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There is no difficulty in our shaping the law to meet them. We could, if we had a continuous session of this committee for six hours, cover the entire ground and bring out, in my judgment, a complete act. I am sure that I am prepared to go ahead, but my associates on the committee do not seem to be of that view. Therefore I favor at present the compromise suggested by the chairman, which I think would vastly advance our work in November next.

Senator BRANDEGEE. As we go along, if there is any line of demarcation, the time to take it up is now. I take just the view that Senator Cummins takes, if I understand his view-that this commission that you suggest, if organized now with only the powers that you propose to give it, would be absolutely useless to me in the framing of a law to correct these evils. I know what the evils are; everybody on this committee and in the Senate knows what the evils are. The departments are filled with reports and criticisms. That does not help me to determine the question of principle or to enact a statute to remedy them. You might pile this room full of the reports of this commission, but unless it was a commission of great lawyers prepared to consider like a court the constitutional and legal points involved in the creation of such a bill as you propose I would not care to read one word of it.

Senator NEWLANDS. Would you not expect President Taft to appoint such men on this commission?

Senator BRANDEGEE. I would expect that. You say if we would sit down here for six hours we could make up a proper bill on this subject. I can not conceive of my coming to any conclusion that I would be willing to bank upon or vote upon recommending that in six hours. If we are going to consider this bill properly, it seems to me that we should have the biggest men in this country to advise us about the wisdom of forming our remedial statutes upon this line or that line, and let us cross-examine them and get information where we are in doubt and frame a constructive bill upon principle and not upon the stuff that the Bureau of Corporations or any commission may give in the way of statistics. It is not a question of statistics or of capitalization. We know all about those. The question is, What can we constitutionally and wisely do?

Now, I do make myself clear?

Senator NEWLANDS. Yes: but I will not pursue the question of immediate action further. I want to get through. I shall complete my statement in a very few minutes, and then I shall be very glad to take up this discussion with you, but I would like to get my statement in the record in a compact form as the basis for further hearings at the next session.

(7) In considering the powers which should be covered by this bill we shall have to take up the question as to whether the power to condemn unreasonable and extortionate prices should be included, and. if so, what should be the form of the rule or standard fixed. Shall it be analogous to that applied to the railroad companies, namely, that prices shall be reasonable and the same to all? And shall the power be given, as originally in the railroad act, to condemn only an unfair or unreasonable price, or, as was later done with the railroad act, shall the power now also include that of fixing a reasonable price? Personally, I am opposed to any attempt at present to fix prices.

(8) Next, shall the provisions regarding registration be simply persuasive or compulsory, and if compulsory as to the large corporations, shall permissive registration be granted to the smaller corporations? I incline to the view that it is better to make them compulsory, at least for the large corporations, in order to insure the effective operation of the system.

(9) Shall the commission, in case of revocation of registration, have power to order that the offending corporation shall not engage in interstate commerce? My own view is that such power should not at present be granted. Therefore I would not urge the retention of section 11, which gives the commission power, in case of revocation of registration, to forbid the offending corporation to engage in inter

state commerce.

I do not think it advisable to overload the commission at this time, and yet we must bear in mind that our experience with the interstatecommerce act shows the great difficulty of adding needed amendments later on. We all know what obstructions needed amendments of the interstate-commerce act met with, and it took nearly 20 years to get that act into really workable shape.

In my first communication with the Chief of the Bureau of Corporations he was very much opposed to the organization of a commission. His view was that the power of public opinion was so great and these corporations were so desirous of placating public opinion that if you would have a single executive official, like the Commissioner of Corporations, vested with the full power to make investigations and to publish what he found, as he is not allowed to de without the permission of the President

Senator CUMMINS. Yes; but the President always gives his permission. He publishes his bulletins every time immediately after finishing an important investigation; as he said the other night, attempting to reduce these reports to a few pages so that the public would read them. Is not that the fact?

Senator NEWLANDS. Oh, yes; I have no doubt that that permission is generally given, but it may be delayed or altogether withheld. I observed the other day, when an investigating committee of the House called upon the Commissioner of Corporations for certain information, his reply was he could not give it without the instructions of the President.

Senator CUMMINS. But when he has gone forward with an investigation, such, for instance, as that of the United States Steel Corporation, he at once, under the order of the President, makes that public in such a way that it is readable.

