURT:

Section 9 of the Merchant Ship Sales Act of 1946, 60 Stat. 46, 50 U. S. C. App. § 1742 (1958 ed.), provides in relevant part:

"Sec. 9. (a) A citizen of the United States who on the date of the enactment of this Act—

“(1) owns a vessel which he purchased from the Commission prior to such date, and which was delivered by its builder after December 31, 1940; . . .

“shall, except as hereinafter provided, be entitled to an adjustment in the price of such vessel under this section if he makes application therefor, in such form and manner as the Commission may prescribe, within sixty days after the date of publication of the applicable prewar domestic costs in the Federal Register under section 3 (c) of this Act. . . .

“(b) Such adjustment shall be made, as hereinafter provided, by treating the vessel as if it were being sold to the applicant on the date of the enactment of this Act, and not before that time. The amount of such adjustment shall be determined as follows:

“(1) The Commission shall credit the applicant with the excess of the cash payments made upon the original purchase price of the vessel over 25 per centum of the statutory sales price of the vessel as of such date of enactment. If such payment was less than 25 per centum of the statutory sales price of the vessel, the applicant shall pay the difference to the Commission.

“(2) The applicant’s indebtedness under any mortgage to the United States with respect to the vessel shall be adjusted.

“(3) The adjusted mortgage indebtedness shall be in an amount equal to the excess of the statutory sales price of the vessel as of the date of the enactment of this Act over the sum of the cash payment retained by the United States under paragraph (1) plus the readjusted trade-in allowance (determined under paragraph (7)) with respect to any vessel exchanged by the applicant on the original purchase. The adjusted mortgage indebtedness shall be payable in equal annual installments thereafter during the remaining life of such mortgage with interest on the portion of the statutory sales price remaining unpaid at the rate of 3½ per centum per annum.

“(4) The Commission shall credit the applicant with the excess, if any, of the sum of the cash payments made by the applicant upon the original purchase price of the vessel plus the readjusted trade-in allowance (determined under paragraph (7)) over the statutory sales price of the vessel as of the date of the enactment of this Act to the extent not credited under paragraph (1).

“(5) The Commission shall also credit the applicant with an amount equal to interest at the rate of 3½ per centum per annum (for the period beginning with the date of the original delivery of the vessel to the applicant and ending with the date of the enactment of this Act) on the excess of the original purchase price of the vessel over the amount of any allowance allowed by the Commission on the exchange of any vessel on such purchase; the amount of such credit first being reduced by any interest on the original mortgage indebtedness accrued up to such date of enactment and unpaid. Interest so accrued and unpaid shall be canceled.

“(6) The applicant shall credit the Commission with all amounts paid by the United States to him as charter hire for use of the vessel (exclusive of service, if any, required under the terms of the charter) under any charter party made prior to the date of the enactment of this Act, and any charter hire for such use accrued up to such date of enactment and unpaid shall be canceled; and the Commission shall credit the applicant with the amount that would have been paid by the United States to the applicant as charter hire for bare-boat use of vessels exchanged by the applicant on the original purchase (for the period beginning with date on which the vessels so exchanged were delivered to the Commission and ending with the date of the enactment of this Act).

“(7) The allowance made to the applicant on any vessel exchanged by him on the original purchase shall be readjusted so as to limit such allowance to the amount provided for under section 8.

“(8) There shall be subtracted from the sum of the credits in favor of the Commission under the foregoing provisions of this subsection the amount of any overpay-ments of Federal taxes by the applicant resulting from the application of subsection (c) (1), and there shall be subtracted from the sum of the credits in favor of the applicant under the foregoing provisions of this subsection the amount of any deficiencies in Federal taxes of the applicant resulting from the application of subsection (c) (1). If, after making such subtractions, the sum of the credits in favor of the applicant exceeds the sum of the credits in favor of the Commission, such excess shall be paid by the Commission to the applicant. If, after making such subtractions, the sum of the credits in favor of the Commission exceeds the sum of the credits in favor of the applicant, such excess shall be paid by the applicant to the Commission. Upon such payment by the Commission or the applicant, such overpayments shall be treated as having been refunded and such deficiencies as having been paid.

“For the purposes of this subsection, the purchase price of a vessel on account of which a construction-differential subsidy was paid or agreed to be paid under section 504 of the Merchant Marine Act, 1936, as amended, shall be the net cost of the vessel to the owner.

“(c) An adjustment shall be made under this section only if the applicant enters into an agreement with the Commission binding upon the citizen applicant and any affiliated interest to the effect that—

“(1) depreciation and amortization allowed or allowable with respect to the vessel up to the date of the enactment of this Act for Federal tax purposes shall be treated as not having been allowable; amounts credited to the Commission under subsection (b)(6) shall be treated for Federal tax purposes as not having been received or accrued as income; amounts credited to the applicant under subsection (b) (5) and (6) shall be treated for Federal tax purposes as having been received and accrued as income in the taxable year in which falls the date of the enactment of this Act . . . .”

(“Secretary,” meaning Secretary of Commerce, was substituted for “Commission” in the above statute, except where otherwise indicated by the context, on authority of 1950 Reorg. Plan No. 21, effective May 24, 1950, 15 Fed. Reg. 3178, 64 Stat. 1273.)

       The total purchase price (without trade-in allowance) was $49,582,767. The trade-in allowance was $2,609,600. The net purchase price of $46,973,167 consisted of a cash payment of $6,449,107 and mortgage indebtedness of $40,524,060. For simplicity in this opinion, the $46,973,167 purchase price will be considered as if it had all been paid in cash.

       The last two vessels purchased by petitioner were delivered on February 27, 1946, and March 11, 1946, respectively, one just before and the other just after the date (March 8, 1946) of the Merchant Ship Sales Act of 1946, 60 Stat. 41, as amended, 50 U. S. C. App. § 1735 et seq. (1958 ed.), and thus were not chartered to the Government before the Act.

       Section 9, in relevant part, is set out in the Appendix to this opinion.

       As with the original purchase price, this figure is after an allowance for the four vessels traded in. The statutory price (without trade-in allowance) was $17,997,981. The trade-in allowance (determined under § 9 (b) (7) was $312,557. For simplicity, in the remainder of this opinion, the figures used for both the original sales price and the statutory sales price will be those of the price after these respective trade-in allowances.

       The total $29,287,743 purchase price credit was comprised of a cash credit of $11,735,951 and a reduction of mortgage indebtedness of $17,551,792. As with the original purchase price, see note 1, supra, for simplicity this total credit will be considered as if it were all a cash credit.

       See note 2, supra.

         This recalculation included a readjustment of previous depreciation allowed.

       The figure $20,468,904 is one dollar smaller than the difference between $29,287,743 and $8,818,838. This discrepancy is caused by the omission from the calculation of figures of amounts less than one dollar. This net credit of $20,468,904 was divided into a cash credit to petitioner of $2,917,112 and a reduction of the mortgage indebtedness by $17,551,792. Again, for simplicity, this 1946 net credit will be considered as if it were all a cash credit. See notes 1 and 5, supra.

       See note 8, supra.

       See note 14, infra.

       The Court of Appeals for the Third Circuit agrees with the result of the Court of Appeals in this case. See National Bulk Carriers, Inc. v. United States, 331 F. 2d 407. However, these decisions conflict with that of the Court of Claims in Socony Mobil Oil Co. v. United States, 153 Ct. Cl. 638, 287 F. 2d 910, upon which the District Court in the instant case relied.

