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the hands of the Attorney General and of the several district attorneys in charge of criminal proceedings. The Government does not interfere in matters of mere private rights, if it acts justly and wisely, and no act of Congress is to be presumed in any event to have been intended to have the Government appear as the advocate or the representative or to appear in behalf of what is merely a private right.

You will find in the San Jacinto Tin Co. case, in which Mr. Justice Miller, speaking for the Supreme Court of the United States, a refusal to entertain an action by the Attorney General of the United States on the ground that the right asserted was, in its essence, a mere private right.

There is a case in England in which one gas company undertook to enjoin another gas company from laying mains because the matter alleged was a public nuisance, if a nuisance at all, and in which it was held that the matter could only be redressed at the suit of the attorney general. The attorney general of England was pursuaded to institute a suit, and the action was dismissed on the ground that it was manifestly not brought for the protection of public interest in respect of public nuisances, but merely for the protection of a rival company, the plaintiff in the previous case. So that legislation which is to be enforced by the Government is to be regarded, so far as the Government enforces it, as involving the remedy of things or the punishment for acts which are in the nature of a public wrong and which have caused a public injury.

This is confirmed by a study of the genesis of the antitrust act of 1890. In the platform put forth by the Republican national convention of 1888 there was this clause:

We declare our opposition to all combinations of capital, organized in trusts or otherwise, to control arbitrarily the condition of trade among our citizens, and we recommend to Congress and to State legislatures, in their respective jurisdictions, such legislation as will prevent the execution of all schemes to oppress the people by undue charges on their supplies or by unjust rates for the transportation of their products to market.

Added to that quotation, which is republished in the North American Review as a foreword to the article of Senator Edmunds, is the statement by the editor:

Pursuant to this declaration Senator Sherman introduced a bill designed to make it effective in December, 1889.

You will observe that the emphasis is on the oppression of the public by undue charges on their supplies or by unjust rates.

I also think that when one looks at the Sherman antitrust law and expresses his opinion about it, it inevitably and necessarily follows that he does it from a particular point of view. A man may have economical views upon the subject and he may be a theorist on the subject, or he may have some particular ideas that we call socialistic in their nature on the general subject. The most persistent clamor comes from sources that are adversely affected by reason of the competition of some other person engaged in the same business. It is my observation that these complainants sometimes do not know how well they are off. They thrive and flourish, thrive and flourish to their greatest extent and perhaps at all, by reason of the doings of some large enterprise, a leader in that branch of business.

Sometimes the minor corporation is unduly oppressed, which is more particularly the case, in my observation, in the retail trade.

Sometimes the competitor who is not successful, whatever the reason may be, imagines that the antitrust law is intended to entitle him to the aid of the Department of Justice in obtaining protection against the stronger competition of the larger combination. We understand now the bigness of the business of itself is not illegal, and we assert it as an accepted proposition, I believe; but I also observe that very great care is to be exercised so that while we loudly acclaim the assertion, we do not, by our acts, contradict the proposition, and after all say, in effect, that it is the bigness of the transaction which is the menace, and that it is because of the bigness of the enterprise that it ought not to be permitted to develop.

I regard it as exceedingly doubtful whether it can be effectively accomplished, as some gentlemen have urged, to establish a certain percentage of the trade which marks the line between legality and illegality, because I do not think all businesses are alike.

I call your attention to the development of what we call the law merchant. The fame of Lord Mansfield is imperishable, largely because of his work in this behalf. He laid it down that certainty was the prime essential of a satisfactory law merchant, and that certainty in respect to the law merchant could best be accomplished and effectuated by ascertaining the usages of merchants, and where those usages had become thought out and crystallized into practical application he believed that they constituted the most satisfactory code of law merchant that could be framed. As a result of his leadership it is now recognized in many reported decisions that certainty in matters of applicable law is the great element to bring about the successful accomplishment of commercial enterprises. I myself believe-and it has been so said-that the rules upon this subject of "trusts," in so far as they govern the conduct of business, are akin to the rules of the law merchant, and that for the same reason there ought to be as much certainty as it is at all possible to attain, for the reason that it is impossible to obtain capital-outside capitalto venture into an enterprise which may or may not turn out to be legal, perhaps years after, and which may turn out to be thus illegal by reason of some event over which the parties to the transaction have no control whatever. It may be that a dealer who was engaged in a class of business in which, as a result of crop failure in this country or abroad, he would be put in such a position, by the natural operation of the law of supply and demand, and thereby he would have accomplished a result that had never occurred to him.

