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That is the proposition establishing this commission of five with those powers. I ask you whether you think the passage of that would tend to restore the shaken confidence which you say exists in the country?
Mr. STACKHOUSE. Senator, I frankly admit that I do not consider myself competent to answer off-hand as comprehensive a question as that. You gentlemen are all experts on this proposition. The three associations that are represented here to-day are just now engaged in studying this entire proposition in the abstract. I wish to state as evidence of my former statement of a few minutes ago that, as humiliating as it might prove, if you are simply hearing us as business men as a whole, I must admit that we are densely ignorant on these matters. We are proceeding now possibly late possibly we should have commenced studying them with some assiduity a couple of years ago—nevertheless I am stating the situation we are in. We are now engaged, within our limitations, in a comprehensive study of this matter throughout our various associations, and we propose taking a referendum vote on it, so that we will not have to come here and burden you gentlemen with personal opinions, but, instead, with the result of a crystallized opinion of all our various business organizations, which you can then consider for what they are worth as a representative composite idea.
Senator BRANDEGEE. What do you ask us to do—to withhold all action upon this until you crystallize your opinions in this matter?
Mr. STACKHOUSE. With the exception, Senator, of creating a commission and vesting it-speaking broadly, and I am only competent to speak regarding this matter in the most general terms—with a comparatively limited authority to commence with.
Senator BŘANDEGEE. I have read what is proposed to confer upon this commission in the way of authority. Would you describe that as comparatively limited authority, or broad and sweeping authority?
Mr. STACKHOUSE. Well, I would not attempt to say either one or the other.
Senator BRANDEGEE. Having heard it, would you express an opinion? Do you know whether you are for it or against it?
Mr. STACKHOUSE. In a general way it appeals to me, but as to whether I am for that particular bill with that particular phraseology, I do not know, sir, offhand, whether I am for it or against it.
Senator BRANDEGEE. What do you mean by saying it appeals to you? What appeals to you?
Mr. StackHOUSE. The general proposition.
Senator BRANDEGEE. Whether you would be for it or not would depend upon whether you would like the things the commission were to do. You would not favor the creation of a commission if you thought it was going to be oppressive and inquisitorial and damaging to business?
Mr. STACKHOUSE. No, sir.
Senator BRANDEGEE. Therefore, whether you are in favor of a commission or not depends upon what authority the commission is · clothed with, what its functions are to be?
Mr. STACKHOUSE. If you will permit me to answer your question this way: We are decidedly in favor of a commission. We are in favor of clothing it, to commence with, with sufficient authority to obtain all of the necessary pertinent data which should be obtained to qualify it to intelligently make comprehensive recommendations for such further legislation as may be necessary.
Senator BRANDEGEE. When you say, “We are in favor of that.” of whom do you speak?
Mr. STACKHOUSE. The three associations that I mentioned.
Mr. STACKHOUSE. Oh, I beg your pardon, Senator. I refer to the National Implement and Vehicle Association, the Ohio Manufacturers' Association, and the Illinois Manufacturers' Association.
Senator BRANDEGEE. But you do not know whether they would be in favor of the kind of commission which I have just read, that we are proposing to establish, do you?
Mr. STACKHOUSE. I do not ; no, sir.
The CHAIRMAN. Do you know what the capitalization of these various organizations is, or the corporations represented in them?
Mr. STACKHOUSE. Why, if you will permit me to suggest, Mr. Bush can answer that question here. Offhand I would be unable to answer it. I think you have the figures, Mr. Bush, have you not?
Mr. GLENN. The Illinois end of it is about a billion dollars.
Mr. STACKHOUSE. Our capitalization is about fifty-five and onehalf million dollars.
The CHAIRMAN. Oh, that is for the single organization that you represent?
Mr. STACK HOUSE. Yes, sir.
The CHAIRMAN. I am talking about the capitalization represented by the various corporations and businesses that are in these three associations to which you refer.
Mr. SraCKHOUSE. No; I could not answer that, Senator.
The CHAIRMAN. The gentleman just stated that the Illinois Association—what is the name of that association?
