There being no further questions, the witness was excused. Senator BRANDEGEE. Mr. Chairman, I have here a communication. from Mr. Easley, the chairman of the executive council of the National Civic Federation, transmitting a letter, which has been sent to some 20,000 competent business men and professional men of the country, containing some suggestions concerning the very question that we are investigating. It seems to me to comprehend the issue that this committee is instructed to investigate so completely that I would like permission to insert it in the record. I think it would be helpful to the people to come before the committee. The CHAIRMAN. That will be done, if there is no objection. EXECUTIVE COUNCIL OF THE NATIONAL CIVIC FEDERATION, Hon. FRANK B. BRANDEGEE, of the United States Senate. DEAR SIR: Herewith please find a copy of a letter and a questionnaire being mailed to-day to over 20,000 people, as explained in the letter of transmittal. We believe that the hearing which your committee is going to hold is of the highest importance to the well-being of the country, and we hope the matter inclosed will help a little at least to focalize public sentiment upon your work. Very truly, yours, R. M. EASLEY, Chairman Executive Council. EXECUTIVE COUNCIL OF THE NATIONAL CIVIC FEDERATION, New York City, November 8, 1911. DEAR SIR: The department on the regulation of industrial corporations of the National Civic Federation is preparing to propose constructive legislation to deal with the business situation as it relates to the Sherman Antitrust Act; and in the same connection is considering what State legislation is called for, so far as State legislation is needed to cover such phases of the subject as Federal law can not reach. The Interstate Commerce Committee of the United States Senate will begin a hearing on this subject in Washington on the 15th of November which will doubtless continue for a number of weeks. The Senate committee consists of the following members: Hon. Moses E. Clapp, chairman, Minnesota; Hon. Shelby M. Cullom, Illinois; Hon. W. Murray Crane, Massachusetts; Hon. George S. Nixon, Nevada; Hon. Albert B. Cummins, Iowa; Hon. Frank B. Brandegee, Connecticut; Hon. George T. Oliver, Pennsylvania; Hon. Henry F. Lippitt, Rhode Island; Hon. Chas. E. Townsend, Michigan; Hon. Benjamin R. Tillman, South Carolina; Hon. Murphy J. Foster, Louisiana; Hon. Francis G. Newlands, Nevada; Hon. James F. Clarke, Arkansas; Hon. Thomas P. Gore, Oklahoma; Hon. Clarance W. Watson, West Virginia; Hon. Atlee Pomerene, Ohio. The purpose of this hearing, it has been announced, is to secure representative views from all sections of the country. To do what it can to facilitate a full and free discussion of this subject from every standpoint, the committee in charge of the Federation's department is sending the inclosed questionnaire to some twenty thousand representative men-manufacturers, farmers, wholesale and retail merchants, lawyers, bankers, political economists, labor leaders, officials of chambers of commerce and boards of trade; in fact, to all classes of organizations directly affected by existing legislation. The answers to the questionnaire will be studied by the committee of the Federation and will be classified by States, and filed with the Senate committee for its use. Will you kindly fill out the inclosed blank-in whole or in part, as it pleases you. Respectfully, SETH LOW, President. 611036 Questionnaire submitted to editors, political economists, lawyers, publicists, statisticians, and others. The Sherman Antitrust Act has now been interpreted by the Supreme Court to mean, as to interstate commerce, that any combination in restraint of trade with the purpose of controlling prices and stifling competition is unlawful. No form of combination has been successful in surviving attack if, "in the light of reason," these qualities have attached to its operations. It must, of course, be proved in a given case whether the combination in question bas produced these results; but it may be taken for granted that when these results have been established the Sherman law will be effective to destroy the combination. Many evils, however, that can not be reached under the Sherman Act have developed in connection with such combinations, and at the same time the advantages of doing business on a large scale are so great as to make the concentration of capital essential to the full and efficient development of modern business. The problem before the country now is to secure the benefits of large aggre gations of capital in business, so far as this can be done without subjecting ourselves to the evils-most of them wholly unnecessary-which have marked the business methods of the last few years. SOME ALLEGED EVILS CHARGED AGAINST LARGE COMBINATIONS. 1. Competition between the States to make laws governing incorporation more and more lax. 2. Power to exploit both the producer and the consumer by depriving them of a competitive market, thus making the prices of the raw material unduly low and those of the finished commodity unduly high. 3. The holding company, which multiplies the power of control inherent in a given amount of capital; which leads to a concentration of power, sometimes perilous, in a few hands; and which conceals the exercise of this power by the few. 4. Unfair methods of competition, as illustrated. (a) By the selling of goods in a given locality, where a competitor is operating, at prices below cost of production until the local competitor is ruined. (b) By the selling of one variety of goods at less than cost for the purpose of driving from the field a rival who produces chiefly this variety. 