The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1902-10-15
Evils and Abuses of Corporations Dis
cussed and Attention Called to
Legal Recourses.
CONGRESS HAS AMPLE POWER
To LEGIsLATE FOR REPRESSION OF
HURTFUL COMBINATIONS,
But Should Not Frame Laws So Arbi-
trary They May Injure Industries
That Benefit the People.

PITTSBURG, Pa, Oct. A.-Attorney Gen.
eral Knox addressed the members of the
Chamber OF Commerce at the Hotel Schen-
ley here tonight. There were 700 guests
present The subject Of his address was
THE Commerce Clause Of the Constitu-
ton and the Trusts" Mr.. Knox was aft
srward entertained by w. H. Keech. chair
man OF the committee In charge of the
meeting. In the course OF his address Mr..
Knox said:
The people. by common consent, have
oenoninated the great industrial and other
corporations now controlling many branches
OF commercial business, trusts. The tech
meal accuracy of the term is unimportant,
put indeed Ii Is much more apt than might
De supposed when it is recalled that the
essential difference between the old indus
trial trusts and the great corporations own
Ing and controlling subsidiary ones Is that
In respect to the former the shares OF indie
pendent corporations agreeing to act in
harmony were lodged with trustee, who
received the separate earnings and distriD-
uted them among the holders Of trust GER
tlncates, while, as TO the latter. corpora
ton Is created to take over the title to the
stock OF properties of the constituent COM
panies and issue its own shares as the evil
dence of interest in the combination. The
corporation owner of corporations invokes
specific legal authority from the legislature
of the State under which it is created
The President, in his first message to
Congress, said There Is a widespread
settled conviction in the minds of the
American people that these trusts are, in
many OF their features and tendencies,
hurtful to the general welfare. This springs
from no spirit OF envy or uncharitableness,
nor lack of pride in the great industrial
achievements that have placed the country
at the head OF the nations struggling for
commercial supremacy. 1t does not rest
upon a lack Of intelligent appreciation Of
the necessity of meeting changing and
changed conditions Of trade with new
methods, nor upon ignorance of the fact
that combination of capital and effort to
accomplish great things is necessary when
the worlds progress is demanding that
great things be done. 1t Is bottomed upon
sincere conviction that combination and
concentration, while not to be prohibited.
Is 10 be controlled, and in my judgment
this conviction is right
These great combinations. now number
Ing thousands are the instrumentalities Of
modern commercial activity. Their number
and size alone appall no healthy American.
We are accustomed to large things and to
do them in large way. We are accus-
toned TO speak with a justiiable pride Of
our great institutions and what we have
fairly accomplished through them. No
right-thinking man desires to impair the
EMERGENCY or the great corporations as in
strumentalities of national commercial de-
velopment. Because they are great and
prosperous Is no sufficient reason for their
destruction. If that greatness and pros
perity are not the result of the defiance of
the natural rights of recorded will of the
people there Is no just cause of complaint.
EVILS AND ABUSES.
promotions, purposes. organizations meth
DDS. management and effects none ques-
tions. except those who have profited by
those evils. That all or any of these abuses
are to be found in every large organization
called trust no one would assert who
valued his reputation for sane judgment.
THE conspicuous noxious features of
trusts existent and possible are these:
Decentralization, lack of publicity of OPP
Grafton, discrimination in prices to destroy
competition, insufficient personal RESPONSE
bility Of officers and directors for corporate
management, tendency to monopoly and
lack of appreciation In their management
OF their relations to the people. for whose
benefit they permitted to exist.
'Overcapitalization is the chief of these
and the source from which the minor onea
flow. II is the possibility of overcapitali-
zation that furnishes the temptations and
opportunities for most of the others Over
capitalization does not mean large capital
fzatioD or capitalization adequate for the
greatest undertakings. 1t is the imposition
upon an undertaking of liability without
corresponding asset to represent 1t. There
fore, DISQUALIFICATION is a fraud upon
those who contribute the real capital, either
originally or by purchase, and the efforts
TO realize dividends thereon from opera
lions Is a fraudulent imposition of a burden
upon the public. When a property worth
a million dollars upon all the sober tests
OF value Is capitalized at five millions and
6 Sld to the pp6l9 it Is rational to assume
to keep its earnings up to the basis of their
capitalization When the inevitable depres-
sion comes wages must be reduced, prices
enhanced, or dividends foregone. AS prices
are naturally not increased, but lowered.
IN dull periods, IL usually revolves itself
into question OF wages or dividends.
while this condition may exist under
any circumstances II Is exaggerated by
DISQUALIFICATION In the illustrating case
five to one. The overcapitalized securities
enter into the general budget of the coun-
try, are bought and sold, rise and fall, and
they fiuctuate between wider ranges, and
are more sensitive in proportion as they
are further removed from intrinsic values.
and. in short. are liable to be'storm centers
of financial disturbances Of far-reaching
consequence. They also, in the same pro-
portion. increase the temptation to mis-
management and manipulation by corpor-
ate administrators.
WHAT SHOULD BE DONE
Corporations and joint stock or other
associations. depending upon any statutory
law for their existence or privileges, trad
ing beyond their own States, should be re-
CURED to do business in every State and
locality upon precisely the same terms and
conditions. There should be no discrimina-
ton in prices; no preferences in service
Such corporations serving the public as
carriers and in similar capacities should
be compelled to keep the avenues of COM
merce free and open to all upon the same
terms and TO observe the law as to its in
functions against sitting competition. More
over, corporations upon which the people
depend for the necessaTies or life should be
REQUIRED to conduct their business SO as
regularly and reasonably to supply the
public needs.
ssThey should be subject to visitorial SUI
pervision, and full and accurate informa-
ton as TO their operations should be made
regularly at reasonable intervals. Secrecy
I'm the conduct and results of operation is
unfair 10 the nonmanaging stockholders,
and should as well, for reasons Of state, be
prohibited by law.
IF these serious evils were eradicated
and a higher measure of administra tive re-
sponsibility required In corporate officers
a long step would be taken toward allaying
the reasonable apprehension that the I'M
checked aggression OF the trusts will result
In practical monopoly OF the important
business OF the country"
Mr.. Knox then reviewed the decisions OF
courts I'm suits brought under the Sherman
antitrust act. Continuing, he said:
"Conceding that the present law is not
effective throughout the situation, we come
to the final alternatives: May not Congress
under the existing constitutional grants
amend and extend the law. and thus rem
edy its defects and so effectively regulate
rational and foreign commerce as to pre-
vent the sitting OF competition, the regu-
Iating OF output and price, and the restrain
ing Of national and international trade
II the answer 10 this question should be I'm
the affirmative a second question follows
How might Congress so amend the present
II do not scrupIe TO say that, In my judg-
raent. the more a thoughtful mind reflects
on the first question the more unhesitating-
Nv will an Affirmative answer be returned
That regulation by Congress In this way