       As stated in note 1, supra, the original purchase price of $46,-973,167 consisted of a $6,449,107 cash payment and $40,524,060 in mortgage indebtedness. By the statutory enactment date of March 8, 1946, petitioner had paid an additional $9,786,339 on the mortgage. At that date therefore the original $46,973,167 purchase price consisted of a cash payment of $16,235,446 and a now reduced mortgage indebtedness of $30,737,721. As stated in note 8, supra, the 1946 payment to petitioner was comprised of a cash credit of $2,917,-112 and a reduction of the mortgage indebtedness by $17,551,792. Thus under petitioner’s calculations, after the 1946 adjustment its cost of the vessels was the sum of its cash investment of $13,318,334 ($16,235,446 minus $2,917,112) and its mortgage indebtedness of $13,185,929 ($30,737,721 minus $17,551,792), or $26,504,263.

       See note 8, supra.

       The figure of $8,818,838 is one dollar lower than the difference between the basis figures as asserted by the two parties. This discrepancy is brought about by the fact that all figures have been rounded off to dollar amounts. Also, the asserted basis figures given in the text are based upon the parties’ contentions as to the correct cost figure for the 18 ships. They do not take into account the undisputed figure of $175,876 which represents the basis of the four ships traded in and which both parties agree should be added to their respective cost bases as given in text. In tabular form, the tax contentions are as follows:

        Government Petitioner

      1. Original sales price. $46,973,167 $46,973,167
      2. Net charter payments by the Government to petitioner from 1942-1946. (8,818,838)
      3. Lump sum payment by Government to petitioner in 1946. (20,468,904) (20,468,904)
      4. Adjusted sales price. 17,685,424 26,504,263
      5. Basis of ships traded in. 175,876 175,876
      6.Basis as of March 8, 1946. $17,861,300 $26,680,139

       As we have already discussed, this $8,818,838 represents the $13,430,431 charter hire which petitioner received from the Government because it owned these ships during the war, as offset by debits to the Government and credits to petitioner representing the charter hire which petitioner would have received on its four ships which it traded in, interest on petitioner’s investment in the ships during this period, and a refund of income taxes paid on this unwound charter hire.

       See note 8, supra.

       See note 8, supra.

       As noted above, notes 1, 5, 8, 12, supra, these figures are stated on th.e basis that the whole transaction was for cash. The same result is achieved, however, when the transaction is viewed on the mortgage basis as set forth in note 12, supra. When this is done the $8,818,838 is seen as a cash payment by the Government to petitioner which must be credited against its asserted net cash investment of $13,318,-334, reducing it to $4,499,496. On this basis, petitioner’s cost therefore is its net cash investment of $4,499,496 plus its mortgage indebtedness of $13,185,929, or $17,685,424 — the statutory sales price. (Again there is a one-dollar discrepancy because of the rounding off of all figures to dollar amounts.)

       The amendment provided, as an addition to subsection 9 (b) of the Act:
      “From and after March 8, 1946, the cost basis of a vessel in respect of which the price adjustment is made shall be the undepreciated original purchase price reduced by the net amount of such adjustment in favor of the applicant resulting from the application of all of the foregoing provisions of this subsection.”
      See H. R. Rep. No. 1342, 81st Cong., 1st Sess., 5; S. Rep. No. 1915, 81st Cong., 2d Sess., 5.

       See note 14, swpra.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    COMMISSIONER OF INTERNAL REVENUE v. COOPER et al.
    No. 262.
    Decided May 17, 1965.

      Solicitor General Cox, Assistant Attorney General Oberdorfer and Melva M. Graney for petitioner.
   Per Curiam.

The petition for writ of certiorari is granted. The judgment is reversed. Paragon Jewel Coal Co. v. Commissioner of Internal Revenue, 380 U. S. 624.

Mr. Justice Black and Mr. Justice Goldberg dissent for the reasons stated in Mr. Justice Goldberg's dissenting opinion in Paragon Jewel Coal Co. v. Commissioner of Internal Revenue, 380 U. S., at 639.


text:
    ALLEN v. HOFFIUS et al.
    No. 994,
    Misc.
    Decided May 17, 1965.
   Per Curiam.

The appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for writ of certiorari, certiorari is denied.


text:
    HOWELL v. OHIO.
    No. 789.
    Decided May 17, 1965.

      Bernard A. Berkman for petitioner.

      Thomas H. Sutherland for respondent.
   Per Curiam.

The petition for writ of certiorari is granted. The judgment is vacated and the case is remanded to the Supreme Court of Ohio for further consideration in light of Griffin v. California, 380 U. S. 609.

The Chief Justice took no part in the consideration or decision of this case.


text:
    WATSON v. MISSOURI.
    No. 1031,
    Misc.
    Decided May 17, 1965.
   Per Curiam.

The appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for writ of certiorari, certiorari is denied.


text:
    TURNEY v. ARKANSAS.
    No. 967.
    Decided May 17, 1965.

      Thomas J. Gentry for appellant.

      Bruce Bennett, Attorney General of Arkansas, and Richard B. Adkisson, Chief Assistant Attorney General, for appellee.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for writ of certiorari, certiorari is denied.


text:
    McKINLEY v. REILLY et al.
    No. 1000.
    Decided May 17, 1965.

      Mark Wilmer for appellant.

      Darrell F. Smith, Attorney General of Arizona, Phillip M. Haggerty and Jerry W. Lawson, Assistant Attorneys General, and John E. Madden, for appellees.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of a substantial federal question.


text:
    O’CONNELL et al. v. MANNING et al.
    No. 454.
    Decided May 17, 1965.

      Martin C. Seharn for petitioners in No. 454.

      Arthur M. Wisehart for petitioner in No. 455.

      Asher W. Schwartz and Walter N. Kaufman for respondents in both cases.

      Together with No. 455, American Airlines, Inc. v. Manning et al., also on certiorari to the same court.

   Per Curiam.

The motions of the petitioners to vacate are granted. The judgment of the United States Court of Appeals for the Second Circuit is vacated and the cases a?e remanded to the United States District Court for the Southern District of New York with directions to dismiss the complaint as moot.

Mr. Justice Goldberg took no part in the consideration or decision of these cases.


text:
    KILLGORE v. BLACKWELL, WARDEN.
    No. 363,
    Misc.
    Decided May 17, 1965.
    Petitioner pro se.

      Solicitor General Cox, Assistant Attorney General Marshall and Harold H. Greene for respondent.
   Per Curiam.

The motion for leave to proceed in forma pauperis and the petition for writ of certiorari are granted. In accordance with the suggestion of the Solicitor General and upon an examination of the entire record the judgment is reversed and the case is remanded to the United States District Court for the Middle District of Pennsylvania with instructions to reinstate petitioner’s adult sentence of October 19, 1962, and release him in accordance with the terms of that sentence.


author: Mr. Chief Justice Warren

text:
    FEDERAL COMMUNICATIONS COMMISSION v. SCHREIBER et al.
    No. 482.
    Argued April 27, 1965.
    Decided May 24, 1965.

      Assistant Attorney General Douglas argued the cause for petitioner. With him on the brief were Solicitor General Cox, Nathan Lewin, Sherman L. Cohn, Harvey L. Zuckman and Henry Geller.

      Allen E. Susman argued the cause for respondents. With him on the brief were Jeffrey L. Nagin and Harry M. Plotkin.

   Mr. Chief Justice Warren

delivered the opinion of the Court.

