Our remarks upon interlocking directorates, Section 8, are as fully applicable and perhaps will appear even more pertinent to Section 10. In fact, Section 10 enters directly into the preventive plan directed against secret and indirect profits in dealings by corporations engaged in public transportation, and condemns and interdicts such practices where the transactions amount to more than $50,000 in any one year.

New Method of Regulation Prescribed by Section 10.-The statute contemplates a new angle of attack upon an old evil, and whatever we think of its potential force, and independently of whether we agree with the scheme of the legislative campaign, still the effort is interesting in itself as a study in law-making. The language of this Clayton Law provision is too compact to admit of further condensation, and we accordingly present the passage in question:

"Sec. 10, par. 1, That after two years from the approval of this act [i. e., after October 15, 1916] no common carrier engaged in commerce shall have any dealings in securities, supplies or other articles of commerce, or shall make or have any contracts for construction or maintenance of any kind, to the amount of more than $50,000 in the aggregate, in any one year, with another corporation, firm, partnership or association when the said 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 and except such purchases shall be made from, or such dealings shall be with, the bidder whose bid is the most. favorable to such common carrier, to be ascertained by competitive bidding under regulations to be prescribed by rule or otherwise by the Interstate Commerce Commission. No bid shall be received unless the name and address of the bidder or the names and addresses of the officers, directors and general managers thereof, if the bidder be a corporation, or of the members, if it be a partnership or firm, be given with the bid."

Then follows a provision that any person aiding or abetting in such dealings otherwise than as above prescribed shall be subject to the same penalties fixed for violations of this prohibition on the part of the officers, directors or agents.

The seriousness of the violations of the statute may be measured by the fact that the common carrier is subjected to a fine of $25,000; while the officers, directors, and agents shall be deemed guilty of a misdemeanor, carrying with it individual fines up to $5,000, and imprisonment in jail not exceeding one year, or both, in the discretion of the court.

The liability to personal punishment incurred on the part of the offending officers, directors and agents marks a course as logical as it is severe. Former enactments whereby the incorporated body which had already suffered by the depletion of its exchequer because of secret profits and swollen commissions, was forced to endure a further loss by means of a fine, did not and could not appeal to the good sense of judges, jurors or the general public. Fines of this description in the ultimate result fell upon the shareholders, whose assets were reduced or whose dividends were cut down, to meet the payment of the fine, in addition to the expenses of the litigation. The injustice is apparent when it is realized that most of these acts originated in the inner official circles and were concealed from the stockholders.

Under the new regime of corporate scrutiny and control these leakages in corporate finances should be curtailed; and may at length be stopped at their source. Certainly, the provisions of Sections 8 and 10 comprise an earnest and intelligent effort by Congress to provide adequate measures to accomplish this longcalled-for reform.

At the conclusion of any business dealings within the scope of Section 10, the common carrier is required to file with the Interstate Commerce Commission a full and detailed statement of the transaction. If that body after investigation or hearing, finds that there is reason to believe the law has been violated in or about those particular purchases or transactions, the board of commissioners shall transmit all papers and documents and its own views or findings regarding the transaction, to the AttorneyGeneral."

It cannot be denied that there is a certain grimness in the absence of direct reference to the criminal prosecutions which under circumstances indicative of guilt would be sure to follow. In no

6 See Chapter XII, Criminal Provisions, pages 138-142.

instance in corporation law, however, can the terrors of the law to evildoers be more usefully employed than in overcoming the practices aimed at. Inside influences and special interests have for years, yes, decades, been potent in and about the financing, equipping and management in general of common carriers and the other classes of the larger corporations engaged in public transportation and service. These special interests will see nothing except interference and unwarranted assumption of power in these restrictive Anti-trust laws. To do less would be more than human, and whatever comment has been made upon those interests and corporate influences, no one conversant with their history and methods has ever denied that the individuals concerned were extremely human. Sources of wealth will be dried up and many officials and agents will find it an irksome task to confine their outgo to their stated salaries and regular commissions. That there will be indignant protests must be expected, and no doubt these will occur in full measure.

