Senator BRANDEGEE. For instance, would it be wise if a corporation were compelled to return its assets and liabilities-for instance, would it be wise to give their competitors the information how much money they are borrowing?

Mr. MORAWETZ. No; I think it would not be wise.

Senator BRANDEGEE. You would give them full powers of examination, would you not, and of investigation?

Mr. MORAWETZ. Yes, sir.

Senator BRANDEGEE. It is a little vague in my mind what powers of a regulatory nature you would give them.

Mr. MORAWETZ. I would give them no powers except to see that the statute is observed; that the prohibitions of the antitrust act are not violated.

Senator BRANDEGEE. And you would collaterally-I mean coincidental with this-you would enforce the antitrust act all the time? If they were doing anything that the Government thought violated the Sherman law, they could be proceeded against under the Sherman law?

Mr. MORAWETZ. Yes, sir.

Senator BRANDEGEE. You would not give the commission any regulatory powers whatever?

Mr. MORAWETZ. No, sir.

Senator BRANDEGEE. Have you ever attempted to put on paper a draft of your views as to the powers you would confer upon this commission?

Mr. MORAWETZ. No, sir; I have not.

Senator BRANDEGEE. I have no right to ask you to do it, but there are several propositions before this committee. I had a letter yesterday from Mr. Krauthoff, who testified before the committee, offering to submit to us a draft in the nature of a proposed bill on the subject. I should be very glad to have him do it, and have so written him. If you care to do it, I am sure that I would like to have it very much, in the form of a proposed bill, and I think the rest of the committee would also, for purposes of consideration.

Mr. MORAWETZ. I should be very glad to take that up. Have such bills been introduced?

Senator BRANDEGEE. Yes; quite a number. Four or five schemes, I believe.

Mr. MORAWETZ. If I could have them

The CHAIRMAN. Not along this line.

Senator BRANDEGEE. Senator Newlands's bill is somewhat along that line.

Senator NEWLANDS. I have asked Mr. Morawetz to take that bill and suggest anything in the way, either of exclusion or inclusion, that may occur to him.

Senator BRANDEGEE. That will cover it, then.

The CHAIRMAN. Pardon an interruption, but the committee would appreciate it, and it might find it more definite to submit your views in a concrete measure. I am sure the committee would greatly appreciate that.

Senator NEWLANDS. Yes. I think that would be very desirable. Senator BRANDEGEE. I think a clean draft of a bill in its original form is better than interlineations in another bill.

Senator NEWLANDS. I would suggest that you give Mr. Morawetz a copy of the La Follette bill.

Senator BRANDEGEE. I think he will read over all the bills which are in the record.

Mr. MORAWETZ. Can I have a copy of the record?

Senator BRANDEGEE. Yes. As to the reorganization of the American Tobacco Co. Do you understand that, it having been reorganized under the approval and under a decree of the court, its organization is now subject to attack by any district attorney or the Attorney General?

Mr. MORAWETZ. I have nothing to do with the proceedings against the American Tobacco Co., and I do not know what the proceedings were, except so far as I have read them in the newspapers. If you ask me the general question of law, as to whether the present organization of the new companies, pursuant to the decree, is in violation of law

Senator BRANDEGEE. No; I do not ask that. I ask you-well, you may complete your statement; I do not want to interrupt you.

Mr. MORAWETZ. If you ask me the general question of law as to whether the present organization of the new companies under the plan of disintegrations if in violation of the law would be protected by the decree from attack by the representatives of the Government, I should say no. Each of these new organizations, and the old American Tobacco Co. in its reduced form as continuing to exist, would be governed by the antitrust act as to all future transactions. But I should say that the organization of these new concerns could not be attacked as long as that decree stands.

Senator BRANDEGEE. Well, I assume, of course, that any corporation, however organized, whether under the advice of the court or of the Attorney General, if in the future it violates the Sherman law, is of course subject to the terms of the law.

Mr. MORAWETZ. Yes, sir.

