PRESIDENT SENDS
SPECIAL MESSAGE
Makes Recommendations as to Com
merce Law and the Trusts .
WOULD CONSTITUTE A SPECIAL COURT
Judges to Have Power to Act in Certain Specified Cases
— Wisdom of Federal Incorporation of Indus
trial Companies Suggested—Scope
of Present LawToa Wide
■
W a Ellington. Jan. 7.—The following is
President Taft's message to congress on
the subject of needed legislation re
garding the interstate commerce law and
the control of the trusts:
To tile Senate and House of Represent
atives: I withheld from my annual mes
sage a discussion of needed legislation
under the authority which congress lias
to regulate commerce between ttie states
and with foreign countries, and said that
1 would bring this subject-matter" to your
attention later in the session. According
ly, I beg to submit to you certain recom
mendations as to the amendments to the
Interstate commerce law and certain con
siderations arising out of the operations
of the anti-trust law suggesting the wis
dom of federal incorporation of indus
trial companies.
Interstate Commerce Law.
In the annual report of the interstate
commerce commission for the year 1908.
attention is called to the fact that be
tween July 1. 2908. and the close of that
year. 16 suits had been begun to set aside
orders of the commission (besides one
commenced before that date), and that
few orders of much consequence had
been permitted to go without protest;
that the questions presented by these va
rious suits were fundamental, as the con
stitutionality of the act itself was in is
sue. and the right of congress to dele
gate to any tribunal authority to estab
lish an Interstate rate was denied; but
that perhaps the most serious practical
question raised concerned the extent of
the right of the courts to review the or
ders of the commission: and it was point
ed out that if the contention of the car
riers in tills latter respect alone were sus
tained, but little progress had been
made in the Hepburn act toward the ef
fective regulation of interstate transpor
tation charges.' In 12 of the cases re
ferred to, it was stated, preliminary In
junctions were prayed for, being granted
in six and refused in six.
"It lias from the first been well under
stood." says the commission, "that the
suet ess of the present act as a regulat
ing measure depended largely upon the
facility with which temporary injunc
tions could be obtained. If a railroad
■company, by mere allegation in its bill
of complaint, supported by exparte affi
davits, can overturn the result of days
of patient investigation, no very satisfac
tory result can be expected. The railroad
loses nothing by these proceedings since
if they fall, it can only be required to
establish the rate and to pay to shippers
the difference between the higher rate
collected and the rate which is finally
held to be reasonable. In point of fact
it usually profits, because tt can seldom
be required to return more than a frac
tion of the excess charges collected.”
In its report for the year 1909 the com
mission shows that of the 17 cases re
ferred to in its 190S report, only one had
been decided in the supreme court of the
United States, although five other cases
bail been argued, and submitted to that
tribunal in October. 1909.
Of course, every carrier affected by an
order of the commission has a constitu
tional right to appeal to a federal court
to protect it from the enforcement of an
order which it may show to be prima
fa. ie confiscatory or unjustly discrimina
tory in its effect; and as tills application
may be made to a court in any district of
the United States, not only does delay
result in the enforcement of the order,
but great uncertainty is caused by con
trariety ot decision.
The questions presented by these ap
pll at.ons are too often technical in
their i haracter and require a knowledge
of the business and the mastery of a
great volume of conflicting evidence
which is tedious to examine and trou
blesome to comprehend. It would not be
proper to attempt to deprive any cor
poration of the right to the review by
a court of any order or decree which,
if undisturbed, would rob It of a reason
able return upon its investment or would
subject it to burdens which would un
justly discriminate against it and In fa
vor of other carriers similarly situated.
What is, however, of supreme impor
tance is that the derision of such ques
tions shall be as speedy as the nature of
the circumstances will admit, and that
a uniformity of decision be secured so
as to bring about an effective, system
atic and scientific enforcement of the
commerce law, rather than conflicting de
cisions and uncertainty of final result.
time when the business of the court of
commerce does not require the services
of all the judges to reassign the judges
designated to that court to the circuits
to which they respectively belong; and it
should also provide for payment to
such judges while sitting by assignment
in the court of commerce of such addi
tional amount as is necessary to bring
their annuol compensation up to $10,000.
Only Second to Supreme Court.
The regular sessions of such court
should be held at the capitol, but it
should be empowered to hold sessions in
different parts of the United States if
found desirable; and its orders and judg
ments should be made final, subject only
to review by Che supreme court of the
United States, with the provision that
the operation of the decree appealed
from shall not he stayed unless the su
preme court shall so order. The com
merce court should be empowered in its
discretion to restrain or suspend the op
eration of an order of the Interstate com
merce commission under review pending
the final hearing and determination of
the proceeding, but no such restraining
order should be made except upon no
tice and after hearing, unless In cases
where irreparable damage would other
wise ensue to the petitioner. A judge
of that court might be empowered to al
low a stay of the commission's order for
a period of not more than 60 days, hut
pending application to the court of its
order or injunction, then only where his
order shall contain a specific finding
based upon evidence submitted to the
judge making the order and identified by
reference thereto that such irreparable
damage would result to the petitioner,
specifying the nature of the damage.
