possible, segregate and disallow from such determination all value attaching to such property or business due solely to monopolistic power (other than patent rights or other legal franchises, the true value of which shall be considered by the commission). The said commission in considering revocation of registration under this section shall give such notice and have power to take such evidence and hold such hearings as may be prescribed by the regulations issued under this act: Provided, That if any subsidiary of a corporation so registered shall be guilty of conduct herein before specified in this section as ground for cancellation of registration, such conduct on the part of such subsidiary shall be ground for canceling the registration of the corporation to which it is so subsidiary. SEC. 11. That in case of revocation of the registration of any corporation the commission may also order that such corporation thereafter shall not engage in interstate commerce. For every day's continuance in such commerce contrary to such order such corporation shall be subject to a fine of not more than one thousand dollars. The district courts of the United States, upon the application of said commission, alleging a failure to comply with such order of the commission, or alleging a failure to comply with or a violation of any of the provisions of this act, by any corporation subject thereto, shall have jurisdiction to issue a writ or writs of mandamus or injunction, or other order enforcing such order of the commission or commanding such corporation to comply with the provisions of this act. SEC. 12. That the said commission may at any time, upon application by a corporation whose registration has been previously canceled, reinstate said corporation for registration and grant it registration anew: Provided, That the said commission is satisfied that the cause or causes for which registration was revoked no longer existt and that the commission shall find that all the requirements for registration as se forth in section four shall have been complied with anew as of the date of the new application for registration. SEC. 13. That the said commission may at any time, if in the opinion of the commission public necessity requires such action, order and require any corporation engaged in commerce among the several States or with foreign nations, except corporations subject to the act to regulate commerce, approved February fourth, eighteen hundred and eighty-seven, as amended, but including pipe-line companies, to make such statements and give such information as is prescribed in sections four and eight of this act, which information shall be published in accordance with the provisions of section nine hereof. The commission may also obtain from any such corporation, through the powers granted in section fourteen hereof, such information as shall enable said commission to determine whether such corporation is subject to the terms of this act. The decisions of the said commission made under the powers conferred upon it in this act shall be final except as to matters involving the taking of private property without due process of law and involving the extent and character of the said powers 80 conferred herein: Provided, however, That an appeal may be taken in equity to any district court of the United States from any order or decision of the said commission made under section eleven of this act. SEC. 14. That in order to accomplish the purposes declared in sections eight and thirteen of this act the said commission shall have and exercise the same power and authority in respect to corporations subject to this act as is conferred on the Interstate Commerce Commission in said act to regulate commerce and the amendments thereto in respect to common carriers, so far as the same may be applicable, including the right to subpoena and compel the attendance and testimony of witnesses and the production of documentary evidence and to administer oaths. All the requirements, obligations, liabilities, and immunities imposed or conferred by said act to regulate commerce and by an act in relation to testimony before the Interstate Commerce Commission, and so forth, approved February eleventh, eighteen hundred and ninety-three, supplementary to said act to regulate commerce, and the act defining immunity, approved June thirtieth, nineteen hundred and six, shall also apply to all persons who may be subpoenaed to testify as witnesses or to produce documentary evidence in pursuance of the authority conferred by sections eight and thirteen hereof. SEC. 15. That the said commission shall, on or before the in each year, make a report, which shall be transmitted to Congress. This report shall contain such information and data collected by the commission as it may deem of value in the determination of questions connected with the regulation of commerce, together with such recommendations as to additional legislation relating thereto as the commission may deem necessary. day of SEC. 16. That any corporation engaged in commerce among the several States or with foreign nations the amount of whose gross annual receipts, inclusive of those of its subsidiaries, shall be less than five million dollars and more than one million dollars may also, by complying and continuing to comply with the terms of sections four, eight, and nine hereof, acquire and maintain United States registration as provided in sections five and six, subject to the provision for cancellation thereof prescribed in section ten; and the information furnished by such corporation shall be subject to the provisions of section nine. SEC. 17. That the said commission shall have power to make any and all regulations necessary and proper to carry out the purposes of this act, and at any time to alter, amend, or repeal the same or any part thereof. SEC. 18. That any person willfully making or furnishing to said commission any statement, return, or record required by this act, when knowing such statement, return, or record to be false in any material particular, shall be guilty of a misdemeanor, and upon conviction shall be fined not more than one thousand dollars or imprisoned not more than one year, or both. [Senate Report No 1326, Sixty-second Congress, third session.] CONTROL OF CORPORATIONS, PERSONS, AND FIRMS ENGAGED IN INTERSTATE COMMERCE. FEBRUARY 26, 1913.