Senator NEWLANDS. Yes.

Senator CUMMINS. I do not think any complaint can be made of the work of the Bureau of Corporations in that respect. While he felt unwilling to become the subject of cross-examination or examination at the hands of the committee without an order of the President, the real facts have been disclosed just as fast as he collected them.

Senator NEWLANDS. Yes; I have no doubt that is so, but I think that such functions should be vested in an independent tribunal or commission, entirely free from executive control or influence.

The Commissioner of Corporations attaches great importance to registration, to the moral effect of refusing or canceling registration.

He has since modified also his views somewhat as to the desirability of a commission, an idea which he at first opposed, and I think that he is now substantially in accord with this bill. The Solicitor General has expressed himself very emphatically in favor of legislation on these lines.

I shall append to my remarks quotations from a letter from Mr. Herbert Knox Smith, in response to a series of questions which I put to him and after he had consulted with the Solicitor General.

The CHAIRMAN. Senator Newlands, it seems to me there are no two sides to Senator Brandegee's suggestion. The thing to do is to print in as a part of the bill those things as you have finally given them, so that they will be there in clean, clear, concrete form.

Senator NEWLANDS. All right. I will do so.

Senator BRANDEGEE. I should like to ask one question. Have you finished for the present?

Senator NEWLANDS. Yes. I shall be very glad to answer your question.

Senator BRANDEGEE. I was going to ask this: You have conferred with the Chief of the Bureau of Corporations and with the Solicitor General?

Senator NEWLANDS. Yes.

Senator BRANDEGEE. I do not know that I care to concede too much to the theories of the departments in a matter of this kind. Perhaps their experience is not any better than ours. But after consulting those, have you also consulted the Secretary of Commerce and Labor and the President?

Senator NEWLANDS. I have consulted the Secretary of Commerce and Labor. I have also consulted the Attorney General. Both the Secretary of Commerce and Labor and the Attorney General were strong advocates of a national incorporation act, believing that national incorporation should cover interstate commerce, and that the act itself should contain all the necessary restrictions upon these corporations as to capitalization, the area of their operations, etc.

Senator BRANDEGEE. I want to understand clearly whether in favoring a national incorporation act they meant to favor that and to pass what you propose.

Senator NEWLANDS. No. In my discussions with them I stated that, so far as I was individually concerned, I had tested the sentiment of Congress regarding a national incorporation act, and particularly the sentiment of my own party; that whilst I had advocated national incorporation with reference to great transportation companies whose functions are largely national, and with a view to taking away from such States as New Jersey the jurisdiction which they had usurped over interstate commerce in the organization of corporations national in scope, I was never able to make much headway with my own party, clinging, as it does, to the exercise of State functions and guarding against Federal encroachment. Therefore my argument was addressed to them, not in opposition to their view as to national incorporation, but as to the possibility of passing a national incorporation bill, and particularly in view of the present political status, the administration having drifted from one of powerful Republican control, a control entirely in sympathy with the broad exercise of national powers, to one of divided control. I think Doth of them, whilst they adhere to the view that a national incorpora

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tion act would be the best method, acquiesce in the view that at present it is difficult if not impossible to secure the passage of such a bill. I have heard no expression from Secretary Nagel as to whether, that being the situation, he would be willing to favor a bill for an administrative commission such as this is, but the Attorney General has expressed himself regarding it, and he has indicated a disposition even to go further. I will append quotations to this effect from his recent speech at Duluth.

Senator CUMMINS. I would yield great deference to their views as lawyers upon the power of Congress to do certain things, but I think we have altogether too much interference on the part of the Executive Department with regard to the character of legislation. It prejudices me against them.

Senator NEWLANDS. I was simply stating this in reply to a question asked by Senator Brandegee. He asked me what the views of these officials were.

Senator CUMMINS. I want to put myself on the record.

Senator NEWLANDS. I want to say this, that I do think the views of men who have been connected with all this trust litigation are entitled to weight.

Finally, I wish to point out one broad consideration. In the present status of our public policy as to the great corporate problem we have at least two leading and divergent schools of thought, two tendencies, each toward a different method of procedure. The one desires to maintain, by governmental action if need be, the full competitive system and to rely chiefly on competition as the regulator of corporate business. The Sherman antitrust law strongly presents this principle.

