prices for the steel industry alone, without considering the thousands of other industries in the United States, each of which would be equally entitled to have prices fixed on their multitude of products. If the questions be considered from the standpoint of fixing maximum prices, it would seem to be equally impracticable, for the reasons just cited, as well as the difficulty of satisfying the many manufacturers engaged in the same lines of trade, each of whom have different costs of manufacture to produce the same or similar articles. It would seem unnecessary to point out the many other objections, including the necessity of frequently altering the fixed prices to accord with the laws of supply and demand, the changeable costs of manufacture contingent on the volume of production and other exigencies of manufacture. As a natural corollary to the fixing of either changeable or maximum prices would be the inevitable necessity of fixing maximum and minimum wages to labor, as it is necessary, according to theorists and economists, that the wages of labor must be commensurate with the article which it manufactures or which it directly or indirectly consumes.

Suggested method of insuring fair prices: If it should be asked, however, granting the necessity of Government supervision of corporations under Federal incorporation, whether mandatory or voluntary, as in the wisdom of Congress might be determined, and conceding the impracticability of fixing prices, how a fair price to consumers and manufacturers alike may be insured with the object of avoiding (a) the exacting of excessive prices from consumers; (b) any possible oppression of their competitors by manufacturers with larger capital or better facilities for economic production; (c) avoiding destructive competition whereby weaker producers would be driven out of business; (d) the impoverishment of people dependent on such industries, loss of employment, or reduction of wages-it is suggested as being worthy of consideration, a law similar to that which obtains in Canada-you are no doubt familiar with that law in Canada-and which in effect is the practice in Germany.

When it might appear to the Government board of supervision, either on their own initiative, or from the complaint of any considerable body of consumers, that prices in any line of industry are unreasonably high, they should be empowered to make inquiry into the facts, to call upon manufacturers to disclose their profits, and to determine and indicate to manufacturers their opinion as to the reasonableness of their price, subject, if necessary, to review by the courts as to any contention that prices were confiscatory.

Likewise, when, in the opinion of any body of manufacturers, it should appear necessary, in order to prevent destructive competition, the lowering of wages, the impairment of plants, throwing workmen out of employment, and other similar evils through reduction of prices to levels which would not permit efficient plants to operate at a fair profit, it should be permissible for manufacturers or the owners of plants to enter into agreement as to such reasonable prices as might be necessary to prevent such results. To avoid the possibility of such manufacturers agreeing on excessive prices there would be the remedy of the opportunity of appeal by consumers to the Government board of supervision, and the consequent publicity, which would act as a restraint upon manufacturers from fixing excessive prices; penalties, such as forfeiture of Federal incorporation or other suitable means of redress could be enforced, if necessary, to dissuade manufacturers from maintaining prices adjudged to be either excessive or ruinously low.

The foregoing suggestion is not by any means a novel or original one. It is in effect that which is permitted in Canada, Germany, and other foreign countries, the object of whose Governments is apparently to foster industries rather than to tear them down. Such Governments not only allow reasonable prices to be fixed by agreement, but require them to be fixed for the protection of manufacturers, consumers, and labor alike.

Mr. BEALL. As I understand, your position is that it is not possible for the Government to step in and go to the extent of fixing even a maximum price, for the reason that you have so clearly stated? Mr. FARRELL. Would you accept that brief as an answer to your question, Mr. Beall?

Mr. BEALL. Yes.

Then the alternative would be the breaking down of the laws as they exist to-day that forbid the kind of agreements such as you have mentioned. You would have to repeal all the laws forbidding monopoly and restraint of trade—the Sherman Act and everything like that?

Mr. FARRELL. Not necessarily. I do not believe in the repeal of the Sherman Act, but I believe the Sherman Act should be amended so as to enable manufacturers to know what they can do. We do not know now what we can do.

Mr. BEALL. If this theory that was suggested here first by Judge Gary should be put in operation, and some governmental agency should be required to fix a maximum price as a basis for its action,

it would be necessary for that agency to be fully advised as to the cost of any article, would it not?

Mr. FARRELL. Are you asking my opinion with respect to the testimony that has been given?

Mr. BEALL. No, sir; I am asking your opinion if a certain policy should be pursued by the Government that has been suggested here, whether or not it would be necessary for that commission, or whatever you might term it, to have accurate, full, and complete information as to the cost of any and every article the price of which they would attempt to regulate; and that condition would bring about the very condition against which you protest to-day; it would advise all the world of the cost of any article made by American manufacturers? Mr. FARRELL. As I understand the Sherman law, it is designed to prohibit monopoly?

