that business is very largely under the control of corporations with a very large capital. For illustration, $50,000,000. It does not make any difference to me whether that corporation is manufacturing 15 per cent or 50 per cent of the particular product in which it is engaged in manufacturing. I, as the owner of only half a million dollars of the capital, if I am prudent, will not hazard it in competition with the larger corporation. But if the corporation with a capital of $50,000,000 is compelled to bear a burden which I am not compelled to bear, then I am placed on an equality with that corporation, and I dare to embark in that enterprise. So far for the part of the suggestion which gives me an opportunity to engage in business.

Now what is the effect upon the price of the commodity which that large corporation is producing? Such an act would automatically and immediately force the large corporation to place its product on the market at a reasonable profit, because if the profit is excessive it at once stimulates competition-competition on the part of those who are not subjected to the burdens to which it is. So that you at all. times have latent competition which will regulate the price of the article which is being manufactured and sold.

Now that can be enlarged upon. There are many ramifications, but that is, in substance, the effect of such an act as I propose. It would restore the opportunity and it would regulate the price of the commodity manufactured. It could be enforced in an administrative manner, and not through the courts, and be practically self-executing. It would be definite and certain, so that any man engaging in business, or any set of men, would know exactly the burden which they were confronting.

Now, it is claimed-and perhaps some of the Senators have actual knowledge of the subject that the cost of manufacturing steel rails, for instance, is $14 a ton. We know that the going price for many years has been $28 at the mills, at least so I am informed; I never bought any. Now, if every part of the prayer of the Government in the case against the United States Steel Corporation should be granted by the courts, the price of steel rails, in my judgment, will continue to be $28. Now, it seems to me the purpose of the legislation-if $14 a thousand is an undue profit, and I think you will agree with me that it is-should it not be the purpose of legislation to so control that and other corporations that they would be compelled to take a reasonable profit? Now, in my judgment, if something of this kind is not done it will not be a great while before the Government would be forced into the very embarrassing position of fixing prices-practically a socialistic condition, fixing prices-and I do not see how you can amend the Sherman antitrust law so that that condition is not apt to obtain in the future unless you place a limit upon the size of a corporation. But if you are going to permit great corporations to continue to exist, with the great power which they possess, they are going, to a very large extent, to be able to regulate the price.

Now, I am not very familiar with many of these industries, but I think it is safe to say that in the larger industries-industries which have been trustified, if I may use the word-that competition has not materially increased during the last 10 years. The country has been growing and developing, and naturally you would have expected enterprises of like character to have sprung up in different sections of

the country, and yet I do not think, generally speaking, that that has been the case. The very fact that great aggregations of money are permitted to exist under one control is so monopolistic that prudent capital-and capital is always prudent, or supposed to be-will not attempt to compete with it on equal terms unless it is in equally large

amount.

Now, as an American citizen, I believe that one of the greatest things, and most important thing, that we might direct our attention to is the preservation of opportunity to the individual. The opportunity to "go West and grow up with the country" will soon be a thing of the past. The opportunity must come along commercial lines. It is going to be rather difficult for a young man, regardless of how energetic he may be, or how ambitious he may be, or how much initiative he may possess, to embark in many lines of industry.

I think that is all I care to say, gentlemen of the committee. The CHAIRMAN. You assume, I take it, that the tendency of the large concerns to add this tax to price of the consumer would be counterbalanced by the competition which your suggestion would develop?

Mr. DWINNELL. Latent competition will prevent its being passed on to the consumer as the ordinary tax is.

The CHAIRMAN. Senator Cummins, do you care to inquire? Senator CUMMINS. Have you reduced your plan to such a concrete form as to be able to give us any idea as to the amount of the tax?

Mr. DWINNELL. I have not; I have thought of it. That, of course, would be a very difficult thing, and something that should require investigation of a character that I have not had the opportunity to make. One ought to have an intimate knowledge of industries and profits, etc.

Senator CUMMINS. I think you have said that a certain capital, measured possibly by the ordinary accumulations of a lifetime, should go untaxed.

Mr. DWINNELL. Yes, sir; I should say a million dollars. That is what my thought has been.