Under the existing law, the Interstate
commerce commission itself initiates and
defends litigation In the courts for the
enforceemnt, or in the defense of its or
ders and decrees, and for this purpose it
employs attorneys, who. while subject to
the control of the attorney general, act
upon the initiative and under the instruc
tions of the commission. This blending
of administrative, legislative and judi
cial functions tends, in my opinion, to
impair the efficiency of the commission
by clothing it with partisan characteris
tics and robbing it of the impartial judi
cial attitude it should occupy in pass
ing upon questions submitted to it. In
my opinion all litigation affecting the
government should be under the direct
control of the department of Justice; and
I therefore recommend that all proceed
ings affecting orders and decrees of the
interstate commerce commission be
brought by or against the United States
eo nomine, and be placed in charge of an
assistant attorney-general acting under
the direction of the attorney general.
Would Permit Agreements.
In view of the complete control over
rate-making, and other practices of in
terstate carriers established by the acts
of congress, and as recommended in this
communication. I see no reason why
agreemnts between carriers subject to
the act, specifying the classifications of
freight and the rates, fares and charges
for transportation of passengers and
freight which they may agree to estab
lish. should not be permitted, provided,
copies of such agreemnts be promptly
filed with the commission, but subject to
all the provisions of the interstate com
merce act, and subject to the right of
any parties to such agreemnt to cancel it
as to all or any of the agreed rates,
fares, charges, or classifications by 30
days’ notice in writing to the other par
ties and to the commission.
Under the existing law the commis
sion can only act with respect to an al
leged excessive rate or unduly discrimin
atory practice by a carrier on a com
plaint made by some individual affected
thereby. I see no reason why the com
mission should not be authorized to act
on its own initiative as well as upon the
complaint of an individual in investigat
ing the fairness of any existing rate or
practice; and I recommend the amend
ment of the law to so provide; and also
that the commission shall be fully em
powered, beyond any question, to pass
upon the classifications of commodities
for purpose of fixing rates, in like man
ner as it may now do with respect to the
maximum rate applicable to any trans
portation.
Existing Law Powerless.
Under the existing law the commission
may not investigate an increase in rates
until after it shall become effective; and
although one or more carriers may file
with the commission a proposed increase
in rates or change in classifications, or
other alteration of the existing rates or
classifications, to become effective at the
expiration of 30 days from such filing, no
proceeding can be taken to investigate
the reasonableness of such proposed
change until after it becomes operative.
On the other hand, if tile commission
shall make an order finding that an ex
isting rate is excessive, and directing it
to be reduced, the carrier affected may
by proceedings In the courts, stay the
operation of such order of reduction for
months, and even years. It has, there
fore. been suggested that the commis
sion should be empowered whenever a
proposed increase in rates is filed, at
once to enter upon an investigation of
the reasonableness of the increase, and
to make an order postponing the effec
tive date of such increase until after
such investigation shall be completed. To
this much objection lias been made on
the part of carriers. They contend that
this would be in effect to take from the
owners of the railroads the management
of their properties and to clothe the In
terstate commerce commission with the
original rate-making power—a policy
which was much discussed at the time
of the passage of the Hepburn act in
1905-6. and which was then and has al
ways been distinctly rejected; and In re
ply to the suggestion that they are able,
by resorting to the courts, to stay the
taking effect of the order of the commis
sion until its reasonableness shall have
been Investigated by the eourts, where
as. ti c people are deprived of any such
rented v with respect to action by the
earr'< i s. they point to the provisons of
the i:i irstate eommerce act providing for
resifi non to the shippers by carriers, of
excessive rates charged in cases where
Recommends Court of Commerce.”
For this purpose I recommend the
establishment of a court of the United
k, States composed of five judges desig
nated for such purpose from among the
circuit judges of the United States, to
be known as the "United States court
of commerce,” which court shall be
clothed with exclusive original Jurisdic
tion over the following classes of cases:
(1) Ail cases for the enforcement, oth
erwise than by adjudication and collec
tion. of a forfeiture or penalty, or by in
fliction of criminal punishment, of any
order of the interstate commerce com
mission other than for the payment of
money.
<2» All cases brought to enjoin, set
aside, annul or suspend any order or
requirement of the interstate commerce
commission.
<3> All such cases as under section 3
bf the act of February 19, 1903. known
is the “Elkins act.” are authorized to
be maintained in a circuit court of the
United States.
H> All such mandamus proceeedings
is under the provisions of section 20 or
section 23 of the interstate commerce
!sw are authorized to be maintained in a
circuit court of the United States.
Reasons precisely analogous to those
which induced the congress to create the
court of customs appeals by the provi
lion* in the tariff act of August 5. 1909.
■nay be urged in support of the creation
of the commerce court.
In order to provide a sufficient num
ber of Judges to enable this court to be
constituted it will be necessary to au
thorize the appointment of five addi
tional circuit Judges, who. for the pur
poses of appointment, might be distrib
uted to thekd circuits where there is at
the present time the largest volume of
business such as the second, third, fourth,
seventh and eighth circuits. The act
should empower the chief Justice at any
LAST OF THE YEW TREES
Small Tract in the Bavarian High
lands of Germany Is a Good Deal
of a Curiosity.
