Show Ii i FEDERAL FEDERAL CONTROL f II I OF CORPORATIONS I Commissioner H K Smith Urges I It in Report to Secretary of 4 and Labor WOULD CONFER BIG BENEFITS I Woul Involve No 0 Drastic but butI butI I I II H Is Ills Conclusion Washington Feb Fb groat Interstate Inh trios cnn can be brought under permanent fc federal emi lion through n a or of regular re reports t ports orts to a agency In a rational wa way which will Involve no drastic action but on tho allI 1111 forestall It II is the tho conclusion drawn In tho annual report of tIer bert bort Knox SmIth commissioner or of to the secretary of corn com comI moree and labor laborThe laborThe The report was motto mUlto public tOlla today I r Publicity will improve the tho sun stand lug InS or of our securities boLh at home and abroad Mr Ill Smith do de deo dares and will help to give glo out our o business machinery that foundation of oC oCI fairness and openness and public con conI I 1 fi enco which It must have havo lr If It Is to tobe tobe I be n a permanent factor In our na lional advance It will brIng together tho govern t I mont and the tho corporate manager In nn and cooperation while one onen contInuoUslY tho an n serve to and changing relationship hItI between our business forces and the public welfare Mr Smith contends that already alread un uner er condemnation made ide b by facts plainlY stated slated great Ireat cor corporate corporate abuses have been abandoned lie He 8 says 6 that a gigantic system of oC oCr railroad rate discriminations harns been r wiped awn away and numerous forms ot of otI commercial oppression diminished I Corporate managers themselves says Mr Smith are arc frankly advocating a amore more open accounting TEXT OF SMITHS REPORT The report In full tull follows Department of ce and Labor Bureau ot of Corporations Washington 31 1910 1 deepest Interest ot of thIs lies In the control of Its commercIal forces The Is IR IRme me nb ts Is moral involving deeply our merican ideal of equal opportunity under the law It Is and on onit Its it outcome the ultimate of oC our busIness system The Tho corporatIon hn has become the tho ac machinery for tor handling these forces It Is the artificial creature ot of the community We e have given bIen It Teat great powers and exemptions not permitted to the Individual We have made It effective We e ha have made It capable of oC sinister Inister misuse The corporation has concentrated enormous commercial power In the hands of a few tew men At the same Ume It has hns l lessened theIr pel personal onal r responsibility for the proper Use of oC that hat power Sense ot of personal lion tion to the community becomes In vast aIt corporate entities rho rhe resulting abuses can enn for some somo restraInt that shall talco the e of the tho old obligation Govern Goorn Government ment and publIcity or of corporations corporation must be that substitute The Issue Is national I action by the federal government Is imperative under Its unquestioned power and duty to regulate commerce The federal government Is the only ado ade adequate quate authority ono of the tho PrimarY prImal motives motle for tor Its creation cr atlon vas nO for a national business T Those lose dIrecting our great have hae deliberate I nationalized them In size and scope they cannot be hearth to object to a centralized control which the they them themselves selves have hae made mado necessary The They have havo made their busIness tru truly govern governmental mental In their effort on the people The They cannot now den deny that the tho gov government government Is concerned therein GOVER GOVERNMENTS DUTY As guardian or of the nations welfare the government must see to It that the tho ordinary standards or of right and fairness which restrain our individual citizens shall also be to our great modern businesses It must make mako sure that Ute the business machinery of the country countr shall be preserved from such as would ultimately ultimate I destroy It Conditions confront Hi which are arenow I now determining the tho future I IA A t process or of evolution Is going on within our commercIal or 01 Two types or of corporate I managers are arc struggling for Its HII con control 1101 Tho one like most business businessmen men basEs his II lug the effIcIency of his I lion lie he acquires and holds his busi business ness nc b by better service or lower prIces price rue Ihn public thus shares the tho or of his lIe buIlds up our In industrIal strength Tile other not b by hi his own but h by crippling the thc efficiency ncy of IW by railway b by un unfair full fair corn competition b 1 commercial hy by public monopolIzed for gaIn not b by S giving 1 better re reice Ice hut hill II iy unfairly preventing others Irons from giving any In service If this process contInues continue It will the control or of our forces to the corn coin to the Injury of oC tIle the na isa lion tion a nil the ruin of oC indivIduals the bure bureau U of oC corporatIon tile the government has hns deliberate deliberately ly Iv taken the side of the tho fair user ot of our commercial forces Corces The Tho Instrument or of tho tim bureau In Its worl has hns been ef f It H has hns on the I souse of oC people Its it compelling force when conceit I t I on a busness It lies reported teS to o the o country I