stock of competing corporations is not therein condemned.

4. Interlocking Directors.

Section 8 condemns interlocking of officers, directors or employees of banks, common carriers and other corporations subject to certain limitations which differ in their application to the different kinds of corporations affected thereby.

(a) AS TO BANKS.

Interlocking provisions extend to officers, directors or employees thereof and not to directors only as in the case of corporations other than banks and common carriers.

The provisions of the first and second paragraph of section 8 are ambiguous and when read in connection with the fourth paragraph of the section are still more difficult of interpretation. The evident purpose of Congress was to prevent interlocking in institutions of large resources. In order certainly to accomplish the desired result Congress applied its regulations from two points of view. In the first place it forbade after two years from the date of the approval of the act interlocking between national banks wherever located if one of them has deposits, capital, surplus and undivided profits aggregating more than $5,000,000, and also forbade interlocking between any private banker or state bank having deposits, capital, surplus and undivided profits aggregating more than $5,000,000 and any national bank of whatever size wherever located. Secondly, apparently more as a matter of precaution than necessity, Congress provided that there shall be no interlocking

whatever in a city of more than 200,000 inhabitants between any national bank of whatever size and any other national bank or state bank or private banker located in the same place. The two provisions referred to appear in the same section, though in separate paragraphs, and the second paragraph contains two provisos-the first to the effect that the section shall not apply to mutual savings bank not having shares of capital stock, and the second to the effect that interlocking is permitted as between not more than two banks of the kinds described where the entire capital stock of one is owned by the stockholders in the other. The second paragraph basing interlocking provisions on population does not in terms permit the interlocking for two years after the approval of the law as does the first paragraph. But we believe, reading the law as a whole, that the second paragraph is in substance a portion of the first paragraph and should be construed as a part thereof, and therefore its provisions likewise do not become effective for two years.

The provisions of the fourth paragraph of the section are to the effect that when any person elected as a director or officer, or selected as an employee of any bank or corporation is eligible to the position at the time of his election or employment, his eligibility shall not be affected by reason of any change in the affairs of such bank or other corporation until the expiration of one year from the date of his election or employment.5

5.-Opinion construing the two year provisions of the section:

Department of Justice,

Office of the Solicitor of the Treasury,

The Federal Reserve Board,

Gentlemen:

Washington, D. C., November 24, 1914.

Referring to the so-called "Clayton Law" approved October 15, 1914,

These provisions tend still further to add to the difficulty of correctly interpreting the section as a whole.

(b) AS TO CORPORATIONS OTHER THAN BANKS AND COMMON CARRIERS.

The interlocking here forbidden applies to directors only, and not to officers and employees also as in the case of banks.

The section provides that after two years from the approval of the act no person shall be a director in two or more corporations any one of which has capital, surplus and undivided profits aggregating more than $1,000,000 engaged in whole or in part in commerce, if such corporations are or shall have been by virtue of their business and location competitors, so that the elimination of competition by agreement between them would violate any of the provisions of the Anti-trust laws.

We have discussed under "Common Carriers" the application of this section to certain kinds of common

regarding monopolies, etc., I am requested to advise you whether the words "from and after two years from the date of the approval of" the said act, apply to paragraph 2 of Section 8.

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In other words, Mr. Robert W. Webb, Vice-President of the Minneapolis Trust Company, inquires of your Board by letter dated the 20th instant, whether a director of the company is eligible to serve as a director of a national bank not having common ownership of stock, until the expiration of two years after the approval of the act. And if so, may he not further serve for such time thereafter as would constitute the unexpired part of one year from the date of his election?" (Here follow the pertinent provisions of the law.) From the facts stated and in accordance with my interpretation of the statute, I am of the opinion that the two years limitation mentioned in the first paragraph of section 8 of the act applies also to the second paragraph, and that a director of the said trust company is eligible to serve as a director of a national bank not having common ownership of stock, until the expiration of two years after the approval of the act; and that by authority of the last paragraph above quoted, he is eligible to further serve for such time thereafter as constitutes the unexpired part of one year from the date of election.

carriers not subject to the act to regulate commerce prior to the amendments of 1906. Our conclusion there drawn is that express, sleeping car, pipe line, and telephone and telegraph companies are subject to the absolute inhibition against interlocking

directors.

(c) AS TO COMMON CARRIERS.

There is no provision in the law against interlocking directors as between common carriers by railroad. As to interlocking directors of pipe lines, sleeping car, express, telephone and telegraph and other companies see comments on "Common Carriers."

Interlocking between common carriers and other corporations is discussed also under the heading "Common Carriers."

TRADE COMMISSION'S FUNCTIONS.

By the provisions of the Trade Commission law Congress has created the Federal Trade Commission

I am of the opinion also that the statute will fairly bear the liberal interpretation that it was intended that paragraphs 1 and 2 should be read together in order that the existing arrangements might not be subject to sudden and inconvenient changes; and that the first paragraph as to eligibility to serve as a director in two institutions whose deposits, capital, etc., exceed $5,000,000, be modified by the second in the case of institutions the stock of one of which is wholly owned by the stockholders in the other.

I am further of the opinion that it was the intention of Congress that the first two paragraphs of section 8 as to banks whose deposits, capital, surplus, etc., aggregate more than $5,000,000, and as to all banks in cities of over 200,000 population, the provisions as to time of the act taking effect, mutual savings banks, common stock ownership and Federal reserve banks, should apply alike.

The letter of Mr. Webb is herewith returned.

(Comment: Released for publication December 3, 1914.)

which is designed to enforce certain rules laid down therein and also in the Clayton law, particularly as to corporations other than banks and common carriers. The Commission in its organization is very similar to and yet fundamentally unlike the Interstate Commerce Commission and is given in many respects like powers. It is designed to take the place of the Bureau of Corporations and is authorized to carry on all pending investigations of the Bureau and to exercise as to such the powers of the Bureau.

The Commission has two main functions which are quite different in their nature. The first is to investigate in very general and also specific ways corporations engaged in interstate commerce, except banks and common carriers. Its powers of investigation apparently do not extend to persons or partnerships. Its power to investigate corporations, however, includes power to investigate their relations with partnerships, associations or individuals. The second is to determine after hearing on complaint filed by the Commission whether particular persons, partnerships or corporations have violated any of the provisions of the two laws.

1. Inquisitorial Functions.

The Commission by section 6 of the law is given general power to gather and compile information and to investigate the organization, business, conduct, practices and management of any corporation engaged in commerce, excepting banks and common carriers, and the relations of such corporation to individuals, associations and partnerships. This is a very broad grant of power, but this power or duty to investigate could probably only be exercised for the better enforcement of the two new laws and the