A b;t of primeval yew forest is still
to be found in the Bavarian highlands
of Germany. This tree, whose wood
was so eagerly sought in the days
when the cross-bow was still a dan
gerous weapon of warfare, was in the
middle ages widely distributed over
Germany, but is to-day almost extinct,
and even most German foresters know
It only as a very rare tree, individual
specimens of which are here and there
preserved. There is, however, a tiny
yew woodland still in existence in the
Bavarian mountains near the village
of Paterzell, and not far from the
royal city of Munich itself. It covers
an area of not much more than half
a mile square. Here along the peaty
shores of the dried out lake of Zell
grow the last of the yew trees.
It is primeval forest land, and ac
the order of the commission reducing
such rates are affirmed. It may be doubt
ed how effective this remedy really is.
Experience has shown that many, per
haps most shippers do not resort to pro
ceedings to recover the excessive rates
which they may have been required to
pay, for the simple reason that they have
added the rates paid to the cost of the
goods, and thus enhanced the price there
of to their customers, and that the public
has in effect paid the bill. On the other
hand, the enormous volume of transpor
tation charges, the grpat number of sep
arate tariffs filed annually with the in
terstate commerce commission, amount
ing to almost 200,000, and the impossibil
ity of any commission supervising the
making of tariffs in advance of their be
coming effective on every transportation
line within the United States to the ex
tent that would be necessary if their ac
tive concurrence were required In the ma
king of every tariff, has satisfied me that
this power, if granted, should he con
ferred in a very limited and restricted
form.
Commission Should Probe Change.
I therefore recommend that the inter
state commerce commission be empow
ered whenever any proposed increase of
rates is filed, at once, either on com
plaint or of its own motion, to enter
upon an investigation into the reasonable
ness of such change, and that it be fur
ther empowered, in its discretion, to
postpone the effective date of such pro
posed increase for a period not exceed
ing 60 days beyond the date when such
rate would take effect. If within this
time it shall determine that such in
crease is unreasonable, it may then, by
its order, either forbid tile increase at
all, or fix tlie maximum beyond which
it shad not be made. If. on the other
hand, at the expiration of tins time, the
commission shall not have completed Its
investigation, then the rates shall take
effect precisely as it would under the ex
isting law. and the commission may con
tinue its investigation with such results
as might be realized under the law as it
now stands
The claim is very earnestly advanced
by some large associations of shippers
that shippers of freight should bfe em
powered to direct the route over which
their shipments should pass to destina
tion. and in this connection it has been
urged that the provisions of section 15
of the interstate commerce act, which
now empowers the commission, after
hearing on complaint, to establish
through routes and maximum joint rates
to be charged, etc., when no reasonable
or satisfactory through route shall have
been already established, be amended so
as to empower the commission to take
such nction. even when one existing rea
sonable and satisfactory route already
exists, if it be possible, to establish ad
ditional routes. This seems to me to
be a reasonable proposition.
The Republican platform of 1908 de
clared in favor of amending the inter
state commerce law, but so as always to
maintain the principle of competition be
tween naturally competing lines, and
avoiding the common control of such
lines by any means whatever. One of
the most potent means of exercising such
control lias been through the holding of
stork of one riilroad company by an
other company owning a competing line.
This condition has grown up under ex
press legislative power conferred by the
laws of many states, and to attempt now
to suddenly reverse that policy so far
as it affects the ownership of stocks here
tofore so acquired, would bo to inflict
grievous injury, not only upon the cor
porations affected but upon a large body
of the investment holding public.
Plan to End Rail Combine.
I, however, recommend that the latv
shall be amended so as to provide that
from and after the date of its passage
no railroad company subject to the Inter
state commerce act shall, directly or In
directly, acquire any interests of any
kind in capital stock or purchase or
lease any railroad of any other corpora
tion which competes with it respecting
business to which the interstate com
merce act applies. But especially for
the protection of the minority stockhold
ers in securing to them the best market
for (her stock, I recommend that such
prohibition be coupled with a proviso
that it shall not operate to prevent any
corporation which, at the date of passage
of such act, shall own not less than one
half of the entire issued and outstanding
capital stock of any other railroad com
pany, from acquiring all or the remain
der of such stock; nor to prohibit any
railroad company which at the date of
the enactment of the law Is operating a
railroad of any other corporation under
lease, executed of a term not less than
25 years, from acquiring the reversionary
ownership of the demised railroad; but
that such provisions shall not operate to
authorize or validate the acquisition,
through stock ownership or otherwise!
of a competing line or interest therein in
violation of the anti-trust or any other
law.