clearly and the operations I of great e Industries tr I Business e f facts and their 1 TI TIe meaning l have e been set t forth I iii I such luch brief and Plain as to be b I available through the iress S for th tilt M I IgO citizen It hs ht thu evolved that thal public opInion that will protect business s and condemn unfair It has been beon pioneer work on eu I a vast ast subject but this tho results have hIe shown what can enn he lone done and ho how to do Ii It A great awakening Inken place In years as to our business nieth e ds R The bur bureau lu does oes not a assert that It has done ilon anything titan than alii aiti in inthis this process s But it Il dl contend that thal the ilie principles which It has liis lI used are till thit have brought about his advance and will it IL bureau has hns by I results sult that 11 ils methods ii nt for Cor broad application the lul public lIc titus made e possible ible b by facts plainly stated staled 1101 t corporate hu have C been heln n abail A sweeping of rate discriminations has been volun canceled b by thc lie railroads In oled and numerous forms of at corn com mercial oppression have diminished Corporate managers are arc more open account accountIng log Ing One 11 13 one the great silent cor are arc seeking public confidence by adopting II a new policy of publicity TIlE SITUATION The situation Is thUs read ready for a cons com complete where 1 nil all Important interstate commerce corporations corporation shall make reports to a federal agency whore where 2 that agency shall have hae the further right to verIfy and amI ox ex extend tend the facts presented whore 3 business transactions or of public Interest shall be bc mado public safeguarding at tue tho same all proper Jr so se crots where 4 there wm be a pernia nent ground fOI cO cooperation and adjustment bet w n the tho govern mont ment and business interests and 5 whereby those thole corporations shall deal deai fairly and open openly shall correspondIng correspondIngly ly h acquire public confidence and sup support port Tue rhe exact form of this Is of at little importance The must be had for the primary purposes of Cf the tue government and the citizen Co Ce Cooperation operation nl also o must he be had should as far as be voluntary Corporate managers are recognizing the I by this new nelV spirit the system of oC supervision lon must provide for lion Prosecution Is In Indeed to destroy unfair methods motho fj but a t should be reserved n as the tho last resort rather than used as the no mal instrument I The bureau has proved the practical value alue or of cooperation In 1908 It point pointer pointed er ed out certaIn defects In the tho method ot of the tho New Ness York and Now Orleans cotton exchanges Each exchange at once offered d to confer with the cons com commissioner missioner As U ii result of such eon con conference ference the New Orleans exchange a adopted opted b by a practically unanimous Vote ote the entire recommendations or of ortho the tho bureau This Im improvement provement affecting beneficially the tho various arlous Interests ln in that great staple was secured simply by publicity and voluntary cooperation In short our great Teat interstate Indus Industries industrIes tries must come under permanent na national national supervision The bureau has proe proved that this can be secured In a a rational and effective way A system tom tem ot of practical publicity with en co cooperation operation will obtain that requisite for all measures reliable inform atlon It will invoice no drastic ac action tion It will trill indeed forestall such action It II will bring brinE to together ethel the government and tIm tho corporate titan man manalel alel ager In conference and cooperation which alone can serve to adjust con the complex and changing relationship between our business for Cor forces ees ces and the welfare It will direct against business evils the over overwhelming whelming force Corce of oC pUblic opinion It II will 1111 be hacked backed b by and mado effective penal law where prosecutIon Is far ear Such publicity will wron wrong beforehand of C punishing Isolated cases afterwards It will remove Unjust prejudice It wIll the stand standIng In of our I securities both at homo lionso und urn abroad I I It will tend toward more mOlo open and mOlo corporate accounting Finally It will trill help to gle our busl hors nels that foundation of oC fairness anti openness and pUblic coo lI ence which It must have if IC It Is Isto Isto to be u a permanent factor In our na national nathonal advance adanee WHAT HAS DONE The total appropriations of oC the lie hu ho hureau horeau reau for the th year ear ended June 30 1909 were lere S The number or of tin em on On Del it H 14 1908 1903 at the reque jt ot of the of if the committee on and nuil mean of the house of oC rep re resi and un under el thus the lOll of oC the president the bureau fur fill that hiat In connection with Its hearings on tile the 1110 posed tariff bill with a statement us as asto to the lie costs prIces and anel profits con connected with the thi production of oC standard rails for the years cus 1902 to 1900 ive On Dee Dec 17 1905 the tho bureau In response to a similar request Lot fur to tue tho chairman of oC the soul a statement as to the costs and profits