-Ordered to be printed. Mr. CUMMINS, from the Committee on Interstate Commerce, submitted the following report. [Pursuant to S. Res. 98.] The Committee on Interstate Commerce, to which was referred the following resolution "Resolved, That the Committee on Interstate Commerce is hereby authorized and directed, by subcommittee or otherwise, to inquire into and report to the Senate at the earliest date practicable what changes are necessary or desirable in the laws of the United States relating to the creation and control of corporations engaged in interstate commerce, and what changes are necessary or desirable in the laws of the United States relating to persons or firms engaged in interstate commerce, and for this purpose they are authorized to sit during the sessions or recesses of Congress, at such times and places as they may deem desirable or practicable; to send for persons and papers, to administer oaths, to summon and compel the attendance of witnesses, to conduct hearings and have reports of same printed for use, and to employ such clerks, stenographers, and other assistants as shall be necessary, and any expense in connection with such inquiry shall be paid out of the contingent fund of the Senate upon vouchers to be approved by the chairman of the committee.' begs leave to make the following report: On the 26th day of July, 1911, the Senate adopted the foregoing resolution, and, acting under the authority and in pursuance thereof, the Committee on Interstate Commerce provided for open hearings upon the subject matter of the resolution. The hearings began on the 15th day of November, 1911, and were continued from day to day for more than three months, during which time 103 men appeared before the committee, and their statements, together with the exhibits and documents submitted by them, fill 2,799 printed pages. A printed copy of these statements, exhibits, and documents, including an index, laws and reference concerning industrial combinations in foreign countries, and a collection of judicial decisions touching the power of Congress in the regulation of commerce among the States, in all, five volumes, is herewith presented to the Senate. While the committee is conscious that some of the matter adduced at the hearings and submitted as a part of this report is not relevant to the questions under consideration and of little worth, it believes that, upon the whole, the hearings have furnished one of the most valuable contributions that can be found in the literature of the subject. It is not yet ready to report any of the bills which are now before it, and which propose specific modifications of or additions to the existing statute; nor is it prepared at this time to report a substitute for them. It hopes that it may be able before the close of the present session to act finally upon these bills and recommend in definite form the legislation which it may think necessary or wise to meet modern business conditions. It is, however, prepared to answer the general inquiries propounded in the resolution, and in view of the overwhelming importance of the subject it ventures to add to the direct response some observations upon the origin, purpose, and effect of the enactment commonly known as the antitrust law, to indicate wherein it is inadequate, and to suggest the general scope of further regulation. The committee is of the opinion: First. That the statute should stand as the fundamental law upon the subject, and that any supplemental legislation for more effectual control and regulation of interstate and foreign commerce should be in harmony with the purpose of the existing statute. Second. That whatever may be our views respecting the power of Congress to enact a general Federal incorporation law, it is neither necessary nor desirable at this time to provide for the organization under act of Congress of industrial corporations which propose to engage in commerce among the States and with foreign nations. Third. That it is desirable to impose upon corporations now or hereafter organized under State law, and engaged or proposing to engage in such commerce, further conditions or regulations affecting both their organization and the conduct of their business, and also to impose further conditions or regulations upon persons, copartnerships, and other associations now engaged, or hereafter engaging, in such commerce, the general character of such regulation to be the same as those laid upon corporations, except such conditions or regulations as are in their very nature peculiar to the corporate form of commercial activity. It is plain that the first question to be answered in considering what additional legislation upon the subject is necessary or desirable is a vital one, it is this: Should Congress attempt to maintain competitive conditions in the general interstate commerce of the country, where they still exist, and to restore such conditions where they have been destroyed, or should it accept the complete or partial overthrow of competition and resort to some other method of protecting the people against the power of combination and monopoly? Without doubt the chief if not the only object in mind, when the antitrust law was passed, was to maintain competition as an effective regulating force in business by making it unlawful to enter into any contract or combination in restraint of trade or commerce among the States or with foreign nations, or to nonopolize, or attempt to monopolize, such trade or commerce. The bill introduced by Senator Sherman, out of which the present statute grew, was in terms directed against the suppression of competition. After a long debate and much reflection the Judiciary Committee of the Senate reported a substitute in which "restraint of trade" was the thing forbidden instead of interference with competition. This was accepted not because there was any abandonment of the desire to preserve competition, but because there was a common law on the subject well established and carefully elucidated in the English decisions. The common law was that both contracts and acts in restraint of trade were injurious to the public welfare and therefore opposed to public policy. The Congress of 1890 very wisely borrowed