The Republican platform of 1908 fur
ther declares in favor of such national
legislation and supervision as will pre
vent the future over-issue of stocks and
bonds by interstate carriers, and In order
to carry out its provisions 1 recommend
the enactment of a law providing that
no railroad corporation subject to the In
terstate commerce act shall hereafter for
any purpose connected with or relating
to any part of its business governed by
said act, issue any capital stock without
previous or simultaneous payment to it
of not less than the par value of such
stock, or any bonds or other obligations
(except notes maturing not more than
one year from the date of their issue),
without the previous or simultaneous pay
ment to such corporation of not less than
the par value of such bonds, or other ob
ligations, or, if issued at less than their
par value, then not without such pay
ment of the reasonable market value of
such bonds or obligations as ascertained
by the interstate commerce commis
sion; and that no property, service,
or other thing than money, shall be
taken in payment to such carrier cor
poration, of the par or other required
price of such stock, bond or other obliga
tion, except the fair value of such prop
erty, services or other thing ascertained
by the commission; and that such act
shall also contain provisions to prevent
the abuse by the improvident or improp
er issue of notes maturing at a period
not exceeding 12 months from date, in
such manner as to commit the commis
sion to the approval of a larger amount
of stpck or bonds in order to retire such
notes than should legitimately have been
retired.
Such act should also provide for the
approval by the interstate commerce com
mission of the amount of stock and bonds
to be Issued by any railroad company
subject to this act upon any reorganiza
tion. pursuant to judicial sale or other
legal proceedings. In order to prevent the
issue of stocks and bonds to an amount
in excess of the fair value of the prop
erty which is the subject of such reor
ganization.
By my direction the attorney general
has drafted a bill to carry out these
recommendatlons.i* which will be fur
nished upon request to the appropriate
committee whenever It may be desired.
ANTI-TRUST LAW AND
FEDERAL INCORPORATIONS
Government Control of Big Industrial
Corporations Favored—Asserts
Scope of Present Law Is
Too Wide.
There lias been a marked tendency In
business in this country for 40 years last
past t y.vard combinations of capital and
plant in manufacture, sale and trans
cording to a recent count comprises
8+5 large and 1,456 small trees. The
larger trees are at least 200 to 500
years old, and perhaps hundreds of
years more. The smaller trees are
all under 50 years. The largest of the
trees at a height of four feet from the
ground has a circumference of eight
feet eight inches, and quite a number
of them are more than six feet in cir
cjmforenee and have heights varying
from 50 to 60 feet. The larger trees
are much damaged by storm and still
more through the cutting away of the
portatlon. The moving causes have been
several: First, It has rendered possible
great economy: second, by a union of
former competitors It has reduced the
probability of excessive competition; and,
third, If the combination has been ex
tensive enough, and certain methods in
the treatment of competitors and cus
tomers have been adopted, the combiners
have secured a monopoly anil complete
control of prices or rates.
A combination successful In achieving
complete control over a particular line of
manufacture has frequently been called
a "trust." I presume that the derivation
of the word is to be explained by the fact
that a usual method of carrying out the
plan of the combination has been to put
the capital and plants of various individ
uals, firms, or corporations engaged In
the same business under the control of
trustees.
The increase In the capital of a busi
ness for the purpose of reducing the
cost of production and effecting economy
in the management has become as essen
tial in modern progress as the change
from the hand tool to the machine.
When, therefore, we come to construe
the object of congress in adopting the
so-called "Sherman Anti-Trust Act” in
1S90, whereby in the first section every
contract, combination in the form of a
trust or otherwise, or conspiracy in re
straint of interstate or foreign trade or
commerce, is condemned as unlawful and
made subject to indictment and restraint
by injunction; and whereby in the sec
ond section every monopoly or atterfipt
to monopolize, and every combination or
conspiracy with other persons to monopo
lize any part of interstate trade or com
merce, is denounced as illegal and made
subject to similar punishment or re
straint. we must infer that the evil aimed
at was not the mere bigness of the en
terprise, but it was the aggregation of
capital and plants with the express or
Implied intent to restrain interstate or
foreign commerce, or to monopolize it in
whole or in part.
Trust Not Necessarily Bad.
Monopoly destroys competition entire
ly and the restraint of the full and free
operation of competition has a tendency
to restrain commerce and trade. A com
bination of persons, formerly engaged in
trade as partnerships or corporations or
otherwise of course eliminates the com
petition that existed between them; but
the incidental ending of that competition
is not to be regarded as necessarily a
direct restraint of trade, unless of such
an all-embracing character that the in
tention and effect to restrain trade are
apparent from the circumstances or are
expressly declared to be the object of
the combination. A mere incidental re
straint of trade and competition is not
within the inhibition of ttie act, but it
is where the combination or conspiracy
or contract is inevitably and directly a
substantial constraint of competition, and
so a restraint of trade, that the statute
is violated.
The second condition of the act is sup
plement of the first. A direct restraint
of trade such as is condemned in the
first st ction.' if successful and used to
suppress competition, is one of the com
monest methods of securing a trade
monopoly, condemned in the second
section.
It Is possible for the owners of a busi
ness of manufacturing and selling useful
articles of merchandise so to conduct
their business as not to violate the in
hibitions ef the anti-trust law and yet
to secure to themselves the benefit of the
economies of management and of produc
tion due to the concentration under one
control of large capital and many plants.
