stitutional provisions for the protection of the liberty and property rights of the people. Power to regulate the prices of commodities can not be supported on these grounds, and I am satisfied that no such power exists.

The other reason for rejecting the proposal to confer upon a commission power to regulate prices of trust-made products is that the exercise of such a power by any governmental commission would be productive of evils far greater than any evils resulting from trusts and monopolies. The wiser and more statesmanlike course is to enforce the policy declared in the antitrust act.

Mr. KRAUTHOFF. While you are on the subject, without meaning to interrupt you, kindly notice on page 1332, near the foot of the page, this sentence:

In the cases of the Standard Oil Co, and of the American Tobacco Co. the evidence showed clearly a continued and successful endeavor to monopolize interstate commerce. Therefore, in deciding these cases the court did not find it necessary to define precisely what constitutes monopolizing or restraining interstate commerce. The question what constitutes monopolizing or restraining interstate commerce still remains an open question, except so far as it has been determined by the actual decisions in prior cases.

That is the sentence I had reference to this morning.

Senator BRANDEGEE. Of course he is one of the best known law writers on the subject in the world, and his book on corporations is a standard authority?

Mr. KRAUTHOFF. It is a classic.

Senator BRANDEGEE. I notice in one place that he was one of the organizers of the Steel Trust, and in his opinion it was, and is, a legal corporation and does not violate the Sherman law. You have just referred to the Tobacco and Standard Oil cases as laying emphasis upon the fact that, while they decided that those combinations violated the Sherman law, they did not pretend to define the terms as used in that law for future use. I assume that it is the practice of courts to decide as little outside of the case presented before them as possible, and I assume that the question before them was the particular combinations complained as violative of the statutes, was it not?

Mr. KRAUTHOFF. You are quite right, and that is emphatically true when the particular case after all involves a question of fact.

Senator BRANDEGEE. If they are able to sustain the statute of the Government conclusively and upon ample proof, they find that the. bill is well taken and order the corporation dissolved, and say just as little as possible to avoid embarrassment in the future; is that not so?

Mr. KRAUTHOFF. That is particularly true; and the courts have been compelled to lay down the emphatic and warning rule that general expressions contained in an opinion in a given case are not to be regarded as axiomatic propositions and as such rigidly applicable in all other cases.

Senator BRANDEGEE. They are obiter dicta?

Mr. KRAUTHOFF. They are obiter dicta, or a statement of general propositions which will not necessarily have binding force when another state of facts is presented.

You will notice the paragraph in Mr. Morawetz's address which appears at the top of page 1333:

That the language of the antitrust act must be construed, not literally or technically, but in the light of reason so as to accomplish the purposes of the act. In order to render the act applicable there must be what may fairly be described as a restraint upon commerce, or an attempt to monopolize commerce and not

merely a lessening of competition in commerce. The act does not prohibit restraints of competition, and a restraint of competition is within the prohibition of the act only if it fairly can be said to constitute monopolizing or restraining interstate trade or commerce.

Senator BRANDEGEE. The word "competition" is not used in the Sherman law in any part of it?

Mr. KRAUTHOFF. No, sir; that paragraph is a summary of what was decided in the Standard Oil and Tobacco cases.

Senator BRANDEGEE. Passing that now, in relation to the proposition for a national incorporation act, I want to read into the record here this sentence on page 1335, the third paragraph from the bottom of the page, as follows:

It has been suggested that a United States incorporation act should be passed. A wise and practicable national incorporation act undoubtedly would be desirable. Trade and commerce are not limited by State lines and they should be governed by national laws. However, I can not see how a national incorporation act would aid in solving the trust problem. The corporations formed under a national incorporation act would be subject to the antitrust act and to all other trust laws to the same extent as other corporations and individuals. Besides, a merely permissive national incorporation act would accomplish nothing. A compulsory act prohibiting State corporations from engaging in interstate commerce, I believe, would be unconstitutional.

The same applies to the proposal to provide for licensing corporations engaged in interstate trade or commerce. It is doubtful whether a compulsory licensing law would be constitutional, but even if it were, the antitrust act would continue to apply to the licensed corporations and the present problems would remain.

Do you agree with what I have just read, or perhaps I have too many different subjects there to ask you about in one question. You might agree with some and not with others.

Mr. KRAUTHOFF. I should prefer to scan the language more closely, because much of it is expressed in the language of legal accuracy. Senator BRANDEGEE. I would not want you to adopt some one else's testimony.

