to his old customers and to customers whose business would be most hurt by shutting down or whose shatting down would cause public inconvenience, such as manufacturing industries requiring continuous operation and water works, lighting and traction companies. It would be most unfair to require a coal producer to sell coal to a person who has never before been his customer, who is brought to him only by an emergency, and who will not be his customer again except under a similar emergency, when he knows or anticipates that the same coal is wanted by a concern that has been his customer for years and which he desires to continue to supply. It would be most unfair also to require a producer of coal to sell his coal to a competitor in order to enable the competitor to take a contract or to supply a contract already taken, which would perhaps prevent the seller from bidding on that particular contract or from taking other contracts for himself. An enterprising dealer might secure a contract and prevent the price being lowered by competition by taking the precaution to insist on buying the output of probable competitors for the contract for one or two months, preventing them from bidding on the contract and leaving them after losing the contract to look elsewhere for the disposing of their output for the remaining 10 or 11 months of the year.

I have known business men of ample financial responsibility, but whose reputations were such that a producer who valued his reputation and that of his coal would not want to have his coal sold by or through them; yet such a dealer under the proposed law might force such sale. A small amount of superior coal in the hands of an unscrupulous man habitually dealing in an inferior coal might seriously injure the reputation of the involuntary seller of the superior coal and aid in defrauding the customers of the unscrupulous dealer

How many men in this House can tell the difference between one kind of bituminous coal and another? And yet there is all the difference in the world—

Also such a law might lead to most reckless and harmful dealing in "futures." A man of small responsibility might take contracts with the intention of filling them by virtually condemning the necessary coal if prices during the time of performance should be low and of not filling the contract if prices should be high. It would result in a complete demoralization of market conditions and put a premium upon business immorality. And the law would inevitably be taken advantage of by speculators in times where high prices were anticipated to the disadvantage both of more conservative producers and merchants and of the consumers.

Finally such a law would practically prevent the maintenance of exclusive agencies. There is nothing else that is so vital a factor in the extension of a business to new markets as the establishing of exclusive agencies, whether they be middle men selling on commission or a branch office or agency of a producer or a principal selling agent. In either case the extension of a business in new territory means large expenses in the way of office rent, employment of salesmen, solicitors, clerks, etc., and advertising. It is the custom to protect the person incurring such expense by giving him the exclusive right of handling the product within his territory. And it would be most unfair to permit a coal dealer who is pushing the sale of one coal and who finds a customer who will not purchase his coal, but desires a coal handled through another dealer with an exclusive agency to insist upon a sale being made through him, depriving the exclusive agent of the other coal of the reward of his time, labor, and expense. In this aspect the bill would be paralyzing in its effect upon efforts to extend. business and increase competition in any given territory.

If the reasons which I have above indicated as possibly dictating a refusal to make a sale, or a discrimination between customers, and other reasons which might be given if this letter were not already too long, which might appeal to the honest judgment of a fair-minded business man, would justify him in refusing to make a sale, then the bill is not so objectionable. But in such case, it seems to me, that the bill would be a useless one, since the existing antitrust act suffices to punish an attempt at monopoly or the restraint of trade or elevations of prices by corrupt agreement in respect to any article of interstate commerce, and gives any party thereby injured an ample right of

action.

I have not considered the constitutionality of the section, which seems to me open to grave doubt, but for the practical reasons given the act seems an unjustifiable attempt to interfere with a private business-a business which has none of the privileges or benefits enjoyed by public-service corporations, and either vicious or useless.

I hope, under the circumstances, that the Members of the House will give this matter serious consideration before they further injure an industry which gives employment in my State alone to 73,000 coal miners and on which nearly one-third of the people of West Virginia depend, and an industry which is fraught with many financial risks to the mine owner and with many personal risks to the men who dig and mine the coal and face untold dangers underground.

When you take into consideration the many perils and dangers which the men who dig and mine the coal daily face, they should be the best-paid laborers in the world; and nothing should be done by Congress which would even tend to injure or cripple the industry in which they are engaged or lessen their opportunity for better wages and living conditions.