If they use no other inducement titan
the constant low price of their product
and its good quality to attract custom,
and their business is a profitable one,
they violate no law'. If their actual
competitors are small in comparison with
the total capital invested, the prospect
of new investments of capital by others
in such a profitable business is sufficient
ly near and potential to restrain them in
the prices at which they sell their prod
uct. But if they attempt by a use of their
preponderating capital, and by a sale of
their goods temporarily at unduly low
prices, to drive out of business their
competitors, or if they attempt, by ex
clusive contracts with their patrons and
threats of non-dealing, except upon such
contracts or by other methods of a sim
ilar character, to use the largeness of
their resources and the extent of their
output compared w'itii the total output
as a means of compelling custom and
frightening oil competition, then they
disclose a purpose to restrain trade and
to establish a monopoly, and violate the
act.
Law to Suppress Abuses.
The object of the anti-trust law was
to suppress the abuses of business of the
kind described. It was not to interfere
with a great volume of capital which,
concentrated under one organization, re
duced the cost of production and made
its profit thereby, and took no advantage
of Its size, by methods akin to duress, to
stifle competition with it
I wish to make this distinction as em
phatic as possible, because I conceive
that nothing could happen more destruc
tive to the prosperity of this country than
the loss of that great economy in produc
tion which has been and will be effect
ed in all manufacturing lines by the em
ployment of large capital under one man
agement. I do not mean to say that
there is not a limit beyond which the
economy of management by the enlarge
ment of plant ceases; and where this
happens and combination continues be
yond this point, the very fact shows in
tent to monopolize and not to economize.
The original purpose of many combina
tions of capital In this country was not
confined to the legitimate and proper ob
ject of reducing the cost of production.
On the contrary, the history of most
trades will show at times a feverish de
sire to unite by purchase, combination,
or otherwise, all the plants in the coun
try engaged in the manufacture of a par
ticular line of goods. The idea was rife
that thereby a monopoly could be ef
fected and a control of prices brought
about which would inure to the profit of
those engaged in the combination. The
path of commerce is strew n with failures
of such combinations. Their projectors
found that the union of all plants did not
prevent competition, especially where
proper economy had not been pursued In
the purchase and in the conduct of the
business after the aggregation was com
plete. There were enough, however, of
such successful combinations to arouse
the fears of good, patriotic men as to the
result of a continuance of this movement
toward the concentration in the hands of
a few of the absolute control of the
prices of all manufactured products.
Refers to Sugar Trust case.
The anti-trust statute was passed In
1890, nnd prosecutions were soon begun
under It. In the case of the United States
vs, Knight, known as the ‘‘sugar trust
case," because of the narrow scope of
the pleadings, the combination sought to
be enjoined was held not to be Included
within the prohibition of the act. because
the averments did not go beyond the
mere acquisition of manufacturing plants
for the refining of sugar, and did not In
clude that of a direct and intended re
straint upon trade and commerce In the
sale and delivery of sugar across state
boundaries and in foreign trade. *f he
result of the sugar trust case was not
happy, in that It gave other companies
and combinations seeking a similar meth
od of making profit by establishing In
absolute control and monopoly in a par
ticular line of manufacture, a sense of
immunity against prosecutions in the
federal jurisdiction, and where that
juris*;1 Mon is barred In respect to a
business which is necessarily commensur
young sprouts in the spring. These
dark green needled branches are much
sought for wreaths and for decoration.
Fortunately, if it may be so put, the
old-trees are ail more or less rotted
and their wood thus rendered useless,
for to this fact undoubtedly is due
their preservation. A small part of
the yew woodland belongs to the com
munity of Paterzell, but by far the
greater part is included in the state
forest reserve. There is at present a
movement on foot looking to the
preservation of these rare trees.
I
ata with the boundaries of the country,
no state prosecution Is able to supply the
needed machinery for adequate restraint
or punishment.
The supreme court tn several of its
decisions, has declined to read into the
statute the word ‘‘unreasonable” before
“restraint of trade,” ori the ground that
the statute applies to all restraints and
does not intend to leave the court the
discretion to determine what Is a reason
able restraint of trade. The expression
"restraint of trade” comes from the com
mon law, and at common law there were
certain covenants incidental to the car
rying out of a main or principal con
tract which were said to be covenants in
partial restraint of trade, and were held
to be enforcible because “reasonably”
adapted to the performance of the main
or principal contract, and under the
general contract, and under the genera!
language used by the supreme court in
several cases, it would seem that even
such incid rntal covenants in restraint
of interstate trade were within the in
hibition of the statute and must be con
demned.
In order to avoid such a result, I have
thought and said that it might be well
to amend the statute so as to exclude
such covenants from its condemnation. A
close examination of the later decisions
of the court, however, shows quite clear
' ly in cases presenting the exact ques
tion, that such incidental restraints of
trade are held not to be within the law
and are excluded by the general state
ment that, to be within the statute, the
effect upon the trade of the restraint
must he direct and not merely Inciden
tal or Indirect. The necessity, therefore,
for an amendment of the statute so as
to exclude these incidental and bene
ficial covenants in restraint of trade held
in common law to be reasonable, does not
exist.