Senator BRANDEGEE. But it has been stated here, if I can substantially correctly quote the parties who made the statement, that, whereas before the Government's suit against the American Tobacco Co. it was liable to proceedings by the Government to break it up, by virtue of the decree of the court under the reorganization scheme the corporations that now represent the American Tobacco Co., as it used to be, have got a shield and a protection and an immunity against any attack upon their organization; that the Government and the courts and the Attorney General of the Department of. Justice have set their seal of approval upon them, which would be equivalent to immunity, and could be pleaded and set up in bar of any proceeding of the Government attacking their organization. Do I make myself plain?

Mr. MORAWETZ. Yes, sir.

Senator BRANDEGEE. Well, what is your opinion about that?

Mr. MORAWETZ. You are asking me the question of law?

Senator BRANDEGEE. Whether the Government to-morrow could maintain a bill to further subdivide the corporations into which the old tobacco company has been recreated?

Senator TOWNSEND. Or dissolve them.
Senator BRANDEGEE. Or dissolve them.

Mr. MORAWETZ. I should think not.

The CHAIRMAN. The committee will take a recess until 2 o'clock. (Thereupon at 1 o'clock p. m. the committee took a recess until 2 o'clock p. m.)

AFTER RECESS.

At the expiration of the recess the committee reassembled.

STATEMENT OF VICTOR MORAWETZ-Resumed.

The CHAIRMAN. Senator Brandegee, you were inquiring when we took a recess.

Senator BRANDEGEE. I suppose that the committee will adjudge me to be in unreasonable restraint of your liberty or an attempt to monopolize you, but you dealt with such a variety of questions yesterday that there are two or three things more that I should like to ask you about. I will try to be very brief, however.

As I understood you yesterday, you would not favor the attempt to set up a list of things which, if committed in commerce among the States, should be construed to be violations of the Sherman law? Mr. MORAWETZ. I would not. I would think such action would only breed doubt, uncertainty, and litigation.

Senator BRANDEGEE. You think those definitions, or the statement of those offenses, would themselves have to be subject of judicial construction, do you not?

Mr. MORAWETZ. I think so.

Senator BRANDEGEE. You agree with Senator Edmunds about that? Mr. MORAWETZ. I do.

Senator BRANDEGEE. Do you agree with Mr. Walker as to his views on the Sherman law-that it prohibits acts and not a status?

Mr. MORAWETZ. I do not agree with Mr. Walker, if I understand him correctly. The Sherman law prohibits contracts, combinations, and conspiracies in restraint of trade; it prohibits the act of monopolizing or attempting or combining or conspiring to monopolize. Now, a combination or a conspiracy is a continuing act. Let me illustrate. There is such a thing as a contract to enter into a copartnership; there is also such a thing as a contract of copartnership. The latter is a continuing contract. Now, to make a contract in restraint of commerce or to monopolize commerce is prohibited by the Sherman Act, and a combination or conspiracy is also prohibited. A partnership to restrain trade or to monopolize trade would be prohibited. A trust in restraint of trade would be prohibited. An unincorporated joint-stock company or a technical corporation also, in my opinion, would be a combination within the prohibition of the act.

Senator BRANDEGEE. Well, in your opinion, would not a conspiracy or a combination which was the result of a contract or argreement and continuing in force year after year-would not that constitute a status?

Mr. MORAWETZ. If you choose to call it so; yes.

Senator BRANDEGEE. It would be the existing condition of the combination?

Mr. MORAWETZ. It would be a continuing combination or conspiracy, which is prohibited by the express terms of the act.

Senator BRANDEGEE. Let me see if I understood you correctly on another point yesterday. You stated, as I recall it, that a monopoly which resulted from successful competition in which there were no illegal acts, in your opinion, would not be prohibited by the Sherman law; and if I recall you testimony, that there ought not to be any law which would prohibit a monopoly which had grown in that way?

Mr. MORAWETZ. That is correct. The statute prohibits the act of monopolizing, or attempting to monopolize, which, in my opinion, means the act of destroying competitive conditions.

Senator BRANDEGEE. I did not object to that part of your statement. I wondered, however, if monopoly was a bad thing, and if, as you have stated, it was not desirable on grounds of public policy to have the various industries of the country owned by a few masters, and making the rest of the population their hired men-why should not the monopoly be prohibited? And why isn't it a bad thing, no matter whether it has arrived by breaking laws or not?

Mr. MORAWETZ. I do not think that the existence of a monopoly under all circumstances and all conditions is a bad thing. The bad thing is to destroy competitive conditions artificially.

