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Show GOUERCE Li AND THE TRUSTS TREATED 8, TAFT PRESIDENT HANDLES TWO I IMPORTANT IM-PORTANT TOPICS IN HIS SPE- CIAL MESSAGE TO CONGRESS. WANTS NEW COURT CREATED Tribunal Would Hear Cases Arising Under the Interstate Law Chief Executive Also U rges Federal I n-corporation n-corporation Statute to Suppress Abuses and Not to Destroy Legitimate Legiti-mate Combinations of Capital. Washington. Jan. 7. Noodvtl legislation con '"O ruins the inters tale lomnurre law and the control of trusts formed the subject sub-ject ol President Tail's special message to congress. The pi"''wident calls attention atten-tion to the partial failure of the -present com nten-e law to get results because of the frequent appeals from its decisions to federal courts and the slowness of the supreme court in deciding these oases. The message says : "Jt would not he proper to attempt to deprive any corpora rion of the right to the review by a court of any order or decree de-cree which, if undisturbed, would rob it of a reasonable return upon its invest -merit of would subject it to burdens which would unjustly discriminate against it and in favor of other carriers similarly si tit a led. What is. however, of supreme importance is that the decision of such questions shall be as speedy as the' nauire of the circumstances will admit, ad-mit, and that a uniformity of decision' be secured so as to bring a bout an effective, effec-tive, systematic and scientific enforcement enforce-ment of the cornerce law. rather than conflicting decisions and uncertainty of final result. Recommends "Court of Commerce." "I''or this purpose I recommend the establishment es-tablishment of a court of the United States composed of rive judges designated desig-nated for such purpose from among the circuit judges of the United Slates, to be known as the 'United States court of commerce,' which court shall be clothed with eNclusive original jurisdiction jurisdic-tion over the followi ng classes of cases: '1) All cases for the en Km ement, otherwise oth-erwise than by ajudication and collection, collec-tion, of a forfeiture or penalty, or by infliction in-fliction of criminal punishment, of any order of the interstate commerce commission 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. 1 i "(3) All such cases as under section p of the act of February 19, 1!K3. known as the 'Elk ins act,' are authorized to be maintained in a circuit court of the United Uni-ted Slates. "(4) All such mandamus proceedings1 as under the provisions of section 20 or section sec-tion 2S of the interstate commerce law are authorized to be maintained in a circuit cir-cuit court of the United States. "Reasons precisely analogous to those which induced the congress to create the court of customs appeals by the provisions provi-sions in the tariff act of August 5, 1!)09, may be urged in support of the creation of the commerce court. "In order .to provide a sufficient number num-ber of judges to enable this court to be constituted it will he necessary to authorize author-ize the appointment of five additional circuit judges, who, for the purposes of appointment, might be distributed to those circuits where there is at tiie present pres-ent time the largest volume of business such as the second, third, fourth, seventh and eighth circuits. The act should empower em-power the chief justice at any 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 additional amount as is necessa ry to bring their annual 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 judgments judg-ments should be made final, subject only to review by the supreme court of the United States, ' with the provision that the operation of the decree appealed from hall not be stayed unless the supreme court shall so order. The commerce court should be empowered in its discretion to restrain or suspend the operation of an order of the interstate commerce commission commis-sion under review pending the final hearing hear-ing and determination of the proceeding, but no such restraining order should be made except upon notice and afetr hearing, hear-ing, unless in cases where irreparable damage would otherwise ensue to the petitioner. pe-titioner. A judge of that court migli t be empowered to allow a stay of the commission's order for a period of not more than 60 days, but ponding application applica-tion to the court of its order or injunction, injunc-tion, then only where his order shall contain con-tain a specific finding based upon evidence evi-dence submit led to the judge making the order and iden titled by reference thereto that such irreparable damage would result re-sult to the petitioner, specifying the nature na-ture of t