Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-01-27
TO REGULATE TRUSTS
PUBLICITY Is THE KEYNOTE OF
THE REPORT ON THE BILL.
Representative Littlefield Points Out
the Opportunities and Evils OF
overcapitalization.

Publicity is the keynote Of the report on
the bill for the regulation of trusts which
was filed in the House yesterday by Repre-
sentative Overstreet.. having been drawn by
Representative Littlefield before he left the
city for the coal transportation inquiry at
Boston. The report fills thirty-six printed
pages twenty-five Of which are devoted to
the publicity section of the bill. In order
that there may be no doubt as to how the
administration stands on this question ex-
tracts are printed from the message of Mr..
Roosevelt when he was governor Of New
York and from his messages to the two ses-
sions of the present Congress. all in favor
Of publicity. The Attorney General Is
placed in evidence for publicity as trust
remedy by extracts from his Pittsburg
speech. The recommendations OF the late
Industrial commission are given also to this
end, and the testimony OF John u. ROCK
efeller before that commission and that OF
Attorney Dill are quoted from to show that
the great trust magnates are themselves on
record as favoring the publishing Of trust
operations
To Regulate and Control.
The purpose Of the BILL the report states.
lis more effectively to regulate and control,
on conservative lines, industrial and bust
ness combinations which in their operation
prove injurious to the public welfare. 1t Is
believed to be a decided step in the advance
Of existing legislation. 1t involves the Idea
Of publicity and additional legislation 10
prevent determinations by rebate or special
privileges upon the part of railroad compa-
MES. 1t seeks to prevent the EFFORT to de-
stroy competition In particular localltles ny
discrimination in prices, and PROMPTS ran
road companies from transporting goods IN
violation Of the provisions OF law, and con-
tains provisions intended to facilitate the
enforcement of this act as well as existing
legislation on the same lines.
TT Is through the medium OF consumers,
the purchasers Of it's products, that the
overcapitalized combination finds Its most
extensive and oppressive contact with the
public. Successful overcapitallzauo,n IN,
wolves the necessity of declaring dividend
upon the overca pitalization equal to div
idend upon actual value, thus giving to the
stock and earning capacity ana creating an
artificial market value. II all OF the over
capitalization were held by the promoters
and organizers. and was not held for the
purpose Of increasing the return there would
be no object in overcapitalizing
Principles Of Corporations.
1.-THE aggregation Of large capital. great
volume of business on a small margin, CIV
ing q fair return to the capital invested,
with reduction in price to the consumer,
Is what Is termed the new phase of modern
Industrial development; and the corporate
form Of organization. with Its evils Of over
capitalization, Ia the medium through which
the development has largely taken place.
Theoretically, on paper, this reasons well,
looks well and works well. The chief ulti-
mate result In which the public has an
abiding interest. the reduction OF the price
to the consumer, 10 in practice seldom at
tanned. This result Is the only fact that can
from the public standpoint. It Is not be-
lisved that any of these corporations yet
organized have ever been dominated by, or
organized for, the altruistic purpose Of re-
ducing the price to the consumer. The con-
trolling purpose in such organizations is be-
lieved to be what 1t naturally would be
the profit Of the parties thereto. If the pub
lie receives any benefit 1t Is incidental.
their operation as well as organization. AS
capital Is entitled to fair return, the pub
lie is vitality interested In the amount OF
capital necessary to carry on given enter
prise. Such fair return Is a proper element
Of the cost Of the article. and the public
must pay for it. and the other elements Of
cost involved, when it buys the article.
Evil Of DISQUALIFICATION.
ITO what extent we are now paying ex-
orbitant prices to produce abnormal re-
turns no one can tell, as no reports are
now made to any authority. state or ma
tional. that give any adequate information
on that point. This is one Of the things that
this bill seeks to accomplish. 1t is through
the facility offered for overcapitalization
that the promoters Of great combinations,
formed from Independent corporations and
competing business concerns, get their
enormous fees. Overcapitalization
furnishes the convenient opportunity for
conoealing the profitable character Of the
enterprise It Is said that 1t was first en-
ployed for that purpose. There are in
stances where corporations have increased
their capitalization 100 per cent in order
that what was really, say, q IL per cent
dividend would appear to be only 6 per
cent dividend, and thus avoided the danger
OF making their employees uneasy and
FESTIVE because they were not receiving in
wages a fair proportion Of the earnings Of
the business. -
Publicity, by creating an intelligent pub
lie sentiment, will go far toward anchor
ating oppressive conditions If 1t Is fact
that competitors are ruthlessly destroyed
and prices are increased in order that
enormous returns may be received upon a
relatively Insignificant investment, and the
searchlight Of publicity can be turned
thereon. 1t Is doubtful II the persons who
are responsible for such q reprehensible
condition could long stand the well-directed
public Indignation that would be thus
aroused. 1t is not claimed that publicity
Is a cure-all 1t is hoped, however, that by
Its application the operation Of natural laws
may in an appreciable degree alleviate ex-
iSttnG conditions"