In some of the opinions of the federal
circuit Judges, there have been intima
tions, having the effect, if sound, to
weaken the force of the statute by In
cluding within it absurdly unimportant
combinations and arrangements, and sug
gesting, therefore, the wisdom of chang
ing its language by limiting its appli
cation to serious combinations with in
tent to restrain competition or control
prices. A reading of the opinions of the
supreme court, however, makes the
change unnecessary, for they exclude
from the operation of the act contracts
affecting Interstate trade in but a small
and incidental way. and apply the stat
ute only to the real evil aimed at by
congress.
me statute nas been on tne statute
book now for two decades, and the su
preme court in more than a dozen opin
ions has construed it in application to
various phases of business combinations
and in reference to various subject mat
ter. It has applied it to the union un
der one control of two competing inter
state railroads, to private manufacturers
engaged in a plain attempt to control
prices and suppress competition in a part
of the country, including a dozen states,
and to many other combinations affect
ing interstate trade. The value of a
statute which is rendered more and more
certain in its meaning by a series of de
cisions of the supreme court furnishes a
strong reason for leaving the act as
it is, to accomplish its useful purpose,
even though if it were being newly en
acted, useful suggestions as to ciiange of
phrase might bo made.
For Government Control.
Many people conducting great busi
nesses have cherished a hope and a be
lief that in some way or other a line
may be drawn between "good trusts” and
"bad trusts,” and that it is possible by
amendment to the anti-trust law to make
a distinction under which good combina
tions may be permitted to organize, sup
press competition, control prices, and do
it all legally if only they do not abuse
the power by taking too great profit out
of tlie business. They point with force to
certain notorious trusts as having grown
into power through criminal methods by
the use of illegal rebates and plain cheat
ing, and by various acts utterly violative
of business honesty or morality, and urge
the establishment of some legal line of
separation by which “criminal trusts”
of this kind can be punished, and they,
on the other hand, be permitted under
the law to carry on their business. Now,
the public, and especially the business
public, ought to rid themselves of the
idea that such a distinction is practic
able or can be introduced into the stat
ute.
Certainly under the present anti-trust
law no such distinction exists. It has
been proposed, however, that the word
“reasonable” should be made a part of
the statute, and then It should be left to
the court to say what is a reasonable
restraint of trade, what Is a reasonable
suppression of competition, what is a rea
sonable monopoly. I venture to think that
this is to put into the hands of the
court a power impossible to exercise on
any consistent principle which will In
sure the uniformity of decision essential
to just judgment. It Is to thrust upon
the courts a burden that they ha%-e no
precedents to enable them to carry, and
to give them a power approaching
arbitration, the abuse of which might
involve our whole judicial system in dis
aster.
An Aid to Business Virtue.
In considering violations of the anti
trust law we ought, of course, not to
forget that that law makes unlawful,
methods of carrying on business which
before its passage were regarded as evi
dence of business sagacity and success,
and that they were denounced in this act
not because of their intrinsic immoral
ity, but because of the dangerous re
sults toward which they tended, the con
centration of industrial power in the
hands of the few, leading to oppres
sion and injustice. In dealing, therefore,
with many of the men who have used
the methods condemned by the statute
for the purpose of maintaining a profit
able business, we may well facilitate a
change by them in the method of doing
business, and enable them to bring it
back into the zone of lawfulness, with
out losing to the country the economy
of management by which, in our domestic
trade the cost of production has been
materially lessened, and in competition
with foreign manufacturers our foreign
trade has been greatly Increased.
Through all our consideration of tills
grave question, however, we must insist
that the suppression of competition, the
controlling of prices, and the monopoly
or attrmpt to monopolize in interstate
commerce and business are not only un
lawful. but contrary to the public good,
and that they must be restrained and
punished until ended.
Ask* National Corporation Law.
I therefore recommend the enactment
by congress of a general law providing
for the formation of corporations to en
gage in trade and commerce among the
states and with foreign nations, protect
ing them from undue interference by
the states and regulating their activities
so as to prevent the recurrence, under
national auspices, of those abuses which
have arisen under state control. Such
a law should provide for the issue of
stock of such corporations to an amount
equal only to the cash paid in on the
stock: and if the stork be issued for
property, then at a fair valuation ascer
tained under approval and supervision of
federal authority after a rull and com
plete disclosure of all the Tart* pertain
ing to the value of such property and the
interest therein of the persons to whom
it is proposed to issue stock in payment
of such property. It should subject the
real and personal property only of such
corporai'ors to the same taxation as im
posed 1 y tile states within which it may
be situated upon other similar property
located therein, aod it should require
Deep Drilling Unprofitable.
The boring conducted by the Prus
sian department of mines at Czuchow
in Silesia had to be discontinued re
cently upon reaching a depth of 2,240
meters in view of the fact that the
cost of drilling at this depth in hard
sandstone was out of proportion to
the obtainable results.
