I

Packers," President Roosevelt pointed out the absurdity of the decision which gave immunity to everybody called to testify before the Bureau of Corporations, from all acts which he or his corporation had committed, and demanded legislation to remedy this condition.

Mr. Moody, in this letter, made two suggestions: first, that the government be given the right of appeal in criminal cases, and second, that the immunity thus granted to persons whose corporations happened to have been examined by the Bureau of Corporations, be reremoved.

In a short message accompanying the Bureau of Corporations' report on the oil industry,' Mr. Roosevelt pointed out the great evils of discriminating rates. And he denied that individual initiative would be harmed by government supervision. "On the contrary, the proper play for individual initiative can only be secured by such governmental supervision as will curb those monopolies which crush out all individual initiative." And then he again recommended a commission to administer the law.

His next message3 was largely a repetition of his last. In forceful language, he pointed out the necessities of the situation.

In some method, whether by a national license law or in other fashion, we must exercise, and that at an early date, a far more complete control than at present over these great corporations-a control that will among other things prevent the evils of excessive over-capitalization, and that will compel the disclosure by each big corporation of its stockholders and of its properties and business, whether owned directly or

1H. R. Doc., no. 706, 59th Congr., 1st sess., Apr. 18, 1906. 1 Sen. Doc., no. 428, 59th Congr., 1st sess., May 4, 1906.

3 59th Congr., 2nd sess., Dec. 4, 1906.

through subsidiary or affiliated corporations. This will tend to put a stop to the securing of inordinate profits by favored individuals at the expense whether of the general public, the stockholders, or the wage workers. Our effort should be not so much to prevent consolidation as such, but so to supervise and control it as to see that it results in no harm to the people.

And he insisted that this was not socialism, but an antidote which would prevent socialism. The plan should not stifle, but encourage individual initiative and energy. "We hold that the government should not conduct the business of the nation, but that it should exercise such supervision as will insure its being conducted in the interest of the nation. Our aim is, so far as may be, to secure, for all decent, hardworking men, equality of opportunity and equality of burden."

Attorney-General Moody, at this time, also discussed the act at length. And he criticised it in three important aspects. First, the exact meaning of "restraints," 'monopolization" and "interstate commerce" had not yet been decided. Second, "one main purpose of the law that competition shall not by agreements be supprest, runs counter to the tendencies of modern business." Third, he complained of the insufficient means for carrying on investigations.

Four things, however, were clear: First, that the law was constitutional; second, that combinations of manufacturers incidentally restraining trade were not included under the act; third, that combinations of manufacturers fixing prices and suppressing competition were within the prohibitions of the act; and fourth, that combinations of competing railroads by which rates and fares were fixed, were forbidden by the act although rates were reasonable.

1 1 Annual Report, Dec. 1, 1906.

And in the course of litigation, it had further been established: (1) That the suppression of competition by means of a holding corporation was a violation of the act, even though the acquisition by itself were lawful. (2) That manufacturers purchasing raw material from various states and territories, and after manufacturing, selling their products throughout the country, were engaged in interstate commerce. (3) That state corporations were subordinate to the rules of Congress; and that they had no constitutional privilege to refuse to show their books.

An interesting sidelight on the policy of the administration at this time,' is afforded by a letter from Mr. Herbert Knox Smith, head of the Bureau of Corporations, while the question of instituting a suit against the International Harvester Company was under consideration. The President had put the matter in the hands of the Attorney-General and Mr. Smith, with instructions. that they confer with Mr. Perkins, representing the Harvester Company. Mr. Smith reported adversely to the proposed suit. Mr. Perkins had claimed that the company had followed the policy of publicity maintained by the Administration, had done nothing, so far as it was aware. in violation of the law, had offered complete access to its books, and had urged an investigation. This investigation was now taking place under the direction of the Bureau. Mr. Smith concurred in this attitude, especially because all the complaints against the company had been traced to two sources: trade papers deprived of advertising, and the general feeling against all combinations.

1

This letter was only published at a later date. Sen. Doc., no. 604, 62nd Congr., 2nd sess.

And he concluded:

This case raises the question included in what the President has called "good and bad trusts;" the question whether mere combination, as such, shall be prohibited; whether the government is going to try to forbid all combinations regardless of their methods or ends, or whether, on the other hand, it is going to pursue the policy, frequently stated by the President, of regulation and control rather than of prohibition.

The abandonment of this case indicates the Administration policy that reasonable combinations should be permitted, and that only unreasonable ones should be disturbed.

Mr. Roosevelt's messages were all marked by novel and energetic language. By now, however, he had little to add to the constructive program which he had been advocating. In his 1907 message' he again urged the national character of the trust problem and the necessity of combination in modern industrial life. The following extracts from his long recommendations will suffice to indicate his policy at this time:

The anti-trust law should not be repealed; but it should be made both more efficient and more in harmony with actual conditions. It should be so amended as to forbid only the kind of combination which does harm to the general public, such amendment to be accompanied by, or to be an incident of, a grant of supervisory power to the government over these big concerns engaged in interstate business. This should be accompanied by provision for the compulsory publication of accounts and the subjection of books and papers to the inspection of the government officials.

Among the points to be aimed at should be the prohibition of unhealthy competition, such as by rendering service at an

16oth Congr., Ist sess.

actual loss for the purpose of crushing out competition, the prevention of inflation of capital, and the prohibition of a corporation's making exclusive trade with itself a condition of having any trade with itself. Reasonable agreements between, or combinations of, corporations should be permitted, provided they are first submitted to and approved by some appropriate government body.

The Congress has the power to charter corporations to engage in interstate and foreign commerce, and a general law can be enacted under the provisions of which existing corporations could take out federal charters and new federal corporations could be created. An essential provision of such a law should be a method of predetermining by some federal board or commission whether the applicant for a federal charter was an association or combination within the restrictions of the federal law.

Attorney-General Bonaparte at this time' outlined his policy in an interesting manner:

The policy of the Department in this field of its activity has been to investigate very carefully all complaints or information brought to its attention respecting alleged offenses under the statutes in question, and to set on foot proceedings, either civil or criminal, only when fully satisfied not merely that the laws had been violated, but that sufficient proof of such violations could be obtained to justify a reasonable hope of success in the prosecution, and that the public interests demanded action on its part for the proper vindication of the law.

And remarking on the ineffectiveness of an injunction owing to the delay, expense and trouble involved in furnishing legal proof of well-known facts, he recommended "the enactment of a statute which, in such civil cases, will give the process of the courts engaged in trying

Annual Report, Dec. 2, 1907.