of the latter was given to the Attorney General's office. After about 23 years of operation, through a gradual process of evolution, the regulation of railroads engaged in interstate commerce has practically been accomplished.

The administration of the antitrust act, on the contrary, has been lame and halting, changing with the shifting incumbents of the Attorney General's office, and according to the requirements of political exigencies. As a result, practically no progress has been made in the control of the trusts, and whilst a few suits have been prosecuted to a successful result and others are now in process of prosecution, there exist to-day over 800 trust organizations of enormous capitalization practically without regulation or control. Experience should teach us that with reference to interstate trade a commission or board should be organized similar to the Interstate Commerce Commission, with powers of investigation, of condemnation, and of recommendation, and with a view, whilst preserving the good arising from commercial combination, to curing the pernicious practices connected therewith. Such legislation should include among the powers of the commission the power, upon complaint or its own initiative, to Inquire into the organization of all corporations engaged in interstate trade, and upon finding that any such organization is unlawful under the terms of the antitrust act, to call upon the Attorney General to prosecute the same.

The interstate trade commission should have a power similar to that of the Interstate Commerce Commission of appearing in litigation by its own counsel. * *

Such legislation will be necessary whatever may be the action of the Supreme Court upon the pending cases. If such combinations are held to be legal, the regulation of their prices and practices becomes a public necessity; if they are held to be illegal, then there should be some law which, while permitting large capitalization and the ownership of many plants by a single corporation engaged in interstate trade, will protect the public from the abuses attendant upon such large capitalization and the oppression exercised by it.

Sincerely, yours,

*

FRANCIS G. NEWLANDS.

During the extra session, on May 11, 1911, I presented in the Senate a program of legislation to be enacted or considered during the extra session. This program provided for nine questions upon which legislative action should be taken before adjournment and for seven questions upon which the action of committees was desirable, with a view to early action during the next regular session.

Under this latter heading, namely, committee consideration, in the second subdivision, I suggested the consideration of legislation as follows:

(2) Providing, in connection with the Bureau of Corporations, for a board of interstate trade, with powers of examination, condemnation, and recommendation regarding interstate trade similar to those conferred upon the Interstate Commerce Commission regarding interstate transportation.

Later, on May 15, 1911, on the very day that the Standard Oil decision was being delivered in the Supreme Court, I spoke in the Senate upon the question of a legislative program for the extra session, and shall insert in the printed hearings an extract from this speech. The matter referred to is as follows:

INTERSTATE TRADE.

Mr. NEWLANDS. Why have we not long before, with reference to this branch of interstate commerce, namely, interstate trade, organized a trade or industrial commission similar to the Interstate Commerce Commission, with powers of recommendation, with powers of condemnation, with powers of correction similar to those enjoyed by the Interstate Commerce Commission regarding interstate transportation? Under the process of evolution that body has worked out a system of law regarding these great railroads that has cured great abuses, that has steadied the finances of the railroads, that has created the confidence of the country, and created the confidence of the railroad managers themselves, so that to-day there is not a railway manager of prominence in the country who would wipe off of the statute books the legislation which we

have enacted, but, on the contrary, these managers, who attacked these measures prior to their enactment, now acquiesce in them and declare that they have been beneficial in their operation.

This great evolution has been crowned by a recent illuminating decision of the Interstate Commerce Commission, through Commissioner Lane, a decision which ranks with the great State papers, and a decision which has settled vital questions connected with this subject so satisfactorily that whilst the public interest has been sustained, it has been accomplished without a ripple in the market, without disturbing a single value; but, on the contrary, assurance to investors throughout the world has been given that whilst this commission is regardful of private right and public right, it is also regardful of the property rights of the railroads themselves. Is there not similar legislation upon the subject of interstate trade, involving the great trusts, upon which we can enter with propriety and with safety?

