logically permit at least a reasonable degree thereof to exist, and recognize in law what has already become an accomplished business fact. Finally, supervision must be administrative. No other method has the necessary flexibility. Business can not be regulated properly by the slow methods of judicial procedure. The administrative system places the whole great subject in a branch by itself, to be handled by a permanent office organized and trained for that purpose. It makes the control active, positive, and constructive, not leaving it to the bare prohibition of criminal law. This supervision must, of course, be in accordance with general principles to be established by statute. Certain specific offenses, also, will always have to be met by penal law, such as railway discriminations and other forms of unfair methods. But general corporate publicity will aid in the enforcement of such criminal statutes, and such offenses will thus be made far more unsafe for the offender. Such a system will give the information necessary to make public opinion intelligent; it will give it the direction necessary to make it effective. It will prevent wrong beforehand, because the fear of publicity is a strong deterrent upon improper transactions. It will strike at great classes of industrial evils rather than, as now, merely punishing a single case after the evil has been done. Such a system of publicity through a government office would necessitate a greater measure of uniformity and simplicity in the accounts of industrial corporations. The present complexity of accounting is too often a cover for corporate wrong. Such publicity will be for the direct benefit of the great majority of companies, those which are conducting their business fairly. Public opinion, now disturbed by a knowledge of the unfair and illegal methods of a comparatively few corporate managers, will thus have the facts as to all large concerns and be able to discriminate between the few evil doers and the great mass of fair and law-abiding companies. Extreme and sweeping attacks on all corporate business will thus be greatly lessened as the misconception of the real facts disappears. Furthermore, a reasonable degree of such public accounting by so-called "industrial" corporations, comparable in principle to present railway accounting, would do much to broaden the legitimate field of conservative investment for the public. It would permit the freer entry of private capital into general and proper industrial development. Such a system will result in cooperation between the Government and corporate managers. Such supervision and the making and receiving of regular reports will necessitate constant contact and con ference between all parties concerned. This is perhaps its greatest advantage. So complex a subject-matter as our immense industrial machinery can not be intelligently adjusted without constant conference by all parties concerned. It is a mere truism to add that human nature is such that the practical results obtained by cooperation will far exceed anything to be accomplished through penal law. A further advantage is gained if this form of legislation is optional, as only the great corporations, those of national interest, will be affected. It is only as to such large corporations that publicity is required, and only these would have any need for a modification of the present prohibitions of the antitrust law and any considerable motive for registering under such a system. A compulsory law would bring in a vast number of small concerns, technically indeed engaged in interstate commerce, but only of local character and of no public interest. Under an optional act these would not register, nor would there be any strong public reason for their doing so. This practical result would do away with much of the inconvenience to individuals which would be caused by a general compulsory system, and would relieve the Government of a mass of unnecessary detail. The time is ready for such an advance in our corporation policy. There has been, mainly from the work of the present administration, a remarkable advance in the attitude of the financial leaders of the country. Many of them frankly recognize that their great commercial powers are largely "affected with a public trust." They give substantial aid to the Government in correcting corporate evils. The Bureau receives frequently their requests inviting its criticism on their business methods. Very few concerns have refused information to the Bureau in its investigations. Most of those called upon have thrown their records open to complete inspection. Some of them have gone to considerable expense in disclosing all possible sources of information. Many corporate managers have found that such cooperation makes for increased public confidence in these companies and their securities. They feel that the giving of reasonable information as to their operations is well repaid by the improved standing thus gained for their companies as concerns with open accounting and equitable methods. An excellent illustration is in the recent action of the New York Cotton Exchange. The Commissioner of Corporations in a recent report criticised certain methods of that exchange. The exchange at once appointed a special committee expressly instructed to confer with the Commissioner with a view to improvement in the methods of the exchange. Similar action has also been taken by the New Orleans Cotton Exchange. ness men. We should take advantage promptly of this attitude among busiTo do so, we must have a system of supervision which provides a working basis for conference and cooperation and which does not rely merely on criminal procedure and opposition. There is not only a change in the attitude of business leaders. There is also an aroused and intelligent demand from the public for fair business methods and for equal commercial opportunity for all. By vigorous effort there has been created a current of opinion which will amply support a modern system of regulation when once the details thereof are properly worked out. Attempts have already been made in this direction. These were exemplified in a bill introduced in the last session of Congress, intended to amend the Sherman antitrust law. It represented an attempt to bring about some such constructive system of publicity as above outlined. It was wholly optional and did not compel any corporation to subject itself to its provisions unless that corporation so chose. It also proposed to modify the present sweeping prohibition against all combination. It recognized, as suggested above, the propriety of reasonable combination. Prominent financial and corporate leaders stated that if the bill were passed they would at once accept its provisions and bring their corporations under its operation. To be allowed to register under a uniform law, to obtain a federal standing as a corporation rendering open accounts to a federal office, was recognized by them as a commercial asset well purchased by a reasonable degree of publicity. The work of the Bureau of Corporations, depending as it does wholly upon publicity, necessarily deals, and has always dealt, with factors which are largely intangible. True it is that very important tangible results in business methods have already been accomplished, as above pointed out, results which of themselves amply justify the work. But the most important results are those which can appear only by a careful estimate of public opinion and of the change in business standards of morals that has been, and is now, taking place. This change is largely due to aroused public opinion, at last furnished with the facts of corporate operations in their proper proportion, impartially, and in such brief and intelligible shape as to be available for the average citizen. The future of the nation must depend largely upon the stability of its business machinery. That machinery can not be permanent or successful unless it operates openly and justly. It must place and keep in control of our great commercial forces men who have risen there solely by superior industrial efficiency. It must protect such men from the competition of those who get power by unfair and illegal methods and privileges-practices that rely peculiarly upon secrecy. To do this the Government must have such supervision and control of that corporate machinery as will maintain in business the fundamental American ideal of equal opportunity to all. Respectfully, To Hon. OSCAR S. STRAUS, HERBERT KNOX SMITH, Commissioner of Corporations. Secretary of Commerce and Labor. О |