5. Restraint of trade, as illustrated. (a) By refusing to furnish goods at prevalent trade rates to merchants who buy anything from rival producers, or who refuse to maintain list prices, as required by "seller's agreements." (b) By control of sources of raw material. (c) By use of patents to protect what is not patented. 6. Over-capitalization. 7. Inadequate protection of minority stockholders and of subsidiary interests; and exploitation of investors by manipulation of stocks and securities. 8. The checking of improvements in methods of production, if monopoly is successfully assured. If you believe there is any other evil to be corrected (or if you think that any of these things are not evils) please indicate it in your reply. PROPOSED REMEDIES FOR ALLEGED EVILS. 1. Competition between the States to make the laws governing incorporation more and more lax. Federal legislation can deal with this either by requiring national incorporation for companies doing interstate commerce, or by requiring that State corporations doing interstate commerce take out a Federal license under suitable conditions. Which do you prefer? Have you any other proposal to cover this point? 2. Exploitation of producers and consumers. The exploitation of producers and consumers is dealt with under the Sherman Antitrust Act. Do you favor additional legislation? If so, what? 3. The holding company. This can be remedied by laws that will prevent one company from holding stock in another company. Do you favor such laws? Or, do you believe in holding companies? 4. Unfair competition; and 5. Restraint of trade Are dealt with under the Sherman Antitrust Act. They may be reached in part if not altogether by statutes expressly forbidding specified practices. Which do you prefer? 6. Over-capitalization. This can be remedied by laws that provide for Government regulation of capitalization. Do you favor such laws? 7. Inadequate protection of minority stockholders and of subsidiary interests; and the exploitation of investors. Can be remedied by laws that call for publicity and that apply to commercial corporations, through a commission to be appointed for that purpose, methods akin to those now used in regulating common carriers and their rates through the Interstate Commerce Commission. Do you favor such laws? ADVANTAGES CLAIMED FOR THOSE DOING BUSINESS ON A LARGE SCALE. 1. Economies in production. 2. Economies in distribution. 3. Greater use of by-products. 4. Steadier employment of labor, and at better wages. 5. Better protection against industrial accidents. 6. More command of international trade. 7. Command of the best ability. If you believe there are other advantages, or if you deny that the above advantages exist, please indicate it in your reply. If interstate business on a scale large enough to secure these claimed advantages is to continue, it is asserted by some that provision must be made by Federal law. (a) To permit large aggregations of capital under single control, and for the merger from time to time of smaller corporations; or (b) To permit agreements which regulate production, prices, and the like under suitable public control. Either of these methods of controlling large aggregations of capital engaged in interstate trade necessitates an interstate trade commission with powers not unlike those now enjoyed by the Interstate Commerce Commission in relation to common carriers. Do you favor such an interstate trade commission? QUESTIONNAIRE SUBMITTED TO MANUFACTURERS, MERCHANTS, BANKERS, AND THE PRESIDENTS OF COMMERCIAL, LABOR, AND OTHER ORGANIZATIONS. 1. Do you believe that the Sherman law, as now interpreted, is made clear and workable? 2. Do you consider it feasible to attempt to return to what are commonly known as old competitive methods in business? 3. Do you favor a repeal of the Sherman law? 4. Do you favor amending the Sherman law in any way? If so, in what particulars? 5. Should railroads be allowed to enter into agreements affecting rates, subject to the approval and regulation of the Interstate Commerce Commission? 6. Should trade unions be excepted from the operation of the Sherman Act? 7. Should combinations of farmers, either to restrict production or to hold a crop for higher prices, be rendered lawful under the Sherman Act? 8. Do you favor a national incorporation law? 9. Do you favor a Federal license law? 10. Do you favor an interstate trade commission with powers not unlike those now enjoyed by the Interstate Commerce Commission in relation to common carriers? 11. In your judgment what caused or causes the present disturbed business conditions? The CHAIRMAN. It is now 4 o'clock, and if there is no one else who desires to address the committee, we will adjourn until to-morrow morning. Mr. MARTIN. Mr. Chairman, I will say that I came here from New York purposely to appear before you. I came immediately from my home, and if you desire to hear me I am ready to go on now; if not, I would like to know from the chairman if I may be heard to-morrow. It will be some convenience to me to know in advance. The CHAIRMAN. Unless there is objection you may proceed, and we may ask you a little later on to suspend until to-morrow morning. STATEMENT OF MR. HENRY B. MARTIN, OF NEW YORK, N. Y., NATIONAL SECRETARY OF THE AMERICAN ANTITRUST LEAGUE; ALSO ENGAGED IN THE MINING BUSINESS. Mr. MARTIN. Mr. Chairman, personally I am in the mining busiI appear before the committee, however, as a representative of my