Senator CUMMINS. And then the tax should be a graduated one? Mr. DWINNELL. Gradually increased with the amount of the capital, upon the theory that the greater the capital the greater the possible earning power, and the greater the tendency toward monopoly.

Senator CUMMINS. You recognize, I assume, that a company may be able to produce a given article; that is, a company with a capital, we will say, with $1,000,000, may be able to produce a given article as cheaply as a company with a capital of $50,000,000 can produce the same article?

Mr. DWINNELL. Yes, and no. Under honest competition, in many cases, that might be the case, but in another instance it would not be the case.

Senator CUMMINS. It would depend very largely, would it not, upon the character of the article?

Mr. DWINNELL. Well, the nature of the business.

Senator CUMMINS. Well, the business out of which its manufacture grows?

Mr. DWINNELL. Yes; that is true. But it is natural for a man to exercise the power that he possesses a competitor-and while I might be able as the controller or manager of $1,000,000 capital to

compete with $50,000,000, I think if they really wanted to put me out of business they could do it.

Senator CUMMINS. And just how had you in mind that they could put you out of business?

Mr. DWINNELL. They could do it. If I were a manufacturer of a certain product in a certain territory, they could go into that territory and sell at a loss. I was talking with a manufacturer yesterday who was doing that very thing.

Senator CUMMINS. That has been a rather common way in which the ruin of the competitor has been accomplished in times past. Mr. DWINNELL. Yes, sir; and there are other ways also.

Senator CUMMINS. But do you not believe that any business ought to be permitted to grow to the size that will enable it to utilize what may be called the unit of cost, without any tax?

Mr. DWINNELL. Yes; that probably is true.

Senator CUMMINS. Your tax is rather for the purpose of discouraging unnecessary aggregations of capital.

Mr. DWINNELL. That is the purpose.

Senator CUMMINS. It seems to me, however, Mr. Dwinnell, that the difficulty, which you so graphically pointed out in the present situation, would still remain if the antitrust law is not in any wise modified; namely, uncertainty and impossibility of ascertainment as to whether a given proposition is lawful or criminal. What would you think of that?

Mr. DWINNELL. That would be true so far as the matter of contract is concerned, but no corporation would be lawful or no corporation would be criminal; they would simply be subjected to a fixed annual burden.

Senator NEWLANDS. You would take off all restraint under those conditions?

Mr. DWINNELL. No; I do not think I would take off the right to combine under contract in restraint of trade.

Senator CUMMINS. Your plan would simply legalize a single corporation, no matter how large its capital might be.

Mr. DWINNELL. There would be nothing unlawful, and I do not think, as a matter of fact, that there is anything unlawful in itself; that is, it does not appeal to us as being wrong in the sense that it should be punished as a crime.

Senator CUMMINS. It is not generally supposed that there is anything unlawful in that sort of association now, is it? Mr. DWINNELL. I think there might be.

Senator CUMMINS. That is, suppose a corporation should organize with a capital of a million dollars and enter a business, and through sagacity and energy the business should gradually grow in the ordinary way until it included the whole business in that field, it is not generally supposed that that corporation would be a violator of the antitrust law, is it?

Mr. DWINNELL. Well, it would come pretty close to being a monopoly. It would be a violation of the common law if it was not a violation of the antitrust law. It would monopolize the industry, I think.

Senator CUMMINS. But you would still have the antitrust law in force so far as any arrangement or agreement or combination between

the country, and yet I do not think, generally speaking, that that has been the case. The very fact that great aggregations of money are permitted to exist under one control is so monopolistic that prudent capital and capital is always prudent, or supposed to be-will not attempt to compete with it on equal terms unless it is in equally large

amount.

Now, as an American citizen, I believe that one of the greatest things, and most important thing, that we might direct our attention to is the preservation of opportunity to the individual. The opportunity to "go West and grow up with the country" will soon be a thing of the past. The opportunity must come along commercial lines. It is going to be rather difficult for a young man, regardless of how energetic he may be, or how ambitious he may be, or how much initiative he may possess, to embark in many lines of industry.

I think that is all I care to say, gentlemen of the committee.

The CHAIRMAN. You assume, I take it, that the tendency of the . large concerns to add this tax to price of the consumer would be counterbalanced by the competition which your suggestion would develop?

