AFTER RECESS.

The committee met pursuant to the taking of recess.

Present: Senators Newlands (chairman), Pomerene, Robinson, Brandegee, Oliver, Lippitt, and Townsend.

The CHAIRMAN. Mr. Bennet, we will hear you now.

STATEMENT OF MR. JAMES E. BENNET, OF NASSAU STREET, NEW YORK.

The CHAIRMAN. You are a lawyer by occupation, are you not? Mr. BENNET. By occupation; it used to be a profession, but in New York it is reduced to a commercial occupation, very largely. Mr. BRANDEGEE. Social service?

Mr. BENNET. Yes, sir. I represent 10 or 15 manufacturers of printing presses and a number of other small and medium-sized corporations. The others are manufacturers of umbrellas, three of them are manufacturers of shirtwaists, two of them are manufacturers of men's shirts, and others are jobbers in paper and jobbers in woolens and linens, etc., and there are 75 or 80 of such corporations that am speaking for here in relation to this trades commission bill. The largest one I represent has a capitalization of $5,800,000, but that is the only one of any such size. Next to that there are $3,000,000, and they run on down to $15,000. We are not related in any way; that is, there is no one of us that could be accused of being a trust or a monopoly; and it is speaking entirely from that standpoint, and not from the standpoint of the so-called trusts that I am interested in this bill.

Senator LIPPITT. How did they happen to unite to employ you— such divers occupations?

Mr. BENNET. They are all clients of mine. Since 1906 I have organized about 150 of these small corporations. Many of them have been organized by turning partnerships into corporations, others by turning individuals into corporations, and others, where individuals have combined we have formed corporations.

Senator LIPPITT. They are merely individual clients. Is that it? Mr. BENNET. Yes, sir. I was the personal attorney for the Bubcock Co. for some seven or eight years. I had a very honorable predecessor. I think Senator Brandegee represented them in some litigation 20 or 25 years ago, in which they were successful. And then, when the tariff business came up, for the first time in 75 years the printing-press men met together to see what they could do to keep themselves from the free list, and they united upon me as spokesman before the Ways and Means Committee. Since then they have united upon me as spokesman in two or three other matters, including this. In fact, I am the only thing that they have ever agreed on in their lives, because they have no relationship with each other. They can not agree on anything; their rivalry is too intense. But on this they are united.

Our interest in this particular bill was centered in the second section of the bill and in the third, the ninth, the tenth, and twelfth sections.

In the first place, in a general way, we are opposed to the letter and spirit of the trades commission. We never objected to the

Bureau of Corporations. That, we understood, was organized for the purpose of gathering together information on such questions as the President needed, and that the President through his assistants or through the Department of Commerce would digest it and make such recommendations as he wanted. That never annoyed us. But we feel that we are going to be annoyed very much by taking that out and making it a separate trade commission, a separate organization. This new organization has got to make a record, and we have had so much experience in New York State with different commissions that have to make records, that we feel that there is nothing good coming out of this trade commission.

Of course, that is no criticism of the gentlemen who drew the bill or the gentlemen who favor the bill. We simply disagree with them on the principle of the bill. We believe that this bill is more in the nature of a control of corporations than a regulation. We believe there is too much regulation now. I was reminded of that the other day when my little boy came home from school and I asked him how he got along at school, and he said, “You know, I would learn so much more if the teacher was not all the time talking about 'deportment." I think the tendency of this bill is to look after the deportment so much, and the matter of regulation, that it does not give us in business the same opportunity of getting ahead and developing our business as we would if we were let alone.

In order not to take your time too much, I will come right down specifically to page 4, which is a part of section 2, where it states that with the exception of the secretary and assistant secretary and one clerk to each of the commissioners, and such attorneys, examiners, and special agents as may be employed-excepting all those, the remainder of the commission shall be part of the civil service, the classified service.

The more I study this bill the more I am appalled at the tremendous work that this commission is going to have. There is going to be no end of work, and all the attorneys and all the examiners and all the special agents and all the people whose work in the matter is at all vital-all the people with whom, as business men, we will come in contact, are going to be absolutely free from civil service. They will examine these corporations; and if they examine one they must examine all. If they examine the Whitlock Printing Press Co. and require them to file a report, in justice to that company they ought to examine and require its competitors to file reports.