At issue in this case are the extent of the Federal Communications Commission’s authority to promulgate procedural standards for determining whether testimony taken and documents produced during an investigatory-proceeding should be accorded confidential treatment, and the scope of judicial review of determinations made pursuant to such standards.

This case had its origin in a subpoena and various orders issued during the course of an investigatory proceeding conducted by the Federal Communications Commission pursuant to § 403 of the Communications Act of 1934, as amended, 48 Stat. 1094, 47 U. S. C. § 403 (1958 ed.) The proceeding, financed by specific congressional appropriation, was initiated on February 26, 1959, and had as its objective the gathering of

“comprehensive information concerning the respective roles played by the networks, advertisers, agencies, talent, film producers and distributors, and other major elements in the television industry.”

As an initial step in the investigation, the Commission ordered that an

“inquiry be made to determine the policies and practices pursued by the networks and others in the acquisition, ownership, production, distribution, selection, sale and licensing of programs for television exhibition, and the reasons and necessity in the public interest for said policies and practices . . . .”

The Commission authorized its chief hearing examiner to conduct the investigation. He was empowered, inter alia, to subpoena witnesses, compel their attendance, and require the production of any records or documents deemed relevant to the inquiry. The Commission ordered that

“said investigatory proceeding shall be a public proceeding except that the said presiding officer may order non-public sessions of the said investigatory proceeding where and to the extent that the public interest, the proper dispatch of the business of said proceeding, or the ends of justice will be served thereby.”

In October 1960, public sessions were held in Los Angeles, California, at which time evidence was received concerning the functions, policies and practices of television companies, talent agencies and representatives, program “packagers,” sales representatives, and others. On October 17, 1960, the Presiding Officer issued a subpoena duces tecum to respondent Schreiber, a Vice President of respondent Music Corporation of America, Inc. (MCA) — one of the largest packagers and producers of network television programs, directing him to appear at the hearing and to produce certain documents described in the annexes to the subpoena. Respondent Schreiber appeared and produced the material specified in Annex A. He refused, however, to submit without qualification the material called for in Annex B, which included a list of the programs packaged by MCA. Respondent Schreiber stated that he would produce the subpoenaed materials only “if the Commission will take this information and assure us that it will be held in confidence, will not be published, and will not be made available to other people, other than those on the Commission, and that serve the Commission.” As grounds for confidential treatment, he asserted that the information sought might disclose trade secrets and confidential data, and that the information was outside the scope of the hearing. He also objected generally to the procedures governing the hearing on the ground that they would require “public disclosure of trade secrets and confidential data of my company which might be of aid to its many competitors in this highly competitive television industry.” The Presiding Officer found “no doubt” as to the relevance of the material and rejected, as “without merit,” the claim that the information should be received in confidence.

Respondents then petitioned the Commission for review. On January 25,1961, the Commission affirmed the Presiding Officer and ordered respondents to appear, testify and produce the material subpoenaed at a reconvened hearing. In its opinion the Commission stressed the importance of publicizing the information gathered during the course of the investigation and reaffirmed its resolve to permit in camera sessions only in extraordinary situations:

“[W]e determined that public proceedings should be the rule herein, and that non-public procedures should be used only in those extraordinary instances where disclosure would irreparably damage private, competitive interests and where such interests could be found by the Presiding Officer to outweigh the paramount interest of the public and the Commission in full public disclosure.”

The -Commission noted that the Presiding Officer and Commission counsel had made “every effort to avoid public disclosure of detailed internal financial information or detailed contractual arrangements which might in fact irreparably harm private interests without sufficient compensating benefit to the public,” and found that they had not departed from this standard in rejecting respondents’ claim of likely competitive harm which, the Commission held, was “totally unsupported by their pleadings and contrary to the record.” Accordingly, the Commission ordered respondents “to testify . . . regarding all matters deemed relevant by said Presiding Officer,” and to produce the information required by the subpoena and “such other information and data as may be deemed relevant and ordered or directed to be produced by the said Presiding Officer.” On remand, a broader claim for confidentiality was made by respondents. They requested that all testimony and documentary evidence to be elicited from them be received in nonpublic sessions, and disclosed only if a court, in subsequent litigation, should authorize its public disclosure. The contention was rejected by the Presiding Officer, but respondent Schreiber persisted in his refusal to comply with the subpoena and the Commission's orders.

The Commission thereupon petitioned the United States District Court for the Southern District of California for the enforcement of its subpoena and orders. The District Court found that the investigation was statutorily authorized, that the information requested in Annex B was relevant to the inquiry, and that respondents had disobeyed valid orders and a valid subpoena. Accordingly, the District Court ordered respondents to appear at a reconvened hearing and to comply with the Commission’s subpoena and orders. However, the court, in order to protect “respondents’ rights and to preclude disclosure of trade secrets of which competitors might take advantage,” ordered that all testimony given and documents produced by respondents be received and held in confidence, The court’s order further provided that, after the investigation of respondents had been completed, the Commission could move the court for an order, “should good cause exist therefor,” permitting such testimony and documents to be made public. 201 F. Supp. 421.

On appeal, a divided Court of Appeals for the Ninth Circuit affirmed that portion of the District Court’s order which pertains to the questions now before this Court. The Court of Appeals held that the District Court had not abused its discretion in conditioning its order to require confidential treatment of the information sought. 329 F. 2d 517. In dissent, Judge Browning stated that the Commission’s procedural rule, requiring public hearings unless in camera, proceedings could be justified by those from whom the information was sought, was well within the Commission’s power. It was Judge Browning’s view that the District Court could require confidential treatment only if the Commission’s application of its procedural rule and consequent refusal to accord confidential treatment were found to be arbitrary or an abuse of the Commission’s discretion. Id., at 528-534. Because this case presents important questions concerning the respective roles to be performed by federal courts and the Federal Communications Commission in the administration of the Communications Act of 1934, we granted certiorari. 379 U. S. 927.

We hold that the Commission’s rule — requiring public disclosure except where the proponents of a request for confidential treatment have demonstrated that the public interest, proper dispatch of business, or the ends of justice would be served by nonpublic sessions — was well within the Commission’s statutory authority. We further find that the Commission did not abuse its discretion in applying this rule. Accordingly, we modify the decision below insofar as it affirms the District Court’s imposition of conditions upon the enforcement of the subpoena and orders issued by the Commission.

I.

Section 4 (j) of the Communications Act of 1934, as amended, 48 Stat. 1068, 47 U. S. C. § 154 (j) (1958 ed.), empowers the Federal Communications Commission to “conduct its proceedings in such manner as will best conduce to the proper dispatch of business and to the ends of justice.” This Court has interpreted that provision as “explicitly and by implication” delegating to the Commission power to resolve “subordinate questions of procedure . . . [such as] the scope of the inquiry, whether applications should be heard contemporaneously or successively, whether parties should be allowed to intervene in one another’s proceedings, and similar questions.” Federal Communications Comm’n v. Pottsville Broadcasting Co., 309 U. S. 134, 138. The statute does not merely confer power to promulgate rules generally applicable to all Commission proceedings, cf. Federal Communications Comm’n v. WJR, 337 U. S. 265, 282; it also delegates broad discretion to prescribe rules for specific investigations, cf. Norwegian Nitrogen Co. v. United States, 288 U. S. 294, 321-322, and to make ad hoc procedural rulings in specific instances, Federal Communications Comm’n v. Pottsville Broadcasting Co., supra. Congress has “left largely to its judgment the determination of the manner of conducting its business which would most fairly and reasonably accommodate” the proper dispatch of its business and the ends of justice. Federal Communications Comm’n v. WJR, supra.

