Mirsrp VJ5
The Commoner
8
VOL. 15, NO. 8
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Business and the Law
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v ' An address delivered by United States Treas
urer John Burke, before the Virginia Bankers
assoolution at thoir annual convention at Old
Point Comfort, Juno 18, 1916.
It is an honor as well as a privilege to meet
With tlio representatives of tho great banking
interests of tho great state of Virginia in this
convention. I fully realizo and appreciate that
I am not only talking to business men and bank
ers, but to representativo citizens of that state
which has been rightfully called "Tho Mother
of Presidents," and in -which tho love of liberty
Is as strong today as it was when Thomas Jeffer
son wroto the immortal Declaration of Independ
ence, and when Patrick Henry, speaking for all
Virginians, thundered "Give me liberty; or give
mo death!"
Tho successful banker is always a business
man, learned of course in his own profession and
with a practical knowledge of every line of busi
ness which necessarily does business through
tho banks. Tho banker is an important man in
every community. His advice is sought and re
lied on in matters of business and upon financial
mattors generally. He is public spirited and
always invited to contribute to every public or
private enterprise, to which invitation he usually
responds generously. Ho is interested in the
growth and development of every business, for
ho knows that general prosperity means more
demand for his money and prosperity for his
bank. Ho believes with every other good citizen
that honest business should have the widest lib
erty for growth and development. If someone
undertakes to make it appear that the laws of
tho country aro unnecessarily hampering busi
ness and preventing growth and prosperity and
causing idleness and poverty, he desires specific
Information on tho subject. What laws are
hampering business; how are they hampering
business; and why should they hamper busi
ness? Why, indeed? Laws should be made for
the protection of business; not to hamper
so that equality of opportunity may Nbe pre
served. REGULATION OF BUSINESS
Quitarecently a man of great reputation and
wide experience in public life charged in a pub
lic speech that the sceptre had passed from the
business man and laws were being enacted under
influences which rejected tho voice of those
whom they immediately affected; that the testi
mony of the railroad man, the banker, the man
ufacturer, the merchant and the ship owner, was
all rejected on account of interest and because
of hatred and envy of wealth. In fact every law
that attempted to regulate business in any way,
including even the pure food laws and the re
servo bank act, was condemned. Tho inference
was plain that there should be no regulation of
business by law whatever. Ho stated that the
election in 1896 and in 1900 was controlled by
tho business men of the United States, and that
the administration which followed the election of
'9G was conducted in the interests of business
and was a golden era of prosperity. This speech
was given wide publicity in the newspapers un
der the headlines: "Time to end war on large
affairs," "Time to call a halt," and other equally
sensational headlines. Following along tho same
line, the department of justice has been criti
cised for appealing from the decision of the cir
cuit court of appeals to tho supremo court in
the case against tho United States Steel corpora
tion. In addition to all this, practically every
financial or business magazine or paper is pub
lishing similararticles and speeches showing
a systematic attSck on trust laws. So it becomes
a very important matter to know if it is true
that business is being hampered by legislation,
tf It is, it is time to call a halt. We do not want
ny restraints on business that are not neces
sary for the protection of human rights and the
preservation of human liberty.
Of course no one will give any serious thought
to tho criticism of tho department of justice in
appeaVng tho case against the United States
Steel corporation1: The attorney general had no
choice in tho matter. This case had been started
In the preceding administration and H was his
plain duty to try it and appeal it to the supremo
court for final decision, believing as he does that
it is a combination in restraint of trade. No
public official can be justly criticised for doing
his plain duty under his oath of office and as re
quired by law. The decision of the court of last
resort, whatever it may be, will be much more
satisfactory to the people of the entire nation
for it will be accepted as final and conclusive.
LEGISLATION AGAINST BUSINESS EVILS
From some of the articles it would appear, and
this is not sarcasm, that business men are so
honorable that all questions of commerce might
be left solely and alono to the business man, and
it is argued that the law merchant is all the law
that the country needs for the safe conduct of
all business and of commercial transactions. So
eminent an authority on. the question of trusts,
however, as Mr. George W. Perkins, in a recent
article in The Market World, argues that there
should bo regulation and that at tho time the
"Sherman law" was passed "there was a cry
ing need for legislation against the evils that
were rapidly developing in tho American busi
ness world, and that there was ground for the
apprchonsion of the people regarding the far
reaching harmful effects of these evil tenden
cies. Business men were acquiring power to an
extent that had previously been unknown
and in many instances they were using that power
for their own personal profit and aggrandise
ment and to the detriment and injury of their
fellow men. They were practicing secretive
business methods, beating down competitors,
and forcing them to choose between bankruptcy
or entering a combination on terms which were
very unfair. This was clearly the tendency of
the times; and legislation to check and prevent
it was imperative." The "Sherman law" was
passed in 1890, at a time when according to Mr.
Perkins, there was great necessity for legisla
tive regulation and prevention. It was held
constitutional during the Cleveland administra
tion, but was practically suspended during the
administration following the election in '96.
After the passage of the "Dingley bill" in 1898
there were more trusts and combinations organ
ized than we ever had before in the history of
the country, and the evils that Mr. Perkins com
plains of. wew multiplied. This was the time
When the business interests controlled the ad
ministration and legislation.