I am not at all favorable to asking one corporation to file a report and leaving out a dozen others. I think that if one must they all must; and from what we heard this morning about the figures, it will mean an immense lot of reports and an immense lot of expert accountants and investigators and inspectors. I would not be at all surprised if they would require a force of two or three thousand men, with salaries of $2,000 to $3,000 each, to make this bill in any way effective, and to make it so that the commission would not really be handicapped itself and be a laughingstock because of inadequacy.

These men are not going to be civil-service employees. In New York State we have a public service commission. We are favored with two of them. We have five commissioners sitting in Greater New York and five sitting in the upper part of the State, at $15,000 each, with an enormous number of clerks, attorneys, and all that; but

all the attorneys except one or two, and all the inspectors except a few, and all of the clerks are under our State civil service, so that it takes away a great deal of the burden of being examined by people who have no knowledge or no responsibility except political pull enough to get the job.

These examiners are likely to have to examine some complicated businesses. Take a shirtwaist business. It seems small, but the books of one of my clients who does a business of about half a million a year are quite complicated. We have to have five or six bookkeepers. Let some man come in there from the outside who has never done anything like that, and he gets the job and later on he investigates the business and reports back what he finds to the commission. The chances are he is going to make an entirely erroneous report of it, and one that will be detrimental to the business. When we turn an army of men loose that have no qualifications at all except pull, heaven only knows what is going to happen. Certainly it is not going to be of any assistance. to us as business men.

And so we have a very strong objection to that section there, which is a part of section 2.

The CHAIRMAN. The part which applies to the employment of men who are not subject to the civil service?

Mr. BENNET. Yes, sir. If those men are going to be employed, they ought to be men of expert knowledge along their respective lines. I have had a good deal of experience myself. I am treasurer of two or three companies and secretary of some others, and I find that the ordinary man bookkeeper that we give $25 a week toand that is a good price for bookkeepers-the ordinary $25-a-week bookkeeper is absolutely incompetent to make any satisfactory examinations of books and give an intelligent report upon which you can base definite ideas and get definite results. They have got to be men of good character and men of strength, strength of mind; men able to analyze. They ought to be men just as competent, if not more competent, than the present bank examiners. The bank examiners examine the same kind of work over and over again, and they average from $2,500 to $3,000 a year.

The CHAIRMAN. Are they under the civil service?

Mr. BENNETT. No; I do not think they are. They are more or less subject to getting a position in various and divers ways. I do not know just how that is.

The CHAIRMAN. You are aware, also, that the examiners and special agents of the Interstate Commerce Commission are not under the civil service, are you not?

Mr. BENNET. Yes; but they have the same line of thing to examine. The CHAIRMAN. The reason for excluding those men from the civilservice requirements is that they were enabled in that way to get men who were specially adapted to the work in hand; and thus far it has been shown, and it has been the experience of the Interstate Commerce Commission, that they have selected very good men in that way.

Mr. BENNET. Yes; that may be true. Whenever you want a man it is always easy to put it up to the Civil Service Commission that you require special work. In New York State they have got all their inspectors and all their agents employed and chosen through the

civil service. I take it that this trades commission is going to have a great many more inspectors than there are employed under the Comptroller of the Currency or under the Interstate Commerce Commission, because it is a very much larger and wonderfully more diversified proposition than has ever before been carried through. Of course, in studying the bill, we have to study it from the proposition of what may happen, rather than from the standpoint of what we think they will do in the way of limiting themselves.

Senator LIPPITT. Do you know what the salary of a bank examiner is?

Mr. BENNET. I had a brother who was a bank examiner, and I think he averaged about $3,000 a year, from which he paid his own car fare.

Senator LIPPITT. You estimate, then, that they are going to ask 2,000 people to act as examiners for this commission?

