The morning times., 1897-03-10
TRUSTS AND THEIR ORIGIN
Lexow Committee Not Sure How
They Can Be Reached.
AN ELABORATE REPORT MADE
Overcapitalization One OF the Seri-
Gus Evils That Lead to Complaint
Against These Combinations-OnI
Satisfactory Solution to Be Found
in General Law.

Albany, N. Y, March 9-The Lexow
committee met this morning and the mem
bers affixed their signatures to the report
of the trust investigating committee. The
report Is an unusually lengthy one, EN-
The testimony taken before the commit
tee, the decisions Of other Investigating
committees and of the United States Su-
preme Court are commented upon at
length, and much attention is devoted to
the operation of factors agreements In
brief, the report says:
Trust agreements no longer form the
basis OF nor are they constituent part of
Che aggrega lions of capital which are com
monty looked upon now as trusts. In
discussing this questions of trusts the COM
mittee finds that it is unnecessary that
absolute monopoly exist in order that
the operations of the trust may be Sc
cured In discussing trusts the com
mittee divides combinations and capital
into three classes First are corpora
lions which operate under public fran
ct1scs; second, legal corporations, Which
are protected by patents ana trademarks:
third, those that depend wholly upon the
use or capital and where monopolies ok
list, not Naturally or by legal permission,
but by reason OF the control of competing
companies and the product, i'll order that
thc greatest net results may be shown.
The committee does not quite agree that
the trusts and monopOlies complained of
are natural result OF the progressive
evolution OF the times and while IL does
not recognize all combinations OF capital
as trusts In the proper sense, ii does reCog-
nize that unless the evils complained of
against Tnammoth combinations of wealth
attempting 10 control the supply and price
Of products, that it will be but a short
time before continuance of the opera
tioii OF such Combinations Will tend TO
stifle competition and place the reguIa-
iion of supply and price of product as well
IS the business OF the country in the hands
OF "a few
Touching the question OF oveT-Capitaliza-
tiol OF these modern combinations OF
wealth, the committee finds that tbs is
one Of the serious evils, which lead to the
complaint against trusts; for not being con
tent TO earn Il fair return ON the actual
capital invested, they seek TO wiring
increased profits out of the consumers Icy
reason Of an oyeT-capit aIization. The
committee condemns the practice of do
nestle capital operating in this State
under the inc orpOTation of mother State
aud especially New jersey TIE commit
tee succeeded in securing copies of the
a n "a H. nf
different corporations investigated, and
finds that their use clinches the system
OF monopoly which has spread over the
country, and renders such combinations of
wealth permanent, 10y making competition
impossible. 1t is1obyious that, as the
Federal courts have placed so narrow a
construction upon the limit of their author
ity, no relief touching the operation of
factors agreements can be expected from
thai quarter. except through the aid of
constitutional amendment.
It seems to us that the operation OF
trusts. and especially factors agreements.
can he satisfactorily reached only by the
exercise OF Il power OF general iurisdic-
tion throughout the United States, and
that any attempt to prevent the evil by
local legislation Will prove abortive or
n
court 5 decision regarding factors agree.
ments leads the committee to the opinion
that the constitutional freedom OF con-
tract may not be linterfered with and
that they can be attacked only when it
is shown that they attack rights, CON
stitutional liberties and the privileges OF
the people.
Tie committee recommends that the laws
he amended soas to place limitation upon
the stock of corporations, especially as re
CARDS foreign corporations operating in
this State, and that foreign corporations
be brought under the jurisdiction OF the
laws of this State which are provided for
the protection of creditors and share
holders OF domestic corporations. The
committee recommends and is now pre-
pairing a bin carrying out these sugges-
tions. and viii make provision for the right
OF citizen to begin civil action and
secure an injunction against any trust
operating in this State in violation OF these
rccommen dations, with the final view of
having the license OF a foreign corporation
to Go business in this State revoked IL 1t
is found that such foreign corporation is not
complying with all provisions OF New York
State laws. This is method SO drastic
that it will be further considered Ivy the
committee before bill is finally sub
mitted.
An important difficulty seems TO be that
of securing the testimony necessary to a
judicial ascertainment of a violation of
New York State laws by so-calIed trust
or foreign corporation The committee is
preparing a bill which will empower the
attorney general to investigate trust on
the complaint OF any citizen Of an alleged
violation of law, which bill will en-
power the attorney general to exam
inc witnesses under subpenas to be is
sued on the attorney generals exparte
application by ii justice Of the supreme
court The examination of witnesses by
the attorney general is to be conducted in
the presence OF a court justice, and the
testimony is to be filed in the attorney
generals office. This law will give Inn
munity from punishment TO witnesses 5csti-
flying or subpenas issued by the attorney
general. The committee is not yet sat
isfied that it can frame law restricting
the operation of factors agreements which
will be constitutional.