lie rl a n i a ge . ' ' "Under the existing law the interstate commerce commission itself initiates and defends litigation inv the courts for the enforcement, or in the defense of its orders or-ders and decrees, and for this purpns'- it employs attorneys, who, while subj'-ct to the control of the att nrney general, act upon the initiative and under Die instructions instruc-tions of the commission, This blinding of administrative, legislative and judicial judi-cial functions tends, in my opinion, to impa ir the efficiency of the com mission by clnlhlntr it with partisan charact'-ris-tics and robbing it of the impartial judicial judi-cial attitude it should occupy in passing pass-ing upon quesl ions submitted to it. In my opmion all litigation affecting the government should be under the direct control of the department "f iusti'-e; and T the reform recommend that all proceed -incs n ffecting orders a nd decrees of the inters i a te com tm rep pom nii;s,'on be hromrh t by or a uai nst the T'ni' Pt ates eo nomine, and h" planed n char're nf an assis'ji'it n t rnrrvv gnnej 1 arC'iT " 'vli-r the d''Cfion of the attorney it'-th nil." Would Permit Agreements. Cominer to the subject of railroad p'vds and traffic agreements. the president sa vs : 'The Republican platform of expressed ex-pressed the b.-Tff that the interstate commerce la v ' y horld be fur' her a m-nd-ed so as to. cive ibn railroads i!m- ri g !i t lo make any public tralh'- agreements sohj.-et to the nnproval of the commission, commis-sion, but ma in -c ning -'ilv;iys tie- pr: n-eiple n-eiple f com n ti t ion hetw-'-n na'.urnlly competinc lirv s. ard .avoiding t )v mm-mnn mm-mnn ron'ro of such lines by any nw ans wha;sever. "In view of the complete control over rate-making, and other pnvticcs of Interstate In-terstate carriers established by the acts of congress, and as recommended in this oHniimnhcalinn. I see no reason why as I'eenient S lie, eel t a 'Tiers Sll hjeel 1 O tiie ;oa. speriiying the ; i s i lica u on s til" freight and the rales, lares an-l riuii'ms I r I tv. ns.. rta ii m of ! .---' a S'1 rs and fr. isiit which they may agree lo establish, estab-lish, should mil I permit leii. provided, enpits of such ;ig:-'--aneiits !. promptly tiled with the commission, but subject to all t he provisions of I he in t erst a com-ni'-nr act. and subject to tiie right of any par lies to such agreement to cam-el it "as to all or any of the agreed rates, fares, charges, or classtti--aiions by ?M days' notice in writing to the other parties par-ties and to the commission." Other Amendments Urged. Tn a--cord with other declarations of the Republican pialform of VM the president furl her recommends that the interstate ionuneree law be amended so as to provide, pro-vide, that no railroad company subject to the commerce act shall, directly or in-direetlv. in-direetlv. acquire any interests of any kind in capil al stock, nr purchase or lease any railroad, or any other corporation corpora-tion which competes with it respecting business to which the im . -state commerce com-merce act applies; that a law be enacted enact-ed providing "that no railroad corporation corpora-tion subject to the interstate commerce act shall hereafter for any purpose connected con-nected with or relating to any part of its business governed by said act, issue any capita! stock without previous or simultaneous simul-taneous payment to it of not less than the par value :,f such stock, or any bonds or other obligations (except notes maturing matur-ing not more than one year from the date of their issuel. without the previous previ-ous or simultaneous payment to s.uch corporation cor-poration of not less than the par value of such bonds, or other obligations, or, if issued at less than their pa r value, then not without such payment of the reasonable market value of such bonds or obligations as ascertained by the interstate in-terstate commerce commission : n nd that no property, service, or other thing than money, shall be taken in payment to such carrier corporation, of the par or other required price of such stock, bond or oilier oili-er obligation, except the fair value of such property, services or other thing ascertained as-certained by the commission." Would Prevent Wrong Practices. The president continues: "1 believe these suggested modifications in and amendments 10 the interstate commerce com-merce act would make it a complete and effective measure for securing reasonableness reasonable-ness of rates and fairness ot practices in the operation of interstate railroad lines, without undue preference to any individual individu-al or class over any others. "By my direction the attorney general has drafted a bill to carry out these