such proceeding be a bar to any criminal prosecution for the same act or acts; but nothing herein contained shall affect any proceedings in contempt pending at the time of the passage of this act. Your committee, after the delivery of a message by the President of the United States, on January 20 last, to the Congress, making certain recommendations relating to the matter of trusts and monopolies, immediately prepared and published tentative bills which were designed to give legislative expression to the views contained in the President's message, and in order that the country might be given ample time to discuss them, the committee conducted public hearings until April 4, at which time they were concluded. This method of dealing with so large a question, though new, met with general response from the business interests of the country, large and small; and though these hearings imposed upon the com-mittee months of tedious labor they were exceedingly helpful to all concerned. The salient principle of the tentative bills as finally agreed upon with additional provisions have been embodied in the one comprehensive bill now reported. The atmosphere of antagonism which such legislation might ordinarily be expected to encounter has not always been present and the entire question has consequently been approached with dispassionate fairness. There has been a liberal exchange of views between the committee and those who, from a business standpoint, must first adjust themselves to new conditions, and prudent, thoughtful, patriotic men seem to be agreed that the bill as proposed will go far to bring about business readjustment with as few, as slight, as easy, and simple changes as the object sought will admit of. "Nothing essential has been disturbed, nothing torn up by the roots, no parts rent asunder which can be left in wholesome combination." The bill is not designed to destroy or hinder business, but on the contrary, to help business and the whole people of the country who are related to or affected by it. The able and patriotic message of the President has been ever before us and the program which he proposed is contained in the provisions of the bill, and if enacted into law will in truth be "additional articles in our constitution of peace the peace which is honor and freedom and prosperity." ANALYSIS OF THE BILL. I. DEFINITIONS OF TERMS. Section 1 of the bill defines technically for the purposes of this bill certain words, phrases, and terms used in the body of the bill. The definitions thus given are designed merely for convenient reference and to avoid repetition. The definition of commerce, it will be observed, is broadened so as to include trade and commerce between any insular possessions or other places under the jurisdiction of the United States, which at present do not come within the scope of the Sherman antitrust law or other laws relating to trusts. The act approved July 2, 1890, and commonly referred to as the Sherman law, and supplementary legislation pertaining to the same subject, are restricted in application to commerce among the several States and Territories, the District of Columbia, and with foreign nations. Your committee can conceive of no good reason why the insular possessions or other places now under the jurisdiction of the United States should not be included within the provisions of our antitrust laws, and with this idea in view we have accordingly in this bill broadened the scope of these laws so as to make them applicable to all places under the jurisdiction of the United States. II. PRICE DISCRIMINATIONS. Section 2 of the bill is intended to prevent unfair discriminations. It is expressly designed with the view of correcting and forbidding a common and widespread unfair trade practice whereby certain great corporations and also certain smaller concerns which seek to secure a monopoly in trade and commerce by aping the methods of the great corporations, have heretofore endeavored to destroy competition and render unprofitable the business of competitors by selling their goods, wares, and merchandise at a less price in the particular communities where their rivals are engaged in business than at other places throughout the country. This section expressly forbids discrimination in price between different dealers of commodities that are sold for use, consumption, or resale within the United States or any place within its jurisdiction, when such discrimination is made with the purpose or intent to thereby destroy or wrongfully injure the business of a competitor, either of such dealer or seller. It will be observed that the language used makes this section applicable only to domestic commerce, or, in other words, its application is restricted to commerce carried on in the United States, or in places under the jurisdiction thereof, and has no reference to commodities sold either in this country or abroad which are intended solely for our export trade. The violation of any of the provisions of this section is made a misdemeanor, and is made punishable by fine or imprisonment, or both. There are two provisos in this section which are important. The first proviso permits discrimination in prices of commodities on account of differences in grade, quality, and quantity