Mr. BEALL. Yes.

Mr. FARRELL. As the Sherman law is designed to prohibit monopoly, which would inevitably result from destructive competition, driving the weaker competitors out of business, it should be equally clear that it should permit such agreements among manufacturers as to prices as would enable them to avoid the destructive competition which is impliedly prohibited.

EXHIBIT 8

GEORGE W. PERKINS 1

It seems to me that the developments of this last year have made this pretty plain to our people, and my observation is that the time is ripe to make a careful beginning at least of some sort of regulation of interstate and international business, and having watched this phase of the development as carefully as I have been able to, and all that has been said by a great many people who are qualified to speak on it, I have reduced to a short memorandum what occurs to me might possibly be a step that could be taken very promptly for relief. I will read it. I have divided this into two parts, as follows:

1 Testimony of George W. Perkins. Hearings before the Committee on Interstate Commerce on the Control of Corporations, Persons and Firms engaged in Interstate Commerce. 62nd Cong. 2nd Sess. 1911-1912, pp. 1091-1093,

1122-1129.

IMMEDIATE RELIEF.

First. Create at once in the Department of Commerce and Labor a business court or controlling commission, composed largely of experienced business men.

Second. Give this body power to license corporations doing an interstate or international business.

Third. Make such license depend on the ability of a corporation to comply with conditions laid down by Congress when creating such commission and with such regulations as may be prescribed by the commission itself.

Fourth. Make publicity, both before and after license is issued, the essential feature of these rules and regulations. Require each company to secure the approval of said commission of all its affairs, from its capitalization to its business practices. In the beginning lay down only broad principles, with a view to elaborating and perfecting them as conditions require.

Fifth. Make the violation of such rules and regulations punishable by the imprisonment of individuals rather than by the revocation of the license of the company, adopting in this respect the method of procedure against national banks in case of wrongdoing.

PROSPECTIVE RELIEF.

First. The House and Senate to join at once in appointing a commission to make a careful study of the Sherman law and the various suggestions that have been made regarding its repeal, amendment, and amplification.

Second. Said commission to study and report on the wisdom and practicability of a national incorporation act.

SUMMARY.

Anyone familiar with present business conditions in this country, both as to domestic and foreign trade, realizes that the brakes are on. We are not expanding our domestic trade to the extent we should be. New enterprises are not being undertaken as freely as they should be. Capital in this country is contracting rather than expanding its operations, while Germany, Canada, and other countries are forging ahead with their industrial plans. The reason for this attitude on our part arises largely from the fear engendered by the prosecutions under the Sherman Act. At the present time the business man's complaint is that he does not know when he is right or when he is

wrong; that this apparently can not be known until he is prosecuted and his case reaches the court, and that as matters now stand he does not and can not know, as he proceeds with his business, whether he is a good citizen or a criminal.

Serious as this phase of the situation is, it is all important that we do not commit ourselves to a permanent national policy until such commitment can be made in a calm, dispassionate frame of mind, the people having had ample opportunity to weigh the pros and cons of the case. While this is true, immediate relief is clearly desirable, if such relief can be provided along conservative lines.

We are now collecting taxes from corporations, which in itself is the first step in establishing the principle of publicity between corporations and government. It ought not to be unwise or difficult, therefore, to immediately expand the powers of the Department of Commerce and Labor, with regard to publicity and control, sufficiently to create a board of control with power to license such interstate companies as, in the judgment of such board, are clearly working for and not against public interest. In other words, in such cases substitute a board of this sort for long-drawn-out lawsuits. This would have the immediate effect of placing any company able to secure such a license in position where it would know that it was proceeding along lines not in violation of national laws or Federal authority. Such concerns as could not or did not wish to meet this test would then have no right to complain if they were proceeded against under the Sherman law.

In the above-described manner immediate relief could be provided. At the same time the questions surrounding the Sherman law and national incorporation for interstate industrial companies would be under an investigation that would be proceeding in a calm and orderly manner, with a view to reaching ultimately a permanent solution of the whole question. Meanwhile, uncertainty would be dispelled; yet we would only be building up our present Department of Commerce and Labor and Bureau of Corporations into a live, vital bureau-much in the same way that we gradually built up the Interstate Commerce Commission by extending and enlarging its powers from time to time.

Senator WATSON. You spoke of the best efficiency being the test of success. Do you think that under the present laws the best efficiency can be reached?