always accomplish the purpose which presumably Congress had in mind. The control by a combination of 50 per cent of a given industry in some cases would not destroy reasonably competitive conditions, as for example, if a number of strong independent competitors remained in the field, or if foreign competition was not restrained by an over-high tariff, and if the means were readily open to other persons to go into the same industry and create new competition if they desired so to do.

On the other hand, under certain conditions, the control of less than 50 per cent of the given industry might be destructive of reasonably competitive conditions. For example, if an entire industry should be divided among two or three competitors working in harmony, each controlling less than 50 per cent of the entire industry, reasonably competitive conditions might no longer exist.

The other question of doubt and uncertainty which I have mentioned is this: Does the first section of the act, which prohibits restraints of interstate trade or commerce, prohibit a diminution of competition which does not extend so far as to destroy reasonably competitive conditions and to amount to monopolizing prohibited by the second section? The second section prohibits the destruction of competition to such a degree as to put an end to reasonably competitive conditions. Is a diminution of competition to a lesser degree prohibited by the first section?

The phrase "restraint of commerce" never has had a single clear and well-defined meaning in the law. Of course, lawyers have always understood that there was some rule or principle of the common law against "restraints of trade," but the phrase "restraint of trade" was applied loosely and with varying meanings to acts condemned for different reasons. We all know that the common law is whatever the judges say it is. As a matter of fact, the judges, in great measure, make the common law. At first these existed certain more or less vaguely defined principles of right or public policy, and by applying these principles to individual cases as they arise the judges crystallize certain rules which afterwards are said to be the original common law which governed the judges in the cases before them.

Now we do find that there were certain underlying principles which guided the judges in deciding the cases involving so-called restraints of trade. In the first place there was an early principle that a contract of an individual not to exercise his craft or trade er means of livelihood was not binding and would not be enforced unless the restriction upon the freedom of the individual was a reasonable one; and such a restriction was held to be unreasonable, unless it was merely incidental to some lawful and proper transaction. For example, a contract of an individual not to exercise his profession or trade anywhere was held to be unreasonable and void; but a contract to sell an established business or professional practice with its good will and not to engage in a similar business or profession where it would enter into competition with the business or practice sold was held to be reasonable and valid. On examining the cases it will be found that a great deal of the so-called law of restraints of trade is based upon these early cases involving merely restrictions placed by individuals upon their freedom to exercise

their craft or occupation or means of earning a livelihood. But I take it that the antitrust act was not passed to deal with cases of that character. It was not designed to prevent individuals from contracting away their personal liberty; it was designed to protect the community against restraints of trade and monopolies.

There was another principle underlying some of the cases involving so-called "restraints of trade." This principle was that to monopolize the trade in any article was contrary to public policy and unlawful because injurious to the community at large. It was to carry out this public policy recognized at common law that the first section of the antitrust act was passed. It was to protect the community against monopolizing, not to protect the freedom of the individual.

At common law there was no principle and no rule rendering it unlawful merely to diminish competition. A diminution or destruction of competition was unlawful at common law only when it went so far as to put an end to reasonably competitive conditions in trade at some place and to constitute what is commonly understood as monopolizing. In my judgment, the purpose of the first section of the act was merely to prohibit a destruction of competition when it went so far as to constitute a restraint of trade within the meaning of the common law. In other words, when it went so far as to constitute monopolizing or an attempt to monopolize.

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I am confirmed in this view by the fact, first, that the word competition" does not appear anywhere in the antitrust act. If Congress had intended to prohibit a diminution of competition, short of monopolizing, I think Congress would have said so. The very fact that by the second section of the act Congress expressly prohibited monopolizing or, in other words, the destruction of competition, to such a degree as to put an end to reasonably competitive conditions, makes it clear to my mind that Congress did not intend by the first section of the act to prohibit the destruction of competition to a minor degree. Certainly, in view of the express prohibition against monopolizing, the prohibition against "restraints of commerce the first section should not be extended by implication so as to prohibit restrictions of competition which at common law were not deemed in restraint of commerce.