of the commodity sold, or that makes only due allowance for difference in the cost of transportation. The second proviso permits persons selling goods, wares, and merchandise in commerce to select their own customers, except as provided in section 3, which will be considered later. The necessity for legislation to prevent unfair discriminations in prices with a view of destroying competition needs little argument to sustain tho wisdom of it. In the past it has been a most common practice of great and powerful combinations engaged in commerce-notably the Standard Oil Co., and the American Tobacco Co., and others of less notoriety, but of great influence-to lower prices of their commodities, oftentimes below the cost of production in certain communities and sections where they had competition, with the intent to destroy and make unprofitable the business of their competitors, and with the ultimate purpose in view of thereby acquiring a monopoly in the particular locality or section in which the discriminating price is made. Every concern that engages in this evil practice must of necessity recoup its losses in the particular communities or sections where their commodities are sold below cost or without a fair profit by raising the price of this same class of commodities above their fair market value in other sections or communities. Such a system or practice is so manifestly unfair and unjust, not only to competitors who are directly injured thereby but to the general public, that your committee is strongly of the opinion that the present antitrust laws ought to be supplemented by making this particular form of discrimination a specific offense under the law when practiced by those engaged in commerce. The necessity for such legislation is shown by the fact that 19 States have enacted laws forbidding this particular form of discrimination within their borders. These State statutes have practically all been enacted in the last few years, and most of them in the years 1911, 1912, and 1913. It is important that these State statutes be supplemented by additional legislation by Congress, for it is now possible for one of these great corporations doing business in not only the 48 States but throughout the world to lower the prices of its commodities in a particular State and sell within that State at a uniform price in compliance with State laws, and thereby destroy the business of all independent concerns and competitors operating within the State. The loss incurred by such gigantic effort in destroying competition can be more than regained by general increase in the prices of their commodities in other sections. In fact, complaint has been made to your committee that efforts have been made by certain great corporations engaged in commerce in some of the States which have enacted statutes forbidding such discrimination. to circumvent the State laws by the methods above described. In seeking to enact section 2 into law we are not dealing with an imaginary evil or against ancient practices long since abandoned, but are attempting to deal with a real, existing, widespread, unfair and unjust trade practice that ought at once to be prohibited in so far as it is within the power of Congress to deal with the subject. This we think is accomplished by section 2 of this bill. As further showing the necessity for such legislation, we call attention to the States which have heretofore adopted statutes varying in form but for the purpose of preventing unfair discriminations in price, as follows: 1. Arkansas, act 1905, as amended March 12, 1913. 2. Idaho, antitrust act of 1911. 3. Iowa, Revised Statutes. 6. Nebraska, act of 1913. 9. Oklahoma, act 1913. 10. South Carolina, act 1902. 11. Utah, act 1913. 12. Wisconsin, act 1913. 13. Wyoming, Revised Statutes, 1911. 14. Kansas, act 1905. 15. Michigan, act 1913. 16. Massachusetts, act 1912. 17. Montana, act 1913. 18. North Dakota, act of 1913. 19. California, act 1913. III. MINE PRODUCTS. Section 3 of the bill makes it unlawful for the owner or operator of a mine, or the person controlling the sale of the product thereof in commerce, to arbitrarily refuse to sell such product to a responsible person who applies to purchase the same. This section, like section 2, is limited in its application to the United States and to places under the jurisdiction thereof, and has no reference to persons desiring to purchase such a product for export sale. In that case the seller is permitted to arbitrarily refuse to sell to a responsible bidder, for otherwise a foreign dealer being responsible might purchase the entire output of a mine, to the detriment of manufacturers and dealers in the United States and the owner be powerless to prevent it. The section is based on the broad conservation idea that natural products such as iron, coal, and other minerals stored in the earth as the result of nature's laws should not be monopolized by the mere acquisition of the title to the lands which contain such resources. The design is to prevent those who have acquired or may acquire a monopoly or partial monopoly of mines from discriminating against certain manufacturers, railroads, or other persons who need the products of the mines in carrying on their industries where the commodity is used