Like the boring at Paruschowitz in
Silesia, which had to be abandoned at
a depth of 2,000 meters on account of
the drills breaking, the Czuchow bor
ing was undertaken for scientific pur
such corporations to file full and com
plete reports of their operations with the
department of commerce and labor at
regular intervals. Corporations organized
under this act should be prohibited from
acquiring and holding stock in other cor
porations (except for special reasons upon
approval by the proper federal author
ity), thus avoiding the creation, under
national auspices, of the holding com
pany with subordinate corporations in
different states which has been such an
effective agency in the creation of the
great trusts and monopolies.
If the prohibition of the anti-trust act
against combinations in restraint of
trade is to be effectively enforced, it is
essential that the national government
shall provide for the creation of national
corporations to carry on a legitimate
business throughout the United States.
The conflicting laws of the different
states of the union with respect to for- j
eign corporations make it difficult, if not
impossible, for one corporation to comply
with their requirements so as to carry
on business in a number of different
states.
To the suggestion that this proposal of
federal incorporation for industrial com
binations is intended to furnish them a
refuge in which to continue industrial
business under federal protection. It
should be said that the measure contem
plated does not repeal the Sherman anti
trust law and is not to be framed so as
to permit the doing of the wrongs which
it is the purpose of that law to prevent,
but only to foster a continuance and ad
vance of the highest industrial efficiency
without permitting industrial abuses.
Sure to Meet Opposition.
Such a national Incorporation law will
be opposed, first, by those who believe
that trusts should be completely broken
up and their property destroyed. It will
be opposed, second, by those who doubt
the constitutionality of such federal in
corporation and even if it is valid, object
to it as too great federal centralization.
It will be opposed, third, by those who
will Insist that a mere voluntary incor
poration like this will not attract to Its
assistance the worst of the offenders
against the anti-trust statute and who
will therefore propose instead t>f it a sys
tem of compulsory licenses for all fed
eral corporations engaged in Interstate
business.
l,et us consider these objections in their
order. The government is now trying to
dissolve some of these combinations and
it is not the intention of the government
to desist in the least degree in its effort
to end these combinations which are to
day monopolizing the commerce of this
country; that where it appears that the
acquisition and concentration of property
go to the extent of creating a monopoly
of substantially and directly restraining
interstate commerce, it is not the inten
tion of the government to permit this
monopoly to exist under federal incor
poration or to transfer to the protecting
wing of the federal government of a
state corporation now violating the Sher
man act. But it is not, and should not
be, the policy of the government to pre
vent reasonable concentration of capital
which is necessary to the economic devel
opment of manufacture, trade and com
merce. This country has shown power
of economic production that has aston
ished the world, and has enabled us to
compete with foreign manufacturers In
many markets. It should be the care of
the government to permit such concen
tration of capital while keeping open the
avenues of Individual enterprise, and the
opportunity for a man cr corporation
with reasonable capital to engage in
business. If we would maintain out
present business supremacy, we should
give to industrial concerns an oppor
tunity to organize or to concentrate their
legitimate capital In a federal corpora
tion. and to carry on their large business
within the lines of the law.
May Doubt Constitutionality.
Second—There are those who doubt tha
constitutionality of such federal incorpor
ation. The regulation of interstate and
foreign commerce is certainly conferred
in the fullest measure upon congress, and
if for the purpose of securing in the most
thorough manner that kind of regulation,
congress shall insist that it may provide
and authorize agencies to carry on that
commerce, it would seem to be within its
power, this has been distinctly affirmed
with respect to railroad companies doing
an interstate business and interstate
bridges. The power of incorporation has
been exercised by congress and upheld
by the supreme court In this regard.
Why. then, with respect to any other
form of interstate commerce like the sale
of goods across state boundaries and into
foreign countries, may the same power
not be asserted? Indeed, it is the very
fact that they carry on interstate com
merce that makes these great industrial
concerns subject to federal prosecution
and control. How far as Incidental to
the carrying on of that commerce it may
be within the power of the federal gov
ernment to authorize the manufacturer of
goods, is perhaps more open to discus
sion. though a recent decision of the su
preme court would seem to answer that
question in the affirmative.
Even those who are willing to concede
that the supreme court may sustain such
federal incorporation are inclined to op
pose it on the ground of its tendency to
the enlargement of the federal power at
the expense of the power of the state.
It Is a sufficient answer to this argument
to say that no other method can be sug
gested which offers federal protection on
the one hand and close federal supervi
sion on the other of these great organi
zations that are in fact federal because
they are as wide as the country and are
entirely unlimited in their business by
state lines. Nor is the centralization of
federal power under this act likely to be
excessive. Only the largest corporations
would avail themselves of such a law, be
cause the burden of complete federal su
pervision and control that must certainly
be imposed to accomplish the purpose of
the incorporation would not be accepted
by an ordinary business concern. The
third objection, that the worst offenders
will not accept federal incorporation, is
easily answered. The decrees of injunc
tion recently adopted in prosecutions un
der the anti-trust law are so thorough
and sweeping that the corporations af
fected \.y them have but three courses
before them:
First, they must resolve themselves
Into their component parts in the differ
ent states, with a consequent loss to
themselves of capital and effective organ
ization and to the country of concen
trated energy and enterprise; or second,
in dellance of the law and under some
secret trust they must attempt to con
tinue their business in violation of the
federal statute, and thus incur the pen
alties of contempt and bring on tn In
evitable criminal prosecution of the indi
viduals named In the decree and their
associates; or
Third, they must reorganize and accept
in good faith the federal charter I sug
gest a federal compulsory license law,
urged as a substitute for a federal incor
poration law. is unnecessary except to
reacli that kind of corporation which, by
virtue of the considerations already ad
vanced. will take advantage voluntarily
of an incorporation law. while the other
state corporations doing an interstate
business do not need the supervision or
the regulation of federal license and
would only be unnecessarily burdened
thereby.
