The Penn's Grove record., 1911-12-08

~ AA6o 0COu bunC lila tAo RkceSh~
pro-rata and common ownership in all
these companies by former stockholders
Of the trust would insure q continuance
OF the same old single control OF all the
companies into which the trust has BY
decree been disintegrated- This In err
roneous and is based upon the assumed In
efficacy and innocuousness of judicial in
functions. The companies are enjoined
from cooperation or combination; they
have different directors, pur-
chasing and sales agents. II all or any
of the numerous stockholders, reaching
into the thousands. attempt to secure
concerted action of the companies with .
view to the control Of the market, their
number is SO large that such an attempt
could not well be concealed and It's prime
movers and all Its participants would be
at once subject to contempt proceedings
and imprisonment of a charac-
ter. The immediate result OF the present
situation will necessarily be activity by
all the companies under different man
ayers and then competition must follow,
or there will be activity by one company
and ~stagnatlon by another.
Cry for Repeal Of Law.
But now that the antitrust act is seen
to be effective for the accomplishment OF
the purpose of it's enactment, we are met
by q cry from many different quarters
for its repeal. 1t Is said to be obstructive
of business progress. to be an attempt to
restore old-fashioned methods of de-
structive competition between small units.
and to make impossible those useful COM
binations Of capital and the reduction of
the cost Of production that are essential
to continued prosperity and normal
growth.
In the recent decisions the Supreme
court makes clear that there Is nothing
in the statute which condemns combina-
tons Of capital or mere bigness of plant
organized to secure economy in produce
ton and a reduction of its cost. 1t is only
when the purpose or necessary effect OF
the organization and maintenance of the
combination or the aggregation OF inn
mense size are the sitting of competition
actual and potential, and the enhancing
of prices and establishing a monopoly.
that the statute is violated
For Federal Incorporation.
In a special message to congress on
January Z, 1910, l ventured to point out
the disturbance to business that would
probab bly, attend the dissolution OF
these offending trusts. / said:
But such an investigation and pos
sible prosecution of corporations whose
prosperity or destruction affects the
comfort not only of stockholders but OF
millions of wage earners. employees,
and associated tradesmen must neces-
SdTlly IeTu 10 uiSluED Tx "
the business community. TO dry up the
now flowing sources of capital from Its
places of boarding, and produce a halt
in our present prosperity that VIII
cause suffering and strained circum-
stances among the innocent many 1or
the fault of the guilty few. The ques-
ton which / wish in this message to
bring clearly to the consideration ana
discussion of is whether. IN
order to avoid such a possible business
Danger. something cannot be done by
which these business combinations may
be offered a means, without great imam.
cia1 disturbance, of changing the char
acter, organization and extent OF their
business into one within the lines OF
the law under federal control and SUI
pervision, securing compliance with tns
antitrust statute.
Generally, in the industrial comb.
nations called Trusts the principal
business is the sale of goo1s In many
states and in foreign markets; In other
words, the interstate and foreign busl-
ness far exceeds the business done in
any one state. This fact will justify
the federal government in granting a
federal charter to such a combination
to make sell in interstate and for
eign the products of usefui
manufacture under such limitations as
will secure a compliance with the anti
trust law. 1t is possible SO to frame
a statute that while 1t offers protec-
ton to a federal company against
harmfuI vexatious and unnecessary
invasion by the states, 1t shall subject
1t to reasonable taxation and control
by the states with respect to its pure.
iy local business.
.Corporations organized under this
act should be prohibited from acquir-
ing n holding stock In other corpora
lions Except for special reasons, upon
approval by the proper federal author
ity), thus avoiding the creation under
national auspices of the holding COM
pany with subordinate corporations In
different states. which has been such an
effective agency In the creation OF the
great trusts and m~onopolies.
IF the prohibition of the ANTITRUST
act against combinations in restraint
of trade is to be effectively enforced,
it is essential that the national govern
ment shall provide for the creation or
national corporations to carry on a
legitimate business throughout the
United States. The conflicting laws OF
the different states OF the Union with
respect to foreign corporations makes
1t diAcult. If not impossible. for ono
corporation to comply with their re-
quirements so as to carry on business
in a number of different states"
M FSQGTGI SOttiItitSSiOn f0kSSSAs
1 do not set forth in detail the terms
and sections of a statute which might
supply the constructive legislation permit
ting and aiding the formation of combina-
tons of capital into federal corporations.
They should be subject to rigid rules as
to their organization and procedure, In
ending effective publicity, and to the
closest supervision as to the issue OF
stock and bonds by an executive bureau
or commission in the department OF
commerce and labor, to which in times OF
doubt they might well submit their pro-
posed plans for future business. 1t must
be distinctly understood that incorpora-
ton under a federal law could not ex-
empt the company thus formed and its
incorporators and from prose-
cution under the antitrust law for SUBJ
seuuent Illegal conduct, but the publicity
OF its procedure and the opportunity for
frequent consultation as to the legitimate
purpose of its transactions would offer
it as great security against successful
prosecutions for violations of the law
as would be practical or wise.
L recommend that the federal charters
thus to be granted shall be voluntary, at
least until experience justiies mandatory
provisions. The benefit to be derived
from the operation of great businesses
under the protection of such a charter
would attract all who are anxious to keep
within the lines of the law. Other largo
combinations that fail to take advantages
of the federal Incorporation will not have
a right to complain If their failure is
ascribed to unwillingness to submit
their transactions to the careful scrutiny,
competent supervision and publicity at
tendant upon the enjoyment of such a
charter.