In the Pottsville Broadcasting case, this Court stressed, in upholding this delegation of broad procedural authority, the established principle that administrative agencies “should be free to fashion their own rules of procedure and to pursue methods of inquiry capable of permitting them to discharge their multitudinous duties.” 309 U. S., at 143. This principle, which has been upheld in a variety of applications, is an outgrowth of the congressional determination that administrative agencies and administrators will be familiar with the industries which they regulate and will be in a better position than federal courts or Congress itself to design procedural rules adapted to the peculiarities of the industry and the tasks of the agency involved. Thus, underlying the broad delegation in § 4 (j) of procedural rule-making power to the Federal Communications Commission is a “recognition of the rapidly fluctuating factors characteristic of the evolution of broadcasting and of the corresponding requirement that the administrative process possess sufficient flexibility to adjust itself to these factors.” Federal Communications Comm’n v. Pottsville Broadcasting Co., supra, at 138.

To permit federal district courts to establish administrative procedures de novo would, of course, render nugatory Congress’ effort to insure that administrative procedures be designed by those most familiar with the regulatory problems involved. Thus, in providing for judicial review of administrative procedural rule-making, Congress has not empowered district courts to substitute their judgment for that of the agency. Instead, it has limited judicial responsibility to insuring consistency with governing statutes and the demands of the Constitution. Oklahoma Press Pub. Co. v. Walling, 327 U. S. 186, 214— 218; Federal Communications Comm’n v. Pottsville Broadcasting Co., supra, at 144-145; Federal Radio Comm’n v. Nelson Bros. Co., 289 U. S. 266, 276-277.

It is apparent that the courts below did not respect this congressional distribution of authority. The Commission promulgated a rule governing disclosure in this investigation. Yet, neither the District Court nor the Court of Appeals inquired into the validity of the Commission’s exercise of its rule-making authority. Instead, the District Court devised procedures to be followed by the Commission on the basis of the court’s conception of how the public and private interests involved could best be served. In reviewing this determination, the Court of Appeals found that the District Judge had not abused his discretion, “but, on the contrary, established a fair and just procedure whereby a most important investigation could proceed without being unduly disrupted, obstructed or prolonged, and at the same time afford [respondents] protection against the improvident disclosure of possible valuable trade secrets.” 329 F. 2d, at 524. In so doing, the Court of Appeals erred. The question for decision was whether the exercise of discretion by the Commission was within permissible limits, not whether the District Judge’s substituted judgment was reasonable.

It is also evident that the Commission’s procedural rule — requiring public proceedings except where it is shown that the public interest, the dispatch of business, or the ends of justice would be served by nonpublic sessions — was well within the Commission’s power. Grants of agency authority comparable in scope to § 4 (j) have been held to authorize public disclosure of information, or receipt of data in confidence, as the agency may determine to be proper upon a balancing of the public and private interests involved. That § 4 (j) is broad enough to empower the Commission to establish standards for determining whether to conduct an investigation publicly or in private is demonstrated by this Court’s decision in Norwegian Nitrogen Co. v. United States, 288 U. S. 294. There, the Court pointed out that a similar grant of rule-making authority — § 315 (c) of the Tariff Act of 1922, 42 Stat. 941, 942-943 — which authorizes the Tariff Commission “to adopt such reasonable procedure, rules, and regulations as it may deem necessary,” empowered the Commission

“to shape its course within reasonable limits by its own conception of the promptings of policy and fairness. It would have kept within the statute even though it had made the hearings private and had refrained from the publication of anything, either the records of its agents or the testimony of witnesses. . . . Instead, it made the hearing public, and exposed everything to view except only when publication was likely in its judgment to result in hardship or injustice.” 288 IT. S., at 321-322.

The delegated power, of course, may not be exercised arbitrarily, but its exercise may not be impeached merely because reasonable minds might differ on the wisdom thereof. Oklahoma Press Pub. Co. v. Walling, 327 U. S. 186, 215-218; Isbrandtsen-Moller Co. v. United States, 300 U. S. 139, 146; Norwegian Nitrogen Co. v. United States, supra, at 321-322. It is apparent, however, that the Commission’s determination in the present case that “public proceedings should be the rule” with exceptions granted “only in those extraordinary instances where disclosure would irreparably damage private, competitive interests and where such interests could be found by the Presiding Officer to outweigh the paramount interest of the public and the Commission in full public disclosure” was not an arbitrary exercise of the Commission’s authority. The procedural rule, establishing a presumption in favor of public proceedings, accords with the general, policy favoring disclosure of administrative agency proceedings. Moreover, the reasons advanced by the Commission in support of its determination to make public hearings the norm and to place the burden of justifying confidential treatment upon those from whom information is sought amply demonstrate that the Commission’s exercise of its delegated powers may not be successfully attacked as arbitrary or capricious. The investigative inquiry was designed to secure information to aid the Commission in the discharge of its many functions. The Commission stated that the subject matter of the inquiry is “complex and generally unknown” involving “many-sided transaction [s]” among “networks, advertising agencies, program producers, program packagers, talent agencies” and others. Therefore, the Commission determined, in order “to obtain a full and rounded picture of such transactions, it is highly desirable that the facts, information, data and opinion supplied by one group or individual be known to other groups and individuals involved, so that they may verify, refute, explain, amplify or supplement the record from their own diverse points of view.” The Commission observed that, in addition to stimulating the flow of information, public hearings serve to inform those segments of the public primarily affected by the agency’s regulatory policies and those likely to be affected by subsequent administrative or legislative action of the factual basis for any action ultimately taken- — a practical inducement to public acceptance of the results of the investigation. Also implicit in the Commission’s discourse is a recognition that publicity tends to stimulate the flow of information and public preferences which may significantly influence administrative and legislative views as to the necessity and character of prospective action. The Commission further pointed out that public disclosure is necessary to the execution of its duty under § 4 (k) of the Communications Act of 1934, as amended, 48 Stat. 1068, 47 U. S. C. § 154 (k) (1958 ed.), to make annual reports to Congress. Significantly, this investigation was specifically authorized by Congress so that Congress might “draw upon the facts which are obtained.”

We hold, therefore, that the Commission’s adoption of the procedural rule favoring public disclosure and placing upon those from whom information is sought the burden of demonstrating the need for in camera proceedings is statutorily authorized.

II.

Remaining for determination is whether the Commission’s application of its disclosure rule and the consequent rejection of respondents’ requests for confidential treatment were so arbitrary or unreasonable as to warrant the imposition by the District Court of conditions upon enforcement of the Commission’s subpoena and orders.

Upon remand from the Commission, respondents moved that all testimony and documents to be elicited from them — not merely Annex B — should be received in camera. Respondents asserted that in light of the announced scope of the inquiry, the Commission’s order to produce documents upon request and to testify “regarding all matters deemed relevant” would require MCA “to disclose all of its business information to its many competitors and to make a public record of all of its activities,” and that such a disclosure, if demanded, would necessarily include confidential business secrets. No factual showing was made; there was only the argument.

The District Court accepted the argument, finding “well-grounded [the] fears of the respondents that the testimony to be given might result in disclosure of trade-secrets, of which competitors might take advantage.” 201 F. Supp., at 425. Accordingly, the court ordered that all testimony and documents adduced by respondents be received in confidence. In so doing the District Court erred, for it is clear that the Presiding Officer did not abuse his discretion in rejecting this request for blanket nondisclosure.