recommendations, which will be furnished fur-nished upon request to the appropriate committee whenever it may be des.red. "In addition to the foregoing amendments amend-ments of the interstate eummeree law, the imersia t e commerce commission should be given the power, after a hearing, hear-ing, to determine upon the uniform construction con-struction of these appliances such as sill steps, ladders, roof hand holds, running boards and hand brakes on freight cars engaged in interstate commerce used by the trainmen in tiie operation of trains, the defects and lack of uniformity in : which are apt to produce accidents and ; injuries to railway trainmen. The won- j derful reforms effected in the number of switchmen and trainmen injured by coup- i ling accidents, due to the enforced in- I troduction of safety couplers, is a demonstration demon-stration of what can be done if railroads are compelled to adopt proper safety ap-plia ap-plia nees. "The question has arisen in the operations opera-tions of the inierstate commerce employers" employ-ers" liability act. as tp whether suit can be brought against the employer company com-pany in any place other than that of its home office. The right to bring the suit under this act should be as easy of enforcement en-forcement as the right of a private person per-son not in the company's employ to sue on an ordinary claim, and process in each suit should be sufficiently served if upon the station agent of the company upon whom service is authorized is made, to bond the company in ordinary actions arising under state laws. Bills for .both the foregoing purposes have been considered con-sidered by the house of representatives and have been passed, and are now before be-fore I the interstate commerce committee of the senate. I earnestly urge that they be enacted into law." Control of the Trusts. The second part of the message is devoted de-voted to the control of trusts. After a lengthy discussion of trusts, good and bad, and the success of prosecutions under un-der the Sherman ami-trust act, Mr. Taft savs : "It is the duty and purpose of the executive exec-utive to direct an investigation by ihe department de-partment of justice, through the grand jury or otherwise, into the history, organization, organ-ization, and purposes of all the industrial companies with respect to which there is anv reasonable ground for suspicion that they have been organized for a purpose, and are conducting business on a plan which is in violation of the an ti-trust law. The work Is a heavy one, but it is not beyond the power of the department depart-ment Of justice, if sufficient funds are furnished, to carry on the investigations and to pav the counsel engaged in the work. But such an investigation and possible prosecution of corporations whose prosperity or 'destruction affects the comfort com-fort not only of stockholders but millions of wage earners, employes, and associated tradesmen must necessarily tend to disturb dis-turb the confidence of the business community, com-munity, to dry up the now (lowing sources of capital from Its places of hoarding, and produce a halt in our present prosperity that will cause suffering and strained circumstances cir-cumstances among the Innocent many for faults of the guilty few. The question which I wish in this message to bring clearly to the considerat ion and decision of the congress whether to avoid business danger something cannot be done by which these business combinations may be offered a means, without great financial finan-cial disturbance, of changing the char- ; acter, organization and extent of their business into one within the lines of the law under federal control and supervision, securing compliance with the anti-trust statutes. For Government Control. "Oenerally. in the industrial combinations combina-tions called 'trusts.' the principal business busi-ness is the sale of goods in many states and in foreign markets; in other words, the Interstate and foreign business far exceeds the business done in a ny one state. This fact will justify tin' federal fed-eral government in granting a federal charter to such n combination to make fnd sell in interstate and foreign commerce com-merce the product s of useful ma ntifac-ture ntifac-ture under such limitations as will secure se-cure a complin nee with t he a nti-t rust law. It is possil.l" so to frame a statute that while it offers prot eetion to a fed-era fed-era 1 com pans- a ga i nst harm t'ul. vxntlmis and unnecessary i nvasion by the yt a t es. it shall subject it to reasonable taxation , and conlrot by Ihe s'ates, with respect to its purely local business. ".Many people conducting great businesses busi-nesses have cherished a hop" a nd a belief be-lief