the language of the common law, and with it came the learning of the judges who had from time to time declared and expounded it. It is not the purpose of the committee to recite the development of the English doctrine. It was not always stated with exact accuracy and there is some inharmony of expression, but it may be said with confidence that a restraint of trade consisted of such unreasonable restriction of competition as impaired substantially, and to the public injury, the freedom of trade or the freedom to trade. Interference with free competition was generally but not necessarily a restraint of trade, for there were some restrictions that could be put upon competition and upon competitors that left the competitive force as an adequate protection to the people. Hence the common law was that unreasonable, unfair, undue restraint upon or interference with competition or competitive conditions constituted a restraint of trade. The committee has made this comment upon the common law and pointed out the distinction between "restraint of competition" and "restraint of trade" in order that it may be fully understood in its analysis of the conflict between the earlier and later opinions of the Supreme Court of the United States relating to the construction and application of the antitrust statute. The committee will not at this time enter upon an extended argument respecting the policy of maintaining competition or competitive conditions in the business of the country. It is well understood that there are many distinguished students and highly trained thinkers who believe that the age of competition is past, and that for the struggle which competition involves there should be substituted combination and cooperation, under such regulation and supervision as will protect the people from the oppression of monopolistic power, and added to the students and thinkers who have reached this conclusion through mere observation and investigation there are many men engaged in commerce, and who therefore speak from a practical standpoint, who have also concluded that some form of regulated monopoly or concentration should be adopted. All these men, whether theorists or otherwise, admit that if we abandon the effort to maintain competition the Government must undertake, directly or indirectly, to fix prices for the combinations or monopolies. The committee feels that the time has not yet come for so radical a departure from the long-established policy of the country, and it hopes that the time may never come when it will be necessary for the Government to assume the task of establishing prices for general commodities. It believes that the progress of the world depends in a large measure upon that fair, reasonable rivalry among men which has hitherto characterized the advances of civilization. It is frequently declared that the law can not compel men employed in like business to compete with each other. There is a sense in which this is true, but it is only technically true. What is meant when we use the phrase "maintaining competition is maintaining competitive conditions. We can both create and maintain competitive conditions, and, until human nature is revolutionized, when competitive conditions exist there will be actual competition; but if for some extraordinary reason that should fail there will be, at least, a potential competition tending to prevent undue prices and unfair practices. Without going further into the issue between regulated competition and regulated monopoly, the committee reiterates its finding that the anti-trust statute should stand and that every possible effort to create and preserve competitive conditions should be made. Assuming, therefore, that Congress should maintain the policy established by the antitrust law and should make it more effective by additional legislation, if it be within our power to do so, the committee calls attention to the interpretation which the Supreme Court has given to the statute and to the application of its provisions which that tribunal has made in cases which have come before it for decision. It is not the intent of the committee in this report, to review the opinions of the Supreme Court one by one, but rather to select certain types which will either demonstrate the wisdom of additional legislation or show that the law is adequate as it is. The committee selects for the purpose indicated the following cases, all of which arose under the statute now being considered: United States v. E. C. Knight Co. (156 U. S., 1). United States v. Trans-Missouri Freight Association (166 U. S., 290). Hopkins v. United States (171 U. S., 578). Northern Securities Company v. United States (193 U. S., 197). United States v. American Tobacco Company (221 U. S., 106). United States v. Union Pacific Railroad Co. (not yet reported, opinion delivered Dec. 2, 1912). The committee does not give a statement of the facts in each of these cases, for to do so would greatly prolong the report, and it will be taken for granted that those who are interested in the subject are already familiar with the facts as they appear in the Supreme Court reports. The rule of law announced in United States v. Knight Co. and in Hopkins v. United States is that a restraint of trade however unreasonable is not prohibited by the antitrust statute, no matter now general or disastrous the interference or restraint may be upon commerce among the States unless it directly affects such commerce. There is a general understanding among the judges and lawyers of the country that the Knight case has been overruled or modified in subsequent decisions. Undoubtedly it can be fairly inferred from the recent opinions of the court in like cases that, if the facts of the case were now presented, it would be held that the restraint was direct; but the rule of law established has never been questioned by the court and has been emphatically reasserted in every prominent opinion hitherto rendered. The committee does not bring these cases forward for the purpose of disputing the soundness of the rule under existing legislation. Its object is to disclose, as clearly as possible, the scope of judicial discretion, and therefore of business uncertainty which it creates. In every prosecution under the act wherein there is proven