Mr. KRAUTHOFF. I have not gathered anything from your reading which is strikingly at variance with what I have already said to Senator Newlands.

Senator BRANDEGEE. It seems to be substantially in accord with your view. You see nothing to be gained by a permissive national incorporation?

Mr. KRAUTHOFF. No, sir; I think that what are classed as undesirable combinations would, if they thought it to their interest, become Federal corporations; otherwise not.

Senator BRANDEGEE. Well, whether it is constitutional or not, what do you think of the expediency of passing a national incorporation act-I mean if it be constitutional-compelling corporations to incorporate under penalty of being prohibited from engaging in commerce among the States?

Mr. KRAUTHOFF. That is purely a question upon which a man primarily has political views.

Senator BRANDEGEE. I mean, what do you think of it in view of your political views or with respect to your views of any kind-what, in your opinion, would be the advisability or expediency of doing it? Mr. KRAUTHOFF. As things stand at present, I do not believe in the expediency of it.

Senator BRANDEGEE. Now, without quoting exactly, I can state substantially that Mr. Morawetz takes the view that the Sherman law should not be amended, and that after a few more decisions from the Supreme Court, and especially the decision in the Steel Corporation, he prophesies that the interpretation of the law will be so much clarified that it will be safer to proceed to amend it ther than now.

Mr. KRAUTHOFF. He and I undertake to say substantially the same thing, but we are not stating it from the same standpoint. If we are to await judicial decisions and permit the present unsatisfactory conditions to remain, and his prophecy comes true, it may be that my suggestion was wholly unnecessary. I was thinking more as to the present, and it is perhaps also proper to say that the word 66 amend" is sometimes used in a narrow sense and sometimes used in a broader sense.

Senator BRANDEGEE. Well, I will modify it in this way

Mr. KRAUTHOFF. He puts it in this way:

I believe it to be true that some additional legislation for the regulation of corporations and trusts is needed.

Additional legislation which qualifies an existing statute comes within my definition of the term "amend.”

Senator BRANDEGEE. Of course, when I say amend the Sherman law I assume that he and you both would like to leave that law as it is now, whatever other laws were passed to supplement it.

Mr. KRAUTHOFF. Not necessarily. I think it would be safer to revise it and avoid the possibility of judicial doubt as to its proper construction.

Senator BRANDEGEE. Would you advocate now our repealing the Sherman law and substituting a new statute drafted upon the lines involving the ideas that you have suggested; making the question whether it was injurious to the public or not the test, instead of whether it was in restraint of trade?

Mr. KRAUTHOFF. No, sir; so much has been settled under this act that I would not repeal it in toto and begin with an entirely new enactment. I would revise the present act.

Senator BRANDEGEE. What would you do now, if you were on this committee, instructed to report to the Senate at the earliest possible day what changes in the laws of the United States relating to the organization and control of corporations were necessary?

Mr. KRAUTHOFF. I think, speaking my first thought, that a proviso in the act would accomplish it.

Senator BRANDEGEE. You would recommend to Congress that the act "be amended by inserting the following proviso, to wit"?

Mr. KRAUTHOFF. Yes; a proviso that the terms "restraint of trade" and "monopoly " or "attempt to monoplize," as used in this act, shall be held and construed to mean and be confined to such contracts, etc., in restraint of trade, or such monopolies or attempts to monopolize, as have produced or will necessarily produce actual injury to the public, is one way of reaching the result. I have not used accurate language in stating the terms of the proviso, and doubtless my suggestion is verbally incomplete. I should hesitate long if there were pending before the Supreme Court of the United States what might be called a border-line case, a case of an organization

which is claimed to mark a mere technical violation of the Sherman antitrust law, but which is not, in popular parlance, a "bad trust," and the facts disclosed that its existence and doings were a real public benefit-or, putting it in the other way, negatively, that there was an absence of a public injury. In such a case the court would be free to determine whether the Sherman law is applicable to a state of facts which involves no public wrong, no public injury, where the combination is either innocent or beneficial to the public. Such a case has not yet been decided by the court. Until there has been a decision covering this phase of the matter, a revision of the existing law would necessarily have to be on the basis of what the law ought to affirmatively say in respect of such a case. Senator BRANDEGEE. Mr. Morawetz says:

I believe that the antitrust act should remain on the statute book as it stands and that no attempt should be made to amend it. It has been urged that the word "monopolize" should be defined by statute. In his recent article in the North American Review ex-Senator Edmunds used the following language. I shall not read that.