The other school inclines rather to state the extremes-toward freely allowing combination, both present and future, applying thereto governmental supervision and direction as the prime regulator. In my opinion it is too early to say which of these opposing tendencies should, or will, ultimately prevail.

Holding such a view, I am urging this bill, because the system it embodies is exactly adapted to the undeveloped situation I have just described. It is available for either tendency; it can be made to serve either principle; it will help to show which is the correct one; and it does not commit us permanently to either of these two main lines of action.

Its primary result will be to furnish both to Congress and to the public the accurate and broad information on corporate conditions that is necessary to determine the line of further advance. It neither legalizes nor forbids combination; it in no way affects the operation of the Sherman law; its work of publicity and supervision will tend strongly to promote fair competition and keep equally open to all the highways of commerce.

On the other hand, it takes the situation as it is; it recognizes that there is a large degree of combination already existing, and it makes that condition a subject for supervision, study, and report to Congress.

In short, it is a step upon which all can unite, as eminently fitted by its moderation and, indeed, by its own frankly tentative character to do what is imperatively needed for the present without prejudicing the future.

(The quotations from the address of Attorney General Wickersham, delivered at Duluth, Minn., July 19, 1911, above referred to, are as follows:)

The gradual interpretation of the act of July 2, 1890, resulting in the decisions and decrees rendered by the Supreme Court at its last term, has at last clearly demonstrated the effectiveness of that law to destroy existing combinations in restraint of interstate or international commerce and attempts to monopolize any part of it and to prevent renewed combination or monopolistic effort.

But the question remains, can the great end and object of the Sherman lawnamely, that the normal course of trade and commerce among the States shall not be impeded by undue restraints and monopolies-be realized through the operation of that law alone?

In dealing with transportation, Congress was not content to rely simply on the process of injunction to restrain and indictment to punish violations of the antitrust law. It also established an administrative commission clothed with powers greatly enlarged from time to time-over those engaged in the transportation business.

Within what limits is legislation to regulate corporations engaged in interstate commerce other than transportation expedient and practicable? Should the analogy of the interstate commerce law and commission be followed?

That some further regulation over corporations carrying on commerce among the States may be necessary is a matter of current conment. * * * The Federal Department of Justice is not organized or equipped to maintain constant supervision and control over business organizations. It deals only with cases of violation of law. The activities of an administrative board or commission would be directed to preventing such violations and in aiding business men to maintain a continued status of harmony with the requirements of law.

Moreover, unless Congress shall provide for the establishment of corporations drawing their life and powers only from the National Government and subject only to its control, or shall confer specific powers on State corporations which will enable them to carry on commerce away from the State of their creation without the interference of States into which they go, the present unsatisfactory condition of carrying on business in the different States by means of many different corporations owned or controlled through stock ownership by a parent company created by some one State will continue, and in the natural, normal, healthy, and legitimate growth of such business questions of the application of the Sherman law must arise which can not be properly settled with the district attorney or the Department of Justice, but which should be dealt with by an administrative body having appropriate jurisdiction.

(The quotations from a letter from the Commissioner of Corporations, Mr. Herbert Knox Smith, above referred to, are as follows:)

Hon. FRANCIS G. NEWLANDS,

United States Senate, Washington.

DEAR SENATOR: Your letter of the 24 instant was received, raising certain questions on the bill for an interstate trade commission (S. 2941) introduced by you. * *

*

Taking up your questions in order:

(1) "Shall an interstate trade commission be organized?”

If the work is to be simply that of investigation and publicity my experience would indicate that an organization under a single head would be decidedly more efficient. For purely executive or administrative action such form of organization is preferable. If, however, judicial or semijudicial powers are to be exercised the commission form has important advantages; it is better adapted for judicial decision, its judicial rulings would probably carry more weight, and, in any event, it tends to secure stability, continuity of policy, and greater independence of action.

(2) "Shall the Bureau of Corporations be merged in the commission?" If the interstate trade commission is to exercise substantially the powers now used by the Bureau of Corporations it seems almost necessary that the bureau should be merged in that commission, as the bureau would have little reason for further separate existence. There is also, however, the very important consideration that the bureau is very necessary to the commission the bureau is the one unit in the Government service which can immediately

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