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Show TAKES UP 181 PROBLEM Only Matter Touched On In President's Message to Congress Additional Legislation to Strengthen Present Statutes Is Recommended Defends Standard Stand-ard Oil and Tobacco Decisions 04 to ocompllah ttio puryo . ; M a rlr poth for ionot nir'lianis mid butltirra nun to follow. It may bo Out ouch plan will bo evolved, but I meruit me-ruit that the dlncumilana wlilth Iirv bB brmiKht out In ro'nt d by tho far of tho rnntlnurd rxorutlon of thu ntl-tnmt ntl-tnmt Ibw hove produti-il nuthlna but s'lt" ti-rlna rnTMtlr and hnv offeroJ no line of ttlKtlnrtlun or rulo or action d'tt-tilto d'tt-tilto and h rli-or Bo that which tho Hn-pri'nio Hn-pri'nio court Itoulf biys down In onturclnf the ltttutc Supplemental Leg'slatlon Needed Not Repeal or Amendment. I o nn objTtliiii Hint liulii'il I con ooo ilrrlilfit nilvniitiiKoln thn rnni lmrnt of a Ihw hlc h oliull ili-m-rlb ami di iMunro iiii-thodo tt I'liiiipwitloii, wlil ti nre unfair 1111. 1 nr luiilsi'o of tho unlawful puiputo ili-noiiliietl In tin- nntl triiMt Ihw. Thr trmii ami purpuii tn aupprfiK ciiiiii-tl-tor by umli tBi llli: him Bt piici '" IUoIIihI.Ii no to ilrivi' hlni out of tiuin". or Ihi' iimklim of rxcliiHlv contrnrtii with iMimntiii-r iin.l'T wlitrh tln v an- r.'iiili i-l to kIvo up BuMocliitlon with othrr tnanu-fni'iuri-i'M. ami numi rous klmlri'd iiH-lhoila for nllllliiK lompi tltlon unit I'Ti-itlnu m-liopoly. m-liopoly. Hhotilcl tin (Ifmrlh'-il with oufftrli-nt Hci-urm-v In n i-rlnilnal iitiituti' on th on IihihI to rnuliln the Kovi'inmi'iit to liort-n liort-n It IiihK by froiiTUtlnit uliixlo mlml-tm-Hiior limti'iul of an iMitlr runnplrary, unit, on the otln-r luinrt, to m-rvo the pur-piwe pur-piwe of polnllnit out more In Ui-tull to the hunlni" n roiumunlty what must b avohli'il. Federal Incorporation Recommended. In a npei'lal nii'HBKO to ronareaa on Junuary 7, liMO. I ventured to point out the dlnturtmnce to IniKliieH that would proluil.lv attend tho dlaoolullon of themi orTrnillliK trilNt. I mild: "Hut utifh an InveHtlRBtlon and poa-llile poa-llile pronei'iitlon of corporation whimo proKper'.ty or deHtnu-tton afferta tha eomfort not only of atnrkholde r but of j million of W"e earner, employe,! and anortnted tradenien mut necra-anrlly necra-anrlly tend to dlHturb the confidence ot the buinr community, to dry up tho now flow-In aource of cnpltnl from It pliic of hoardln. and produce a hi It In our preaent prosperity tht will cmiHe aufferlna and etrulncd clrcum-utiuii-e ainotiK the Innocent mnny for the f.iult of the irilllty few. The one-tlon one-tlon which I wlh In thl nu-OBHRO bnna: clearly to the rnnalileratlnn and dlwcii'Mlon of conreii I whether. In order to avoid mu-h n pofnlhle tutHlnena duiiiter. fnmethlnif cannot tie dune by which thetie bowmen ronildimtlon may be offered a mean, wit hout a rent llnun-etii llnun-etii I dint urban. -e. of chinmlntr the chnr-actcr. chnr-actcr. ortranlr-atlon nnd extent of their luiHineH Into one within the line nl the low under federal control and u-pervlnlon. u-pervlnlon. aeciirlna; oompliance with tht antl-lruft n-itute. "Cenerally. In the Industrial cornhl-nntlon cornhl-nntlon ealieil Trust.' the principal tuiHlnefi I the ale of a-ood In many Mate and In forclKn mnrket: In other word the Interwtnte and forelan IiuhI-ne IiuhI-ne far exceed the builncH done In any one tnte. Thl fact will JiiHtlfy ttie federal government In arnntlnif a federal charter to ouch a combination to make and mil In lnertate nd for-elirn for-elirn commerce the product of utu-fot lonniifacture under ench limitation as will aecurc a compliance with the antl triit law. It I iiilhle no to frame a otatute that while It otT.-r protection protec-tion to a federal company nrmnti harmful, vexation and unnwiiM j Invasion bv the M.