Mr. BENNET. If they are going to examine 100,000 corporations or 50,000 corporations, it is going to take a great many examiners. A cursory examination would take three or four days, with an ordinary corporation. You take a corporation doing a business of $60,000, and you never could get any idea of the business inside of three or four days. Personally, I spent over two weeks examining a company that did $56,000 worth of business a year, before I could tell whether the manager of the company had been looting the company or whether he had not.

The CHAIRMAN. Do you think that it is to be expected under this act that the commission will immediately undertake to examine every one of the 100,000 corporations of the country? Do you not think that it would have in view the purposes of the act; that is, to restrain monopoly and to prevent unfair practices in business, and that they would investigate only those corporations that were under suspicion or under charge? That would not involve a vast mass of corporations. Do you not suppose they would exercise some judgment and discretion?

Mr. BENNET. They probably would exercise some judgment and discretion, as I have just indicated. Here are five men manufacturing printing presses, and I think that in justice and as a matter of fair dealing-and when we are passing a law to compel fair dealing among manufacturers and business men we have got to have fair dealing on the part of the commission-if one of them is examined, then, in justice, the others should also be examined. I think when you examine one industry you ought to examine the others. If you are going to give forth to the world important facts with reference to one corporation, then you ought to give forth to the world facts with reference to the competitors of that corporation. Senator LIPPITT. You mean at substantially the same time?

Mr. BENNET. It ought to be done at substantially the same time. That is the great fear we have, that in discussing these matters these things may come out from time to time greatly to the detrimentThe CHAIRMAN. And may prove injurious to one corporation when others, perhaps, are indulging in the same practices and go free? Mr. BENNET. That is exactly the point. I think all men would agree on that.

The CHAIRMAN. Can you suggest in words an amendment that would prevent this act from being abused?

Mr. BENNET. I am a good deal like Sir Walter Raleigh when he said, looking at the ax with which he was to be executed, "That ax is a panacea for all ills." I think the only safeguard is to just chop this right off short, because, from our standpoint, we do not want it at all.

Senator LIPPITT. Because there are some practices that ought not to be made public?

Mr BENNET. Oh, no, sir; not that at all.

Senator LIPPITT. Why do you not want them made public?

Mr. BENNET. Because there is such a tremendous chance for making wrong interpretations. If they take facts and wrongly interpret them and publish them and have the people interpret them who do not know anything about the business and put interpretations on them that you and I or nobody else ever thought of doing, or if somebody gets up in Congress and makes a speech, distorting the facts, there is absolutely no redress. It simply makes the greatest opportunity for business and financial gossip, without any responsibility, that we have ever seen. That is why we fear it.

We do not have any fear of the Attorney General coming to the Babcock Co. or any of these other companies and, after investigation, saying, "You are doing such and such a thing and I want to have it corrected." If there is nothing wrong, nothing is ever heard of it. There are lots of people investigated and nothing is ever heard of it. But this bill would give the commission the right to make it public from its standpoint and the real truth could never be satisfactorily explained.

Last night I left the office and started up the street and met a man who was formely a general. He had his hands full of packages and he said to me, "Mr. Bennet, I can not shake hands with you because I am going home full." Now, if I went out and told somebody that I met the general and he was going home "full," and he apologized, and could not shake hands with me because of that condition, you can very readily see how I might seriously injure the gentleman's reputation as a temperate man. Those things are bound to happen under these reports. Reports will go out that will injure business. that you will never be able to explain, and they will not be true. The interpretation will not be true.

In speaking to a friend of mine I told him that one man could get up in some legislative body and make a speech, not being bound down by the rules of evidence and not being afraid of any libel, and make his own interpretation of some other fellow's record of what he had seen in some book, and he could do a tremendous lot of damage to some innocent corporation, and that corporation would be absolutely without reparation. That is the thing we fear. We honestly and sincerely fear it, because it is so likely to happen. There is a provision in here that if anybody gives out information that is wrong he is fined. Suppose he was employed to examine a corporation and obtained valuable information. Then if he is discharged by the commission, may he not blackmail that corporation? I suppose every corporation has a dozen weak points, and we do not want any of those weak points to be made public.

Senator LIPPITT. What do you mean by "weak points"?

Mr. BENNET. For instance, there is one concern I know of that sells a special kind of machinery and takes notes from its customers. It