Senator BRANDEGEE. I fail to see, myself, if monopoly itself is a bad thing, why it is not a bad thing as a result; that is, I do not think it is desirable to have one coroporation monopolize all the departments of a stable industry like the steel industry. Now, if the Steel Corporation, to be specific, should, by perfectly proper means and superiority in skill and ability to produce at lower cost, legitimately, under present laws, come into absolute control of a monopoly of all the departments of the steel industry, I should think there ought to be some law passed to prohibit that.

Mr. MORAWETZ. I agree with the view expressed by Senator Cummins that monopoly of a great industry producing a staple of commerce never results, has never resulted, and is not likely to result in that way. The only way in which such a monopoly can be effected is by the destruction of competition.

Senator BRANDEGEE. Of course, I agree that it is a supposititious case, and I hope that it is an impossible supposition. But it was your statement yesterday, if I quote you correctly, that I took exception to, or at least that I did not give adherence to at the timethat, if it should come about, that there ought to be no law to prohibit it.

Mr. MORAWETZ. There may be, and I believe there are, instances where a monopoly may exist harmlessly without the destruction of competitive conditions; but in the great industries of the country, producing articles of general use, I do not believe that monopolies have been created or are likely ever to be created except in the way stated-by destroying existing competition.

Senator BRANDEGEE. Well, there being no exact definition of the word "monopoly," in order to get some sort of idea about how you would define it, let me ask you this question: Would you consider the Standard Oil Co., as it exists at the present time, a monopoly in the refining of oil?

Mr. MORAWETZ. I do not know anything about the Standard Oil Co., excepting what I have read in the newspapers.

Senator BRANDEGEE. If the facts, as shown in the record before the Supreme Court, are true, would you think that the Standard Oil Co. was a monopoly before the recent Standard Oil Co. decision? Mr. MORAWETZ. I have not read the record.

Senator BRANDEGEE. I do not care to ask anything more.

The CHAIRMAN. Senator Watson, you may inquire.

Senator WATSON. In reply to one of Senator Cummins's questions, Mr. Morawetz, you said there might be certain trade agreements that would not be in violation of the Sherman law. Did I understand you correctly on that?

Mr. MORAWETZ. Yes.

Senator WATSON. What kind of a trade agreement could be made that would not be in violation of that law?

Mr. MORAWETZ. Well, I should say that no trade agreement would be in violation of the law, unless it was designed to monopolize trade, or unless it be an agreement creating a practical boycott against the trade or other parties.

Senator WATSON. Well, would not most trade agreements tend toward rather a lack of competition, or monopoly?

Mr. MORAWETZ. I think undoubtedly some trade agreements affecting competition and, to some extent, diminishing competition would be permitted under the act.

Senator WATSON. In reply to another question, you made the statement that you did not think it always a bad practice to have common directors in any industry or in railroads. In the case of competing railroads, where one railroad owns stock in a competing line, do you think it is a healthy practice to have the executive officers of that road as directors in their competitors'?

Mr. MORAWETZ. I think that it is not a healthy practice to allow one railroad company to own any stock in another railroad company, unless under the law the holding company could lawfully own all the stock in this company in which it holds some stock, and I think where a railroad company owns a controlling interest in the stock of any other company provision should be made for the protection of the minority stockholders, to enable them to sell out on fair terms if they see fit to do so.

Senator WATSON. It is rather a common practice now with railroads, even among competing lines, to hold stock in other companies? Mr. MORAWETZ. I think not: I think it is rare.

Senator WATSON. I think I can cite a sufficient number of instances of that kind to show that it is very prevalent. The Pennsylvania Railroad Co., for instance, owns 20 per cent of the Baltimore & Ohio to-day. It owns the majority of the stock of the Norfolk & Western; until a year or two ago it owned a controlling interest in the Chesapeake & Ohio-all competing lines between New York and Chicago. Mr. MORAWETZ. The practice of controlling a competing interstate carrier through a common ownership was condemned in the Northern Securities case.

Senator WATSON. That was in the form of a holding company, however.

Mr. MORAWETZ. I think that makes no difference. The ownership of stock in the Norfolk & Western, I think, is based on the ground that it is not for practical purposes a competing line at all.