tracts be not in unreasonable restraint of trade. Now, however, it is proposed by some that this construction of the anti-trust act must be nullified by legis lative enactment.

The Congress should recognize and make provision for trade agreements and combinations which would be in the nature of things in restraint of competition up to a certain point. Unrestrained and uncontrolled competition would be as disastrous to interstate trade as no competition at all, for ultimately the result would be exactly the same. Competition is sought to be justified in the belief that it insures low prices to the consumer. The producer is just as important a factor in our economic life as the consumer, although certain schools of political philosophy teach that spoliation of a large producer should always be encouraged, under the hope that it will reduce prices to the consumer. The consumer's power to consume is dependent upon his ability to produce something which he can sell at a profit. The public are willing to pay a reasonable price for the things it consumes. Such reasonable price includes a fair profit to the producer.

EXCESSIVE COMPETITION.

Te Supreme Court held in the Northern Securities case that Congress had the power to prescribe the rules by which interstate and international commerce should be governed, and by the antitrust act had prescribed the rule of free competition among those engaged in such commerce.

The court further held in the same case "that the natural effect of compe tition is to increase commerce, and an agreement whose direct effect is to prevent this play of competition restrains instead of promotes trade and commerce." This same ruling or principle is adhered to by the court in the oil and tobacco cases, where it is decreed that all the subsidiary companies should be divorced from the parent company and each should be managed separately and independently, and all should be in competition with each other. The court in the latter cases has not considered the question as to whether real competition is possible where all the competing companies are owned and managed by the same persons and interests. It is confidently asserted that no real and actual competition can exist under such circumstances.

The economic basis for the doctrine that free competition increases commerce is only partially true, for it is a fact that free and unrestricted competition always produces excessive competition, and excessive competition destroys instead of promotes commerce. One of the principal grounds relied on by the Government and considered by the court in the suits against the oil and tobacco companies was the excessive competition waged by these companies against their weaker rivals. The methods employed by these companies in their competitive warfare were condemned by the court on the ground that they were unfair and operated to restrain trade. The economies which the larger concerns can and do practice in the production and distribution of their products and which the smaller concerns are unable to do must ultimately secure such a large portion of the trade that the weaker concern will be driven out of business and commerce to that extent destroyed. Some way must be devised whereby competition will not destroy the small business. This can only be done by permitting trade agreements that will limit or restrain competition to such an extent as will allow the small concern to live. That large and small concerns alike may know to what extent trade agreements are lawful, it is necessary that there should be some tribunal provided by law to examine and pass upon the legality of such instruments. The approval of such agreements should be secured before they go into effect or become operative, for the reason that men should feel safe and that they are within the protection of the law in all their business transactions.

One of the principal causes of the present industrial depression is due to the uncertainty as to the legality of the organization of some of our largest industrial enterprises. However honest the purpose or upright may be the intention of those responsible for these organizations, they can not know whether they have been engaged in violating the law or practicing sane and reasonable economies until after a protracted litigation seeking to dissolve the corporation is ended. It is needless to say that such conditions must continue to depress and keep in stagnation all our industrial enterprises. If a commission vested with power to determine the legality of trade agreements had been in existence at the time these great organizations were created and had passed upon their legality, the doubt and uncertainty that now hangs over them and

their stockholders would be removed and their business would have a chance to grow and expand.

The preservation of the big business of the country is absolutely essential if we would expand our trade. The small producer, whether he be manufacturer or farmer, can not engage directly in our export trade The only foreign commerce that is permitted to him is through the instrumentality of the broker or middleman. This course means a limited trade and loss of profits to the producer. We must depend upon our giant enterprises for our proper share of the world's trade. Legislation should aim to encourage and protect these larger industrial concerns, and at the same time bestow upon them such a measure of governmental regulation as will secure to our own people their products at reasonable prices, without impairing their efficiency. How can this be done except to permit them the greatest liberty of action in making trade agreements consistent with a wise economic policy. A commission composed of men conversant with the trade is the best and, I may say the only tribunal that can give the necessary intelligence to all the details of these trade agreements, and protect our own people against unreasonable prices and at the same time place the least possible restraint upon their activities.