Mr. Perkins, believing in statutory regulation
of trusts and corporations, of course disagrees
with the suggestion that all commercial trans
actions might be left to the law merchant, or to
the honor of those engaged in commercial trans
actions. The common law did not leave all
transactions to those engaged in such trans
actions. It only accepted and adopted those
customs which were just and equitable 'and
which became a part of the common law of the
country and of which the courts took judicial
notice. There is an unbroken line of English
and American decisions holding that contracts
in general restraint of trade are void and that
contracts in reasonable restraint of trade are
valid; so that while the merchants customs be
came law, they were the customs that were just
and not transactions which took away any right
or which were tainted with fraud. Such trans
actions never were permitted by the courts .to
become customs and law. The law merchant
was unavailing, or at least not enforced, against
e SS2B existinS at tho time of the passage of
the "Sherman act." While contracts in general
restraint of trade were void, the term contract
does not include all the means by which trade
was restrained, for as Mr. Perkins says "Thev
(meaning the corporations and trusts) were
practicing secretive business methods, beating
down competitors, and forcing them to chooSI
between bankruptcy or entering a combinat?on
on terms which were very unfair. S
was clearly the tendency of the times." Mr
S? UmJ? rht V? ClGarly th0 teency of
the times, the proof of which is found in the
opinions of the supreme court in the Standard
Oil case and the Tobacco case. naara
THE ANTI-TRUST LAWS
It is also suggested that the "Sherman act" in
a blight on enterprise on account of an ile5
States U the Standard Oirc,m0pfany,ea"oWea
& & ana ln?h fh the "uweme court gave to
the i "Sherman law" tho construction which 2
critic claim, that it should have. hadnd which
decision is follqwed and. re-affirmed in Tim i
States vs. American Tobacco, company ,wi ,?
in May, 1911. In .the .Standard S3 caS fV
court .hold that "the terms restriction ofL
and attempts to monopolize, as used in the anli
trust legislation took their origin in the l?1'
law.and were familiar in the law of this Sn
prior to and at the time of the adoXn of te
act and their meaning sliould be sought trm
the conceptions of both English and AmerSE
law prior to the passage of this act, and xS
construed in the light of the. common law it nS
prohibits contracts and combinations wiS
amount to an unreasonable pr undue rcstri n
of trade in interstate commerce." Gongret in!
been-in session a great patf of the time since
these decisions were rendered and, has not sought
to change or modify this reasonable construction
placed upon the law by the supreme court but
on the contrary it has recognized it in section
of tlie "Clayton act" which provides tSatltsnail
bo unlawful for any person engaged in com
merce, in the course of such commerce to "lease
or make a sale or contract for sale of goods
wares, merchandise, machinery, supplies or
other commodities, whether patented or unpat
ented, for use, consumption, or resale within the
United States or any territory thereof or the
District of Columbia or. any insular possession
or other place under the jurisdiction of the
United States, or fix a price charged therefor or
discount from, or rebate upon, such price,' on
the condition, agreement or understanding that
the lessee or purchaser thereof shall not use or
deal in goods, wares, merchandise, machinery
supplies or other commodities of a competitor or
competitors of the lessor or seller, where the
effect of such lease, sale or contract, for sale or
such condition, agreement or understanding may
be to substantially lessen competition or tend to
create a monopoly in any line of commerce." In
other words they may make any kind or a con
tract for any such goods, wares or merchandise,
so long as the contract do'es not substantially
lessen competition or substantially tend to create
monopoly. The term "substantially" applies to
the creation of monopoly the same as to the
lessening of competition and it requires the ex
ercise of reason on the part of the' court to de
termine whether it is substantially lessening
competition or substantially oreating a mon
opoly. It is in fact the same as though congress
had used the term "reasonable" instead of "sub
stantial" for both require the exercise of reason,
and hence this provision in tho "Clayton law" is
substantially the same as the rule of
reason applied by the supreme, court.
It is not necessary, however, to go to the
expense of a trial to determine whether such
contract is a violation of the law, for under
section 8 of the "Clayton act" it may be deter
mined by the board upon notice, which board is
provided for by the "Covington act" "An act
to create a Federal Trade Commission, to define
Its powers and duties, and for other purposes."
Under the liberal construction given to the
Sherman act" by the supreme court, supple
mented by the liberal trust laws, known as the
Clayton act" and the "Covington act," there is
no reason why any honest business man should
fear the law or should :.e hampered in any way
by the law. It is true, that under the "Sherman
law' as construed in the light of reason, the
same as at common law, what constitutes a rea
sonable restriction can not be defined by rule
but must depend upon the circumstances of each
particular case and the good sense and sound
discretion of the tribunal before which the case
Is tried. It is not too much to ask business men
to exercise their reason in their contracts, agree
ments and actions affecting the trade in which
the general public is interested. They are as a
rule reasonable men, far above the average in
education and judgment, and conscience will
tell them when their contracts and their acts
are unreasonable and oppressive. It is not even
asking them to know the law, by'which all are
bound. It simply asks the exercise of good sense
and sound discretion and to know 'from that
good sense and sound discretion that their con
tracts and acts are not oppressive and unreas
onable in restraint of trade. Indeed, it is doubt
ful whether the trust laws, as now construed aro
any more drastic than the common law, to which
they are an addition.
The attack is not confined, however, to trust
laws. It is suggested that the business of the
country is affected by the adverse tariff legisla
tion, and it is argued by some of those who, favor
protection that a tariff which will produce
enough revenue for the support of the govern
ment is all the' protection' that is necessary. I
K.