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The Commoner
.'22
nmfV f"flpf CT
VOL. 17, no. 1
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at
about as effective a method of com
petition as can bo devisod?
-Mr. Bryan. Well, I think that that
makes competition offectivo, provided
tho railroads of which those are
branches aro not thomselvos in sorm
combination by which they destroy
it. You see, there aro two ways of
destroy Ins competition; ono by tho
absorption of ownerships and tho
other is by tho association of man
agers. Tho Chairman. XCflJ and your
contention
Mr. Bryan. Wo have had somo
experienco with both.
Tho Chairman. Y our contention is
that theso great corporations,
through intorcorporato holdings,
crbato practically a monopoly?
TVIr. Bryan. My contention is, and
has been for many years, that there
should be no interlocking director
ates; that is, no man should be a di
rector of two competing corporations.
Tho Chairman. You realize, legis
lation has been onacted by tho nation-Mr.
Bryan. I am very much grati
fied to know that it has.
Tho Chairman. Now tako tho
Southern railway system, which op
orates in about 10 or 11 states, and
which is competitive with tho Atlan
tic Coast lino in part and with tho
Louisvillo and Nashville
Mr. Bryan. And the Seaboard?
Tho Chairman. And tho Soaboard
in part there, as I understand it
there woro many hundreds of small
stato railroad corporations that were
organized into this great system.
Mr. Bryan. I am not acquainted
with tho history of those.
Tho Chairman. I will state to you
ijrlouy their history. That consoli
dation or union of railroads, was ac
complished through tho Richmond &
Danvillo railroad, organized under
tho laws of Virginia, and to which
a very liboral charter was given by
the stato of Virginia without many
restrictions as to stock and bond is
sues, without many of tho restric
tions which have since been regarded
as necessary in both stato and na
tional legislation. And through tho
powers given to that Richmond &
Danville railroad of purchasing tho
stocks of other corporations and of
leasing other corporations that rail
way, as I understand it, has come in
to tho physical control of some 10,
000 or 11,000 miles of railroad which
had been operated' previously by in
dividual roads somo two or three
or four hundred in number. You
will realize, now, that was done for
tho purpose of promoting interstate
commerce.
Mr. Bryan. I should say that that
was not tho primary purpose.
Tho Chairman. No; not the pri
mary purpose perhaps of the incor
porators. Theirs was private, but it
was poBs'bly acquiesced in.
. Mr. Bryan. Yes; that may have
been incidental.
The Chairman. Upon the assump
tion that it advanced the interest of
interstate commerce. I now ask you
t whether you think it was wise, as a
matter of public policy, to permit
a single stato to ,create the organiza
tion that was intended to promote
tho national purposo of interstate
- commerce and to frame tho entire
organization that was to operate that
immense system in 11 states;
whether it was wise public policy to
permit a single state ro iwslate re
garding a matter in which all these
states wero interested"?
Mr. Bryan. My "answer is this, that
Aitis not necessary to restrict the
iH-power of the state to incorporate to
H ifie the federal government power
to regulate that corpbration when
ever it goes outside of the state that
organizes it. No matter what tho
stato of Virginia may say that a cor
poration can do, tho federal govern
ment can say what it can do outsldo
of tho stato of its origin when It en
gages in interstate commerce, and
tho Federal government can bo per
fectly indifferent to tho liberality, s
you so call it, of stato laws, because
they do not bind tho federal govern
ment, and theBo state laws do not
command tho railroads to do so-and-so,
they merely permit, and when tho
federal government says, "Wo will
not permit you to act up to the full
authority of your state outside of
your stato" there is no conflict be
tween It and the state, for mo stato
does not exorcise or attempt to exer
cise any compulsion. When it gives
this power it simply gjves permis
sion, and I can not see that any other
state should respect this power to its
own Injury any more than it should
allow a citizen traveling from Vir
ginia to another state to do In the
other stato anything that is harmful.
The state exercises tho right to say
what a citizen coming from Virginia
or any other stato shall do or can do,
and the federal government exercises
tho samo authority within Its bor
ders. Take the sale of liquor. If a
man goes from Virginia into West
Virginia or into North Carolina ana
attempts to sell liquor the govern
ment does not care where he came
from, It says, "You can not do that."
And so when a stato says that a cor
poration organised within its limits,
and under its laws can do so-and-so,
it does not interfere in the icust with
tho rights of any other state to say
it can not do it within its jurisdic
tion or tho right of tho federal gov
ernment to say it shall not do it any
where outside of its own Btate. I can
not seo that there is any conflict.
Tho Chairman. Regarding the
question of capitalization, wo will
assume that the Richmond & Dan
villo railroad, which changed its
name to the uthern Railroad sys
tem, was -organized for the purpose
of promoting interstate commerce in
11 states, and that each ono of those
states has a different view as to tho
rule which should govern the issue
of stocks and bonds, and that ennh
should declare that no corporation
organizeu in another state should op
erate in that state sa-o upon comply
ing with its requirements as to stock
and bond iBsues. That would bo a
condition which woutifoabsolutely
prevent, would it not, theneeting of
tho economic requirements of that
section by unifying these railroads?
Mr. Bryan. My answer would be
this, that the people of the state are
more interested in their own welfare
than any people outside, and thoV
would not do anything that would
hurt themselves, and if they do a
thing, you may rest assured that it
is dono on the theory that they are
helping themselves, they are protect
ing themselves. And I can not seo,
Mr. Senator, why a corporation, or
ganized in another state or organ
ized even under the federal govern
ment, if you succeeded in securing
such a change, should be permitted
to do In a state what an individual
is not permitted to do in a state. That
is, I do not see why a man-made cor
poration should have rights higher
than tho Qod-mado man.