If the legislator would keep in mind the fact that the big business of the country is just as essential to our general welfare as the small enterprise and entitled to the same measure of protection and encouragement, and that in the practice of legitimate economies in production and distribution the small concern is at a great disadvantage in a competitive struggle with its more powerful antagonist, it should not be very difficult for him to frame some measure that will keep the big business from being harassed and embarrassed and give the smaller man the right to make trade agreements necessary for his continuance in business and at the same time protect the public against the evils of unreasonably high prices.

CONSTITUTIONALITY OF PROPOSED ACT.

It may be contended that the commerce clause of the Constitution is not broad enough to give Congress the power to enact legislation of this character. The power of Congress over interstate commerce has been so well defined in numerous cases that it is sufficient to state in general terms the extent of that power as defined by the courts.

Commerce includes all the means and instrumentalities by which such intercourse and traffic may be carried on, as well as the purchase, sale, and exchange of commodities. (Story on the Constitution, sec. 1061; McCall v. California, 136 U. S., 104; Hopkins v. United States, 171 U. S., 578; Northern Securities Co. v. United States, 163 U. S., 197; United States v. Knight, 156 U. S., 1.)

The term "commerce "in its broadest acceptation embraces, not merely traffic, but the means, vehicles, and appliances necessarily employed in carrying it (See citations above.)

on.

The act of intercourse and traffic again embraces all the means, instruments, and places by and in which intercourse and traffic are carried on. And, further still, comprehend the act of carrying them on at these places and by and with these means. (Pomeroy Constitutional Law, sec. 378; McCall v. California, 136 U. S., 104.)

A dining car is under the control of Congress by the act of making its interstate journey, and it was equally so when waiting for a train to be made up for the next trip, it being regularly used in the movement of interstate traffic. (Johnson v. Southern Pacific Co., 196 U. S., 1.)

Where a contract is for the sale of an article and for its delivery in another State, the transaction is one of interstate commerce, although the vendor may have also agreed to manufacture it in order to fulfill his contract of sale. (Addiston Pipe Co. v. United States, 175 U. S., 211.)

When an article is actually started in the course of transportation to another State or country, or delivered to a common carrier for such transportation, then commerce in that article has begun. (Coe v. Errol, 116 U. S., 517; Kidd v. Pearson, 128 U. S., 1; The Daniel Ball, 10th Wallace, 565.)

The power conferred on Congress to regulate commerce is unlimited except so far, and so far only, as such powers are limited by the Constitution itself. (Gibbons v. Ogden, 9th Wheaton, 1; Commerce Commission v. Brimson, 154 U. S., 447; United States v. Joint Traffic Assn., 171 U. S., 505; Lottery cases, 188 U. S., 321.)

INSTRUMENTALITIES.

The power of Congress to regulate interstate and foreign commerce extends to and embraces within its control and authorizes appropriate legislation with respect to all the instrumentality and means by which that commerce may be carried on or conducted. And Congress has authority to regulate an instrumentality or agency employed in commerce between the States not only when that agency or instrumentality extends through two or more States, but also when it is confined in an action within the limits of a single State.

The power granted to Congress to regulate commerce is not confined to the instrumentalities of commerce known or in use when the Constitution was adopted, but it keeps pace with the progress of the country and adapts itself to the new developments of time and circumstances. (Gloucester Ferry Co. v. Pennsylvania, 114 U. S., 196; Smith v. Alabama, 124 U. S., 465; Pensacola, etc., Co. v. Western Union Tel. Co., 96 U. S., 1; Scranton v. Wheeler, 179 U. S., 141.)

PROTECTION OF LIVES.

Under its commercial power Congress may enact appropriate legislation looking to the protection of the lives and limbs of employees of railroads engaged in interstate commerce. (Johnson v. Southern Pacific Co., 196 U. S., 1; Schlammer v. Buffalo, etc., 205 U. S., 1; In re Debbs, 158 U. S., 564.)

Also to provide and specify qualification of employees. (Nashville, etc., v. Alabama, 128 U. S., 96; Smith v. Alabama, 124 U. S., 465; Hennington v. Georgia, 163 U. S., 299.)

