Commissioner of Corporations, automatically ceased to exist. § 2. Derivation of Commission: The Trade Commission is an outgrowth of the office of Commissioner of Corporations abolished by the Trade Law, and is plainly modeled upon the lines of the Interstate Commerce Commission. The principal function of the office of Commissioner of Corporations, created in 1903, was to acquire, and to report to the President, information as to the organization, conduct and management of the business of corporations engaged in interstate commerce, to the end that the President might thereby be enabled to make recommendations to Congress for legislation regulating such commerce. It is one of the several functions of the Trade Commission to furnish information as a basis for the enactment of additional legislation regulating interstate and foreign commerce. But the Trade Commission may report to Congress directly, and is not under the domination of the President. The Commissioner of Corporations made his investigations under the direction and control of a member of the cabinet, the Secretary of Commerce and Labor. The Trade Commission is more independent and may act upon its own initiative and at its own discretion to a large degree. The office of Commissioner of Corporations was a political office, and the incumbent changed with the administration. The Trade Commission is nonpolitical and its membership will change infrequently.10 The legislative purpose appears to have been that the Trade Commission should accumulate experience, form 6Trade Law, Sec. 3. 71 U. S. Comp. Stat. (1913) Tit. 12A, Ch. C, Sec. 889, p. 357; United States v. Armour & Co. (1906) 142 Fed. 808, 819. 8Secs. 5, (5), (6), and 38 and 39, infra; Trade Law, Sec. 6, (f), (h). 9Sec. 35, infra. ulate precedents, maintain continuity and consistency of governmental policy towards business, and gradually bring about an evolutionary growth of regulation of industrial corporations engaged in interstate commerce similar to that which has resulted in respect of carrying corporations from the creation of the Interstate Commerce Commission. Powers of Commission: The general nature 11 § 3. of the Trade Commission appears from the nature and scope of the powers which are conferred upon it by the Trade Law, and in part by the Clayton Law,11 and are of course confined to the field of interstate and foreign commerce.12 Its powers may be grouped as (1) regulative (2) advisory and (3) investigative. § 4. Regulative power:13 The Commission has authority to institute and conduct against persons,14 partnerships and corporations 15 engaged in interstate commerce, except banks and interstate common carriers, a statutory proceedingis designed to lead to a decree by a competent court, (1) restraining the use of "unfair methods of competition in commerce" which are declared unlawful by the Trade Law,17 and (2) pre 11The Clayton Law is entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes" (H. R. 15657; Pub. No. 212; 63d Congress), in force October 15, 1914. Printed in full in appendix. For the provisions of the Clayton Law which confer power upon the Trade Commission, see Secs. 2, 3, 7, 8 and 11 thereof. 12"Commerce", as used in the Trade Law, is defined in Sec. 4 thereof, and as used in the Clay ton Law, in Sec. 1 thereof. The 14 For meaning of "persons", as used in the Clayton Law, see Sec. 1 thereof. 15 For meaning of "corporation" as used in the Trade Law, see Sec. 4 thereof. 16Trade Law, Sec. 5; Clayton Law, Sec. 11; Secs. 29 to 33, infra. 17 As to what are "unfair methods of competition", see Secs. 14 to 27, infra. venting violations of sections two, three, seven and eight of the Clayton Law.18 Those sections of the Clayton Law forbid (a) price discriminations between purchasers of commodities, where such discrimination may substantially lessen competition or tend to create a monopoly in any line of commerce; (b) exclusive purchase and sale arrangements, consisting of sales or leases of commodities, or the fixing of prices of commodities, whether patented or unpatented, upon condition that the purchaser or lessee shall not use or deal in the goods of a competitor, where such transaction may substantially lessen competition or tend to create a monopoly in any line of commerce; (c) intercorporate shareholding, and holding companies, where one corporation's owning or voting shares of stock of another may substantially lessen competition between the corporations affected, or restrain commerce in any section or community, or tend to create a monopoly of any line of commerce; (d) any person, after October 15, 1916, to be a director, officer, or employee of more than one federal bank, if either of such banks has capital, surplus, and undivided profits of more than $5,000,000; (e) any private banker, or person who is a director of any state bank or trust company having deposits, capital, surplus, and undivided profits of more than $5,000,000 to be a director of any federal bank, after October 15, 1916; (f) any federal bank, after October 15, 1916, in a city of more than 200,000 inhabitants, to have as a director, or other officer or employee, any private banker, or any director, officer, or employee of any other bank located at the same place, with certain exceptions; and (g) any person, after October 15, 1916, to be at the same time a director in any two or more corporations, except banks 18 See Secs. 9 to 12, infra. nish information to the legislative and executive branches of the government in furtherance of the enactment of new and the enforcement of existing laws, in part to inform and mould public opinion, in part to regulate trade, and in part to assist the courts. The Commission is not a court, and does not possess judicial power.22 Its investigative power is perhaps the most formidable of any it possesses. Its regulative power is not great. The subjects intended principally to be affected by the Commission's powers would seem to be the antitrust laws, unfair competitive practices, and foreign trade. While under its regulative authority the Commission may institute and conduct proceedings against natural persons, its powers in the main pertain to corporations and, with exceptions which will be noted,23 cannot affect banks subject to the jurisdiction of the Federal Reserve Board, or common carriers subject to the jurisdiction of the Interstate Commerce Commission. 22Sec. 30, infra. 28 Secs. 11, 12, 35, 36, 45, infra. CHAPTER II. REGULATIVE POWER. § 8. Scope of power: The matters as to which the regulative power of the Commission may be exercised are discriminations in price between different purchasers of commodities, exclusive purchase and sale arrangements, intercorporate shareholding, and interlocking directorates, declared unlawful by the Clayton Law,24 and unfair methods of competition in commerce, declared unlawful by the Trade Law.25 As to those matters, the Commission's authority is preventive only. It can only restrain, and cannot even restrain effectively except in so far as its preventive orders may be sanctioned and enforced by the courts.26 The Commission cannot punish violations of the law. It is without power to command affirmatively, or even to give protective permission for, the adoption of any course of conduct in interstate trade. The Trade Law is explicit that nothing therein contained shall be construed to prevent or interfere with the enforcement of the antitrust laws, or the acts to regulate commerce,27 and that neither the restraining order of the Commission, nor the decree of a court in enforcement of such order, shall in any manner absolve or relieve any person or corporation from liability under the antitrust laws.28 24 Clayton Law, Secs. 2, 3, 7 and 8; Sec. 4 supra, Secs. 9 to 12, infra. 25Trade Law, Sec. 5; Secs. 14 to 27, infra. 26 Sec. 29 (6), (7), infra. 28 Trade Law, Sec. 5; Clayton Law, Sec. 11. |