-itr. It hnll auhject It to reoRonat.le taxation and control by the tatc with reaped to It purely pure-ly local bUKlhe. Corporation oriranlxed under this act ahonld be prohibited from acquiring acquir-ing and holding atock In other corporation corpora-tion leicept fur special reoaon. .upon anproval by the proper federal authority), author-ity), thua avoiding tho creation under national aunpl'-e of the holding company com-pany with auKordlnate corporation In different atnte. which ha been auch an effective agency In tha creation of tho gret truet and mononolle. "If tho prohibition of the antl-trtirt act aaalnt combletton In retrnlnt of trade I to bo effectively enforced. It I eeenilal that tho nHtlonal aovern-ment aovern-ment hall provide for ffie rreatlon of national corporation to carry on a legitimate buRlnee throughout tho fnltcd Htate. The conflicting law of the different atate or the t'nlon with repect to forelarn corporation make It dlSiciilt. If not Impoaniblo, for ono corporation to comply with their requirement re-quirement o to carry on business In a number of different tatea" Federal Corporation Commission Proposed. Pro-posed. I do not aet forth In detail the term and section of a atatutn which mlrfht supply the constructive legislation permitting permit-ting and aiding the formation of combinations combina-tions of capital into feder.il corpuriitli.nl. They should be stil.ect to rigid rule a to their organlxttllon ans procedure, Including In-cluding effective publicity, and to tho clnKcHt aupervlslon a to the Issue i.f clock and bond by an executive bureau or commission In the depurtiftj-nt of commerce and labor, to which In time of doubt they might well submit their proposed pro-posed plan for future huslne. It must lie distinctly understood that Incorporation Incorpora-tion under a federal law could not exempt ex-empt the company thus formed and Ita Incorporator and managers from prosecution prose-cution under the anti-trust law for subsequent sub-sequent llegal conduct, but the publicity of it procedure and the optH.rlunlty for frequent consultation a to tho leicltlmat purpose of It transaction would offer It aa rreat security against auccessful prosecution for violations of tho law a would be practical or wise. Huch a bureau or commission might well be Invested also with the duty already al-ready referred to, of aiding tho courts In the dissolution and recreation of trusts within the law. It should lie an executive execu-tive tribunal of the dlRnlty and power of the comptroller of the currency or tho Interstate commerce commission, which now exercise supervisory power over Im-irtant Im-irtant clnsse of corporations under federal fed-eral reaulatlon. Tho drafting of auch a federal Incorporation Incorpor-ation law would offer ample opportunity to prevent many ninnlfeot evils In eorpnr-ale eorpnr-ale management today. Including Irresponsibility Irre-sponsibility of 'control In the hand of the few who are not the real owner. Incorporation Voluntary. t recommend that the federal charter thus to be granted shall tie voluntary, at least until experience Jualilles mandatory provision. The benefit to be derived from the operation if great business- under the protection of atieh a charter would a Mm. I all who are anxious to keep within the line of the law. other large combination that fail to take advantage of the fe.J.ral Incorporation will pot havo a rich! to complain If thetr failure Is scntied to unwillingness to submit their transaction to the careful critlny, competent 'iM-rvilon and publlilty attendant at-tendant upon tho enjoyment of uch a charter. Supplemental Legislation Needed. The opportunity tMu suggested fur fd-eral fd-eral Incorporation. It ms to me. la suit-si. suit-si. I constructive legislation need'-d to facilitate fa-cilitate the niiir n( of great Industrial rnterprtae to the ruie cf otiun laid down bv tie anti trust law. Ttls s'a'u'l as construed by tho Huprem court must continue to b the lin of distinction lor legit-mat business It must bo enforced, unless we or to banish Individualism from 11 busln and rduc It to cm common ivftn of rgulatln or control of priceo Ilk that eh!