APPENDIX A FORMULATION OF SUGGESTED METHODS FOR THE SOLUTION OF THE TRUST PROBLEM BY WILLIAM WIRT HOWE Permanent Chairman of the Chicago Conference on Trusts In what are called courts of conciliation, in some jurisdictions, the constant aim of the presiding magistrate is to note those admissions and concessions of the contending parties themselves which may be found even in apparently hopeless disputes, and to make those admissions and concessions a basis for a judgment substantially just. Now, following this sensible idea, where do we stand after four days of discussion, always interesting, often profoundly scientific, and sometimes passing into the brilliant sphere of oratory? It seems to me-simply as an individual, of course -that almost every paper or address we have heard has made some admissions or concessions which may form a basis for some conclusions, and if you will allow me I will formulate some of them only, as follows: 1. Combinations and conspiracies in the form of Trusts or otherwise in restraint of trade or manufacture, which by the consensus of judicial opinion are unlawful, should so be declared by legislation, with suitable sanctions, and, if possible, by a statute uniform in all jurisdictions, and also uniform as to all persons, and such a statute should be thor *Their statement made in 1900 at the conference called by the National Civic Federation is of value as showing that at that date the crystallized opinion of sensible men with no parties or special interests to serve was far in advance of legislation, and was sufficient, if prompt action could have been taken in accordance therewith. oughly enforced, so that those who respect it shall not be at a disadvantage as compared with those who disregard it. 2. That the organization of trading and industrial corporations, whether under general or special laws, be permitted only under a system of careful governmental control, also uniform, if possible, in all jurisdictions, whereby many of the evils of which complaint is now made may be avoided. 3. The objects of the corporation should be confined within limits definite and certain. The issue of stock and bonds, which has been a matter of so much just criticism and complaint, should be guarded with great strictness. If mortgage bonds seem to be required, they should be allowed only for a moderate fraction of the true cash value of the property that secures them. As for issues of stock, they should be safeguarded in every possible way. They should only be allowed either for the money or for property actually received by the company, and dollar for dollar, and when the property is so conveyed it should be on an honest appraisement of actual value, so that there may be no watering of stock. 4. And finally, there should be a thorough system of reports and governmental inspection, especially as to issues of bonds and stock and the status and value of property, whether corporeal or incorporeal. Yet, at the same time, in the matter of trading and industrial companies, there are legitimate business secrets which must be respected by the general public. In short, we need to frankly recognize the fact that trading and industrial corporations are needed to organize the activities of our country, and that they are not to be scolded or belied, but controlled, as we control steam and electricity, which are also dangerous if not carefully managed, but of wonderful usefulness if rightly harnessed to the car of progress. APPENDIX B FINAL REPORT OF THE INDUSTRIAL COMMISSION 1902* Recommendations of the Commission. Early in the year 1900 this Commission submitted to the Congress a preliminary report of findings and recommendations on the subject of industrial combinations. Said report was in part as follows: To prevent the organizers of corporations or industrial combinations from deceiving investors and the public, either through suppression of material facts or by making misleading statements, your Commission recommend (a) That the promoters and organizers of corporations or industrial combinations which look to the public to purchase or deal in their stocks or securities should be required to furnish full details regarding the organization, the property or services for which stocks or securities are to be issued, amount and kind of same, and all other material information necessary for safe and intelligent investment; (b) That any prospectus or announcement of any kind soliciting subscriptions, which fails to make full disclosures as aforesaid, or which is false, should be deemed fraudulent, and the promoters, with their associates, held legally responsible; (c) That the nature of the business of the corporation or industrial combination, all powers granted to directors and officers thereof, and all limitations upon them or upon the *Vol. XIX, p. 649. This report is of historic value. Some of the recommendations have already become law. Others should be enacted into law. It shows that the opinions of experts were distinctly in advance of legislation. |