Also Congress has the power to provide for arbitration between interstate railroad companies and their employees. (Act of Congress, 1888, chap. 1063; In re Debbs, 158 U. S., 564.)

Congress may regulate intrastate commerce if it is a necessary consequence of the exercise of its power to regulate interstate commerce, although such regulation may also, to some extent, affect and regulate the intrastate commerce. For, to the extent necessary completely and effectually to regulate interstate commerce, the Nation, by the Congress and its courts, may affect a regular intrastate commerce. (Shepherd v. Northern Pacific Ry. Co., 184 Fed., 795, and numerous cases cited.)

The power of Congress to regulate commerce extends to and includes the employment, duties, obligations, liabilities, and conduct of all persons engaged in interstate commerce. (Martin v. Pittsburgh, etc., R. R., 203 U. S., 284; Penn. R. R. v. Hughes, 191 U. S., 477; Peirce v. Vandusen, 78 Fed., 693; Johnson v. R. R. Co., 196 U. S., 1; Sclemmer v. Railroad, 205 U. S., 1; Sherlock v. Alling, 93 U. S., 99; Nashville, etc., v. Alabama, 128 U. S., 99.)

In the Johnson case (196 U. S., 1) and the Sclemmer case (205 U. S., 1) the court has recognized and applied the foregoing principle in construing the safety appliance act.

COAL MINERS ARE ENGAGED IN INTERSTATE COMMERCE.

It is a well-known fact that most of the coal mined in this country is consumed in States and Territories other than the States wherein it is mined. This is peculiarly true of West Virgina, where fully 95 per cent of the coal produced goes to consumers in other States and Territories. The coal is practically all contracted before it is mined, and, under the terms of sale, it is to be produced in one State and transported to another.

It will not be denied that every agency necessarily employed in the process of interstate transportation is an instrument employed in interstate commerce. It will be conceded that the miner who actually digs the coal is the first person to start that coal on its interstate journey. As soon as the lumps of coal are separated by pick and blast from the main coal bed they are then moving on their way from one State to another. The movement is then continuous; first in the mine car, where the miner shovels them, from the mine car to the railroad car into which it is loaded at the tipple, and then it is hauled on to the consumer located in another State.

Before interstate commerce can be effected in the coal trade there must exist certain active, cooperative agencies and instrumentalities all necessary and participating in such commerce. Each supplements the other, and all must

unite their efforts before the commodity can move in interstate trade. There must be a railroad equipped with engines, cars, and men to handle them. These instrumentalities do not and can not go farther than the mine mouth where they receive and take charge of the coal that has already started on its interstate journey. The miner actually starts the coal on its way to another State, and he is as much of a factor in interstate transportation as the engineer who hauls the loaded cars away from the tipple, for without the services of the miner in starting the coal there would be no interstate commerce in that commodity.

The miner is in no sense of the word engaged in manufacture so as to be within the ruling in the Knight case. His occupation is essentially one of transportation. He does not create or change the commodity to be transported. His whole energy is expended in moving coal, first with pick and blast, then with shovel, and finally with mining cars to the railroad train. Being thus engaged in moving the coal and actually starting it away on a continuous and minterrupted journey to another State, from the time he first touches it with his pick why is he not as clearly within the jurisdiction of congressional power over interstate commerce as any other necessary agent of interstate transportation? (Dozier v. Alabama, 218 U. S., 127; U. S. v. Am. Tobacco Co., 164 Fed., 600; C. & A. R. R. Co. v. Int. Com. Com., 173 Fed., 930; C. & A. R. R. Co. v. Int. Com. Com., 215 U. S., 479; I. C. R. v. Int. Com. Com., 215 U. S., 452; Barrett v. City of New York, 183 Fed., 793; Fed. Rep., Oct. 19, 1911, 189 Fed., 268.)

EMPLOYERS' LIABILITY CASES.

(207 U. S., 463.)

In the above-mentioned case the Supreme Court, by a majority of one, held an act of Congress unconstitutional which made interstate railway companies responsible in damages for accidents occurring to any employee. The ground for the majority opinion was that the act in terms included all employees whether they were engaged in interstate commerce or not, and said it applied as well to shopmen as to other employees engaged in hauling interstate trains, and that such employees (shopmen) were not in interstate commerce, and were therefore, not within the jurisdiction of congressional legislation. Justices Moody, Harlan, Holmes, and McKenna dissented. Of the Justices who are now on the bench and who participated in the decision, Justices White and Day were with the majority, and Justices Holmes and McKenna were with the minority.

