Birmingham state herald. (Birmingham, Ala.) 1895-1897, 1897-03-10
.LEXOW COMMITTEE REPORT
VoKSli1ods and Complete in
81 Every Particular.
IS DISCUSSING TRUSTS
q
-she Committee Divides Them Into Three
Classes-Laws Not Adequate to Pun
: ish Corporations as Desired.

Albany, n. Y, March 9.-The Lexow
committee met this morning and the
members affixed their signatures to the
report of the trust investigating commit
tee. The report is an unusually lengthy
one, embracing $50 typewriter pages.
Those taken before the committee, the
decisions of other investigating commit
tees and of the United States supreme
court are commented on at length and
much attention is devoted to the opera
ton of factors agreement. In brief, the
report says:
Trusts agreement no longer form the
basis of, or are they a constituent part
of the aggregations of capital which are
commonly looked upon now as trusts.
In discussing this question: of trusts the
committee finds that 1t is unnecessary
that absolute monopoly exists in order
that the operations of a trust may be Sc
cured. In discussing trusts, the commit
tee divides combinations and capital into
three classes. First are corporations,
which opera te under public franchises;
second, legal corpora tions, which are pro-
tec.ed by patents and trade marks, and
third, those that depend wholly upon the
use of capital and which monopolies ex-
list, not naturally or by legal permission,
but by reason of the control of compet-
ing companies and product in order that
the greatest net results may be shown.
The committee does not quite agree
that the trusts and monopolies com
pained of are che MA tural result of the
progressive evolution of the times, and
while it does not recognize all eombina-
tons of capital as trusts in the proper
sense, it does recognize that unless the
evils complained of against mammoth
combinations of wealth, that 1t will be
but short time before the continuance
of the operations of such combinations
will tend to stifie competition and place
the regulation of supply and price of
product, as well as the business of the
country, in the hands of the few
Touching the question of over-capitali-
cation of these modern combinations of
wealth, the committee finds that this is
one of the serious evils which lead to the
complaint against trusts for not being
content to earn fair return on the
actual capital invested. They seek to
wiring increased profits out of the con-
sumers by reason of an over-capitaliza-
ton. The committee condemns the prac-
tice of domestic capital operating In this
state under the incorpora tion of another
state, and especially New Jersey. The
committee succeeded in securing copies
of the factors agreements in use by all
of the different corporations investigated
| and finds that their use clinches the sys-
tenn of monopoly which has overspread
the country and renders such combna-
tfons of wealth permanent, by making
competition impossible. It is obvious
that, as the federal courts have placed
SO narrow a construction upon the limit
of their authority, no relief touching the
operation of factors agreements can be
expected from that quarter except
through the aid of a constitutional
amendment. 1t seems to us that the
operation of trusts, and especially fac
tors agreements can be satisfactorily
reached only by the exercise of a power of
general jurisdiction throughout the
United States and that any attempt to
prevent the evil by local legislation will
prove abortive or at least insufficient.
A review of the courts decision regard
ing factors agreements leads the COM
mittee to the opinion that the constitu-
tional freedom of contract may not be
interfered with and that they can be
attacked only when 1t is shown that they
attack the rights, constitutional liber-
ties and the privileges of the people. The
committee recommends that the laws be
amended SO as to place Limitation upon
the stock of corporations, especially as
regards 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 bill carrying out these sugges-
tions and will make provision for the
right of a citizen to begin a civil action
and secure an injunction against any
trust operating in this state in violation
of these recommends tions with the final
view of having the license of a foreign
corporation to do business in this state
revoked If 1t is found that such foreign
corporation is not complying with all pro-
visions of New York state laws.
This is a method so drastic that II will
be further considered by the committee
before a bill is finally submitted. An
important difficulty seems TO be that Of
securing the testimony necessary to q
| judicial ascertainment of violation OF
any provisions of New York state laws
by a so-called trust or foreign corpora
ton. The committee is preparing a bill
which will empower the attorney general
to investigate a trust on the complaint
of any citizen of an alleged violation of
law, which bill will empower the attor-
ney general to examine witnesses under
subpoenaes to be issued on the attorney
generals ex parte application by JUS
tice of the supreme court. This exam
ination of witnesses by the attorney
general is to be conducted in the pres
ence of court justice and the testimony
is to be filed in the attorney generals
office. This law will give immunity from
punishment to witnesses testifying on
subpoenas issued by the attorney gen.
eral.
The committee is not yet satisfied that
1t can frame a law restricting the oper-
alton of factors agreements which will
he stitl1ffona1