Of course, the question of reasonableness or unreasonableness can not arise under the second section of the act. There can not be such a thing as reasonable monopolizing or reasonable attempt to monopolize. If the diminution of competition does not amount to monopolizing or an attempt to monopolize it is not within the prohibition. If it does amount to monopolizing or an attempt to monopolize it is within the prohibition, whether it be reasonable or not. Now, a fundamental question which must be determined by your committee, and, I presume, has already been settled, is whether you will recommend a reversal of the entire policy of the antitrust act or whether you will adhere to the policy of the act, which is to prevent, to stop restraints of trade and monopolizing. There are eminent economists and eminent captains of industry who have urged that a great change has taken place in the economic development of the world and that the era of competition in trade has gone forever. They say that the Sherman Antitrust Act and all other laws prohib

iting monopolizing or restraining trade are in conflict with modern economic methods and embody an attempt to stem natural evolution and progress in production and in commerce. They say that the right policy is to repeal all these laws and to adopt a new policy, namely, that of governmental regulation.

I do not agree with those views.

I believe that the era of competition has not gone by. Monopolies and restraints of trade are not necessary to secure economy of production or economy of distribution. I believe that the evils of monopolies are far greater than any benefits which they possibly could bestow.

The present struggle against the monopolization of our industries is nothing new. It is merely a continuation of a similar struggle which has gone on from the beginning of history. From the earliest days men have attempted, wherever opportunity offered, to monopolize industries or trade for their own profit and at the expense of the community. In the fifth century after Christ, Zeno, the Roman Emperor of the east, issued an edict against monopolies and combinations to fix prices which reads very much as if it had been an early draft of one of our modern antitrust laws. We find the same conflict in Germany, early in the sixteenth century, between those who attempted to monopolize trade for their own profit and those who wished to keep competition open. We find the same conditions existing in England 300 years ago. In the statute of monopolies, which was passed, I think, in 1623, Parliament declared that monopolies were against the fundamental laws of the Kingdom.

It is true that monopolies have been created of recent years in some industries, and, through the labor unions, in some classes of skilled labor. But even to-day monopolies are the exception, and not the rule. In the great majority of our industries and trades competitive conditions still exist. In the greatest of our industries, the farming industry, there is not, and probably never can be, a monopoly. In the vast majority of our manufacturing and industrial businesses, in nearly all wholesale and retail trade, in the professional pursuits, in many classes of skilled labor, and in nearly all unskilled labor, competitive conditions still prevail.

It is true that in the modern times industries and the commerce of the world are conducted on a greater scale than ever before, and that large aggregations of capital are essential to secure economy of production and of distribution, but neither the common law nor the antitrust act, as I construe that act, prohibits any combination or individuals or any aggregation of capital that is necessary to secure economy of production or economy of distribution. The common law and the antitrust act prohibit combinations among competitors only when their effect is to destroy competitive conditions. in some branch of commerce to reach a degree as to create a monopoly conferring power to control prices and thus to profit at the cost of the public generally-not when their object is to obtain a profit through economy or production or of distribution. We all know that in many cases the principal object of those attempting to monopolize an industry is not to secure economy of production or economy of distribution as it is to raise prices and to profit at the cost of consumers, and, I might add, sometimes also to float securities on the stock exchanges.

There is another reason why the monopolization of our industries should be prevented. Whether or not it be true that competition is the life of trade, it certainly is true that in competition lives the spirit of human endeavor, and that competition is necessary to progress. The monopolization of the industries of the country, if earried so far as it would be if the antitrust act were repealed, surely would result in lessening the initiative and the resourcefulness of our people, and I believe it would soon result in slovenly methods of production, so that any economies which might at first result would soon be lost. The fact is that monopolies or large combinations have not been the cause of industrial development, but in great measure they have reaped the benefit of the development which took place during the era of competition.

Now, with the consent of the committee, I should like to say a few words as to the desirability of additional legislation to carry out the policy of the present antitrust act.