-i now prevails with rteet lo public utilities, and which when applied ap-plied to all business would b sting step toward stat socialism WSI H. TAIT, Washington. -President Taffa annual mcsage, which Wit read In both bouses of congress Tuesday, deals exclusively with tho anti-trust atatuto. Tha message 1n purt Is a follows- To tho Renato and House of Represent atlve: Thl mcsago I tho first of several sev-eral which I shall send to enngn- during tho Interval between the opening of It Tegular cession and It adjournment for 1ho Christmas holiday. The amount of Information to be communicated aa to tho operations of the government, tho number of Important aubj-ct calling for comment by tha executive, and the trans-mlslon trans-mlslon to congress of exhaustive report re-port by special commissions, make It Impossible Im-possible to Include In ono message of a reaaonnhle length a discussion of the topics top-ics that ought to he brought to tho attention at-tention of tho national legislature at Ita first regular aesslon. Tha Anti-Trust Law The Supreme Court Decisions. In May Inst the Hiiprenie court hnnded down decision In the suit In equity brought by the T'nlted States to enjoin the further maintenance of the Standard Oil trust and of the American Tobacco trust, and to secure their dissolution. Th decision are epn.-b-niaklng and serve to advise the business world authoritatively of tho O'-op and operation of the antitrust anti-trust law of l:m. The decisions do not depart In any substantial way from the previous decision of the court In construing constru-ing nnd applvlng thl Important statute, but thev clarify those Important d-cWIons bv further defining the nlr ady adtiiltt.-l exceptions to the literal construction of the act. Ttv the decrees, thev furnish n Useful precedent HS to ttic proper method of dealing with the cnp'lal and property of Illegal trusts. These decision suggest sug-gest the need and w-lcdom of additional or aupplement.il legislation to make It ensler for the entire business conitnunltv to square with the rule of fiction nnd legality thu fltiriHv established nnd to preserve the benefit, freedom and spur Of reasonnt le competition without losa of real efficiency or progress. No Change In the Rule of Decision Merely In Form of Expression. The statute In It first section declare to be Illegal "every contract, combination In the form of trust or olherwlse, or conspiracy. con-spiracy. In restraint of trade or commerce com-merce among tho aeveral atate or with foreign nations," and In tho ceoond, de-rlare de-rlare guilty of a misdemeanor every person per-son who shall monopolize or attempt to monopolise or combine or conspire with any other person to monopolise any part If the trade or commerce of tho aeveral Itatoa or with foreign nations." In two early cases, where tho statute a-aa Invoked to enjoin a transportation Igreement between Interstate railroad tompanles, It waa held that It wa no defense de-fense to ahow that tho agreement aa to rate complained of waa reasonal at common com-mon law. because It waa said that the statute waa directed against all contract con-tract and combination In restraint of trade whether reasonal at common law or not. It waa plain from the record, however, that the contracts complained of In those case would not have been feemed reaaonablo at common law. It haa been atd that the court, by Introducing In-troducing Into tho eonatructlon of tho ( statute common law distinction. hn . emaaculHted It. Thl I obviously untrue. Hy tt Judgment every contract and coin- I blnatlnn In restrnlnt of Interstate trade , made with the purpose, or necessary ef- ( feet of controlling prices by stifling com- petition, or of establishing In whole or In 1 part a monopoly of auch trade, la condemned con-demned by the statute. The most ex- 1 treme rrllllcs cannot Instance a case that t ought to bo condemned under the statute 1 which la not brought within It term a 1 thu construed. 1 Th augeatlon I also made that the Bit- t prem court by It decision tn the last 1 two case has committed to the court tho I undefined and unlimited discretion to de- 1 termlno whether a case of restraint of 1 trade la within the terms of the statute. 