ANNUAL REPORT OF THE COMMISSIONER OF CORPORATIONS. DEPARTMENT OF COMMERCE AND LABOR, BUREAU OF CORPORATIONS, Washington, December 1, 1906. SIR: I have the honor to submit the report of the Commissioner of Corporations for the fiscal year ended June 30, 1906. There have been no changes in the act of February 14, 1903, by which the Bureau was created. Certain important statutory changes, however, have taken place, which do affect the Bureau; first, the act of Congress approved June 30, 1906, defining the extent to which immunity from prosecution shall be allowed to those giving information under the compulsory powers of the Commissioner, which act merely declares and makes unquestionable the clear intent of the existing law; and second, the so-called railway-rate law, which amends the interstate-commerce act and acts amendatory thereof. The total appropriations for the Bureau for the said fiscal year were $217,879.40. The amount of $136,535.80 was expended. The appropriations for the fiscal year 1906-7 are $185,920. The number of persons employed by the Bureau on June 30, 1906, was 73. The estimates for the year ending June 30, 1908, are $248,220. As the investigations conducted by the Bureau often expand in unforeseen directions it is impossible to estimate with accuracy the specific work which will be done in a given period. It has been, therefore, wise to keep the organization in a flexible condition, so that its force may be applied as the exigencies of the work develop; with the lump sum appropriation it has been possible to adapt the means to the end desired with comparatively little waste of time or money. The legal work of the Bureau in the past year has been largely concerned with interpretation of statutes relating to transportation, together with a consideration of numerous proposed forms of legislation on this subject. Considerable time also has been devoted to the laws relating to railway discriminations. The report of the Commissioner on the Transportation of Petroleum, which dealt almost entirely with railway discriminations in favor of the Standard Oil Company, has led to a very careful consideration of the interstate commerce act, the Elkins Act, and various other laws affecting transportation. Pursuant to the letter of the President, submitting the said report to Congress, the Department of Justice has taken up the discriminations set forth in the said report and assistance has been given by this Bureau to the Department of Justice in preparing criminal cases in connection therewith. Digests of the various State corporation laws in the Bureau have been kept up to date and compilations have been made of certain branches of such laws. During the course of the investigation of the oil industry it was discovered that a very widespread system of railway discriminations existed in favor of the Standard Oil Company, affecting a very large proportion of the country and resulting substantially in giving to the Standard Oil Company an overwhelming advantage in transportation in almost all sections of the country; that this system had been in existence for a number of years, and that largely by virtue of it the Standard had been able to restrict or eliminate competition thruout many parts of the country and thereafter reap the benefits of monopoly. These railway discriminations took various forms, often very ingenious in their nature, and so skilfully concealed that their existence was very rarely suspected even by the active competitors of the Standard, altho such competitors knew that in general they were doing business at a disadvantage. This system of discriminations was discovered by the agents of the Bureau when examining the oil-shipping records and accounts of the various railroads. So important was the effect of these discriminations that it was deemed best to make a special report on the Transportation of Petroleum. This report was submitted to the President and by him transmitted to Congress on May 2, 1906. The regular adjournment of Federal courts for the summer has made it impossible as yet to secure the trial of any of the criminal cases growing out of this investigation, but indictments containing 8,193 counts have been returned by the various grand juries. It is claimed that the various devices by which these discriminations were obtained are permissible under the law, but this contention seems untenable. The purpose of the law is to provide equality of opportunity and treatment to all shippers. The law deals with the result, not the device by which the result is accomplished. The more clever the device the more flagrant is the violation of the law, for wilful intent to evade is shown. If this be not the true interpretation of the law, it becomes worse than useless, because it offers false security and opens the door to fraud. A most striking and important result immediately followed the investigation of the Bureau; the railroads canceled substantially all the secret rates, illegal or improper discriminations, and in many |