that in seme way r other n line ma y be drawn bet ween ''-rood troy's and 'had t rust s.' a nd tha ' it is possible by amendment to the an:i-r'ist I'-.v to maW a diyiineiion under which trood combinations combina-tions may In1 permitted to oi-sanize. sun-prey sun-prey eoriT'-t i t: on. control pr:c. y. and do it all legally if only Ihey do not nlm the power l.v taking t io LTeat profit out of the business. They point with force to certain notorious trusts as having thrown into pow-r t h rough cp mi na 1 met hods by the use of illeL'al rebates and plain ''healing, ''heal-ing, and by va nous net s ut terl y violative of businecc honesty or inorabty. and urge the establishment of peine legal line of yep: i ri t ion bv which 'c-;n;i na 1 t rusts of t'is 1'ind can ! pi : n M : . and thev. on -de oHe-i bnrd. lie termMte,! under the la w to '-..j--',- i ,. their business. Xo w. r.cl.li ami e-p.-emjiv the busin'-ys OU Oh' CO gilt to r d t I. e;n - ve of the idea that such a distinction is pracl ic- able or can be introduced into the stat- U "In considering violations of the antitrust anti-trust law we ought, of course, nor to I.u-et that t hat law makes unl.i vhl, meiiiods of carrying on 1 i 1 1 . ss wiiiill be-, .re US passage v. ere regained as evidence evi-dence of husinos saigucil y and sueo ss, and that ih. v were ueno.moed in lois a'v L not Ik cause ol their intrinsic imntoral-itv, imntoral-itv, but because of the dangerous results re-sults lowaru which they t"i:d d. me concentration con-centration of in dust rial pow er in ice iiands of tiie lew. leading to oppr-s-siou and injustice. In dealing, thei. iorc w it h manv of t he men who iia e used the met hods comb mind by the slat uie for the purpose of ma.iuainig a profitable profit-able business, we may well la- Mi;aie a change bv inem in the method ol doing do-ing business, and enable them to bring it back into the zone of lawfulness, without losing io the country the eeoiiomy of management by winch, in our domestic trade' tiie cost' of produolion has be. :i materially 1-ssened. ami in competition with foreign manufacturers our toivig.ii trade has been greatly increased. Asks National Corporation Law. "I therefore recommend tr.e enactment: by congress of a general law providing for the formation of corporations to engage en-gage in 1 rade and commerce among t states and with foreign na::ons. protecting protect-ing them from undue interference by the. states and regulating their activities so as to prevent the recurrence, under na-, tional auspices, of tnose abuser. v bu i; have arisen under state control. Such a law should provide for the issue of stock of such corporationas to an amount equal onlv to the cash paid in on the stock; and if the stock be issued for property, then at a fair valuation ascertained under un-der approval and supervision of federal authority after a full and complete disclosure dis-closure of all the facts pertaining 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 proper i y onh of such corporations cor-porations to the siiiit1 taxation as imposed im-posed by the states within which it may be situated upon other similar property 1 located therein, and it should require- : such corporations to tile full and com- ! plete reports of their operations with the j department of com m en e a nd labor a t j regular intervals. Corporations organized under this act should be prohibited from acquiring and holding stock in oilier cor- i porations (except for special reasons upon I approval by the proper federal authority), author-ity), thus avoiding the creation, under national auspices, of the holding company with subordinate corporations in different stales which has been such an effective agency in the creation of ihe great trusts and monopolies. State Laws Conflict. "If the prohibition of the anti-trust act against combinations in restraint of trade is to be effectively enforced, it is essential essen-tial that the national government shall provide for the creation of national corporations cor-porations to ca rry on a legitimate business busi-ness throughout the United Slates. The conflicting laws of the different states of the union with respect, to foreign corporations corpora-tions 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- ' binalions is intended to furnish them a refuge in which to continue industrial business under federal protection. It should he said that the measure contemplated contem-plated does not repeal the Sherman antitrust anti-trust law- and is not to be framed so as , ! to permit the doing of the wrongs which ; it is tiie purpose of that law to prevent, J ! but only to foster a continuance and nd- vance of the highest industrial efficiency without permitting industrial abuses. "Such a national incorporation law will be opposed, tirst, by those wiio lie lie ye that, trusts should be completely broken up a nd their property destroyed. 