Powers of Bureau of Corporations Supplemented and Made Effective. The law now under consideration so far as its inquisitorial powers are concerned, is in substance an enlargement of the Act of 1903, creating the Bureau of Corporations. The power to obtain corporate information is supplemented and rounded out by the power to require stated and special reports. Penalties of a criminal nature have been added, to compel obedience to the law. It should be noted that the Commission's jurisdiction extends only to requiring reports from corporations; therefore, the offense in that particular attaches only to neglect on the part of corporate officers and representatives.

Enforcement is by Court Proceedings.-The administrative and judicial features of the statute are so intimately connected with the creation of a supervising and directing body in the form of the Commission with its distinctly civil powers, that it was natural Congress should entrust the carrying out of said orders to the courts, which have ample power at their command and can enforce those mandates by the coercive means specially provided by this law, or by customary writs of injunction or mandamus or proceedings for contempt, or by any other form of compulsion under the general jurisdiction granted to them to that end.

2. CLAYTON LAW.

Supplements System of Anti-trust Laws.-As a supplement to the Anti-trust laws, the Clayton Law would naturally enter the campaign equipped with a complete armory of weapons for use in the war upon predatory monopolies and combinations in restraint of trade.

Reasons for Non-Criminal Methods of Enforcement Stated. -It should be understood and recognized, however, at the outset, that certain provisions are not made subject to enforcement by the rigors of the criminal law; and in those particulars we shall look in vain for any means at command, outside of proceedings of a civil nature, to compel obedience to the law.

This policy was deliberately adopted by Congress. As already stated, (page 132), it was the legislative purpose and intent that "the harshness of the criminal law" should not be employed in haste or without impelling cause. Those requirements embraced in this legislation which are novel and to a considerable extent embody features that are experimental or foreign to our existing system of jurisprudence, are left to be enforced by civil measures.

Clayton Law Amalgamates Five Proposed Anti-trust Laws. The Clayton Law is composed in part of five proposed statutes enlarging the series of Anti-trust laws, and features more or less unrelated except by propinquity, are therein assembled under one head. It is not surprising that the more extreme or untried among the statutory provisions should be deferred as to operation until a period of two years have elapsed; nor that they even then are made subject to the civil rather than the criminal arm of the law.

Certain Novel Provisions Considered.-Infractions of the provisions prohibiting price discrimination, conditional or "tying" contracts, stock-ownership, and interlocking directorates (Sections 2, 3, 7, and 8), are not made criminal offences. Failure to obey an order against a defendant "requiring such person to cease and desist from such violations and divest itself of the stock held or of the directors chosen" (Section 11, paragraph 2), is not made the object of penalty. Enforcement of such official mandates must be had (paragraph 3) through the machinery of the United States Circuit Court of Appeals.

Treating all infractions of the Anti-trust laws as tortious acts and imposing threefold damages (Section 4) does not denote all those injuries to be crimes.

It appears probable that the prohibition of contracts between corporations dealing in securities or supplies and common carriers having one or more joint directors, etc., is a requirement (Section 10) which does not take effect as to any of its provisions until two years from the passage of this law. However that may be, Section 10 contains severe penalties; and its provisions are intended to work reform in dealings between a common carrier and banks and concerns that sell its securities or furnish supplies. This section was inserted in compliance with the recommendation contained in the message delivered by the President before Congress in January, 1914, wherein he characterized existing methods as in effect

"making those who borrow and those who lend practically one and the same, those who sell and those who buy but

9 These tentative measures were utilized in varying degrees in the preparation of the Federal Trade Commission Act and the Clayton Law. They were entitled: (1) Interstate Trade Commission Bill, (2) Interlocking Directorates Bill, (3) Sherman Law Definitions Bill, (4) Trade Relations Bill, (5) Anti Holding Company Bill.

the same persons trading with one another under different names and in different combinations, and those who affect to compete in fact partners and masters of some whole field of business."

"Sufficient time," he continued, "should be allowed, of course, in which to effect those changes of organization without inconvenience or confusion."