It is so difficult as to be almost impossible to induce larger and permanent investments in plants without a feeling of certainty that they can ultimately be legally utilized. All must therefore recognize the propriety of the great emphasis which the Supreme Court of the United States has laid upon the protection of the investments in the organizations which it has recently dissolved.

I am asked to tell you how those ideas ought to be carried into effect. The friends of the antitrust law claim for it that' its very simplicity, rigidity, and dignity of language is one of its greatest attributes and entitles it to the greatest praise. I do not believe that the Supreme Court of the United States has yet finally announced what the real definition of restraint of trade and monopolies within the meaning of that act is. It has held that certain corporations do constitute violations of the act, and I do not believe that any

of the cases on the subject, unless it be the Knight case, have been erroneously decided in respect of this phase of them. Assuming that it is true that the antitrust law was intended to apply to railroads, as to which there was a strong dissent, apparently all the cases except the Knight case have been correctly decided. I think the decision in the Knight case was most unfortunate, in that it engendered a feeling of fancied security, on the strength of which so many of these organizations have grown up in the United States and now exist. It would be infinitely more satisfactory, instead of using dignified, rigid, and unbending language, to say that all acts, howsoever accomplished and of whatsoever nature, which have caused injury to the public by restraining trade or commerce and in the conduct of a monopoly should be illegal.

In other words, you will see that I put predominately into my view of the matter the test that there must be a public injury, and I mean by that an actual public injury. I am one of those who believe that if a large organization should exercise its power to oppress the public that public sentiment would speedily remedy the injury, just as it has remedied it in other countries where no such statutes exist. I am perfectly in harmony with the idea that nothing can be more wrongful-a practice now dead, formerly much indulged as the giving of rebates to one producer to the disadvantage of a competitor. I think, with diffidence, that an enactment of my views would result in a much more coherent act and a much more effective act, and, on the whole, in an act to which business could readily adjust itself and which would be fairer to the people as a whole, because, after all, the interest that Congress serves in legislation and the executive department seeks to protect in the enforcement of the law is the welfare and good of the people and the protection of the people against injury to the public as such.

In furthering the welfare of the people, you must bear in mind that perhaps the chief thing, as has repeatedly been said, that the Government is interested in is the promotion of trade and commerce.

Permit me, in passing, to call your attention to an anomalous situation, no doubt mentioned before. The foreign countries, on which we most rely for the disposition of the large part of our surplus products, agricultural as well as otherwise, have no such statutes and enforce no such rules, and, indeed, many of the countries directly permit, under governmental sanction--certainly without question-the organization of buying and selling syndicates, and in some countries of cartels. There is an authenticated instance that an American undertaking to sell products in foreign markets was confronted by a committee which represented every purchaser of that commodity and fixed the price to be paid for it. In consequence, the American was compelled to take that price or to leave it. These committees were particularly careful to give out a very high price, so as to attract shipments, especially of articles which were of a perishable nature, and then to largely reduce the quotation upon arrival of the goods. The American was prevented by this statute from agreeing with his fellow manufacturers that in respect of such shipments they should be made on the same basis of mutual protection or advantage which the foreign law permitted the buyers to adopt.

When you come, not because of our abundant prosperity and great natural resources, but as the result of our effort-striving for it as Germany must strive for it, or as England must strive for it, if you please-to achieve prominence in foreign commerce, the strict enforcement of the Sherman antitrust law applicable and enforceable only against the American manufacturer or the American producer, will keep you out of the foreign market.

The particular instance which I have in mind was the case of an article of American production, in the marketing of which the people were interested to a marked degree, because our own laws had practically made it unmarketable in this country. I mean oleo, or "oleo oil" as it is commercially called. In Rotterdam the representatives of all the European manufacturers of oleomargarine, lawfully and publicly, by agreement fixed the price to be paid for this essential ingredient, which, on account of our Federal and State legislation on the subject of oleomargarine, could not be fully realized on without shipment abroad. The article was perishable, it was prone to deteriorate, the freight and the charges for insurance and storage were high. The American shippers found themselves constrained to accept what the purchasing committee was pleased to offer. Is it strange that the American producers entered into an agreement to make no shipments abroad except in pursuance of a previous firm sale? We read in the newspapers that this agreement was deemed to be so grievously illegal as to call for an indictment under the Sherman

Act.