1 1 will be opposed, second, by t hose who doubt j the constitutionality of such federative ." : corporation and even if it is valid, bjoct. to it as too great federal eentupii.ationf It will be opposed, third, by those wloi will insist that a mere voluntary inc'-poration inc'-poration like ttiis will not attract to its assistance the worst of the offendi j-s against The anti-trust statute and who will therefore propose instead of it a system sys-tem of compulsory licenses for all federal feder-al corporations engaged in 1 ntcrstate, j business. w "1 jet us consider t hese object ions in their order. The government is now try- ,f ! ing to dissolve some of these combina- n ! tions and it is not the intention of the U government lo desist in the least degree. JJ in its effort to end these combina 1 ions which are to-day monopolizing- the commerce com-merce of this country; that whore it appears ap-pears that the acquisition and concentration concen-tration of property go to the extent of creating a monopoly of substantially and directly restraining interstate commerce, it is not the Intention of the government to permit t Ids monopoly to ex ist u nder federal in corpora t ion or to t ra nsfer to the protecting wing of the federal gov-j gov-j ernmen of a state corpora t ion now violating vio-lating the Sherman act . Hut It is not, I and should not tie, (tie policy of the gov- eminent to prevent reasona bio concen- f : t ration of ca pit al which is necessa ry t o J the economic development of ma nufac- f I ture. trade a nd commerce. ... ! May Doubt Constttutidnality. ', j "Second There are those who doubt the J 1 constitutionality of such federal incorpor- i ation. The regulation of interstate and v 1 ! foreign com'nierce is certainly conferred ' I in the fullest measure upon congress, and I if for the purpose1 of sei uriug In the most, thorough manner thai kind of regulation, congress shall insist that it may provide and authorize agencies to carry on that commerce, it would in to be wit bin its power, t ins has been disi i net ly a (II rmed wi th respect lo railroad en in pa nles doing an interstate tuisinc: s and interstaio bridges. The power of incorporation has been exercised by congress and upheld by the supreme ci n;ri in this rega rd. i M'hy, then, wil h respe. t to any other ' form of interstate commerce like "the sale of goods across state boundaries and Into foreign countries, inav the same power not be assert ed 7 I ml I, it is the very - fact that they carry on Interstate commerce com-merce that ma ices t h y grea t i ndusl ria 1 concerns subject to fe..-ial prosecution and co nt rid. I low fa r as incident a I to the carrying on of that commerce it may be within the power of the federal government gov-ernment to authorize the manufacturer of gofids. is perhaps more open to discussion, discus-sion, though a recent Oerisinn of the supreme su-preme court warn Id seem to a nswer that question in the affirmative. "The third objection, that the worst offenders of-fenders will not a crept federal incorporation. incorpora-tion. Is easily a ns wvn-d. The dec re, -h of injunction recently ' adopt ed in pro;..o.j tions u nder tiie a nt i-1 rust law a re -t borough a nd swo'pinn thai the corpora- ' lions iffeeed bv them have but thrre i course s before them " Kirs! . t hey must reyn) vp I heuisolvcs into their component parts in the different differ-ent states, with a consequent loss to lheniseh.es of capital and eif.-eiive orgaiir izaliou and 1o the country of concentrated concen-trated energy and enterprise, or second, in defia rice of t lie law and u nder some secret trust 1 1 icy must attempt to con-t con-t i niii' 1 1 ie'r business in viola t ion of the fed ral statute, and thus In ur Ibr pen-allies pen-allies of cont i-iii pt a nd bri ng on an inevitable in-evitable riminal proseeuiion of ihe individuals indi-viduals named in the deeri e arid their associates: as-sociates: or "Thl rd. liii'v tn nst reon-a nize and accept ac-cept in goor fain, the federal charier I 4 sie-est a feder-. co ri i p u 1 yo i' v license law. tin." d as a substitute (or a federal Incorporation Incor-poration hi w. is unnecessary e; cepf to reaeli that kind of corporation which, hv ' virtue of the eonsidern t inns a 1 read y ad- L vanced. will t ii'e advantage voluntarily of an ineorp.trition law. w h i h l ho other state corT'' l a l ions doi nt' an i rd orvt a l e hi I fa II ess do ,H, perx) tie y u p r V i s i O 1 or the n gnhitjon of federal hre,rJ,. ;im would o,,jy he nnueeessa rjv burdened, thereby." |