The Chairman. Mr. Bryan. 1 do
not like to trespass on the time of
tho other members of the commit
tee, and J think I havo occupied your
time long enough.
Mr. Bryan. At what time do you
adjourn? '
The Chairman.- We adjourn at 12
o'clock. ,
Senator Cummins. Before Judge
Adamson interrogates Mr. Bryan I
have a suggestion to make.
Tho Chairman. Certainly; we
shall be glad to hear it.
Senator Cummins. I agree with
so many of tho observations made by
Mr. Bryan and with so much of his
reasoning, and tho people of this
country havo so great confidence in
his opinion, and I think each memoei
of tho committee ought to have an
opportunity to develop this subject a
llttlo further. At least I feel that
way, and I hope that tho chairman
can make an arrangement with Mr.
Bryan at some future time to resume
this inquiry so that all of us will have
a chance to go further into this very
important matter.
Tho Chairman. Would the com
mittee be disposed to go on this af
ternoon at half past 1?
Mr. Adamson. No, sir; tho houso
Is In session, and I havo never yet
been smart enough to bo in two
places and do two things at the same
time.
Mr. Bryan. I am compelled to
leave here at 4 o'clock.
Mr, Adamson. I shall join with
Senator Cummins in inviting Mr.
'Bryan to return here at a future day
and allow us all to examine him.
Mr. Bryan. I can now fix tho 16th
day of January as a day that I could
uso for that purpose.
Mr. Adamson. We are not em
powered to trade that far ahead yet,
because this committee Spires on
the 1st day of January, unless we
secure an extension.
The Chairman. I will endeavor to
fix a time that will be convenient.
Mr. Bryan. Of course, gentlemen,
anything that you require of me will
take precedence over, anything that I
have arranged for myself.
Mr. Adamson. I move that the
chairman arrange with Mr. Bryan to
return at some convenient day to re
sumo this discussion.
The Chairman. Without objection
that motion will be adopted.
Mr. Adamson. Has the chairman
completed his examination?
The Chairman. I should like to
ask another question. I stopped be
cause of delicacy. I thought I was
taking too much of the time of the
committee.
Mr. Bryan. So far as I am con
cerned, I could remain hero. rv un
til 1 o'clock, If it suited your con
venience; but I could not remain af
ter that hour.
Mr. Adamson. There are just two
or three questions suggested by your
questions, Mr. Chairman, which I
will ask, it you will allow me.
The Chairman. I will ask one or
two other questions, if you please.
Mr. Bryan, you are aware that with
reference to the national banks,
which serve national purposes re
garding our fiscal affairs and which
also -servo interstate commerce in
providing for interstate and foreign
exchange, that we have organized na
national incorporations. Would that
not suggest that in the exercise of
the national power with reference to
transportation, that we should organ
ize national Incorporations?
Mr. Bryan. To my mind it raises
neither necessity nor suggestion. In
the first place the national bank wa's
created as a war measure. The pri
mary purpose was to secure a market
for bonds. That purpose no longer
exists, but the bank has been found
to serve a commercial purpose; but
the bank is amenable to the laws of
tho state; and then remember that it
is no such institution as the rail
roads. For instance, the income of
all the banks is relatively small com
pared with the income or tho rall-
roads. The employees of all thT '
is small in number com ni.?
the number of employees ff. 2
L08' 1, 3.ero ,s "either the'orti
uciomLy nor a parallel uRA tC
would suggest the foUow ing 0 h!
example. My own opinion J
the necessity for the national banks
"mated?" "" PSSlbly
The Chairman. But would you
favor a reorganization of the national
bank system, and the restoration o
the state bank system?
Mr. Bryan. I would not say that
it was necessary because tho evils
such as they may be, are insignifll
cant, in my judgment, compared
with the evils that would To"
from the change wich is proposed
in regard to railroads, and then you
have an existing institution created
for a purpose no longer existing, but
an institution to which society has
adjusted itself, so that the abolition
of the bank would compel a read
justment. The surrender of state
authority over railroads and tho ex
ercise of exclusive authority by the
federal government would compel a
readjustment, so that In one case the
readjustment is an argument against
the changeyback, and in tho other
case it Is an argument against the
change proposed.
The Chairman. You spoke of the
necessities of war warranting the or
ganization of the national banks. Do
you take into view the fact that in
the future adaptation of the railroads
of the country to our national re
quirements for national defense do
you take that as an essential?
Mr. Bryan. I see no reason why
we need change our present methods
to give the federal government any
authority it needs. I think the plan
proposed by the President, of author
izing the taking over of the railroads
in cases
The Chairman. In cases of ne
cessity? Mr. Bryah. Yes, sir; would meet
that emergency.
The Chairman. That would mean
that for that purpose the national
government would practically oper
ate all the .railroads, or could oper
ate all the railroads?
Mr. Bryan. Only to the extent that
it was necessary, but that might be a
vorv Hmtfnrl ovtont fnv Jl limited time.
And then that is a contingency that
really I am less disturbed about than
some others.
The Chairman. You realize the .
fact, do you not, that while for many
years there was great complaint
about our national bank system,
and particularly about the money
control of the country, that com
plaint has-been largely done away
with by legislation enacted by the
national government, has it not.
Mr. Bryan. Tthink the creation of
this reserve system, with its twelve
financial centers, and its central
board, has very much relieved tne
public from the control that was ex
ercised through the banks, not neces
sarily by them.
The Chairman. Does not that di
minish, to some degree 7" "J
of faith in the ability of the national
representatives to meet tho require
ments of the hour with reference to
restrictive and controlling W
as to these great national lnstru
mentalities?
Mr. Bryan. Not when I reniwiMr
the difficulty we had in getting tw
law passed and the effort made,
undo it. . t
The Chairman. Do you think tnw
in the matter of the regulation w
transportation the states, acting