This is perhaps the strongest case in recent years against the power of Congress under the commerce clause of the Constitution to regulate employees of carriers engaged in interstate commerce. The majority ruling in this case appears to be out of harmony with the decision in the safety-appliance cases (205 U. S., 1.)

The court did not rule upon questions raised wherein the employee would be engaged in both interstate and intrastate transportation at the same time. A car is loaded with traffic, a part of which is purely intrastate shipments, and a part interstate, and a brakeman is injured while engaged about this car. In such case if the National Government took jurisdiction it would necessarily influence, if not control, the purely intrastate shipment; whereas, if it declined, it would abandon its jurisdiction over a purely interstate shipment.

A very large part of interstate traffic is so mingled with purely intrastate business that it is impossible to separate the two. The same train, same car, and train crew are all engaged at one and the same time in handling and transporting both interstate and intrastate articles. To require the carrier to separate these articles into cars and trains used purely in intrastate shipments or interstate shipments, would add greatly to the cost of carriage, and impair the carriers' efficiency, and, in 'most cases, would be wholly impracticable. All will agree that where interstate and intrastate commodities are so mingled in their transportation that separation is impracticable, that the jurisdiction over such commerce should be lodged either exclusively in the States, or in the National Government.

Mr. VINSON. I desire to thank you, Mr. Chairman and gentlemen of the committee, for your courtesy.

STATEMENT OF W. S. DWINNELL, OF MINNEAPOLIS, MINN.

Mr. DWINNELL. I want to say, Mr. Chairman, before I make the few remarks that I desire to make to the committee, that I perhaps ought to apologize for being here. I did not know that the committee was in session until I was passing through the city. I have prepared no bill and no brief and no argument. This gives me an opportunity, however, to relieve myself of some ideas that have been in my system for several years, and I will give them to you for what they may be worth.

The primary purpose, it seems to me, of the legislation which you are considering

Senator POMERENE. Before you proceed, may I ask what your business is?

Mr. DWINNELL. I am a lawyer by profession, but I am not practicing now. I am not representing any interests, but simply appearing here as a citizen.

It seems to be the primary purpose of any legislation, such as you are considering, is first to restore to the individual citizen, or to the smaller aggregation of capital, an opportunity to do business; and, second, to reduce to the consumer the price of the commodity produced by the so-called trusts or combinations. In my judgment, the Sherman Antitrust Act, or its enforcement, does neither. Furthermore, it is impossible for a man engaged in business, or a corporation engaged in business, to know whether it is violating the antitrust law until it is proceeded against by the Federal Government. It is true that it can make an agreement in restraint of trade which it would know to be in violation of the Sherman antitrust law, but it could not know, by virtue of its size and the character of its business, whether or not it was violating the law until it was proceeded against because that would be very largely a matter of opinion and judgment. There is no hard and fast rule. We do not know whether a corporation which is manufacturing 15 per cent of all of the output of a certain product is a trust, and whether it is violating the Sherman antitrust law, or whether it must manufacture 60 per cent of the product. My purpose, however, is not so much to criticize the Sherman antitrust law because that act pertaining to agreements in restraint of trade must stand. But I believe that there is a remedy which is practically self-executing; that is, it is what may be termed an administrative remedy in contradistinction from a remedy which compels constant resort to the courts, which is a very unsatisfactory way for any Government to enforce its laws. The plan which I suggest is a graduated annual tax upon the capital of every corporation engaged in interstate commerce whose capital exceeds a certain amount. I should say that the amount of capital which would be exempt from that capitalization tax would be such an amount as an average person could, by legitimate means, accumulate in his lifetime. It is based not only upon the idea of necessity, but because the right to associate capital under one control is a valuable right, and the Government, it seems to me, has the right to demand something in return for that privilege.

Now the effect would be this: I desire to start in business. I have $500,000 which I want to use in getting a given enterprise. I find