Mr. STACKHOUSE. The Illinois Manufacturers' Association.
The CHAIRMAN. Represent in all about a billion. May I ask your name?
Mr. GLENN. John M. Glenn.
Mr. STACKHOUSE. Apropos of your question—it does not answer it directly, but according to the statistics gathered by our three organizations, the States of Ohio and Illinois represent 33,164 factories, employing about 1,084,000 employees, with an annual pay roll of $782,365,000. That does not directly answer your question, but those are the only available statistics we have.
Senator POMERENE. Let me suggest, Mr. Stackhouse, apropos of the questions which were asked by Senator Brandegee, that the powers which it is proposed to confer upon this interstate trade commission, so far as they pertain to the subject of investigation, are substantially the same as the powers now possessed by the Bureau of Corporations.
Mr. STACKHOUSE. That is the bill that Senator Brandegee just read ?
Senator POMERENE. Yes. In that respect it is about the same.
Mr. STACK HOUSE. Personally, and in view of your explanation, I am decidedly for it, Senator.
Senator BRANDEGEE. You are in favor of that?
Senator BRANDEGEE. Are you in favor of a commission exercising those powers over all of the corporations and individuals of the country engaged in commerce?
Mr. STACKHOUSE. Yes, sir. Senator BRANDEGEE. Very good. (The witness was excused.)
STATEMENT OF MR. HENRY G. HERGET, PRESIDENT OF THE
ILLINOIS MANUFACTURERS' ASSOCIATION, PEKIN, ILL.
The CHAIRMAN. Will you state your name, residence, and occupation ?
Mr. HERGET. I am president of the Illinois Manufacturers' Association, manufacturer of cooperage, Pekin, Ill.
The CHAIRMAN. Mr. Herget, will you proceed with your statement regarding this matter?
Mr. HERGET. I heartily indorse what Mr. Stackhouse said as to a trade commission. I think the powers as outlined are rather large and would be drastic. Speaking for myself personally, I think that my own company, if. it were required to produce books, being an innocent corporation and a very close one, would probably convert itself into a private partnership. I think that would follow very largely.
The CHAIRMAN. Have you been disturbed as yet by the Bureau of Corporations?
Mr. HERGET. No, sir; we have not.
The CHAIRMAN. It was stated by Senator Pomerene that the Bureau of Corporations has had such powers for many years.
Mr. HERGET. We have obeved the law.
Senator BRANDEGEE. The Commissioner of Corporations has been the gentleman who has been authorized to exercise these powers in the past. Of course, one man could not exercise very much of those powers over the 330,000 corporations of the country or over the individuals of the country. When we get a commission of five established here, with a salary of $10,000 a piece, with authority to employ the necessary field agents and inspectors and special agents, with the powers that we are giving them to exercise, I do not suppose it is to be assumed that it will not exercise the powers.
What I want to get at is that when the powers are exercised by the commission and the corporations are compelled to produce their private correspondence and their bank accounts and make financial statements, and produce their contracts and books to the inspection of the commission whenever the commission wants them to, whether they will like it then? There is so much talk about people generally favoring a commission. I do not believe that they know what kind of a commission and what kind of powers it is proposed
to establish the commisison with. If we respond merely to the general request for a commission, and then when we get a commission they commence to rebel against its inquisitorial proceedings and its prying into their private papers, I want to know whether they understand what they are asking for-whether they are asking for what we are proposing to give them.
Mr. HERGET. It was said by Mr. Stackhouse that we are not familiar with this bill. It occurs to me that it is giving the commission very much authority.
Senator BRANDEGEE. If a commission is to be created to investigate the affairs of corporations engaged in commerce among the States, it has got to investigate. That is what it is to be created for-to investigate the methods adopted by corporations in their business and in their relation to other corporations and to individuals. When they get to investigating and summoning witnesses by subpænas duces tecum issued to produce books and papers and letter files and bank accounts and financial statements of the corporations, and they are brought on here to Washington to be exhibited to this commission, and they are compelled to make a clean show-down to the commission, then it will not be fair for the people who said that they encouraged Congress to pass this bill to say, “We did not know anything about it, and we would not have asked for it if we had known what trouble it was making for us." I would like to know before I jump what I am jumping into, myself.
