A RESOLUTION DIRECTING THE COMMITTEE ON INTERSTATE COMMERCE TO INVESTIGATE AND REPORT DESIRABLE CHANGES IN THE LAWS REGULATING AND CON- Printed for the use of the Committee on Interstate Commerce MONDAY, FEBRUARY 12, 1912. COMMITTEE ON INTERSTATE COMMERCE, Washington, D. C. The committee met, pursuant to recess, at 10.30 o'clock a. m., for the purpose of further considering the bill (S. 2941) entitled "A bill to create an interstate trade commission, to define its powers and duties, and for other purposes," introduced by Mr. Newlands July 5, 1911. Present: Senators Clapp (chairman), and Brandegee. There being no one present who desired to be heard, the committee thereupon took a recess until Friday next, February 16, at 10.30 o'clock a. m. FRIDAY, FEBRUARY 16, 1912. COMMITTEE ON INTERSTATE COMMERCE, UNITED STATES SENATE, The committee met, pursuant to recess, at 10.30 o'clock a. m., for the purpose of further considering the bill (S. 2941) entitled "A bill to create an interstate trade commission, to define its powers and duties, and for other purposes," introduced by Mr. Newlands July 5, 1911. Present: Senators Clapp (chairman), Crane, Cummins, Brandegee, Oliver, Tillman, Newlands, and Pomerene. The CHAIRMAN. The committee will first take up Senator Williams's bill. The bill referred to (S. 4747) was introduced by Senator Williams on January 23, 1912. STATEMENT OF HON. JOHN SHARP WILLIAMS, A SENATOR FROM THE STATE OF MISSISSIPPI. Senator WILLIAMS. Mr. Chairman, and gentlemen, I feel almost as if one needed to apologize for one Senator coming around to talk to others about the trusts. I frankly confess that no public question ever gave me the degree of mental embarrassment that this one has, both in trying to diagnose the disease and in trying to suggest a remedy. For a long time I wandered around in the dark, reading everything I could get hold of and trying to think the thing out as best I 2503 could. I found the difficulty lying in my way was not one of making up my mind as to whether we wanted to prohibit trusts or regulate them. I wanted to prohibit them, but in defining what a trust was so as not so to define it as, while prohibiting the trust, to prohibit a legitimate business of some sort. While I was in this sort of wilderness I picked up one day a copy of Pearson's Magazine containing an article by Robert R. Reed, of the State of New York, which interested me very much, and, to use the homely phrase that my friend from South Carolina, Senator Tillman, will understand, as we use it down South, it seemed to me that he had "the right sow by the ear." I refer to an article entitled "The practical way to regulate trusts," in the January number of Pearson's Magazine, and I shall ask that that be inserted in the record. The article referred to appears on page 2296. Senator BRANDEGEE. Mr. Reed has testified before this committee. Senator WILLIAMS. Not hearing this led me to sit down and write a letter to Mr. Reed, and as a consequence of that, he told me he had written a previous article that he considered explained the salient points even better, and that I also got hold of. That is an article entitled "American democracy and corporate reform," and it appears in the January, 1909, number of the Atlantic Monthly. I shall also ask that that be inserted in the record. The article referred to appears on page 2289. All this led to a considerable degree of correspondence, out of which finally grew the bill which I introduced at the extra session. The main credit of it, if there be credit attached to it, belongs to Mr. Reed the credit of initiation and of suggestion. Later I found some things in that bill that I thought were crudities and were impracticable, and I thought of some other things that ought to be in the bill, and I introduced Senate bill 4747, which is the bill I desire to talk to you about to-day. I am Mr. Chairman, as long as I attempted to deal with the trust question as a question merely of magnitude, of status, and of definition, with the idea in my mind that there was too little law concerning it, I had more and more trouble. When I got hold of the idea that the trust evils have grown out of too much law-unlimited special privilege granted by charter law to corporations issued by the Statesthen I began to see some light in connection with this question. Now, I am going to do rather an unwonted thing for me. going to read what I have to say to you to-day, mainly not to take up your time. I have written it so as to boil down into about 20 minutes what if I undertook to state extemporaneously might stretch out into an hour. It may be said that it would have been easier to have handed it to the clerk and let the members of the committee read it, but my experience, I am sorry to say, as well as my observation, is that when that first step takes place the second never does. Nobody ever reads things that are handed in; at least very few members of the committee do. Senator BRANDEGEE. What did you say the number of your bill was? Senator WILLIAMS. 4747. Senator BRANDEGEE. Then it is not the one that is printed in the record? The Senator WILLIAMS. No, sir; it was introduced at this session. one you have there is the one I introduced at the extra session. That is Senate bill 1377. I shall not ask you to bother with 1377 at all, and I will explain why I subsequently introduced the other bill. Mr. Chairman and gentlemen, all right government, spelling the highest expression of civilization, is a government of law, and not of persons; a government of uniform, prescribed, and published legal regulations, and not a government of regulations issued by a man or a board of men from day to day. The former is a government "of the people, for the people, and by the people;" the latter is, as Mr. Robert R. Reed has aptly expressed it, "a government of the day, for the day, and by the day.' In approaching the so-called trust question it is well to inquire first whence the evils arise. Legal provisions in State charters by express or permissive force are the source of all our trusts, monopolies, near-monopolies, and restraints of trade. Thus the trust evil is one of too much law-not one of too little law-of too much corporate power granted by law. You will note that I do not say "unreasonable" restraint of trade. Restraint of competition is not always restraint of trade; it sometimes is precisely the opposite. Ex-Senator Edmunds gives an instance which is finely illustrative of this point. He says, suppose two mills were grinding corn in a neighborhood where the product of both mills could not be consumed and marketed, and where, therefore, each was grinding on half time and the two were compelled therefore to make up for this sort of inefficient business not only by employing their labor half time, but by charging consumers more than they ought to pay, the overcharge being necessary in order to make up for the time the machinery was lying idle. Suppose that the two companies combined and agreed that the power running one of the mills should be used to saw lumber and the other mill kept at its old work of grinding corn. Here would be plainly a restraint of competition and at the same time an increase of trade resulting in increased production, increased employment of labor, and in cheaper production of meal. I have never understood what a "reasonable restraint of trade" is. A restraint of trade, in its technical and legal sense, is necessarily a public injury and violative of public policy. I understand that there may be a reasonable and even a beneficial restraint of competition, which results in increase of trade and in public benefit. I suppose that is what the Supreme Court meant in its late Standard Oil and tobacco decisions. At any rate, it seems to me that that is what I should have said had I been the Supreme Court. But to return to the main point: There is not a great evil of combination existing to-day in interstate commerce that has not grown out of law-conferred or law-permitted privileges granted in State charters. I am not alone in this opinion, for Attorney General Wickersham in February, 1910, used this language: * No such comprehensive control over any one of the great industries which were dominated by those large aggregations of capital called trusts could have been attained but through the exercise of powers granted by the sovereign States, and the condition, therefore, was strongly analogous to that which arose in the reign of Elizabeth. * * The problem was complicated by the dual nature of our Government. Concerted action by the States was impracticable-it may be said impossible. Efforts at control by one State were evaded first by removal to another, then by the device of holding corporations. |