The statute (Section 10) translates the President's words into the language usual in statute books. The period of grace is fixed at two years. After that date, to wit, October 15, 1916, transactions between common carriers engaged in commerce and dealers in securities or supplies, or with construction companies, are regulated wherever business to the amount of more than $50,000 has been engaged in between those concerns within any one year. The prohibitions and regulations affect only the class where the common carrier—

"shall have upon its board of directors or as its president, manager, or as its purchasing or selling officer, or agent in the particular transaction, any person who is at the same time a director, manager, or purchasing or selling officer of, or who has any substantial interest in, such other corporation, firm, partnership or association,❞—

unless the transaction is conducted by competitive bidding under the direction of the Interstate Commercee Commission. The names and addresses of the bidders and of the officers, directors and general manager, if a corporation, and of the members, if it be a firm or partnership, must be given with the bid.

"Any person who shall, directly or indirectly, do or attempt to do anything to prevent anyone from bidding or shall do any act to prevent free and fair competition among the bidders or those desiring to bid shall be punished as prescribed in this section in the case of an officer or director."

Every such common carrier engaging in those transactions or purchases shall within thirty days thereafter,―

"file with the Interstate Commerce Commission a full and detailed statement of the transaction showing the manner of the competitive bidding, who were the bidders, and the

names and addresses of the directors and officers of the corporations and the members of the firm or partnership bidding; and whenever the said Commission shall, after investigation or hearing, have reason to believe the law has been violated in and about the said purchases or transactions it shall transmit all papers and documents and its own views or findings regarding the transaction to the AttorneyGeneral."

A violation of this section will involve the corporation in a fine of $25,000; and every such director, agent, manager or officer thereof,

"who shall have knowingly voted for or directed the act constituting such violation or who shall have aided or abetted in such violation"

shall be adjudged guilty of a misdemeanor, with an attendant fine in the maximum sum of $5,000, and incur in addition thereto liability to imprisonment for one year.

Specific Common Carrier Regulations Considered.-Two features of this inhibition are distinctive and invite discussion: First-The section is inclusive of all persons who,—

"directly or indirectly, do or attempt to do, anything to prevent any one from bidding, or shall do any act to prevent free and independent competition among the bidders.”

Every participant in such a transaction becomes as much concerned in way of penalty incurred, as though he were a principal.

The reason for this sweeping provision is the realization on the part of the public that waste or dishonesty in the affairs of public service corporations either cuts down efficiency and safety, or increases the cost of operation and thereby renders more burdensome charges which it necessarily devolves upon the people to pay.

In European countries the problem has been solved by government ownership. In the United States the same question is being met by permitting privately owned corporations to continue in control under supervising official boards.

This movement is a natural and intelligent use of the general laws relating to the public health, order, safety and comfort, and which, taken together, represent and embody that police power

which is inherent in every government. It is a topic already discussed at some length,-see remarks at page 65, and also pages 67-9, supra.

Second-The method adopted is what may be termed indirect prosecution. Those common carriers within the prescribed class are required to sell securities or purchase supplies or deal with construction or maintenance concerns only by competitive bids, which in turn shall be accompanied by the information required to ascertain the persons composing the dealing concerns. Avoidance of this requirement by indirect means through the aid of agents or third parties, is prohibited; and persons participating in such indirection or artifice are subjected to full penalties.

A detailed statement of the particular transaction is required to be submitted to the Interstate Commerce Commission for their inspection and approval; it is only in the event the board "have reason to believe the law has been violated," that all documents and papers are directed to be filed, together with its opinion, with the Attorney-General. Thus the ultimate decision as to filing a formal complaint and instituting a criminal proceeding rests with the chief prosecuting officer of the government.

General Purpose and Scope of Section 10.-In dealing with the subject of Unlawful Restraints and Monopolies, the Senate Committee on the Judiciary, when reporting back this section in substantially its present form, stated in their report that they have

"recommended a substitute *

which with the

publicity, competitive bidding and the supervision of the Interstate Commerce Commission provided for, will, it is believed, minimize, if not wholly cure the evil to be reached."

The committee, as their reason for avoiding an absolute prohibition of all dealings between concerns where such entangling alliances have been consummated, set forth the argument that seasons of emergency might arise in the affairs of the common carrier when a firm or corporation having joint representatives or officers or other interests in common would be the only or the most desirable dealer, and that conflicting or incompatible positions would be rendered extremely unlikely under the safeguards which the statute, after careful revision, affords.

Since Section 10 relates to "common carriers engaged in commerce," it is important to note the broad definition of "com