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About The commoner. (Lincoln, Neb.) 1901-1923 | View Entire Issue (Oct. 1, 1914)
- -3 , The Commoner VOL; 14, NO. 10 6 K" WMH MA -f :! L?? . 1 s ! i ! . t i 0. t The Federal Trade Commission By Joseph E. Davies, Commissioner of. Corporations The first mouBuro in President Wilson's trust program has been enacted into law. The fed nral trade commission bill passed the senate on the 8th day or September; passed the houso on tho 10th day of September; and was immediate ly .transmitted to tho president. BRIEF ANALYSIS ' Tho following is a brief analysis or tho pro visions of tho bill: Organization: Tho commission is to bo com posed of ilvo members, whoso terms of ofllco are sovon years each, and not mora than throo of whom are to bo members of tho same political party; its employees in general are to bo under tho civil service; tho bureau of corporations is to' bo transferred to and merged in tho commis uloii. Declarative Law: Unfair methods of competi tion are doclarod to be unlawful. Power is given to tho commission to order such practices stop ped, whoro found, after all parties in interest have boon duly heard. Tho orders of the com mission are enforced through tho circuit court of appeals. . A defendant may also file a petition to havo an order sot aside, in tho circuit court of appoals. Findings of fact by the commission arq conclusive; the appellate court reviews only questions of law. Tho judgment of the circuit court of appeals is iinal, except that it is subject to roviow by the supreme court upon certiorari. Other Powers: The commission is also em powed: (1) To investigate and procuro fucts upon organization, business, conduct, practices, and management of corporations in interstate com merce, except banks and common carriers. (2) To require reports, under oath or other wise, from corporations or classes of corpora tins proscribed by the commission as to facts of organization, business, conduct, practices, man agement, and relation to other corporations, partnerships, or individuals. ((3J To investigate tho manner in which de crees under tho Sherman law are carried out, and to.malco report to tho attorney general. (4) To Jnvostigato violations of tho anti trust acts whenever dirocted to do so by tho pres ident or either house of congress. (5) To make recommendations upon the re quest of tho attorney general for readjustment o business of any corporation to comply with tho anti-trust laws. (6) To mako public such information obtain ed by it hereunder as it may deem oxpodlent, except trade secrets and names of customers. (7) To investigate trade conditions in and with foreign countries where associations, com binations, practices of trades, or other conditions may affect tho foreign trade of the United States, and to report to congress thereon. (8) To aid tho courts in the formulation of decrees in trust cases whenever called in by tho court. (9) To require by subpoena tho attendanco and testimony of witnesses and tho production of documents, and to examine and copy any docu mentary evidence of any corporation investi gated. (10) Penalties of fine or imprisonment are Imposed for failure or refusal to testify or to answer, or for making any false statement or false entry, or for mutilation or alteration of documentary evidence. Penalty is also made in the form of a forfeit of $100 for each day for failure to file reports within the timo required by the commission. Any employee or officer of tho. commission who makes public any Informa tion, unloss dirocted by the court, Is subject to fine or imprisonment. POWERS IMPOSED BY THE BILL: INTER LOCKING STOCKHOLDINGS-AND DIRECTORATES Tho Clayton bill as now pending in congress pro hibits interlocking stock ownership and direct orates, the effect of which is to lessen competi tion. Power to enter orders to enforce these provisions within its jurisdiction is also con ferred upon tho federal trade commission by tho Clayton bill. At the date of writing tho final form of the Clayton bill had not been agreed upon; but tho powers as above outlined are sub stantially assured. COMMISSION OP STRONG POV$S.? It is tq bo noted that tho bill provide for a commission with strong powers. The court re- viow provided for by the act is practically a "nar row review"; the findings of tho commission as to facta are in practical effect made conclusive. The procedure is made simple, and is expedited by direct appeal from the commission to the cir cuit court of appeals. It is adapted to speedy and expeditious determination of matters to tho benefit and advantage of business. FORECAST BY THE LATE JUSTICE HARLAN As far back as 189 3, the late Justice Harlan, in the caso of Interstate Commerce Commission v. Brlmson, 154 U. S. 474, pointed out that: "All must recognlzo the fact THAT THE FULL INFORMATION NECESSARY as a basis of intel ligent legislation by congress from time to lime upon the subject of interstate commerce CAN NOT BE OBTAINED, NOR CAN THE RULES ESTABLISHED for tho regulation of such commorco BE EFFICIENTLY ENFORCED, otherwise than through the instrumentality of an administrative body representing the whole country, always watchful of the general inter ests, and charged with tho duty not only of ob taining tho required Information, but of compel ling, by all lawful methods, obedience to such rules." (Capitals ours.) Thus did this great jurist foresee the neces sity for an administrative body representing the whole country, always watchful of the general interest, and charged with the duty not only of obtaining information as to the enforcement of the law, but charged with" the duty of compel ling, by all lawful methods, obedience to the rules of law as to interstate commerce laid down by congress. The federal trade commission bill seems to have been the fulfillment of- this need. ' It passed tho house of representatives without a dissenting voj;e, and it passed the senate with but five dis senting votes. FACTS AS TO CORPORATIONS There were 305,330 corporations, the United , States in 1912, according to reports made "to the