in its crude state, as coal, and, further, to prevent arbitrary discrimination against responsible purchasers who desire to obtain such products for use or consumption or for resale to persons who desire to purchase same for use or consumption. This provision is new, but in view of the fact that many railroad corporations, the United States Steel Corporation, and other corporations have acquired and own, either directly or indirectly, through the medium of subsidiary corporations, vast areas of land containing coal, iron, and copper and other minerals in common use, we feel that this legislation is needed and fully justified. By its enactment into law we make it impossible for mere ownership of mines to enable the owners or those disposing of the products thereof to direct the disposal of such products into monopolistic channels of trade. It will liberate from the power of the trust every small manufacturer who is compelled to go into the open market for his raw material and every person who desires to purchase coal for use or for resale to those who desire to purchase for use or consumption, and will afford to every such manufacturer an opportunity to purchase same for cash wherever offered for sale in commerce. The section expressly forbids the mine owner or person controlling the sale of the product of the mine to arbitrarily refuse to sell such product to any responsible purchaser, and thereby prevents the mine owner or operator from giving the preference to another and rival dealer in the disposal of such product. IV. EXCLUSIVE AND "TYING" CONTRACTS. Section 4 of this bill has apparently been much misunderstood, and great confusion seems to have arisen in regard to its provisions. Whether designedly or from a misunderstanding of its purport, we know not, but it has been contended very earnestly that its provisions prevent exclusive or sole agencies. It not only does not prohibit or forbid exclusive agencies, but on the contrary it in no way whatever relates to agencies properly so termed. Let us therefore consider what this section really accomplishes. It prohibits the exclusive or "tying" contract made between the manufacturer and the dealer by purchase or lease, whereby the latter agrees, as a condition of his contract, not to use or deal in the commodities of the competitor or rival of the seller or lessor. It is designed merely to prevent this unfair trade practice now so common throughout the country, and which is generally regarded by everyone who has given the subject any serious consideration as unjust to the local dealer and to the community and as monopolistic in its effects. The section provides that any person engaged in commerce who either leases or makes a sale of goods, wares, and merchandise in the United States or in any places under its jurisdiction on the condition or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor of either the lessor or seller shall be deemed guilty of a misdemeanor and punished as provided in the section. The words "or fix a price charged therefor or discount therefrom or rebate upon such price" are merely descriptive of the different methods used by the manufacturers to induce the dealer or local merchant to enter into this exclusive or "tying" contract, which obligates him to surrender a right which every dealer should enjoy, namely, to handle any manufacturer's goods, wares, or merchandise he sees fit to handle. Of course, the manufacturer must offer some very flattering and extraordinary inducements on his part, for otherwise no dealer would be foolish enough to enter into any such contract. The first inducement in every case must of necessity relate to price. By fixing the price so high that the retail dealer will make an extraordinary or unusual profit on the commodities actually sold, the manufacturer is enabled to induce him to enter into an arrangement whereby the local dealer can actually increase his profits for the time being at least by giving up his entire trade in competitive commodities which he is compelled to handle on a small margin. But, rest assured that when the local dealer enters into such a contract and gives up a portion of his trade to rivals, he at once attempts by the aid of the manufacturer to establish a monopoly in the trade of the commodity handled under the exclusive contract and sold at a higher profit. If the transaction results in completely driving out competitive articles from the community as the contract by its terms takes them out of the business of the local dealer, there can be little room to question the contention of the advocates of this system that both the manufacturer and the dealer are benefited by the transaction. If on the contrary the local merchant who has tied his hands by an exclusive contract can not drive out of the community competitive articles and thereby secure a monopoly of the trade in his immediate locality, it is manifest that he has been seriously hampered and injured in his business by the restrictions placed upon him by his contract. But, the advocates of this system and practice of monopoly, in dealing with this question never look beyond the manufacturer or the local dealer to the millions of American consumers who are compelled to purchase daily the neces 47909-14-3 |