The Presiding Officer did not know what information would actually be sought, what questions asked. Indeed, he could only speculate as to whether the Commission would seek to elicit any data which, if disclosed to MCA’s competitors, would work competitive harm. He could not ascertain the likelihood of irreparable damage to private competitive interests, nor could he discern whether the private interest outweighed the public interest in disclosure. If and when information was demanded which if disclosed might in fact injure MCA competitively, there would be ample opportunity to request that it be received in confidence, and to seek judicial protection if the request were denied. Cf. Reisman v. Caplin, 375 U. S. 440. The Presiding Officer would have abused his discretion in denying the request only if it were shown that no information could have been elicited from respondents which could be publicly disclosed. The record affords no justification for such a proposition.

The only other possible basis for the District Court’s order would be an assumption that the Presiding Officer would consistently require disclosure even if a balancing of public and private interests compelled secrecy. There is no support for such an assumption in the record and it runs contrary to the presumption to which administrative agencies are entitled — -that they will act properly and according to law.

Nor can the District Court’s order be saved on the ground that it did not direct that all information be held in confidence, but merely deferred the determination of whether the information was entitled to confidential treatment until after the inquiry of respondents had been completed. The order directs that there be no disclosure until the court so orders, “should good cause exist therefor.” Not only does this order seem to shift the burden of proof to the Commission to justify publication, despite the valid rule to the contrary, but it also permits respondents to avoid submitting the issue of disclosure to the Presiding Officer despite the “long settled rule of judicial administration that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.” Myers v. Bethlehem Shipbuilding Corp., 303 U. S. 41, 50-51; Reisman v. Caplin, supra. Moreover, the District Court’s order forbids disclosure until completion of the investigation of respondents without any showing that secrecy is justified. During this period the Commission could not make the information available to Congress, and the Commission would be denied the benefit of other evidence stimulated by disclosure. And the period during which the benefits of disclosure would be denied would inevitably be long. Respondent first appeared before the Presiding Officer on October 21,1960, and resolution of the issues then raised has caused a delay of more than four and one-half years.

We do not find forceful respondents’ contention that the District Court’s order was necessary to protect against the discriminatory treatment of MCA by the Commission. The allegation finds little support in the record; moreover, no reference is made to this factor in the District Court’s opinion or findings of fact. Respondents’ assertions that “the Commission’s interest in MCA was deep” and that “concentration upon MCA was unique,” even if true, would not demonstrate the need for secrecy. Instead, such assertions merely lend credence to the Commission’s unchallenged finding that because of the importance of MCA in the industry, the failure to explore fully the policies and practices of MCA “would seriously impair, if not render nugatory, any attempt on the Commission’s part to understand and delineate the policies, practices and activities involved in the creation, production, sale and licensing of television filmed programs.” Furthermore, it is clear that respondents are adequately protected against improvident disclosure, even if the Commission should unfairly seek disclosure of information which would be competitively disastrous to respondents. Not only does the administrative remedy exist, but judicial protection against Commission overreaching also remains available with respect to any requests for information made in the future.

We conclude, therefore, that the Commission did not abuse its discretion in rejecting respondents’ requests for blanket nondisclosure and accordingly hold that the District Court erred in ordering the Commission to afford confidential treatment to all information elicited from respondents.

Respondents also moved that confidential treatment be accorded Annex B which called for the production of a list of programs as to which MCA served as a “packager” and those in which MCA had a financial interest. Respondent Schreiber testified that the information sought would disclose MCA’s confidential agency relationships with clients, “might be used detrimentally,” and “would be possibly advantageous to our competitors.”

We find that the Commission’s affirmance of the Presiding Officer’s determination that the material sought in Annex B should be received in public session was clearly proper. Certainly private agreements between MCA and its clients not to disclose facts without the client’s consent could not affect the Commission in the discharge of its public duties. See 8 Wigmore, Evidence § 2286 (McNaughton rev. 1961). And the naked assertion of possible competitive injury does not establish that the Presiding Officer abused his discretion in declining to accord confidential treatment. Moreover, there is nothing in the District Court’s opinion, findings or conclusions of law which indicates the likelihood, or even the possibility, of competitive harm from public disclosure of the Annex B information. MCA’s competitors and others engaged in similar businesses had furnished publicly the same type of information without objection. Respondents did not attempt before the Commission or on review to distinguish the information furnished by MCA’s competitors or the list of programs produced by MCA (subpoenaed in Annex A) which was introduced without objection by respondent Schreiber. Nor did respondents file affidavits in support of their position. But, even if it were conceded that disclosure of Annex B might have some competitive impact, there is no warrant for concluding that the Presiding Officer abused his discretion in finding that respondents had not sustained their burden of demonstrating that the private interest involved outweighed the public interest in disclosure.

One further point should be discussed. During oral argument counsel for respondents suggested that his clients were prejudiced in their efforts to demonstrate the need for confidential treatment of the information contained in Annex B by restrictions imposed upon the participation of counsel by the then-prevailing Commission rules. We do not find this contention persuasive. Respondents filed a petition, prepared and signed by counsel, seeking review before the full Commission of the Presiding Officer’s rejection of their confidentiality request. Subsequently, they filed a second motion for confidential treatment with the Presiding Officer and respondents’ counsel was afforded an opportunity to argue orally in support of the motion. Thus, it is evident that the then-existing Commission rules restricting the rights of counsel did not prejudice respondents in their efforts to secure in camera proceedings with regard to Annex B, and hence there is no occasion to order that respondents be afforded an additional opportunity to present objections to the disclosure of the information subpoenaed in Annex B.

The judgment of the Court of Appeals is modified so as to strike paragraph 2 of the District Court’s order, and the cause is remanded to the District Court with directions to enforce the Commission’s orders and subpoena without qualification.

It is so ordered.

       Section 403 provides:
      “The Commission shall have full authority and power at any time to institute an inquiry, on its own motion, in any case and as to any matter or thing concerning which complaint is authorized to be made, to or before the Commission by any provision of this Act, or concerning which any question may arise under any of the provisions of this Act, or relating to the enforcement of any of the provisions of this Act. The Commission shall have the same powers and authority to proceed with any inquiry instituted on its own motion as though it had been appealed to by complaint or petition under any of the provisions of this Act, including the power to make and enforce any order or orders in the case, or relating to the matter or thing concerning which the inquiry is had, excepting orders for the payment of money.”

       Independent Offices Appropriations Act, 1956, 69 Stat. 199, 201-202.

       Statement of Commission Chairman McConnaughey; Hearings before the Subcommittee of the Senate Appropriations Committee, Independent Offices Appropriations for 1956, 84th Cong., 1st Sess., p. 293. Chairman McConnaughey also noted that “[o]nly with this information can the problems affecting the further expansion of television outlets be adequately identified and evaluated, and appropriate recommendations made for their solution.” Id., at 294. See also Hearings before the Subcommittee of the House Appropriations Committee, Independent Offices Appropriations for 1956, 84th Cong., 1st Sess., pp. 663-664.