The attorney general, at my suggestion,
has drafted a federal incorporation law.
embodying the views I have attempted
to set forth and it will be at the disposi
tion of the appropriate committees of
congress.
WILLIAM H. TAFT.
The White House. Jan. 7, 1310.
poses only, since mining operations
are of course entirely impossible at
this depth, if no account is taken
of the rapidity with which the ex
pense for hoisting increases with
depth —Scientific American.
Gifts to Columbia University.
Within the period since the trustees
of Columbia university held their reg
ular meeting in June, the sum of $4,
281,502 has been received by the insti
tution in gifts from various sources,
chiefly in the form of bequests. _
COUNTRY AWAKE TO DANGEF
Immense Amount of Money Spen'
Last Year in Fight Against
Tuberculosis.
A report issued recently by the Xa
tional Association for the Study unc
Prevention of Tuberculosis shows tha'
for the treatment of tuberculous pa
tients in sanatoria and hospitals $5,
292,289.77 was expended during tht
year 1909. The anti-tuberculosis asso
ciations spent $975,8S9.56, the tubercu
losis dispensaries and clinics $640,474,
.64, and the various municipalities, foi
special tuberculosis work, spent $1,
111,967.53. The anti-tuberculosis asso
ciations distributed the most litera
lure, spreading far and wide 8,400,001
copies of circulars, pamphlets anc
printed matter for the purpose of edu
eating the public about consumption
The health departments of the differ
ent cities also distributed more that
1,056,000 copies, which, with the wort
done by state departments of health
brings the number of pieces distribut
ed during the year well over 10,000,
000. The largest number of patients
treated during the year was by tht
dispensaries, where 61,586 patients
were given free treatment and advice
The sanatoria and hospitals treatec
37.758 patients, while anti-tuberculosis
associations assisted 16,968.
Lightning Change.
“Maria, who is the spider-legged
gawk that comes to see Bessie two oi
three times a week?”
“Why, don't you know, .John? That's
young Mr. Welloph, the junior partner
in the firm of Spotcash & Co."
“Well, confound her, why doesn’t
she give him a little more encourage
ment?”
Sarcastic.
“I am afraid Dulby is putting an en
emy into his mouth to steal away his
brains.”
“Yes,” answered Miss Cayenne; “ano
It’s a case of petty larceny, at that.”
A noble life, crowned with heroic
death, rises above and outlives the
pride and pomp and glory of the
mightiest empire of the earth.—Gar
field.
T>r. Pierce's Pellets. small, sugar-coated. easy
take as candy, regulate and invigorate stomach,
liver and bowels and cure constipation.
There comes a moment in every
man’s life when he regrets his inabil
ity to kick himself.
Lewis' Single Binder straighr fx.- cigar.
You pay 10c for cigars not so good.
Sometimes a man’s wisdom is due to
the possession of a clever wife.
Nebraska Directory
The Ohio State
Chemist says
Uncle Sam
Breakfast Food
“Has a high Food Value and
contains no deleterious in
gredients.”
Hundreds testify to the value
of Uncle Sam as a cure for
CONSTIPATION.
Ask Your Grocer
I
POSITIVELY CURES ^LCOHOLX
INEBRIETY
OPIUM
MORPHINE
AND OTHER DRUG ADDICTIONS.
THIRTY YEARS
of continuous success. Printed matter sent
i:i plain envelope upon request. All cor
respondence strictly confidential.
THE fEELEY INSTITUTE
Cor. Twenty-Fifth and Cams St.. OMAHA. NEB.
U/ PI niMA (auto genoua) By
WW Co k law I IS VI this process all broken
parts of machinery made good as new. Welds
cast iron, cast steel, aluminum, copper, brass of
any other mstsl. Expert automobile rcpalriag.
BCRTgCHV MOTCR CO.. Council Bluffs.
Ko run want the Beet Oom Bheller made? It set
Insist on having a
MARSEILLES CORR SMELLER
Write tor cm lag or see year local denier.
JOHN DEERE PLOW CO.. OMAHA
THE PAXTON ftSS!
Rooms from $1.00 up single, 75 cents up double
CAn PRICES REASONABLE
When You’re Hoarse Use\
“m im fxmii m
It Gives immediate relief. The first I
|] dose relieves your aching throat and H
y allays the irritation. Guaranteed to I
1| contain no opiates. Very palatable, ■
AUDruggiits, 25r.
