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AUGUST 28, i9Qk '
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tions can, without violating the law, reach the same end by electing
the same directors.,
The second remedy is one upon which I desire to dwell at some
length. We believe it to be a simple, complete and easily enforced
remedy. As stated in the platform it is :
"A license system which will, without abridging the right of
each state to create corporations, or its right to regulate as it will
foreign corporations doing business within its limits, make it neces
sary for a manufacturing or trading corporation engaged in inter
state commerce to take out a federal license before it shall be per
mitted to control as much as twenty-five per cent of the product
in which it deals, the license to protect the public from watered
stock and to prohibit the control by such corporation of more than
fifty per cent of the total amount of any product consumed in the
United States;"
It will be noticed, in the first place, that care was taken by
those who drew the platform to provide that there should be no
abridgment of the right of a state to create corporations, or of its
right to regulate as it will foreign corporations doing business
within its limits. This plan, therefore, does not in the least infringe
upon the right of the states ta protect their own people. It simply
provides for the exercise by congress of the power vested in it to
regulate interstate commerce. As long as a corporation confines
itself to the tate in which it is created, congress can not interfere
with it; but when the corporation engages in interstate commerce,
congress is the only power that can regulate its interstate business.
In proposing the exercise of this power, the democratic plat
form is not asserting a new doctrine. In January, 1896, a republican
house of representatives adopted a resolution calling upon Hon.
Judson Harmon, then attorney general of the United States, now the
democratic candidate for governor in Ohio, to report what steps,
if any, had been taken to enforce the law of the United States
against trusts, combinations and conspiracies in restraint of trade
and commerce, and what further legislation was, in Ids opinion,
needed to protect the people against the same. On the 8th day of
February he submitted a reply, in which he described the steps
which were being taken to enforce the law, and recommended the
enactment of further legislation. I call special attention to the
following words:
" Congress may make it unlawful to ship from one state to
another, in carrying out, or attempting to carry out, the designs of
such (state) organizations, articles produced, owned or controlled
by them or any of their members or agents."
His recommendation embodies the very idea which our plan
now proposes to carry out. We want to make it unlawful for a
corporation to use the instrumentalities of interstate commerce for
the carrying out of a monopolistic purpose. Surely no party can
consistently claim to be opposed to private monopolies which will
permit the interstate railroads to be used to carry out the designs
of a monopoly, or which will permit the interstate telegraph lines
to be used to increase the power of a private monopoly; or, to make
the case stronger, no party can consistently claim to be opposed to
the trusts which will allow 'the mails of the United States to be
used by the trusts as an agency for the extermination of competition.
Congress has already exercised this power to exterminate lotteries.
Why not exercise it to make private monopolies impossible?
If it is conceded that congress has the power to prevent the
shipment of goods from one state to another when such shipment
is a part of a conspiracy against trade and commerce then the only
question is as to the means to be employed to prevent such ship
ment. The license system presents an easy way of regulating such
corporations as need federal regulation. The law can prohibit the
doing of a thing and impose a penalty for the violation of the
law, but experience has shown that it is very difficult to gather up
evidence from all sections of the United States and prosecute a
great corporation; so difficult is it, that although the Sherman anti
trust law has been in force for eighteen years, no trust magnate
has been sent to the penitentiary for violating the law, although
in a few cases the court has found corporations guilty of a viola
tion of the law. In the enforcement of a penalty, the government
must seek the defendant; by the use of the license system, the cor
poration is compelled to seek the government.
A trust can best be defined as a corporation which controls
so large a proportion of the total quantity of any article
used in this country as to be able to regulate the price and
terms of sale, and as the proportion controlled determines the
power of the trust for harm, it has seemed best to use propor
tionate control as the basis of this plan, and twenty-five per
cent has been fixed arbitrarily as the proportion at which the
line should be drawn. A corporation which controls less than
twenty-five per cent of the product in which it deals, may,
in extraordinary cases, exert a perceptible influence in controlling
the price of the product and the terms of sale, but as a rule a cor-
poration must control more than thAt percentage of the total pro
duct before it can exert a hurtful influence on trade. Under this
plan, the small corporations are left entirely free and unhampered.