On May 16, after the Supreme Court had rendered its decision in the Standard Oil case, I continued my remarks of the day previous. Addressing myself to the decision of the court, I urged still further the necessity for organizing an administrative tribunal for the regulation of corporations engaged in interstate trade. I shall quote quite freely from this speech, as it contains quotations from the President, and his opinion that to leave the courts to say what is a reasonable restraint of trade, what is a reasonable suppression of competition, what is a reasonable monopoly, would be "to thrust upon the courts a burden that they have no precedents to enable them to carry, and to give them a power approaching the arbitrary, the abuse of which might involve our judicial system in disaster."

I concur emphatically in this view that the courts are not the proper medium for exercising such a function. Because, therefore, we have clearly reached a point where some branch of the Government must do this sort of work, and because, as the President correctly states, the courts are not the proper place for it, I am advocating the establishment, as in this interstate trade commission bill, of an administrative agency that can perform this duty.

The excerpts referred to are as follows:

MAY 16, 1911.

BUSINESS OF THE SESSION-LEGISLATIVE PROGRAM.

Mr. NEWLANDS. Mr. President, whilst I was addressing the Senate yesterday upon the importance of taking up immediately certain questions upon which public opinion has been formed, and crystallizing them into legislation, I referred, among others, to the great questions of the combinations of capital called trusts which have assumed of late years so powerful and menacing an aspect.

The Supreme Court yesterday acted upon this matter with reference to one of the great trusts in a decision which applies to them all, and, as the result probably of the inertia and the inaction of Congress, has taken upon itself what the dissenting member of that court, Mr. Justice Harlan, declared to be judicial legislation, and has written into the statute words which Congress never put there; and so to-day we have a decision upholding the antitrust act so far as it applies to unreasonable restraint of trade.

The question therefore presents itself to us whether we are to permit in the future the administration regarding these great combinations to drift practically into the hands of the courts and subject the question as to the reasonableness or unreasonableness of any restraint upon trade imposed by these corporations now existing and to be brought into existence in the future to the varying judgments of different courts upon the facts and the law, or whether we will organize, as the servant of Congress, an administrative tribunal similar to the Interstate Commerce Commission, with powers of recommendation, with powers of condemnation, with powers of correction similar to those enjoyed by the Interstate Commerce Commission over interstate transportation.

NATIONAL INCORPORATION,

We are told that the President is now about to urge upon Congress the passage of a national incorporation act with a view to meeting this question, and doubtless determining the extent to which these combinations may capitalize themselves, the number of plants which they may own, the extent of their operations, placing them all under national jurisdiction as national creations.

So far as I am concerned, Mr. President, for years I have advocated the full exercise of the power of Congress over interstate commerce, even though it led to the organization of the artificial beings that are to enter into interstate commerce. But I have confined my advocacy of the latter proposition entirely to corporations organized for transportation-to the railways of the country.

*

# * * But even with reference to this question—the incorporation of interstate railroads-I gradually modified my views. for I realized that many of the States were unwilling to give up their jurisdiction over the State corporations within their boundaries, engaged as they were in State transportation as well as interstate transportation; and so my mind gradually drifted to a method of procedure by which the National Congress would organize not corporations that would own interstate railroads, but would organize corporations that would simply own the stock of State railroads, thus substituting national holding companies for the holding companies now created under the laws of such a State as New Jersey.

*

SENTIMENT OF PARTIES.

Now, Mr. President, I must admit that so far as my own party in the Senate is concerned the views which I entertain upon this subject have not made the headway I could wish.

*

*

* * There was a time when a national incorporation act could pass Congress, and that was under the recommendation of a Republican President and by the action of a Republican House and a Republican Senate. But that condition of things exists no longer. The House is now Democratic. It will probably remain Democratic for years. The Republican ascendency in this body has been constantly diminishing and is now in danger. So I can not see any possibility within a reasonable time of the enactment of a national incorporation law, even regarding railroads, much less regarding the commercial business of the country.

Now, the President contemplates this as his remedy for existing abuses, and we are told by the press that that recommendation is to be renewed, and the bill which has been sleeping for so long a time in the Committee on the Judiciary will again be pressed. We all realize how futile such an endeavor will be; and it is therefore all the more incumbent upon us to determine at this session of Congress what is practicable, what will secure the assent of a Democratic House, what will secure the assent of a Senate under the control of a divided Republican Party.