or admitted a contract or combination which restrains trade among the States, the first thing that the court must ascertain and declare is whether the restraint is direct or indirect. In the Knight and Hopkins cases, and others of that type, it was held to be indirect. In the Northern Securities Co., Standard Oil Co., and American Tobacco Co. cases it was held to be direct. It is obvious that the opinion of any given man in any given case upon this question, whether he be judge or not, must depend largely, not upon his learning in the law but upon his training and bent in the economy of commerce. The result has been, and necessarily will be, that the law officer of the Government before he institutes a prosecution must determine whether the restraint is direct and immediate, and the court in order to decide the issue must employ the functions of the legislator rather than the lawyer. The consequence is twofold: First, the Department of Justice will ignore a great many unlawful transactions because there will be doubt as to whether the interference with interstate or international trade is direct or indirect; second, the business community has found itself, and will find itself in a state of uncertainty as to whether a particular transaction is to be judged by the law of the State or the law of the Nation. It is not claimed that this undefined and undefinable field of judicial discretion can be wholly occupied by legislation, but it is manifest that it is the duty of the legislative branch of the Government to circumscribe it within the closest practicable bounds. The committee will recur to this subject in connection with another aspect of the judicial power, and contents itself now with a statement of its conclusion that there should be further legislation specifically prohibiting certain forms of association, combination, or monopoly which admittedly restrain trade and commerce among the States and with foreign nations, but which may be held by the courts to be indirect or remote interferences. The committee has first referred to the point just mentioned, not because it is first in importance, but because it first arose. It now passes to another and more serious weakness in the law as now interpreted. In the Trans-Missouri Freight Association case there developed a controversy among the members of the Supreme Court that was carried on with unabated vigor through the 15 years intervening between the opinion in the Freight Association case and the opinion in the Standard Oil Co. case. In this period the vicissitudes of life and the changes upon the bench which necessarily ensued converted the opinion of the court in the Freight Association case into a single dissenting opinion in the Standard Oil Co. case, and the dissenting opinion in the former case into the opinion of the court in the latter case. In the Freight Association case Mr. Justice Peckham, in delivering the opinion of the court, said: "Second. The next question to be discussed is as to what is the true construction of the statute, assuming that it applies to common carriers by railroad. What is the meaning of the language as used in the statute that 'every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several States or with foreign nations, is hereby declared to be illegal'? Is it confined to a contract or combination which is only in unreasonable restraint of trade or commerce, or does it include what the language of the act plainly and in terms covers, all contracts of that nature (p. 327)?" The learned justice answered the question thus propounded many times and in great variety of phrase in the course of the opinion, and the committee quotes some of these answers. "When, therefore, the body of an act pronounces as illegal every contract or combination in restraint of trade or commerce among the several States, etc., the plain and ordinary meaning of such language is not limited to that kind of contract alone which is in unreasonable restraint of trade, but all contracts are included in such language, and no exception or limitation can be added without placing in the act that which has been omitted by Congress (p. 328). "But we can not see how the statute can be limited, as it has been by the courts below, without reading into its text an exception which alters the natural meaning of the language used, and that, too, upon a most material point, and where no sufficient reason is shown for believing that such alteration would make the statute more in accord with the intent of the lawmaking body that enacted it (p. 329). "The arguments which have been addressed to us against the inclusion of all contracts in restraint of trade, as provided for by the language of the act, have been based upon the alleged presumption that Congress, notwithstanding the language of the act, could not have intended to embrace all contracts, but only such contracts as were in unreasonable restraint of trade. Under these circumstances we are, therefore, asked to hold that the act of Congress excepts contracts which are not in unreasonable restraint of trade, and which only keep rates up to a reasonable price, notwithstanding the language of the act makes no such exception. In other words, we are asked to read into the act by way of judicial legislation an exception that is not placed there by the law-making branch of the Government, and this is to be done upon the theory that the impolicy of such legislation is so clear that it can not be supposed that Congress intended the natural import of the language used. This we can not and ought not to do (p. 340). "The conclusion which we have drawn from the examination above made into the question before us is that the antitrust act applies to railroads, and that it renders illegal all agreements which are in restraint of trade or commerce as we have above defined that expression, and the question then arises whether the agreement before us is of that nature (p. 341)." The issue was clearly joined by Mr. Justice White (now Chief Justice), who in his dissenting opinion, in which Justices Field, Gray, and Shiras concurred, thus stated the question: "To state the proposition in the form in which it was earnestly pressed in the argument at bar, it is as follows: Congress has said every contract in restraint of trade is |