organization. ness. Mr. Chairman and gentlemen of the committee, I appear before the committee on behalf of the organization primarily because of the fact that I noticed in the statement of the Senator from Nevada that one of the purposes of his bill, which has been considered by this committee and by the Senate, was to modify and amend, and practically to entirely restrict, the Bureau of Corporations. Our organization were the originators of the Bureau of Corporations law. I wrote the first draft of that law myself, and when it was before the House Committee on Interstate Commerce and there was an amendment to be inserted creating the Department of Commerce and Labor, three members of our organization were the only gentlemen who appeared before that committee to urge its passage Mr. Herman J. Schulteis, the attorney of our organization, the Antitrust League, Congressman Sulzer, of New York, and myself. Fortunately the amendment was accepted by the committee, inserted in the bill, and it was passed by the House and adopted by the Senate and was sent back to the Senate for acceptance of the House amendment. Now, while our organization is favorably disposed toward any new steps that Congress may see fit to take wisely for the regulation of the great corporations engaged in interstate commerce-the great aggregations of capital-we believe that the matter is of such large importance that in any steps that Congress takes, the greatest deliberation should be observed and nothing done hastily. In starting on a voyage or a process of manufacture of any legislation governing this great subject, we believe there are certain great ruleslandmarks of our Government and of our principle of governmentthat should be observed in this legislation. We are adherents of the idea laid down in the Constitution of the United States that the purpose of this Government and of its founders was the establishment of freedom and equality, and we believe that all legislation now to be enacted affecting these matters should have that purpose mainly in mind, and be directed principally to that end. The objection that we have or that the Antitrust League has and the great mass of the people of the United States have to the operations of the so-called trusts and great corporations and aggregations of capital in interstate commerce, is that they destroy the principle of freedom and equality in commerce and industry and labor. For that reason the antitrust act of 1890, which our memhers were very actively in favor of, was passed and is on the statute books. To accomplish that purpose the interstate commerce law of 1887 was enacted, and the national president of our organization, Mr. M. L. Lockwood, of Oklahoma, was one of the committee of five which came to Congress in 1884 with the first draft of an interstate commerce law and gave it to Congressman Reagan, of Texas, who introduced it. He welcomed it with open arms and said he had been looking for it for many years. It was known for years as the Reagan bill, afterwards passed, I believe, as the Reagan-Cullom bill, and is now the great perfected statute of interstate commerce. So that for a long time our people have been profoundly interested in this subject, and we wish to submit to this committee that the matter embodied in the bill of the Senator from Nevada, and to some extent in the bill of the gentleman from West Virginia-Mr. Vinson, I believe his name is who spoke here this afternoon, seems to us to contravene a great basic principle that should govern legislation regulating interstate commerce, which is divided into two fields-legislation regulating railways, steamship lines, pipe lines, telegraph lines, telephone lines, and other instrumentalities for the maintenance of highways and the operation of transportation are matters of one class and entirely different and widely divergent from business of the other class, such as manufacturing, mining, and merchandizing industries, and agriculture. The same principle which governs the enactment of law, in our belief, to regulate the maintenance of highways and the transportation industry, do not apply to the regulation of organizations, corporations, and combinations of capital engaging in mining, manufacturing, and merchandising. I think I may say truthfully that the creation, maintenance, and control of highways for travel and transportation have been from time immemorial one of the most important functions of civilized government; one of the half dozen great essential attributes of sovereignty of which no State could divest itself without weakening in the gravest and most dangerous manner its authority and power. I think right in the United States the history of our transportation and our railroad corporations is conclusive proof of the soundness of this doctrine and that principle. They have for many years usurped this great function of the Government, the maintenance and the operation of highways and the creation of highways. There is no more reason why a highway laid on steel rails should not be a public highway than the streets of the city of Washington. In most cases it is the essential function of the Government to create and maintain that highway open and on equal terms to every citizen, and every business and industry and corporation, big or little. Had we done that, Mr. Chairman and members of the committee, it is our belief that there would be no such thing as trusts in the United States to-day. I think I may say, and it is susceptible of proof, and I will undertake to prove it to the committee, if there is any doubt |