This is not a discrimination against the larger corporation, but a.
recognition of the fact that rules are necessary in the case of cor
porations controlling a large percentage of the product which art
not necessary in the case of smaller corporations. Probably not
one per cent of the corporations engaged in interstate commerce
would be required to take out a license under this plan- possibly
not one-half of one per cent and yet what a protection the re
maining ninety-nine per cent would find in the law requiring a
license in the case of the larger ones !
The license, however, would not prevent the growth of the cor
porations licensed. It would simply bring them under the eye
of the federal government and compel them to deal with the
public in such a way as to afford the public the protection necessary.
One of the restrictions suggested is that such licensed corporations
be compelled to sell to all purchasers in all parts of the country
on the same terms, after malting due allowance for cost of trans
portation. Mr. Taft attacks this restriction as "utterly im
practicable." He says: "If it can be shown that in order to
drive out competition, a corporation owning a large part of the
plant producing an article is soiling in one part of the country,
where it has competitors, at a low and unprofitable price, and in
another part of the country, whore it has none, at an exorbitant
price, this is evidence that it is attempting an unlawful monopoly
and justifies conviction under the anti-trust law."
If such an act is now unlawful, why is he so frightened at a
plan which gives to the small competitor this very protection? The
trouble with the present law is that it does not restrain the evilM
at which it is aimed. The plan proposed in the democratic plat
form brings the corporation under the surveillance of the govern
ment when it has reached the danger point, and thereafter sub
jects it to federal scrutiny. The present law simply prohibits it
in an indefinite sort of way, and then leaves the officers of the
law to scour the country and hunt up violations of the law's pro
visions. Mr. Taft is unduly alarmed at this proposal, or else he
entirely fails to comprehend the details of the plan. He says:
"To supervise the business of corporations in such a way as
to fix the price of commodities and compel the sale at such price
is as absurd and socialistic a plank as was ever inserted in a dem
ocratic political platform."
And yet this sentence is found in the same paragraph with the
sentence above quoted in which he declares that it is even now
violation of the Sherman anti-trust law for a corporation to attempt
to destroy a competitor by selling at a low and unprofitable price
where it has competition, and at an exorbitant price where it has
no competition. In what respect is our plan more socialistic than
the plan which Mr. Taft endorses? Merely in the fact that ours
can be enforced. According to Mr. Taft's logic, a plan is not
socialistic which is not effective, but the same would be socialistic
if made effective. Why should a corporation supplying twenty
millions of people for a corporation controlling twenty-five per
cent of the total product supplies one-fourth, or more, of our pop
ulation should such a corporation be permitted to sell at one
price in one part of the country and at another price in another
part? What reason can a corporation have for such discrimination?
Prices are not made as a matter of favor; when a big corporation
sells to the people of one section at one price and the people of
another section at another price. the cost of transportation being
taken into consideration there is a reason for it, and in almost
every case the reason is to be found in the effort to destroy a com
petitor. One of the most familiar methods of the trust is to under
sell a small competitor in the small competitor's territory the.
price being maintained elsewhere until the small competitor is
driven to bankruptcy and then the price is raised. That has been
done over and over again. It is open and notorious; and yet, with
the republican party in complete power at Washington, what effort
has been made to prevent this. This remedy, although vehemently
denounced by Mr. Taft, will appeal to the average man as not only
very salutary, but very necessary.
Fifty per -cent is fixed as the maximum limit. When a corpora
tion controls fifty per cent of the total product, it supplies forty
millions of people with that product. Is that not enough? Mr.
Taft's objection to this limitation can hardly be characterised as
statesmanlike. He says:
"A corporation controlling forty-five or fifty per cent of the
product, may by well known methods, frequently effecj, a monopoly
and stamp out competition in a part of a country as completely as
if it controlled sixty or seventy per cent thereof."
Why, then, does he not propose a lower limit? If the control
of forty-five per cent may constitute a monopoly, why docs he not
suggest that as a maximum? It can not be because of any disin-
