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?

Senator WILLIAMS. No, sir; it was introduced at this session. The 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.

So far the Attorney General and I agree. Afterwards we begin to differ. We begin to differ the moment we seek a remedy. He looks to a "new nationalism," either through Federal regulation of acknowledged but allegedly unavoidable near monopoly by a body similar to the Interstate Commerce Commission, or through Federal incorporation. I don't mean that he would himself use the phrase "new nationalism," but that is a phrase which was used by a very distinguished and a somewhat vociferous ex-President to describe the same thing. I would look to what Gov. Wilson, of New Jersey, calls "a new stateism"; to a more exact performance of their proper functions by the States; and to a more vigilant and careful guarding of the conditions prescribed in their charters by the States. The so-called "new nationalism" is nothing less than something worse than old "Hamiltonian federalism" revamped.

There is not in all the Scripture to me a sweeter phrase than that of St. John, in which he advises us to "reason together in brotherly love." Thus reasoning, let us see in the first place what is the object of all patriotic men seeking to be guided by the public welfare and not solely by their own private business interests? I think the answer is that that object is to divorce big business from government and government from big business as its ally. How has government been the ally of big business? Answer. By laws of incorporation, expressly or impliedly authorizing and permitting and making possible dishonest, unfair, or oppressive methods. Some one says: "Let government keep its hands off of business;" but the truth is that the interference of government with business began with the charter which created the corporation and conferred upon it, or permitted it to exercise, the powers which it exercises. The trouble is, existing legislation, charter-enacted legislation. Without this first interference of law, the evils could not have existed. Just for one example: No corporation under the common law could own stock in another corporation, and except for an express power given to it in its charter, it can not do it now. One can not too much emphasize the fact that the power to do wrong, dishonest, unfair things, conferred by charter law, is the source of all the evil, and that without this no trust, and no harmful big business, no monopoly, nor near-monopoly, could exist. If a man could, for example, without special privilege granted by law in a charter, raise all the cotton in the United States now being raised at a profit to himself and put it on the market at 4 cents a pound; if he could do this by improved methods of cultivation and by improved machinery and by superior administrative ability, honestly and fairly, employing more laborers at higher wages, no harm could in the long run result to humanity, nor could he long maintain the relative magnitude and seeming absorption of the business, because other people would learn his methods and competition would soon set in on new lines, bringing about still further increased production, coupled with a still larger employment of human activities and with decreased price to the consumer. If one could, without any special privilege granted by law in a charter, make shoes at a profit to himself at $1.50, which now cost $3 to make when made by other people, no matter how large a business he could build up for himself, he would be doing something infinitely beneficial in the long run to the human race. You may depend upon it that men's abilities do not sufficiently differ one from another, they being first all restrained from indulging in

wrongful, dishonest, or oppressive methods, to enable any one man or set of men to build up a monopoly or near-monopoly, or a large business "in restraint of trade." Men differ more with regard to scrupulousness and unscrupulousness than with regard to ability.

This brings me to the next point, which is, that the trust evil is not a question of magnitude, nor a question of status, but is a question of methods, and of law-granted special privileges. Federal incorporation is, in my opinion, not necessary, even if its constitutionality were not doubted. It spells governmental and industrial centralization; it spells more laws and more offices, and license by an administrative bureau spells government by men and not by laws; it spells more and more bureaucracy, and in the long run it spells corruption and dry rot. What is worse, both of these methods spell not only centralization, but centralization of evil by Federal authorization, for so-called regulation of trusts means that.

Those of us who love local self-government-and the liberty and civilization of the world has grown out of it, and every government which has ever risen and fallen has fallen through the toppling over of the top-heavy machinery of government-those of us who believe that "government is a convenience and not a providence"; those of us who believe that the Federal Government is too remote from the people to be well watched by them, or to be capable of watching them well, want to cure the existing evil of too much centralization of business and of industrialism by a decentralization of it.