I will be glad to furnish the gentlemen in charge of the bill with a great number of letters pointing out some of the evils of this section. The gentlemen from whom I have received such letters had not heard of this section until I called their attention thereto. I did not know that such a section was in the bill until I came across it a few days ago, and I immediately communicated with those who produce the coal in my district and asked their opinion thereon. Without exception, every man who has written to me about this section is bitterly opposed to its being made a law.

Mr. PLATT. Will the gentleman yield?

Mr. PLATT. I have received one or two letters that lead me to think that some people have the idea that this section is aimed against the retail coal dealers, so that a customer who was not satisfied with their prices could go directly to the mine and purchase coal.

Mr. AVIS. Yes; this section will not only injure the mine operator, but the dealers as well. The coal dealer who has gone to great expense to acquire a yard and teams and the other necessary paraphernalia, and to work up a trade by personal solicitation and expensive advertising, can be eliminated either by the mine owner or his customers, because if this section becomes a law his customers can purchase directly from the mine owner and the mine owner will be compelled to sell directly to such customers.

For this further reason I think the gentlemen in charge of this bill should not insist upon the passage of this section, and if they are going to insist upon its passage and are going to leave the words "refuse arbitrarily" therein they should at least define them so that the mine owner will not be left to guess what may happen to him if he is prosecuted or sued in the courts for any refusal which he may in self-defense be compelled to make to sell his product upon demand.

And you can see why. As I stated before, if I were a mine owner every person to whom I might refuse to sell my coal, however good the reason might be to me, would have the right not only to institute a criminal prosecution against me, but he would have the right to bring a civil suit for what he claims to be threefold damages. Therefore you can see the dangers and perils to which a man who is engaged in the business of mining coal may be exposed.

Mr. FESS. Will the gentleman permit one more question?

Mr. AVIS. Certainly.

Mr. FESS. I am president of a college. We buy a great deal of coal. We always buy from dealers at home. Suppose I send to you directly for the amount of coal I want. Can you refuse to sell to me, although you do not know what my standing is?

Mr. AVIS. I do not know. That is what I want to know. Upon whom is placed the burden of determining whether the person who applies to purchase coal or other minerals is a responsible person or not? The seller? Is he to determine whether the person is responsible or not? Under this bill I can not determine.

Mr. FESS. I live in western Ohio, and the gentleman lives in West Virginia. I buy West Virginia coal, and I desire to buy it directly from the gentleman. I send you an order for it. What is your responsibility if you refuse to fill the order?

Mr. AVIS. I am subject to a possible $5,000 fine and to a year's imprisonment, or both, and I am subject to threefold damages if any ensue.

Mr. BARTLETT. Does the gentleman think it is the province of Congress, under the power to regulate commerce, to regulate these particular contracts which do not in effect impede commerce or create a monopoly?

Mr. AVIS. I do not.

Mr. BARTLETT. Is it not taking away from the citizen the right to make a contract to sell a product where he makes no effort either to monopolize or impede or interfere with commerce?

Mr. AVIS. I am glad the gentleman asked me that question. Mr. BARTLETT. In other words, unless a man so uses his own property as to injure others the freedom of contract exists in this by reason of the constitutional guaranties. Now, to say arbitrarily that you can not, when you are not undertaking to have a monopoly and have not a monopoly, when you do not undertake to interfere with commerce but simply to make a contract for the sale of a product, does the gentleman think Congress, under what is known as the commerce clause of the Constitution, can limit and restrict that privilege of the citizens to contract?

Mr. AVIS. I do not think so. I think that the freedom and right of citizens to contract in regard to their property can only be limited or restricted by Congress in some instances. If the contract or contemplated contract is for an unlawful purpose, Congress can lawfully legislate; otherwise I think such legislation is unconstitutional. I have not attempted to discuss the constitutionality of the section. This section does not prevent one competitor from absorbing another competitor, or competitors, but in effect permits and legalizes such absorption. In the Northern Securities case the Supreme Court of the United States held that one competitor could not absorb another competitor, and that if he did he violated the provisions of the Sherman antitrust law.

Mr. BARTLETT. The purpose of that holding company, the Northern Securities Co., was for the purpose of interfering with commerce and destroying competition.

