The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1912-04-08
REPORT. Of THE
CORPORATIONS
COMMISSIONER
Relation of the Federal Gov
ernnent to the Leading
Trusts Outlined.
DISSOLUTION Of CORPORATIONS
BY SUIT LONG ANO TEDIOUS
Units Of Dissolution Ought to be Sub
tect to Government Inspection to
Enforce Competition Among Them
in Fact as well as In Theory.

Washington, April S.-The creation
of a federal administrative office to
ations is strongly urged by Herbert
Knox Smith. commissioner of corpora
tions. in his annual report, made pub
lie today. Mr.. Smith maintains that
it is Impossible to enforce effectively
any real system of restraint upon
business through the courts alone be-
cause of the vast complexity of cor
porate interests and the constantly
changing business conditions.
AS Convincing object lesson on
the need of such an administrative
system" the commissioner of corpor-
ations points to the disintcGrated
Standard Oil and American Tobacco
companies. The purpose of these dis
nomic conditions.
And yet," MIR. Smith freely de-
clares, the country has no effective
means of ascertaining how far the de-
sired reform will really be carried out.
No one can foresec the future Of
these new units in the two great in
dustries. 1t will be purely an econom-
ic and financial process. No judicial
machinery is adapted to handle this
mover pTODieIn.
The report in full follows:
The actual dissolution of two great
corporate combinations. ordered by
the supreme court in the Standard
Oil company and American Tobacco
company cases. has thrust forward the
whole problem of our policy toward
industrial corporations. If it was not
plain before, it is certainly clear now
mi
have IL permanent administrative Of
tice through which to supervise inter-
state corporate business.
There is little dispute as to the OBJ
ject of our corporate policy. We want
a business machinery Of high effici-
ency. serving the best interests of the
citizen and returning ample reward
who use that machinery fairly. But
the means to this end are now in de-
bate.
Two great restraints may be i'm
posed upon business One is the auto
matte regulator, competition; the
other. direct governmental interven-
ton. 1t is indeed true that under
some conditions even fair competition
may result in combination. The fur
ther question Is then raised. how far
Is 1t desirable to enforce competition
by dissolving such combination? That
question, however, need not be dis
cussed here.
Whatever shall be our ultimate
policy, however, whether of preserv-
ing competition. Of enforcing compe-
tition, or Of direct governmental regu-
lation of business operations: or
whether. as is perhaps more likely,
our policy will be a combination of
these various principles. in any event
such permanent administrative sys-
tenn is a necessary part of it. That
system must have broad powers of
Investigation, taking continuous cog
nizance of the operations of large in
dustrial corporations. Such admins
tration is necessary for either of the
does not exclude the others. BY pub
licity and supervision 1t will preserve
competition and provide equal oppor-
tunity: by an expert knowledge of
current business conditions it will dis
play the working Of competition, and
the cases. If any, where this fails to
be of benefit. 1t will always be in a
position to furnish. through its per-
manent force of trained specialists.
the information needed for legislation
or regulation. 1t will also have the
knowledge and data that may be re-
quired properly to enforce competi-
ton and to carry out the intent of
any decree of dissolution entered un-
der the antitrust law.
A convincing object lesson on the
need of such administrative system is
now before US. The American Tobac-
co company and the Standard Oil
company having been disintegrated
the resultant units are now started on
a new career. These disintegrations
have. been accomplished only after
long litigation and at much expense.
The purpose was to benefit the public
by. broad reform in economic con-
ditions. And yet the country has no
effective means. of ascertaining how
far the desired reform will really be
carried out. No one can forcsee the
future of these new units in the two
great industries. 1t will be purely an
economic and financial process No
judicial machinery Is adapted to han
die this novel problem. Indeed, the
circuit court expressly refused the
suggestion of the. attorney. general
for three or more years for such pur-
pose of supervision.
Public interest requires that these
two groups of companies and any
others in like circumstances. should
be at once obliged by law to submit
to constant inspection by a federal Of
flee organized on lines similar to those
CNo0SceSO opoNC. AL SuSSC lWO ChSeS,
which are but current examples of a
general principle, both public and pri-
vate rights are involved. The public
has no means of following the de-
velopment of competition therein
through succeeding years. nor have
the security holders in those corpora.
tions.,-certainly. at least. those not
"on the fnside"-any menas of tudg-
ing the value of their holdings under
the novel conditions now operative.
In short. under present conditions,
as we'll as in whatever future course
may hereafter he followed, a per.
manent administrative Office will he
necessary. The vast COM
plexity OF corporate business and it's
changing conditions make
1t wholly impossible to enforce effec-
lively any real system of restraint
through the courts alone.
The exact form of such an admin
istrative Office is a matter for further
detailed consideration. The essentials
are permanence, expert training. ad-i
fiexibility. effective in
and publicity. all covering
those interstate Industrial corporations
whose size and operations make them
of public importance.
The bureau during the past fiscal
year has been applying. within the
marrow. limits possible to It, the prin.
etplAs Of publicity. above referred to.