       The purpose and scope of the inquiry are set forth in the Commission’s order of Feb. 26, 1959. 24 Fed. Reg. 1605. On Nov. 10, 1959, the Commission entered a supplemental order
      “[t]hat the inquiry and investigatory proceeding instituted pursuant to the Commission’s Order of February 26, 1959 (FCC 59-166), be and is hereby amended and enlarged to determine the policies, practices, mechanics and surveillance pursued and carried out by networks, station licensees and others in connection with the acquisition, ownership, production, distribution, selection, sale and licensing of programs for radio and television exhibition and the policies and practices pursued by networks, station licensees and others in connection with the selection, presentation and supervision of advertising material for broadcast to the public and the reasons and necessity in the public interest for said policies and practices . . . .” Id,., at 9275, 9276.
      In its orders the Commission noted that the information sought was necessary (1) to complete its general investigation of radio and television broadcasting pursuant to the Independent Offices Appropriations Act; (2) to determine “what, if any, rules, regulations, legislation or other actions are necessary or desirable in the public interest in connection with” television programming; (3) to determine where the public interest lies in the granting of construction permits, station licenses, modifications and renewals; and (4) to enable the Commission to report and make specific recommendations to Congress in relation to the regulation of broadcasting. Id., at 1605, 9275.

        Id., at 1605.

        Ibid.

       "Packagers” develop and assemble the talent and scripts for a particular program or programs. A “producer” has general charge of the process of preparing the package for television showing.

       The Commission’s unchallenged finding was:
      “that MCA, Inc., (a) represents a large share of the talent, both acting and creative, engaged in television programming; (b) produces television programs; (c) packages and/or sells such programs; (d) maintains and leases production facilities for such programs and generally engages, on a large scale, in all facets of television program production. The record of the proceeding to date clearly establishes that failure fully to explore the policies, practices and activities of MCA, Inc., in connection with television programming would seriously impair, if not render nugatory, any attempt on the Commission’s part to understand and delineate the policies, practices and activities involved in the creation, production, sale and licensing of television filmed programs . . . .” R. 16.

       “ (A) A list by name or title of all television programs whether series programs, special programs, or otherwise, which appeared or were exhibited by or through the facilities of the television networks operated by NBC, CBS, or ABC since September 1, 1958, which programs were produced by MCA, Inc. or Revue Productions, Inc. and/or in which MCA, Inc. or Revue Productions, Inc. has or had a financial or proprietary interest or with regard to which MCA, Inc. or Revue Productions, Inc. is or was entitled to receive or has received a percentage of the profits or other compensation or fees in connection with the production or exhibition of such programs other than remuneration or compensation for the representation as agent of individual natural persons as talent.”

       “(B) A list of all television programs whether series programs, special programs, or otherwise, which appeared on or were exhibited by or through the facilities of the television networks of NBC, CBS, or ABC, since September 1, 1958, in which MCA, Inc. or any predecessor affiliate or subsidiary of MCA, Inc. acted as packager and/or, by agreement or otherwise, is entitled to receive or has received a percentage of the cost or selling price of said program or was or is entitled to receive or has received other compensation, remuneration or fees in connection with the packaging, licensing for broadcast or selling of said program, otherwise than as remuneration or compensation for the representation as agent of individual natural persons as talent.”

       See infra, pp. 293-294.

       On review of the Presiding Officer’s first order, the Commission, although dealing with the merits of that order, held "that the orders and directions of the Presiding Officer as to relevance and public disclosure of evidence, information and data are interlocutory in nature, do not of themselves 'aggrieve’ any person, and are not, as of right, appealable to the Commission.” This holding precluded an application to the Commission for review of the Presiding Officer’s second order.

       Respondents do not challenge these findings.

      Paragraph 2 of the District Court’s order provides:
      “It is Further Ordered that any further interrogation of respondents and any documents produced by respondents be taken and held by the Commission in private and confidential session, that the public be excluded therefrom, that all testimony adduced and documents produced be maintained in confidence by the Commission, that the Commission by motion duly made and served, may move the Court upon the conclusion of such interrogation and production for an order, should good cause exist therefor, permitting such testimony and documents to be made public, and that respondents shall retain the right to oppose such motion if and when so made.”

       Under the procedures established by the Presiding Officer, counsel for a witness could not, during the course of interrogation of his client, take exception to, request clarification of, or object to any question, nor could he initiate consultation with his client. Counsel could consult with his client only upon the request of the client if approved by the Presiding Officer. The District Court held that under § 6 (a) of the Administrative Procedure Act, 60 Stat. 240, respondents were entitled to the assistance of counsel in the following respects: the right to have counsel object to any question and state his reasons therefor, and the right to have counsel initiate consultation without interference by the Commission or its agents. The Court of Appeals disagreed, concluding that the procedures established by the Presiding Officer were not violative of any constitutional or statutory provisions. On Sept. 2, 1964, the Commission amended Part I of its Rules and Regulations, permitting counsel for any person compelled to appear in Commission proceedings to advise his client either upon his own initiative or that of his client, “to make objections on the record, and to state briefly the basis for such objections.” 29 Fed. Reg. 12774^12775. Finding this amendment to be “in accord with respondents’ legal position on this matter,” respondents did not seek review of the ruling below. Given the change in the Commission’s rules, we need not, and do not, express any views as to the legality of the prior rules concerning a witness’ right to the assistance of counsel.

       The Commission’s own conception of its authority is-similarly broad. Section 1.1 of the Commission’s General Rules of Practice and Procedure provides that procedures to be followed in investigative proceedings shall “be such as in the opinion of the Commission will best serve the purposes of such proceeding.” 47 CFR § 1.1 (1965).

        Civil Aeronautics Board v. Hermann, 353 U. S. 322; Oklahoma Press Pub. Co. v. Walling, 327 U. S. 186; Wallace Corp. v. National Labor Relations Board, 323 U. S. 248; Endicott Johnson Corp. v. Perkins, 317 U. S. 501; Utah Fuel Co. v. National Bituminous Coal Comm’n, 306 U. S. 56; Norwegian Nitrogen Co. v. United States, 288 U. S. 294.

        Isbrandtsen-Moller Co. v. United States, 300 U. S. 139; American Sumatra Tobacco Corp. v. Securities & Exchange Comm’n, 71 App. D. C. 259, 110 F. 2d 117 (1940); E. Griffiths Hughes, Inc. v. Federal Trade Comm’n, 61 App. D. C. 386, 63 F. 2d 362 (1933).

        Norwegian Nitrogen Co. v. United States, supra.

       Section 3 (c) of the Administrative Procedure Act, 60 Stat. 238, 5 U. S. C. § 1002 (c) (1958 ed.), provides:
      “Save as otherwise required by statute, matters of official record shall in accordance with published rule be made available to persons properly and directly concerned except information held confidential for good cause found.”
      This statute has been interpreted to apply to all information received in any “formal proceeding.” Attorney General’s Manual on the Administrative Procedure Act 24 (1947). In construing §3 (c), the District Court for the District of Columbia has stated: “Of course, the public interest in open hearings places the burden on the plaintiffs to show that their documents should be received in confidence.” Graber Mfg. Co. v. Dixon, 223 F. Supp. 1020, 1022 (D. C. D. C. 1963). See also Davis, Administrative Law § 8.09 (1958).

       See generally Rourke, Law Enforcement Through Publicity, 24 U. Chi. L. Rev. 225 (1957); Note, 72 Yale L. J. 1227 (1963).

       Statement of Senator Magnuson, 101 Cong. Rec. 7629.

       Respondents do not contend that a denial of confidential treatment would result in the abridgment of any constitutional right.

       See note 15, supra.