In connection with the pro production of oC steel both Bessemer and open hearth basic Tue fhe Information ion tion In iii both of oC these was hart parl of the data secured by the lie bu bureau bureau reau In tue tho course ot of Its investigation of the lie Iron and steel sled industry and while brief In form was unique In its Il accuracy and scope The data as to rails covered producing than 13 03 per cent of oC all the rails mils manufactured In the United States luring during the period covered The In formations as to billets covered the entire Be Bessemer semer ingot of oC the ho country and more than 75 per cent of the tho open hearth Ion for the period coveted The de detailed detailed tailed facts upon which the ho statements were based were vere taken directly from the books ot of the companies In lag the rails ralis and the steel On Feb 25 1909 the bureau published part r I or of its report on tue tho tobacco industry This part dealt with the position of the tobacco combination In the industry resulted from a thorough boroughs examination ot of the organization and development of the Amer AmerIcan Ican Tobacco company campan and Its sub subsidiary concerns It also Included certain Independent tobacco corpora corporations corporations The American Tobacco corn com compaU paU pany gave the ho bureau free access to all its lis very extensive and voluminous records so 10 that the bureau burau was able to present an unusually corn com completo pleto and satisfactory history ot of the organization of one or of the tho great in corporations ot of the country countr Ad Additional parts are arc no now In course of preparation I n On May 17 7 1908 the bureau publish ed eu part I of Its report on the taxation of corporations This concerned the system of oC taxing manufacturing mer mercantile cantile transportation and transmission transmission sion corporations In tho ho six N New w Eng England land lanel states The uniform presentation or of these theNe systems allows of oC comparison and th purpose or of the report was to tomake tomake make tho ho general prIncIples and practises ot of taxation In these states avail available available able In concise and shape for Cor the average reader Financial re results suits of each system for the latest fiscal year were given In each case cuso lie principal state officials were wele consulted at length ns as to methods and practical enforcement No taxation system can be properly understood from a mere mero examination of statutes statute or without thereto tL n of the method and practical results ot of Its on Similar reports as II to other sections ot of Ito tho country are arc In course of oC preparation The subject Is of oC such groat current Importance and involves such differences In theOl theOla theory a and practise that It is believed that such stich presentation will have hae vcr very con value On June 4 I 1909 the bureau prepared for tor the a report on the prices of oC tobacco and operations ot of corpora corporations corporations and anel others healing dealing therein In response to a senate resolution adopt adopted ed Cd May Iu 14 11 1909 Tate president trait the same sante to the senate where shere It was largely largel consulted In with certaIn proposed changes In the Internal revenue tax on tobacco products On June 30 1909 the tho bureau hud had on hand as current work investigations Into the tho lumber and steel industries the tho International Harvester company the concentration of water power own ownershIp tonI transportation by I water In Inthe the tho United States and also continuing Its investigations Into the tobacco In industry the operations of oC cotton ox ex changes und ltd state systems or of corpora corporate to taxation FUNDA FUNDAMENTAL PURPOSES It Is i one of oC tho ho pur purposes purposes poses Of C the lureau hureau to available for fOI Ito UIO average citizen through the tho dally daIly press the informatIon tItus col coi collected all as to great interstate businesses Accordingly According each ot of Its published ro ports man many of which were several hundred pages In length has been ac accomplished with II a summary usually front from 20 to 50 j pales pages long nn and again with a still more compact digest In the shape shapo of oC a letter of submittal to the tho president usually front from fIve to eIght This letter ot of submittal states Very er the Important facts and conclusions all as to permanent an and sIgn con conditions and tendencies In the Ito industry un or Investigation and has ha been the Ito real medium ot of general pub publicity licit It has been especially rained In each euch case with a ot of the tho needs ot of the press und and M as a a rule these lot let tars have hae been b by the tue news nOWR over oer the tho whole country In full We c term such Buch work pub It obViously ly requires on nn or 01 organization es especially hI II adapted Undo Under the immediate supervision of Ito tho commissioner Investigation Is usually iii charge ot of ono one man who by reason of his hIgh economic training technical business exper hence lonco and anil executive ability Is able ablo to organize tho ho collection and digesting ot of tho ho vast ot of Information needed and to draw reliable conclusions as to tho ho Important facts and tendencIes |