But the public at large is certain to benefit,-and that is surely the ultimate object of legislation in a free republic. Improvements in public conveyances, reduced rates in communications by telegraph and telephone, equal or enhanced returns to investorsthese are results far more desirable than "the thrift that follows fawning." Without fear of contradiction it may be said that the deterrent effects of the Anti-trust laws alone are worth many times the cost of the public managing boards which have been created; in fact, insistence that unearned increments shall cease and those sources of revenue shall be restored to the coffers of transportation companies marks a new era in the management of corporate affairs.

Enforcement of Section 10 Committed to Commerce Commission.-In concluding these references to the regulations prescribed by Section 10 for the guidance of common carriers with common or interlocking members upon the boards of directors of construction, supply or financial concerns, we desire to call attention to the fact that enforcement thereof rests with the Interstate Commerce Commission. This jurisdiction is in addition to the provision of Section II, which relegates to the Interstate Commerce Commission and Federal Reserve Board respectively the authority to enforce Sections 2, 3, 7, and 8 of the Clayton Law, in so far as they relate to transactions by common carriers and banks.

CHAPTER VIII.

THE SHERMAN ANTI-TRUST LAW; ITS ORIGIN, HISTORY AND THE LEADING CASES THEREUNDER CONSIDERED.1

1. Comprehensive Language Employed.

2. Unlike Constitution,-Framers Did Not Expound Law.

3. Principles and Development.

4. Occasion for Statutory Relief.

5. Various Drafts of Measure Considered.

6. Supporting Argument in Senate.

7. Tentative Measures Considered.

8. Scope and Effect of Law as Enacted.

9. Constitutional Questions Settled by Supreme Court.

10. Benefits from Anti-trust Act.

II. Foreign Anti-trust Laws Discussed.

12. Commission Law and Clayton Law Broaden Means of Relief. 13. Narrowing Argument Examined.

14. Definitions of "Commerce."

15. Congress Supplements Anti-trust Decisions.

1. COMPREHENSIVE LANGUAGE EMPLOYED.

Language of Statute Very Comprehensive.-The Sherman Law, when it received the approval of President Harrison in 1890, closely resembled the Constitution of the United States when it was framed in 1787, in that the enactment was couched in terse, general and comprehensive language, calling for construction and application in numerous diversified cases to insure the incorporation thereof into the great and generally recognized body of statutory provisions seasoned by court rulings, which taken together constitute the law of the land.

Early Application of Constitution and Sherman Law Compared. Very fortunately for the early development of our Federal government, the statesmen who framed the Constitution of the United States did not permit their interest to cease at its birth, but continued their ministrations through a series of years. While realizing that judicial development and application would continue into remote periods, they also understood that the most precarious stage would be when it was necessary to apply re

I For text of Sherman Law, see Appendix C, pages 279-281, post.

straints or enforce positive requirements upon the original States which had until a then recent time acted as colonies independent of all restraint which was not exercised from a central government sometimes lenient and often forgetful of everything that did not directly concern English trade or interests.

2. UNLIKE CONSTITUTION-FRAMERS DID NOT EXPOUND LAW.

Principles of Constitution Explained by Its Framers. This patriotic duty led the "fathers of the Constitution" to set forth their understanding of its meaning and practical workings in those able papers which when collected were known as the "Federalist"; and our obligations to Hamilton and Madison and Jay are largely enhanced by their voluntary act.

No Similar Interpretation of Sherman Law Exists.-Unfortunately, no publications of a similar nature and authority accompanied the enactment of the Sherman Law; and it may be for that reason the statute for a time was not rigidly enforced or at least was applied in an ineffectual way; and it may also have resulted from the same cause that only in matters of great moment has it been utilized, for, like impeachment for high treason, only formidable offenders have been thought worthy of a prosecution which arose in effect to the dignity of a state trial.

Absence of Exposition Delayed Enforcement.-Had such an authoritative explanation followed the enactment of this epochmaking statute, and had the law itself contained a provision whereby the injured citizen could register his complaint and and be heard without the intermediation of government functionaries, the era of delay, uncertainty and difficulties that has beset its enforcement might have been obviated, and a whole generation of predatory trusts and monopolies might have perished unborn.

3. PRINCIPLES AND DEVELOPMENT.

Development of Sherman Law Described.-Perhaps it is not too late in this connection to describe the genesis and de velopment of this law, even though with the advent of the Clayton Law, and its enabling act, the Federal Trade Commission Law, some measure of the immediate necessity for and importance of the broad and sweeping denunciations of the Sherman Law may have passed out of our system of jurisprudence.