Mr. DWINNELL. Latent competition will prevent its being passed on to the consumer as the ordinary tax is.

The CHAIRMAN. Senator Cummins, do you care to inquire? Senator CUMMINS. Have you reduced your plan to such a concrete form as to be able to give us any idea as to the amount of the tax?

Mr. DWINNELL. I have not; I have thought of it. That, of course, would be a very difficult thing, and something that should require investigation of a character that I have not had the opportunity to make. One ought to have an intimate knowledge of industries and profits, etc.

Senator CUMMINS. I think you have said that a certain capital, measured possibly by the ordinary accumulations of a lifetime, should go untaxed.

Mr. DWINNELL. Yes, sir; I should say a million dollars. That is what my thought has been."

Senator CUMMINS. And then the tax should be a graduated one? Mr. DWINNELL. Gradually increased with the amount of the capital, upon the theory that the greater the capital the greater the possible earning power, and the greater the tendency toward monopoly. Senator CUMMINS. You recognize, I assume, that a company may be able to produce a given article; that is, a company with a capital, we will say, with $1,000,000, may be able to produce a given article as cheaply as a company with a capital of $50,000,000 can produce the same article?

Mr. DWINNELL. Yes, and no. Under honest competition, in many cases, that might be the case, but in another instance it would not be the case.

Senator CUMMINS. It would depend very largely, would it not, upon the character of the article?

Mr. DWINNELL. Well, the nature of the business.

Senator CUMMINS. Well, the business out of which its manufacture grows?

Mr. DWINNELL. Yes; that is true. But it is natural for a man to exercise the power that he possesses a competitor-and while I might be able as the controller or manager of $1,000,000 capital to

compete with $50,000,000, I think if they really wanted to put me out of business they could do it.

Senator CUMMINS. And just how had you in mind that they could put you out of business?

Mr. DWINNELL. They could do it. If I were a manufacturer of a certain product in a certain territory, they could go into that territory and sell at a loss. I was talking with a manufacturer yesterday who was doing that very thing.

Senator CUMMINS. That has been a rather common way in which the ruin of the competitor has been accomplished in times past. Mr. DWINNELL. Yes, sir; and there are other ways also.

Senator CUMMINS. But do you not believe that any business ought to be permitted to grow to the size that will enable it to utilize what may be called the unit of cost, without any tax?

Mr. DWINNELL. Yes; that probably is true.

Senator CUMMINS. Your tax is rather for the purpose of discouraging unnecessary aggregations of capital.

Mr. DWINNELL. That is the purpose.

Senator CUMMINS. It seems to me, however, Mr. Dwinnell, that the difficulty, which you so graphically pointed out in the present situation, would still remain if the antitrust law is not in any wise modified; namely, uncertainty and impossibility of ascertainment as to whether a given proposition is lawful or criminal. What would you think of that?

Mr. DWINNELL. That would be true so far as the matter of contract is concerned, but no corporation would be lawful or no corporation would be criminal; they would simply be subjected to a fixed annual burden.

Senator NEWLANDS. You would take off all restraint under those conditions?

Mr. DWINNELL. No; I do not think I would take off the right to combine under contract in restraint of trade.

Senator CUMMINS. Your plan would simply legalize a single corporation, no matter how large its capital might be.

Mr. DWINNELL. There would be nothing unlawful, and I do not think, as a matter of fact, that there is anything unlawful in itself; that is, it does not appeal to us as being wrong in the sense that it should be punished as a crime.

Senator CUMMINS. It is not generally supposed that there is anything unlawful in that sort of association now, is it?

Mr. DWINNELL. I think there might be.

Senator CUMMINS. That is, suppose a corporation should organize with a capital of a million dollars and enter a business, and through sagacity and energy the business should gradually grow in the ordinary way until it included the whole business in that field, it is not generally supposed that that corporation would be a violator of the antitrust law, is it?

Mr. DWINNELL. Well, it would come pretty close to being a monopoly. It would be a violation of the common law if it was not a violation of the antitrust law. It would monopolize the industry, I think.

Senator CUMMINS. But you would still have the antitrust law in force so far as any arrangement or agreement or combination between