Hence, when you come to treat this matter of foreign commerce, you must treat on the same basis of what laws of other countries permit competitors to do by way of agreement or cooperation;" otherwise you will close foreign markets to American manufacturers by the operation of American statutes.

Manifestly the general subject is one which merits the fullest and most dispassionate consideration. I am not sure that the present marks a time at which it can receive such a consideration on the part of the people in general, because undoubtedly there are firm and fixed popular views upon this subject. The matter is also one of an economical character, beclouded by phraseology somewhat difficult for the layman to understand, especially if as a basic element the public is told to accept as indisputable the proposition that big business of itself is not illegal.

The subject is worthy of all the consideration that can possibly be given to it; and I have somewhat considered the two suggestions of a national incorporation act and of the establishment of an industrial commission.

I am not a believer in a national incorporation act which is merely permissive in its character, principally because I do not think it will accomplish any substantial results and because I doubt whether a compulsory Federal incorporation act is warranted by the Federal Constitution.

If the conditions in respect of public opinion, as they exist in this country, are to continue-not that I really believe in the proposition, and perhaps would not reconcile myself to it at all as an original proposition, and under ordinary conditions-it would be preferable to the present condition of affairs to establish an industrial commission, but always on the basis that unless the Sherman Act is amended in such a way that this commission can determine the legal

ity or illegality of the matters presented; otherwise very little will be accomplished by creating such a commission appointed, for if that commission is to proceed under and subject to the Sherman Antitrust Act as it stands, then the situation has not been advanced or remedied. Unless the antitrust law is amended so as to give such a commission power to pass upon the question what contracts or combinations are within the meaning of the antitrust act, the creation of such a commission will exemplify Dead Sea fruit.

The matter comes back to and emphasizes what I said at the outset, that public injury must be the test of what constitutes or what does not constitute a violation of a law which is a declaration of the rule of public policy, a rule intended to be applied and enforced so as to prevent injury to the public. So, if Congress creates an industrial commission, it must start with the proposition that when that commission acts, or orders or grants permission to do a thing, or approves it, the matter ordered or approved must be lawful until set aside on review. You can not establish a commission that will do more than the Bureau of Corporations is now doing, unless you carry the matter along the lines that I have indicated, namely, of making the acts of that commission, in respect to certain inatters, as is the case with the Interstate Commerce Commission in respect to certain matters-legal and valid. Otherwise I do not think you will, by creating such a body accomplish anything which is not already within the functions of the Bureau of Corporations.

I believe the Bureau of Corporations has been and is a useful instrumentality, but certainly to treat it as an adjunct to the Department of Justice is a wide departure from the propositions upon which the creation of the bureau was originally established.

I regard as one of the best reports ever made by the Bureau of Corporations the report made by Commissioner Garfield, whose assistant at that time was Mr. Durand, on the beef industry. This report was received by the country with disdain and trampled in the dust. It made no impression whatever, and yet it is an exhaustive and intelligent and perfectly dispassionate report covering a most interesting and important industry. So that there is, I am afraid, in the country a little disposition to say that the Bureau of Corporations is a great institution when it reports in accordance with the prevailing public sentiment, but that it is an absolute failure and a monument of inefficiency if its conclusions, however just, happen to be unpopular. I think that your greatest difficulty, if I may venture to suggest it, in developing the idea of an industrial commission is along the lines I have indicated.

The ACTING CHAIRMAN (Mr. Cummins). I infer from your statement that, as the Supreme Court of the United States has often declared or often said that the antitrust law was simply declaratory of the common law, you doubt whether its interpretation is in harmonly with the common law as it was understood at the time the antitrust law was passed.

Mr. KRAUTHOFF. No; not quite that, Senator. I think the matter should be tested by inquiring what the common-law rule is which applies in cases of actions brought on behalf of the Government, and I believe that in such an action the element of public injury is an essential ingredient. I do not believe that this precise question has been passed upon.

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