commissioner of internal revenue. This number, of course, includes corporations doing business solely within a state (intrastate business), as distinguished from those coming under the juris diction of congress doing an interstate business! It is only over interstate commerce that congress has jurisdiction. Of this total, only about 8,700 have a capital ization of $1,000,000 or over. It should be noted that in this 8,700 are in cluded many corporations that are doing an in trastate business, and therefore are not included within tho jurisdiction of the federal trade com mission; and Included therein also are a large number of railroads and banking corporations, which are under the. jurisdiction of the federal reserve board and the interstate commerce com mission. TABLE OF CORPORATIONS AND CAPITAL Total number of corporations, 1912, 305,336 mimuer navmg less than $1,000,000 capital . . Number having capital of $1,000,000 and less than $2,000,000 Number having capital of $2,000,000 and less than $3,000,000 Number having capital of $3,000,000 and less than $4,000,000 Number havmg capital of $4,000,000 and less than $5,000,000 ... I Number having capital of $5,000,000 and less than $10,000,000 ... SGI Number having capital of $10,000,000 and lesn than $50,000,000 G52 Number having capital of $50,000,000 and less than $100,000,000 G2 Number having capital of $100,000,000 or over, 35 Total having capital of $5,000,000 or over..; 29G,G70 4,688,. t;399 ' ; G77.r 2 as : if . ' -fcr 1,610 305,330 T Derived from publications of the commission er of internal revenue, treasury department. Of the total number of corporations, only 1,000 have a capitalization of $5,000,000 or over. Hero again this number includes corporations en gaged in intrastate commerce, banks and. rail 10 Jid1 "' JURISDICTION OF COMMISSION ', " Orders on Unfair Competition: Probably tho most significant, and certainly tho function most discussed by congress is tho power of tho com mission to enter orders on unfair competition. Apart from control of transportation)! natural resources, it is generally recognized tha the most powerful factors in tho building up of mon opoly are unfair trade practices. In practically all of the government trust suits the pleadings UYQ full of declarations of unfajr methods of com petition, by which the monopoly had grown up. Some of these practices are as follows: . Bogus independents, Used to drivo out and de stroy competition. "Fighting ships and fighting brands," used to kill tho market of a competitor: ' Espionage and bribery. Refusal to sell to dealers unless lhoy,act as exclusive agents, to deprive competitors of mar kets and to destroy tliem. Refusal to sell article unless dealer or pur chaser agrees to buy certain other articles tied up in the contract of sale, for the purpose of de stroying competition. Cutting the price of an article locally, to drive out competition, and raising tho price elsewhere to recoup tho loss. All these and many others appear in the plead ings and decrees in the trust cases brought by the government. They aro generally alleged as a part of the conspiracy or as tending to show a monopoly or an attempt to monopolize. Where they have been brought together, showing a con spiracy in restraint of trade or showing a mon opoly or an attempt to monopolize, they have been condemned by the courts. There was con siderable doubt, however, as to whether the law has been sufficient to reach any one of these practices by itself.. The commission is given power to stop them IN ISOLATED INSTANCES, wherever they may appear, upon due hearing had, and to stop them before the restraint of trade has actually .been accomplished or before tho monopoly has actually been achieved. By prohibiting these practices in their inception, it is maintained that the seeds of monopoly are destroyed. There is promise, therefore, that by its rulings on unfair competition there will grad ually be built up a body of administrative law for the definite guidance of business in this field that is declared by many to be uncharted. The object and design of the legislation is to destroy monopoly and to provide for competition upon a sane and just basis. It contains possibilities of great promise ,for real constructive aid to the business world. It affords relief to the moderate-sized businesses of the country, those which have not attained monopolistic size, and which are seeking and must have protection from mon opoly and its weapons of unfair competition. SEEDS OF MONOPOLY DESTROYED According to the latest returns available, there o??ll I'6,00 corporations out of a total of JUo.ddb that had a capitalization of $5,000,000 or over, as shown in the preceding table. This is but one-half of one per cent of the corpora tions of the country. The great body of corpora tions, practically 303,000, are of a smaller cap italization than $5,000,000. There are 296,000 corporations that have a capitalization of under a million. Practically all of these relatively smaller units are subjected to the possibility of practices of unfair competition employed by their monopolistic rivals. It is to the great ad antago of this 95 per cent of the corporations ot the country, and to the great preponderance Si bu?mes men of the nation, that unfair piactices, the favorite weapon of these big units, may be stopped before monopoly has been cre- ?,,!f ian?i as hBComQ susceptible of proof in a suit by the government under the Sherman law. INFORMATION, PUBLICITY AN AID TO . , BUSINESS .""swntive law may prohibit tho interlock lh?!!;i i?resJ8' either through stockholding or n?JS? i dlrfctorates, or restraints of trade and n P,-yi buL up to tllIs tim there has been m, i! miniBJraJive agency of government direct um ri? ilivi? .attfentioa to the procuring of Si, nlbliGlty ls In itself a event corrective SS?S V Vlm, ,?ommssion is charged with the hpJp mn?fbta,l?n?1 th0 facts wIth reference to buR1Lmattr3 in,the lnterest of the public and mSrSSKn P!,,oyisIon is mae in tho law for the and the ?lke secrets, lists of customers, Benefit and advantage to business and to busi- '),