Our remedy is a plain one, to wit, to prevent the evil by refusing, when evil methods and powers are given by charters, to permit the artificial persons thus chartered to commit them or to exercise themto engage in interstate commerce. We would make it a crime for those chartered to commit evil to do business anywhere in the United States beyond the borders of the State chartering them. Let that State have the full benefit. It is its sovereign right to have it, but not beyond its own borders. It can not license wrong to enter into other States any more than it can be allowed to decree a spread from its own borders over other States of yellow fever or bubonic plague. We would therefore preserve local self-government by the States, but in essentials would persuade uniformity of State charter legislation by the exercise on the part of the Federal Government of its right by uniform prescribed law to define conditions and regulate the character of artificial persons permitted by it to engage in interstate commerce. I doubt whether Congress has the power under the pretext of "regulating" commerce between the States to destroy commerce between the States. Whether it has the power or not, I know it has not the right. But it has the power and the right and the duty even, in "regulating" that commerce, to destroy fraud, dishonesty, unfairness, and oppression, and to say that persons chartered by a State with powers so large as to permit them to commit fraud, dishonesty, unfairness, and oppression shall be penalized for the act of engaging at all in interstate commerce until they have gone back to the State of their incorporation and procured a charter properly limiting their powers. You will see the importance of this when you remember that New Jersey, and I believe Delaware alsothough I am not so sure of this last statement-have in some cases given powers to corporations so extensive, and in the opinion of the

New Jersey legislators so oppressive, that the legislature has forbidden the exercise of those powers within the State of New Jersey. The power I claim here is not denied. On the contrary, Mr. Wickersham, whom I like to quote, because he is a man of great power and lucidity of thought and expression, in a public speech at Duluth on July 19, 1911, is reported to have used the following language:

If Congress should enact that no corporation engaged in interstate commerce shall hereafter acquire any stock of any other corporation so engaged, and that unless such corporation should dispose of all stock held by them in other corporations engaged in interstate commerce within some specified period, they should be prohibited from engaging in interstate commerce until they did so dispose of such stock, the ax would indeed be laid at the root of the trust evil.

My objection to regulation of so-called trusts by an executive bureau, issuing regulations or licenses, can be expressed by me in no stronger language now than the language which I used in a letter on September 27, 1911. I shall take the liberty of reading it:

I can imagine nothing more dangerous to the American Republic than control of great corporations by a Federal bureau subject in its turn to a political administration of either party, excluding or admitting participation in business substantially at the whim and caprice and by the favoritism or enmity of the head of the bureau, influenced by Senators, Speakers, and Presidents, whose "pull" would be in favor of "good trusts" and whose frowns would be for "bad trusts." In such a case "good" would come to mean subservient. The remedy is to exclude trusts from interstate commerce, but to exclude them not by the fiat of a bureau (which in the last analysis is a man influenced by other men and acting secretly, with subordinates forbidden to give out information), but to exclude them by fiat of law, providing that corporations having charters conferring powers broad enough to establish monoploy or near monopoly and unlimited in the interest of the public shall be excluded.

*

* *

I added, "this remedy seems to me to be the right one, efficient, sufficient, operating in the open and by force of uniform prescribed law." Please remember the phrase: "By force of uniform prescribed law;" a law published and known to all men, or knowable by all men, as contradistinguished from an uncertain, unforeseeable, spasmodic, inconstant, bureaucratic interference with business by a bureau working in secret, with regulations to prevent its employees from communicating public knowledge of its methods or its work.

Those of you who know me, know that I do not indulge in denunciatory rhetoric. That is no way to "reason together in brotherly love," nor is it any way to procure the advantage of the cool light of reason in the analysis of a subject, still you will excuse me for asking you this question, Who are they who are now beginning most strenously to demand some sort of Federal regulation or incorporation for the regulation of trusts, so called? I shall not even answer my own question, except by asking you one more: Are they not principally, if not altogether, those who are beginning to feel the halter of the present law draw? Gentlemen, unfair, dishonest, or oppressive big business, which alone can build up monopoly, or near monopoly must be never licensed nor regulated nor incorporated by the Federal Government. It must be outlawed from interstate commerce; stamped out of existence; and it must be done by prescribing the limitations and conditions of "charter power" for artificial persons engaging in interstate commerce. The Federal Government is powerless to outlaw it within a State which may have chartered it, so long as it confines itself and its operations to that State, but it can exterminate it in interstate commerce by refusing to let it so much as enter that broad arena. It has the power and the right to do it.