       It should also be noted that during the initial proceeding before the Presiding Officer when respondent Schreiber first objected to disclosure of the Annex B information, he was afforded an opportunity to consult with counsel. In addition, the Commission rules then in effect contained no restrictions on the right of counsel to prepare written documents in support of requests for confidential treatment or on the right of witnesses, such as respondent Schreiber, to submit such documents.


author: Mr. Justice Douglas Mr. Justice Brennan,

text:
    LAMONT, dba BASIC PAMPHLETS v. POSTMASTER GENERAL.
    No. 491.
    Argued April 26, 1965.
    Decided May 24, 1965.

      Leonard B. Boudin argued the cause for appellant in No. 491. With him on the briefs were Victor Rabino-witz, Norman Dorsen and Henry Winestine.

      Solicitor General Cox argued the cause for appellee in No. 491 and appellants in No. 848. With him on the brief were Assistant Attorney General Yeagley, Nathan Lewin, Kevin T. Maroney and Lee B. Anderson.

      Marshall W. Krause argued the cause for appellee in No. 848. With him on the brief was Lawrence Speiser.

      Nanette Dembitz and Melvin L. Wulf filed a brief for the American Civil Liberties Union, as amicus curiae, urging reversal in No. 491 and affirmance in No. 848.

      Together with No. 848, Fixa, Postmaster, San Francisco, et al. v. Heilberg, on appeal from the United States District Court for the Northern District of California.

   Mr. Justice Douglas

delivered the opinion of the Court.

These appeals present the same question: is § 305 (a) of the Postal Service and Federal Employees Salary Act of 1962, 76 Stat. 840, constitutional as construed and applied? The statute provides in part:

“Mail matter, except sealed letters, which originates or which is printed or otherwise prepared in a foreign country and which is determined by the Secretary of the Treasury pursuant to rules and regulations to be promulgated by him to be ‘communist political propaganda,’ shall be detained by the Postmaster General upon its arrival for delivery in the United States, or upon its subsequent deposit in the United States domestic mails, and the addressee shall be notified that such matter has been received and will be delivered only upon the addressee’s request, except that such detention shall not be required in the case of any matter which is furnished pursuant to subscription or which is otherwise ascertained by the Postmaster General to be desired by the addressee.” 39 U. S. C. 4008 (a).

The statute defines “communist political propaganda” as political propaganda (as that term is defined in § 1 (j) of the Foreign Agents Registration Act of 1938 ) which is issued by or on behalf of any country with respect to which there is in effect a suspension or withdrawal of tariff concessions or from which foreign assistance is withheld pursuant to certain specified statutes. 39 U. S. C. § 4008 (b). The statute contains an exemption from its provisions for mail addressed to government agencies and educational institutions, or officials thereof, and for mail sent pursuant to a reciprocal cultural international agreement. 39 U. S. C. § 4008 (c).

To implement the statute the Post Office maintains 10 or 11 screening points through which is routed all unsealed mail from the designated foreign countries. At these points the nonexempt mail is examined by Customs authorities. When it is determined that a piece of mail is “communist political propaganda,” the addressee is mailed a notice identifying the mail being detained and advising that it will be destroyed unless the addressee requests delivery by returning an attached reply card within 20 days.

Prior to March 1,1965, the reply card contained a space in which the addressee could request delivery of any “similar publication” in the future. A list of the persons thus manifesting a desire to receive “communist political propaganda” was maintained by the Post Office. The Government in its brief informs us that the keeping of this list was terminated, effective March 15, 1965. Thus, under the new practice, a notice is sent and must be returned for each individual piece of mail desired. The only standing instruction which it is now possible to leave with the Post Office is not to deliver any “communist political propaganda.” And the Solicitor General advises us that the Post Office Department “intends to retain its assumption that those who do not return the card want neither the identified publication nor any similar one arriving subsequently.”

No. 491 arose out of the Post Office’s detention in 1963 of a copy of the Peking Review #12 addressed to appellant, Dr. Corliss Lamont, who is engaged in the publishing and distributing of pamphlets. Lamont did not respond to the notice of detention which was sent to him but instead instituted this suit to enjoin enforcement of the statute, alleging that it infringed his rights under the First and Fifth Amendments. The Post Office thereupon notified Lamont that it considered his institution of the suit to be an expression of his desire to receive “communist political propaganda” and therefore none of his mail would be detained. Lamont amended his complaint to challenge on constitutional grounds the placement of his name on the list of those desiring to receive “communist political propaganda.” The majority of the three-judge District Court nonetheless dismissed the complaint as moot, 229 F. Supp. 913, because Lamont would now receive his mail unimpeded. Insofar as the list was concerned, the majority thought that any legally significant harm to Lamont as a result of being listed was merely a speculative possibility, and so on this score the controversy was not yet ripe for adjudication. Lamont appealed from the dismissal, and we noted probable jurisdiction. 379 U. S. 926.

Like Lamont, appellee Heilberg in No. 848, when his mail was detained, refused to return the reply card and instead filed a complaint in the District Court for an injunction against enforcement of the statute. The Post Office reacted to this complaint in the same manner as it had to Lamont’s complaint, but the District Court declined to hold that Heilberg’s action was thereby mooted. Instead the District Court reached the merits and unanimously held that the statute was unconstitutional under the First Amendment. 236 F. Supp. 405. The Government appealed and we noted probable jurisdiction. 379 U. S. 997.

There is no longer even a colorable question of mootness in these cases, for the new procedure, as described above, requires the postal authorities to send a separate notice for each item as it is received and the addressee to make a separate request for each item. Under the new system, we are told, there can be no list of persons who have manifested a desire to receive “communist political propaganda” and whose mail will therefore go through relatively unimpeded. The Government concedes that the changed procedure entirely precludes any claim of mootness and leaves for our consideration the sole question of the constitutionality of the statute.

We conclude that the Act as construed and applied is unconstitutional because it requires an official act (viz., returning the reply card) as a limitation on the unfettered exercise of the addressee’s First Amendment rights. As stated by Mr. Justice Holmes in Milwaukee Pub. Co. v. Burleson, 255 U. S. 407, 437 (dissenting): “The United States may give up the Post Office when it sees fit, but while it carries it on the use of the mails is almost as much a part of free speech as the right to use our tongues . ...”

We struck down in Murdock v. Pennsylvania, 319 U. S. 105, a fiat license tax on the exercise of First Amendment rights. A registration requirement imposed on a labor union organizer before making a speech met the same fate in Thomas v. Collins, 323 U. S. 516. A municipal licensing system for those distributing literature was held invalid in Lovell v. Qriffin, 303 U. S. 444. We recently reviewed in Harman v. Forssenius, 380 U. S. 528, an attempt by a State to impose a burden on the exercise of a right under the Twenty-fourth Amendment. There, a registration was required by all federal electors who did not pay the state poll tax. We stated:

"For federal elections, the poll tax is abolished absolutely as a prerequisite to voting, and no equivalent or milder substitute may be imposed. Any material requirement imposed upon the federal voter solely because of his refusal to waive the constitutional immunity subverts the effectiveness of the Twenty-fourth Amendment and must fall under its ban.” Id., p. 542.