*

What has been our experience regarding that branch of interstate commerce which covers transportation? Our experience has been that 20 years ago, just about the time the antitrust act was passed, Congress passed the interstate-commerce act, creating a commission as its servant to attend to its duties under rules prescribed by Congress. The regulation of interstate commerce belonged to Congress. Congress wisely saw that it could not undertake that regulation in all its details; that it could not pass rate bills which would be satisfactory to every section of the country; that it could not reduce rates that were claimed to be excessive and increase rates that were claimed to be too low; that it could not correct the varying abuses which creep into the administration of every great enterprise. Therefore it created this commission as its servant, to carry out its will under rules established by it.

The history of the last 23 years proves the wisdom of our action. By a gradual process of evolution this commission, as the result of gradual improvements in legislation and as the result of constantly increasing powers recommended by it and affirmed by Congress, has become a tribunal second in impor tance only to the Supreme Court of the land. It has made transportation a science. It has studied all the intricate questions relating to it, and in a recent illuminating decision has formulated a great state paper that has impressed the country and the world with its wisdom.

Now, contrast that action with other action taken by Congress regarding the trusts. It would have been possible 23 years ago, when the interstatecommerce act was passed, with reference to interstate trade, to have established an industrial or trade commission or board similar to the Interstate Commerce Commission with reference to transportation. If we had done so and had put upon that commission the same class of men who have been appointed upon the Interstate Commerce Commission, we would have had the constant corrective power of that commission applied both to the existing trade corporations and to the trade corporations afterwards created. Many abuses would have been prevented. Many abuses would have been corrected. As a result of the constant study and inquiry of a competent board engaged in this work as a specialization recommendations would have been made to Congress which would have been accepted, as were those recommendations made with reference to interstate transportation, and a great body of administrative law would have been built up and combinations of capital would have been effected without the abuses which have existed during the past 23 years.

Mr. LA FOLLETTE. I was unable to hear that portion of the Senator's discussion of the recent decision of the Supreme Court in the Standard Oil case, but in so far as I did listen to his remarks, I understood him to express some disagreement with the opinion of the court on one or two points. * * *

* I will beg his indulgence while I read one paragraph from the special message of the President of the United States to Congress, transmitted to the Senate January 7, 1910:

"Many people conducting great businesses have cherished a hope and a belief that in some way or other a line may be drawn between 'good trusts' and 'bad trusts,' and that it is possible by amendment to the antitrust law to make a distinction under which good combinations may be permitted to organize, suppress competition, control prices, and do it all legally if only they do not abuse the power by taking too great profit out of the business. They point with force to certain notorious trusts as having grown into power through criminal methods by the use of illegal rebates and plain cheating and by various acts utterly violative of business honesty or morality and urge the establishment of some legal line of separation by which 'criminal trusts' of this kind can be punished, and they, on the other hand, be permitted under the law to carry on their business. Now, the public, and especially the business public, ought to rid themselves of the idea that such a distinction is practicable or can be introduced into the statute. Certainly under the present antitrust law no such distinction exists. It has been proposed, however, that the word 'reasonable' should be made a part of the statute, and then that it should be left to the court to say what is a reasonable restraint of trade, what is a reasonable suppression of competition, what is a reasonable monopoly. I venture to think that this is to put into the hands of the court a power impossible to exercise on any consistent principle which will insure the uniformity of decision essential to just judgment. It is to thrust upon the courts a burden that they have no precedents to enable them to carry and to give them a power approaching the arbitrary, the abuse of which might involve our whole judicial system in disaster." Mr. NEWLANDS. * * I called attention to the fact-and it seems that I am sustained by the President in that view-that if the various courts of the country, according to varying conditions, were hereafter to be called upon to determine as to whether a restraint of trade thus imposed by these corporations was reasonable or unreasonable, we could not expect any very satisfactory administration of the law, particularly in view of the fact that it has taken 23 years for us to ascertain what the law means, and in order to ascertain that it has been necessary, according to the views of Mr. Justice Harlan, to read into the statute certain words that are not there.