Any statutory definition probably would give rise to as much uncertainty and litigation as the term " to monopolize,” and judicial decisions would be necessary to define the definition itself.

Mr. KRAUTHOFF. In that paragraph Mr. Morawetz is evidently leading up to state what percentage of control, or what proportion of control, may be exercised by an organization before it can be said to have become a monopoly. I agree that the term "monopoly " ought not to be defined in detail.

Senator BRANDEGEE. Would you say that "restraint of trade" ought to be defined?

Mr. KRAUTHOFF. I do not; but mere constructive restraint of trade or monopoly should not

Senator BRANDEGEE. Should not be an offense?

Mr. KRAUTHOFF. Should not be an offense. In each case there should exist and be found by the trier of the facts to exist, whether it be court or jury, the element of public harm.

Senator BRANDEGEE. You think now they are liable to be convicted of constructive restraint of trade?

Mr. KRAUTHOFF. It is the apprehension that there may be such a case which causes uncertainty in the minds of some of the larger business men, and which causes so many of them to come before you and tell you (and no doubt truthfully tell you) what effect this apprehension has on preventing extensions of their operation.

Senator BRANDEGEE. Among these recommendations of Mr. Morawetz, he recommends that a commission should be created and they should have power

to determine, after giving a hearing to the parties in interest, whether any contracts, combinations, or other acts complained of are in violation of the antitrust act. Such a finding of the commission should be deemed prima facie evidence that a contract, combination, or other act is or is not in violation of the act; but every such finding of the commission should be subject to review in the Commerce Court upon application of any party in interest or upon application of the Government.

You would agree to that, would you not?

Mr. KRAUTHOFF. With due deference to Mr. Morawetz, as long as the present act stands unamended Congress could not confer upon an administrative commission the power to determine that question. The commission would have to be made a judicial body. The terms of the existing statute are absolute. It does not say, "Whenever, in the opinion of the Bureau of Corporations or trade commission, any contract shall appear to be in restraint of trade," etc.

Senator BRANDEGEE. Would not a subsequent law stating that any corporation which had been approved by this commission and authorized to make a contract should be allowed to, the Sherman law notwithstanding, be an amendment of the Sherman law?

Mr. KRAUTHOFF. That would be, in my opinion, an amendment of the Sherman law.

Senator BRANDEGEE. I assume that that is what Mr. Morawetz has in mind?

Mr. KRAUTHOFF. Yes; probably. You will observe that on one page he is using the word in one sense and on another, referring to supplementary legislation, he is evidently meaning what, in fact, will operate as an amendment. It is likely-I am not now prepared to commit myself, and I am rather conservative in my notions-that the time will come, partly because of political conditions throughout the country, meaning thereby the fixed views of the people on this subject-prejudices, perhaps-largely due to the fact that for so long a time only one side of the problem has been presented, and because, in the very nature of things, it is almost impossible to effectively present the other side of it, that the difficulties will have to be met by some legislation prompted largely by considerations of expediency. We are a very great country and very rich, and we have been developing by means of our own momentum to a very great extent. But we want to develop more, and we must develop more in order to keep pace with the rest of the commercial nations, so that the time may come when the public interest will require that this clog on American commerce be removed-perhaps by the creation of a body which, provisionally, at least, will have power to pass upon the questions that have been suggested by Mr. Morawetz. It ought not to be so in principle. An act of Congress which interferes with private rights and undertakes to regulate trade ought to be so specific that a man could obtain the opinion of counsel as to whether a particular transaction was legal or illegal. The present act, unfortunately, in a great number of instances, does not put it within the power of counsel, however learned he may be, to give accurate advice.

Senator BRANDEGEE. And yet ex-Senator Edmunds, who drew the act, states, if I understand correctly his article in the North American Review and the subsequent interview which appeared in the New York Evening Post about three weeks ago, that all those matters were considered most exhaustively before the Judiciary Committee, of which himself and Senator Hoar and Senator Sherman were members, and after full consideration they intentionally refrained from being any more specific than they were, and used this general language in drafting this Sherman law for the very purpose of allowing the questions to be decided by the courts in each specific instance as presented, whether there had been violations or not; and, if I understand him, he said those questions are properly judicial questions and nothing but judicial questions.