Here the Congress — expressly restrained by the First Amendment from “abridging” freedom of speech and of press — is the actor. The Act sets administrative officials astride the flow of mail to inspect it, appraise it, write the addressee about it, and await a response before dispatching the mail. Just as the licensing or taxing authorities in the Lovell, Thomas, and Murdock cases sought to control the flow of ideas to the public, so here federal agencies regulate the flow of mail. We do not have here, any more than we had in Hannegan v. Esquire, Inc., 327 U. S. 146, any question concerning the extent to which Congress may classify the mail and fix the charges for its carriage. Nor do we reach the question whether the standard here applied could pass constitutional muster. Nor do we deal with the right of Customs to inspect material from abroad for contraband. We rest on the narrow ground that the addressee in order to receive his mail must request in writing that it be delivered. This amounts in our judgment to an unconstitutional abridgment of the addressee’s First Amendment rights. The addressee carries an affirmative obligation which we do not think the Government may impose on him. This requirement is almost certain to have a deterrent effect, especially as respects those who have sensitive positions. Their livelihood may be dependent on a security clearance. Public officials, like schoolteachers who have no tenure, might think they would invite disaster if they read what the Federal Government says contains the seeds of treason. Apart from them, any addressee is likely to feel some inhibition in sending for literature which federal officials have condemned as “communist political propaganda.” The regime of this Act is at war with , the “uninhibited, robust, and wide-open” debate and discussion that are contemplated by the First Amendment. New York Times Co. v. Sullivan, 376 .U. S. 254, 270.

We reverse the judgment in No. 491 and affirm that in No. 848.

It is so ordered.

MR. Justice White took no part in the consideration or decision of these cases.

Mr. Justice Brennan,

with whom Mr. Justice Goldberg joins,

concurring.

These might be troublesome cases if the addressees predicated their claim for relief upon the First Amendment rights of the senders. To succeed, the addressees would then have to establish their standing to vindicate the senders’ constitutional rights, cf. Dombrowski v. Pfister, 380 U. S. 479, 486, as well as First Amendment protection for political propaganda prepared and printed abroad by or on behalf of a foreign government, cf. Johnson v. Eisentrager, 339 U. S. 763, 781-785. However, those questions are not before us, since the addressees assert First Amendment claims in their own right: they contend that the Government is powerless to interfere with the delivery of the material because the First Amendment “necessarily protects the right to receive it.” Martin v. City of Struthers, 319 U. S. 141, 143. Since the decisions today uphold this contention, I join the Court’s opinion.

It is true that the First Amendment contains no specific guarantee of access to publications. However, the protection of the Bill of Rights goes beyond the specific guarantees to protect from congressional abridgment those equally fundamental personal rights necessary to make the express guarantees fully meaningful. See, e. g., Bolling v. Sharpe, 347 U. S. 497; NAACP v. Alabama, 357 U. S. 449; Kent v. Dulles, 357 U. S. 116; Aptheker v. Secretary of State, 378 II. S. 500. I think the right to receive publications is such a fundamental right. The dissemination of ideas can accomplish nothing if otherwise willing addressees are not free to receive and consider them. It would be a barren marketplace of ideas that had only sellers and no buyers.

Even if we were to accept the characterization of this statute as a regulation not intended to control the content of speech, but only incidentally limiting its unfettered exercise, see Zemel v. Rusk, 381 U. S. 1, 16-17, we “have consistently held that only a compelling [governmental] interest in the regulation of a subject within [governmental] constitutional power to regulate can justify limiting First Amendment freedoms.” NAACP v. Button, 371 U. S. 415, 438. The Government’s brief expressly disavows any support for this statute “in large public interests such as would be needed to justify a true restriction upon freedom of expression or inquiry.” Rather the Government argues that, since an addressee taking the trouble to return the card can receive the publication named in it, only inconvenience and not an abridgment is involved. But inhibition as well as prohibition against the exercise of precious First Amendment rights is a power denied to government. See, e. g., Freedman v. Maryland, 380 U. S. 51; Garrison v. Louisiana, 379 U. S. 64; Speiser v. Randall, 357 U. S. 513. The registration requirement which was struck down in Thomas v. Collins, 323 U. S. 516, was not appreciably more burdensome. Moreover, the addressee’s failure to return this form results in nondelivery not only of the particular publication but also of all similar publications or material. Thus, although the addressee may be content not to receive the particular publication, and hence does not return the card, the consequence is a denial of access to like publications which he may desire to receive. In any event, we cannot sustain an intrusion on First Amendment rights on the ground that the intrusion is only a minor one. As the Court said in Boyd v. United States, 116 U. S. 616, 635:

“It may be that it is the obnoxious thing in its mildest and least repulsive form; but illegitimate and unconstitutional practices get their first footing in that way, namely, by silent approaches and slight deviations from legal modes of procedure. This can only be obviated by adhering to the rule that constitutional provisions for the security of person and property should be liberally construed. A close and literal construction deprives them of half their efficacy, and leads to gradual depreciation of the right, as if it consisted more in sound than in substance. It is the duty of courts to be watchful for the constitutional rights of the citizen, and against any stealthy encroachments thereon.”

The Government asserts that Congress enacted the statute in the awareness that Communist political propaganda mailed to addressees in the United States on behalf of foreign governments was often offensive to the recipients and constituted a subsidy to the very governments which bar the dissemination of publications from the United States. But the sensibilities of the unwilling recipient are fully safeguarded by 39 CFR § 44.1 (a) (Supp. 1965) under which the Post Office will honor his request to stop delivery; the statute under consideration, on the other hand, impedes delivery even to a willing addressee. In the area of First Amendment freedoms, government has the duty to confine itself to the least intrusive regulations which are adequate for the purpose. Cf. Butler v. Michigan, 352 U. S. 380. The argument that the statute is justified by the object of avoiding the subsidization of propaganda of foreign governments which bar American propaganda needs little comment. If the Government wishes to withdraw a subsidy or a privilege, it must do so by means and on terms which do not endanger First Amendment rights. Cf. Speiser v. Randall, supra. That the governments which originate this propaganda themselves have no equivalent guarantees only highlights the cherished values of our constitutional framework; it can never justify emulating the practice of restrictive regimes in the name of expediency.

MR. Justice Harlan concurs in the judgment of the Court on the grounds set forth in this concurring opinion.

         “The term 'political propaganda’ includes any oral, visual, graphic, written, pictorial, or other communication or expression by any person (1) which is reasonably adapted to, or which the person disseminating the same believes will, or which he intends to, prevail upon, indoctrinate, convert, induce, or in any other way influence a recipient or any section of the public within the United States with reference to the political or public interests, policies, or relations of a government of a foreign country or a foreign political party or with reference to the foreign policies of the United States or promote in the United States racial, religious, or social dissensions, or (2) which advocates, advises, instigates, or promotes any racial, social, political, or religious disorder, civil riot, or other conflict involving the use of force or violence in any other American republic or the overthrow of any government or political subdivision of any other American republic by any means involving the use of force or violence.” 22 U. S. C. §611 (j).

       A Post Office regulation permits a patron to refuse delivery of any piece of mail (39 CPR § 44.1 (a)) or to request in writing a withholding from delivery for a period not to exceed two years of specifically described items of certain mail, including “foreign printed matter.” Ibid. And see Schwartz, The Mail Must Not Go Through, 11 ü. C. L. A. L. Rev. 805, 847.

       “Whatever may have been the voluntary nature of the postal system in the period of its establishment, it is now the main artery through which the business, social, and personal affairs of the people are conducted and upon which depends in a greater degree than upon any other activity of government the promotion of the general welfare.” Pike v. Walker, 73 App. D. C. 289, 291, 121 F. 2d 37, 39. And see Gellhorn, Individual Freedom and Governmental Restraints, p. 88 et seq. (1956).