Mr. President, I am not commenting upon this for the purpose of criticizing the Attorney General's office or the President of the United States or the court, nor have I made reference to President Roosevelt with a view of criticizing him for his action. I have no doubt he acted patriotically under the then existing conditions, that he felt the great peril of the hour, and that he yielded, under compulsion, to action which he thought necessary in order to prevent a greater disaster than was consummated by the action which he approved. I am attack

The action of President Roosevelt regarding the acquisition of the property of the Tennessee Coal & Iron Co. by the Steel Trust is here referred to.

ing this system of turning over the administration of our legislation regarding interstate trade to the Attorney General's office or to courts, when we should create a great administrative tribunal like the Interstate Commerce Commission, charged with powers over interstate trade similar to those possessed by that tribunal regarding transportation. I have claimed that if such a commission had been organized 23 years ago, when the antitrust law was passed, these vast accumulations of menacing capital would have been prevented; that all the advantages of combination of capital would have been secured without the attendant abuses; and that we would have been saved the economic wrench that is now to take place through the dissolution of these giant combinations and the restoration of their constituent elements. I insist upon it that at this extraordinary session of Congress, with six months before us unembarrassed by general legislation, by appropriation bills, and by other matters that usually distract our attention, we have the opportunity to take up this great question in connection with the reciprocity bill and tariff matters and to press it to a wise solution.

*

Again, in a speech upon the subject of a self-governing Senate, delivered in the Senate on June 22, 1911, in alluding to the program of legislation which I had been urging, I spoke regarding a board of interstate trade, and shall insert an excerpt in the record.

PROPOSED BOARD OF INTERSTATE trade.

Mr. NEWLANDS. What is the second one which I suggested? I suggested legislation providing, in connection with the Bureau of Corporations, for a board of interstate trade, with powers of examination, correction, and recommendation with regard to interstate trade similar to those conferred upon the Interstate Commerce Commission regarding interstate transportation. This resolution was offered before the recent decision of the Supreme Court regarding the trusts, and I then declared that whatever might be the decision of that court the creation of such a commission was essential. Interstate trade is just as much a part of interstate commerce as interstate transportation. The abuses of interstate trade have become just as great as the abuses of interstate transportation in the past have been. Obviously the teachings of experience lead us to the organization of a commission or board similar to the Interstate Commerce Commission, with a view of taking hold of the great combinations of capital and making them obedient to the law, giving such a commission powers of examination, recommendation, and condemnation similar to those enjoyed by the Interstate Commerce Commission.

Since that decision the trust managers themselves have seen a great light, and in public examinations have stated that in their judgment the time has come for as complete regulation of corporations engaged in interstate trade as of corporations engaged in interstate transportation. Whether that regulation will ever extend so far as the regulation of the price itself is a matter to be determined in the future, for Congress will be called upon to decide how great these corporations shall be, what the extent of their capital shall be, what number of plants they shall own, and what shall be the extent of their operations. If they conclude to maintain the principle of competition, even though it leads to destruction, there will then, of course, be no necessity of regulating prices. But if they recognize the principle of helpful cooperation instead of destructive competition, then it will be necessary for them in extreme cases to face the question of the regulation of prices just as the prices of any public utility are regulated.

I do not venture to express an opinion now as to what course should be pursued with reference to this great question, but it is time that the Interstate Commerce Committee of the Senate were entering upon an inquiry of the most important question in economics that has engaged the attention of the country since the railroad question was first presented to it.

Later I drew up this bill and introduced the original on the 5th day of July, 1911. During the time I had this bill under consideration I discussed the matter with various persons whom I regarded as experts, particularly with members of the Interstate Commerce Commission, the Attorney General, the Commissioner of Corporations, the Solicitor General, and lawyers who were engaged in the trust