1 Thl I wholly untrue. A reaaonablo re- I stralnt of trade at common law I well understood and I clearly defined. It does I not ret In tho discretion of the court. It must bo limited to acompllsh the purpose j of a lawful main contract to which, tn order that It shall be enforceable at all. It must b Incidental. If It exceed the need of that contract It I void. t The Remedy In Equity by Dissolution. J In the Btandard Oil case tho Supreme I ' and circuit courta found th combination to bo a monopoly of tho Interstate busl- 1 nes of refining, tranpnrt!ng. and mar- ketlng petroleum and It product, effect- ed and maintained through thlrty-even t different corporatlona. th atock of which t waa held by a New Jeraey company. It t In effect commanded th dlaolutln of 1 thl combination, directed Iho transfer and pro-rata distribution by the New Jer- aey company of the atock held by It In ) the thtrty-seven corporations to and t among Ito clock holder, and the corpora, c tlona and Individual defendant were on- t Joined from conplrlng or combining to 1 reoiore auch monopoly; and all agree- t menta betwen the eubaldlary corporation c tending to produce or bring about further r violation of tho Oct wer enjoined. In tho Tobacco cooe. the court found " thet the Individual defendanta. twenty- ' nine In number, had hen engaged In a b succeesful effort to acquire complete do- o minion over th manufacture, sale, and distribution of tobacco In this country ' and abroad, and thet this had been done r by comblnatlona mad with a purpose, t and effect to stiff competition, control prices, and establish a monopoly, not rt only In th manufacture of tobacco, but P also ef ttn-foll and licorice, used In It tnnufcturo end of It prod i t of cigar, ci-gar, cigarette end onuff. The tobacco eutt preentend a far more complicated ' and dlffii ult rase than the Standard till d oult for a decree which would effectuate " the will of tho court end end th viola- 'I tlon of the ototut. There wao hero no b otngto holding compony a In th esse w ef tho "tendard OH trust. The main com- a pany wag the Amerbon Tobacco com- r' pany. a manufacturing, selling and hoid- Ing company. Tree plan adopted to d- " otroy th combination and restore com no- " tttlon Involved th redlvlslon of th rpl- " tal and plnta ef th whole trust between " aom of th companteo constituting th trust end nw companies organiz-d for " tho purpooeo of th decree and mad par. f' tlo to It. and aumbeting. new and old. k fourteen. In th original autt there wero twenty- cl Sitne defendonto who wero charged with Swing th ennsptratoro through whom tho Illegal comtxnetloo acquired and osorctoo4 u Ito unlawful dominion. I'nder tho de-true de-true these ilfffudunta will hold amount of stock In the vurlous Ulstrlbuteu companies com-panies ranging from 41 j.r cent, a 4 maximum to ;-ia per cent, a a minimum, exci pi In tho caso of one small cumpuny, th 1'oitu Itlcun Tobacco company, In which they will hold 44 per cent. The twenty-nine Individual defendant are enjoined en-joined f,,r three yeui from buying any tock except from each other, and the group la thus prevented from extending It control during thut period. All panic to the suit, ami the new companies who ure made parll.-s, are enjoined peipetual-ly peipetual-ly from in any way effecting any combination com-bination betwoen any of the cotnpuiile In violation of tho statute by way of resumption of the old trust. Kach of tho fourteen companies I enjoined from acquiring stock In any of the other. All these companies are enjoined from having common director or officer, or common buying or wiling agent, or common com-mon offices, or lending money to each other. Size of New Companies. Objection wa made by certain Independent Inde-pendent tobacco companies that this settlement set-tlement was unjust because It left companies com-panies wlili very large capital In active business, and that the s.-lllcincnt that would be effective to put all on an equality equal-ity would he a division of the capital and plant of the trust lnlo small fraction in amount more nearly equal to that of each of tin. Independent companies. Thl contention con-tention rcsii'ts fiotn 11 misunderstanding of I he anil trust law and It purpose. It Is not Intended thereby to prevent the accumulation of large capital In business enterprise In which such a combination can secure reduced cottt of production, sale and distribution. It Is directly against such on aggregation of capital only when Ita purpose is that of Milling competition, enhancing or controlling prices and establishing a monopoly. f we shall have by the ducree defeated these purposes and restored competition between be-tween the largo unit Into which the capital cap-ital mill plant have been divided, we shall have accomplished tho useful purpose pur-pose of the statute. Confiscation Not the Purpose