Mr. AVIS. Absolutely; and that is the point that I am making about this section, that it will permit one competitor

to absorb another competitor, although the Supreme Court of the United States has held, not only in the Northern Securities case, but in the Standard Oil and Tobacco cases, that such absorption is unlawful.

Mr. BARTLETT. But unless we change the present antitrust law that law as construed by the Supreme Court would prevent that.

Mr. AVIS. But this will conflict with that and then where will we be?

Mr. BARTLETT. At sea.

Mr. AVIS. If this bill becomes a law, we will not know which is to apply to and govern sales to competitors of an entire output, the Sherman antitrust law or this law; and for that reason, and others already given, I believe that the small mine owners of this, country, upon whom several hundred thousand of our laboring men depend, and from whom for every ton of coal mined labor receives an average of about 80 cents, will be left in uncertainty and doubt.

Mr. BARTLETT. I was not applying this solely to coal, I desire to say.

Mr. AVIS. My remark was addressed more particularly to coal because I know something about coal and I do not know so much about other minerals.

Mr. TALCOTT of New York.

question?

Mr. AVIS.

Certainly.

Will the gentleman yield for a

Mr. TALCOTT of New York. I understood the gentleman to say that the prohibition of the Constitution against contracts applies to legislation by Congress

Mr. AVIS. I do not understand the gentleman's question. Mr. TALCOTT of New York. I understood the gentleman to say a moment ago that he did not think Congress had certain rights in regard to contracts..

Mr. AVIS. In regard to certain contracts.

Mr. TALCOTT of New York. The gentleman does not think the prohibition of the Constitution relates to legislation by Congress, does he?

Mr. AVIS. I do. As citizens we have certain inherent and vested rights, and under the fourteenth amendment of the Constitution, Congress can not deny the right or freedom of contract as to private property, unless such contract is against public policy or for some illegal or unlawful purpose.

Mr. BARTLETT. That is not under the fourteenth amendment, but under another provision of the Constitution.

Mr. AVIS. I said the fourteenth amendment. I am glad the gentleman corrected me. I meant the fifth amendment, which provides that no person shall be deprived of life, liberty, or property without due process of law, nor shall private property be taken for public use without just compensation.

50330-13605

Trusts-Their Root in Privilege. Atrocities in Mexico

Should the Pot Call the Kettle Black?

SPEECHES

OF

HON. WARREN WORTH BAILEY,

OF PENNSYLVANIA,

IN THE HOUSE OF REPRESENTATIVES,

May 23, 29, June 1, and May 27, 1914.

ANTITRUST LEGISLATION.

May 23, 1914.

Mr. BAILEY. Mr. Chairman, the pending bill is one to which I intend to give my support. I am not going to undertake to discuss the trust question from the legal standpoint. I think the pending bill is a lawyer's bill, a lawyer's conception of the trust problem and methods of handling it. I am not a lawyer and have no technical knowledge whatever of the law. I have made some little study of this question from the economic standpoint, and in the brief time allotted to me I propose to discuss the trust question on a fundamental basis, on the basis. of political economy. And I want to begin by saying that it was no mere jingle of words in which Oliver Goldsmith declared that

II fares the land, to hastening ills a prey,
Where wealth accumulates and men decay.

The people of the United States during the last quarter of a century have witnessed a concentration of wealth and power so enormous as to be appalling, and this concentration still goes on with hardly a sign of abatement. The growth of the trust, so called, has been the phenomenon of the time. It has marked an industrial change more startling by far than any that has ever before been recorded in the history of the world, more startling, indeed, than that involved in the harnessing of steam and electricity. It has noted the rapid passing of the individual and the appearance upon the stage of a vast impersonal force which reduces the social unit from positions of independent initiative to a mere part in a huge machine. It is no longer easy for pluck and brains and energy to win in a struggle which involves relatively new and strange conditions. Pluck and brains and energy are still factors of success, but they no longer play the part they once enacted in the upbuilding of independence and the scoring of individual triumphs. They have become merchantable quantities, like common labor; they are bought in the open market by the highest bidder, and the highest bidder is that industrial creation of privilege which