I agree with the views expressed this morning by Mr. Walker, that the present antitrust act should remain on the statute books unaltered and unchanged. I agree with Senator Edmunds that an attempt to define by statute the phraseology of the act would not be a step in the right direction. I do not think it would lead to greater certainty, and I do believe it would lead to a great deal of litigation. In any event I should defer any modification of the language of the act until we have had some further decisions by the Supreme Court showing that the results desired by Congress will not be attained under the present law..

It has been suggested that we should have a national act for the incorporation of companies engaged in interstate trade or an act requiring the licensing of corporations and, possibly also, individuals engaged in interstate commerce. I do not see how such acts would bring about or tend to bring about a solution of the antitrust problem. If there were a national incorporation act or an act requiring corporations and individuals engaged in interstate commerce to obtain licenses, the present problems nevertheless would remain. The antitrust laws would apply to the corporations formed or licensed under the national laws as they do to corporations acting under State laws, and it would still be necessary to determine the meaning and the effect of the antitrust laws.

Trade and commerce are not limited by State lines, and therefore a wise and practical national incorporation act would be very desirable. However, an act of Congress merely authorizing the formation of corporations to engage in interstate commerce, without prohibiting the formation of State corporations for similar purposes, would not bring about uniformity of the law and would not solve any of the problems before your committee. An act of Congress prohibiting State corporations from engaging in interstate commerce would involve a serious constitutional question. Even if Congress had power to pass such an act, I think it a very serious question whether such a power should be exercised. There are many matters which ought to be governed by uniform laws throughout the United States, but which can not be governed by uniform laws without changing our system of government. For example, marriage and divorce ought to be governed by uniform laws and not by 48 different sets of laws in the various States. Yet to attempt to pass national legislation,

even if it were practicable under the Constitution, which it is not,
governing all subjects which ought to be governed by uniform laws,
would put an end to our whole system of government. I should like
to see a national incorporation act, if it were a well-drawn act, and
I should like to see a great many other subjects which are now
governed by separate laws in the 48 different States governed by
uniform laws. But I can not say that I think it would be statesman-
like to govern such matters by national legislation or to amend the
Constitution so as to enable Congress to pass such legislation, because
this would mean practically recasting our whole system of govern-

ment.

A licensing law certainly would be of no advantage, but would be a positive disadvantage, if it merely made interstate trade more difficult and more troublesome by imposing red tape and unnecessary conditions upon those engaged in interstate commerce. The only object of licensing those engaged in interstate commerce would be to subject them to certain regulations believed by Congress to be necessary to secure the freedom of interstate trade and commerce. Now, I do not see why licensing is necessary in the first instance. It seems to me that whatever rules Congress deems necessary to secure the freedom of interstate trade and to regulate interstate trade should be applied to all corporations and individuals, whether they be licensed or not.

The proposal has been made to establish a commission somewhat similar to the present Interstate Commerce Commission, with jurisdiction over interstate commerce other than transportation, over which the present Interstate Commerce Commission has jurisdiction. With that plan I am in sympathy. I think such a commission, if it were constituted of intelligent and enlightened men, might prove very useful. I should give the commission the following powers:

(1) To require reports of any corporation regularly engaged in interstate commerce and power and to require all contracts and combinations between competitors in interstate commerce to be reduced to writing and to be filed with the commission.

(2) Upon the application of any citizen, or upon the application of the Government, or of its own motion, to investigate the interstate commerce transactions of corporations and of individuals.

(3) After granting a hearing to the parties in interest, to determine whether any contracts, combinations, or conspiracies or any acts complained of were in violation of the antitrust act. Such a finding of the commission should be made prima facie evidence of the fact that a contract or combination or other act is or is not in violation of the act; but of course every finding of the commission should be subject to review in the Commerce Court upon the application of any party in interest or upon the application of the Government.

(4) I should provide that parties proposing the enter into a contract or combination should have the right to apply to the commission for an order determining whether or not the proposed contract or combination would be in violation of the antitrust act, and the finding of the commission in such a case should be effective until set aside by the commerce court. Upon the approval of a contract or combination by the commission, acts done in pursuance of such approval, so long as the order of the commission remains in force,