of the Statute. It Is not the purpose of the statute to Confiscate tho properly and capital of the offending trust. Methods of punishment by flue or Imprisonment of the linhvldiial offenders, by tine of tho corporation, or by forfeiture of It goods In transportation, transporta-tion, are provided, but the proceeding In equity 1 a atwclflo remedy to top tho operation of the trust by Injunction and prevent tho future use of the plant and capital In violation of the statute. I venture to say that not In the history of American law haa a decree more effective ef-fective for SHIch a purpose been entered by a court than that aguinst the Tobacco trust. Common-Stock Ownership, It ha been assumed that the present pro-rata and common ownership In all these companies by former atockholder of the trust would Insure a continuance of the same old single control of all the companies Into which the trust haa by decree been disintegrated. Thl I er-roneou er-roneou and I based upon the assumed In-i-ftlcacy nnd tnnocunuane of Judicial Injunction. In-junction. The companies are enjoined , from co-operation or combination; they have different manager, director, pur-rhaslng pur-rhaslng and sale agent. If all' or any nf the numerous stockholders, reaching Into the thousand, attempt to secure concerted action of the companies with a view to the control of the market, their number I so large that such an attempt r-ould not well be concealed and It prime mover and ail It participant would be t onco auhject to contempt proceedings and Imprisonment of a summary character. charac-ter. Tho Immediate result of the present situation will necessarily bo activity hy nil the companies under different manager man-ager and then competition must follow, nr there will bo activity by one company ind atagnatlon by another. Only a short Im will Inevitably lead to a change In iwnershlp of tho atock. aa all opportunity oppor-tunity for continued co-operation must llsappear. Movement for Repeal of the Anti-Trust Law. Put now that tho anti-trust act Is seen In be effective for the accomplishment of he purpose of Ito enactment, we are met y a cry from many different quarters 'or It repeal. It I ald to be obstructive jf business progress, to bo an attempt to estor old-fashioned method of d-itructlve d-itructlve competition between email unit, ind to make Impossible those useful com-.(nations com-.(nations of capital and the reduction of he cost of production that are essential 0 continued prosperity and normal trowth. In tho recent decision th Supreme ourt make clear that there la nothing n the etatule which condemn combine-Ion combine-Ion nf capital or mere bigness of plant rganlxed to eeeure ersnnmy In produc-on produc-on and a reduction of It cost. It I only vhen the purpose or necessary effect of he organisation and maintenance of the 'omhlnatlon or the aggregation of Im-nense Im-nense size are the atlMlng of competition, ictual and potential, and the enhancing f price and establishing a monopoly, hat the statute to violated Mere six s no sin against the law. The merging if two or more busine plants necessarily llmlnates competition between the units bus combined, hut this elimination I In ontravrntlon of th statute only when he combination 1 made for pnrpo nf ndlng thl particular competition In nr-r nr-r to eecur control of. and enhance, lice and create a monopoly. Lack of Definiteneas In the Statute. The complaint la made of th statute hat It Is not sufficiently definite In It cscrlptlon of that which 1 forbidden, tn nal.le huslne mn to avoid It viola-ion. viola-ion. Th uggetion l. that w may av a combination ef two corporations, . tdch may run on for yers. and that ibseqoently th ettnrr.v general may on. hide li st It was a violation of th latule, and that whUh was supposed by 1 .. conduners to b Inocent tto-n turns ut to t a combination In violation of ! e ststute The answer to tins bvpo. lethal cae Is that when mn attempt ' 1 a mass stupendous capital as will ens Me ' hem to suppress competition, control rh-e and establish a monopoly thy ' now th purpoo of their act Men do ' nt do ouch thing without having It ! korly In mind. New Remedies Suggested. , Much I sold of th repeal of thl otat- t to and ef constructive JetnaUtten Intend. |