Senator POMERENE. Permit me to suggest to the witness that while it gives the power to do these things it does not compel the examination of any one of these corporations at all.
Senator BRANDEGEE. No.
Senator POMERENE. Because in every county in the State you have a grand jury, that does not mean that your books are always being inquired into and you are compelled to come with a subpæna duces tecum to bring every piece of property you have.
Senator BRANDEGEE. If we create a commission and pass this bill, if a man comes on and files a complaint against a corporation, the commission will send on an inspector to investigate whether or not the man has made out a prima facie case. If he reports that he can not tell without a more thorough investigation, they will summon the corporation here with its books and papers and make an investigation. If they do not the commission is not performing its duties at all; and unless they are going to carry out the powers which we are conferring upon them, it seems to be there is no excuse for their existence.
The CHAIRMAN. It is quite possible, Mr. Witness, that the commission may do all the things that are pointed out by Senator Brandegee, but it is not likely to do them, unless there is some probable cause based upon a complaint or some information which is received.
Senator SAULSBURY. It is quite possible that they might send a man out to do this work and thus ascertain what the real condition is, instead of bringing along a large carload of books to Washington.
Senator BRANDEGEE. I hope so; but I may suggest to the witness that with five commissioners sitting in Washington paid $10,000 apiece, clothed with these powers, the chances are there will be some
thing doing. I do not think they will dare to sit there idle very long drawing $10,000 apiece if there is no occasion for it. If we create this commission, certainly there will be business for them. If there is nothing for them to do and they are not going to investigate anybody, they should not be established, it seems to me. If they are going to investigate anybody, they are going to investigate everybody that they think ought to be investigated.
Senator POMERENE. By the same logic, you would do away with the grand jury, would you !
Senator BRANDEGEE. No; the grand jury is summoned whenever the district attorney has some criminal case to lay before it.
The CHAIRMAN. Do you wish to go any further, Mr. Herget?
Senator MYERS. You are aware that the Federal laws now forbid combinations in restraint of trade?
Mr. HERGET. Yes, sir.
Senator MYERS. And this proposed legislation, I may say, is, I assume, in a measure intended to strengthen those laws and extend them. Have you any idea to express about the propriety of apply. ing to domestic trade the laws against combinations in restraint of trade and exempting the export trade from those laws?
Mr. HERGET. I would favor exempting the export trade.
Senator MYERS. You would favor exempting the export trade. What are your reasons for that?
Mr. HERGET. The reason for that is that we are obliged at times to sell really below the cost of manufacture to foreign countries. I can give you a very practical illustration, if you wish.
Senator MYERS. I should like to have it.
Mr. HERGET. We ship very largely wine barrels to Argentina, and provision barrels, also, to that point, for the packers in this country. These are all made from white oak secured in Arkansas. In order to keep our factory going, and in order to hold our men, we are taking orders for shipments at cost or less. These barrels are put up in shook form so they can speculate on them down there and carry them for years without being at all damaged, whereas our local or domestic buyers of barrels could not speculate in that way. They would come to pieces. But the foreign buyer can speculate on them and he takes advantage of our dullness of trade to secure a large quantity of barrels at a low price. We are to-day selling at fully 10 to 124 per cent lower than we were a year ago, to South America.
Senator MYERS. Do you think it would be advantageous to allow the manufacturers in this country to combine and agree not to sell to foreign buyers at less than a certain price?
Mr. HERGET. In effect; yes. For instance, if we had a combination among our cooperage men we would agree that we would get a certain price, say, 5 per cent more than we are, for the reason that they have to come to this country for our particular materials, because white oak is not produced anywhere else.
Senator Myers. Do you think it would be advantageous to agree to charge them a little more than you are getting now, or not to sell to them?
Mr. HERGET. I think we could get the price, because we know what the requirements are and we know they must come to this country for the materials.