The Birmingham age-herald., 1912-04-08
Smith Advocates Federal Administrative Office
 For Supervision
HE POINTS OUT THE
 CONVINCING NEED
Cites Dissolution of Oil and Tobacco Trusts as Example of All Courts Can do-Judicial Machinery
 Inadaptible He Says

Washington, April 1.-The creation of a | federal administrative office to superYse
 interstate industrial corporations is strongly urged by Herbert Knox Smith.
 commissioner of corporations. in his an
 nual report made public today. Mir. sm.h
 maintains that it is impossible 10 enforce
 effectively any real system Of restraint
 upon business through the courts alone
 because of the vast eomplexity of cor
 porate interests and the constantly changing business conditions.
 l As a convincing object lesson on the
 need of such an administrative system,
 the commissioner points to the disin-
 tegrated Standard oil company and Amer
 ican Tobacco company. The purpose of
 these disoutisns was broad reform ,n
 economic conditions.
 And yet" MT. Smith freely declares. l 'the country has no effective means of
 ascertainns how far the desired reform will really be- carried out No one can
 forsee the future of these new units in the two great industries It will be I,lre- l ly an economic and financial process. No judicial machinery is adapted to handle
 this novel problem"
 Mir. Smiths Report
 Department of Commerce and Labor, Bureau of Corporations, Washington, April [, 1912.
 Sir: The actual dissolution of two great corporate combinations ordered by the supreme court in the Standard oil cosn- Iany and American Tobacco company cases, has thrust forward the whole nroa- lem of our policy toward industrial col- tapp bpfDTe. f Is certainly clear now tEat the federal government must have a permanent dd- ministrative office through which to su- pervise interstate corporate business.
 Objects Are Clear
 There Is little dispute as to the object of our corporate policy. We want q lns- ness machinery of high efficiency, serving the best interests of the citizen and re- turning ample reward to the ability and Industry of those who use that machinery
 fairly. Bnt She means 10 this end are noa l in dehate
 ] Two great restraints may be imposed upon business one is the automatic reg ulator competition; the other, direct gov ernmenta intervention. II is indeed true that under some conditions even fair com petition may result in combination. The further question is then raised, How far is it desirable to enforce competition by dissolving such combination? That aues- ton, however need not be discussed here.
 Whatever shall be our ultimate policy, however. whether of preserving compe- titon, of enforcing competition. ar pf di- rect governmental regulation of business operations: or whether, as is perhaps more likely, our policy will be combination Of these various principles, in any event such a permanent administrative system
 is a necessary part of it. That sSatem must have broad powers of investigation, taking continuous cognlzance of the op- erations of large industrial corporations. Such administration is necessary Tor either of the foregoing policies described. while 1t does not exclude the others By publicity and supervision it will preserve competition and provide equal opportnni- ty: by an exert knowledge of current hnsi- ness conditions il will dislay the working of competition, and the cases. if any. where this fails to be of benefit. IL will always be in a position to furnish through it's permanent force of trained specialists. the information needed for legislation or regulation. It will also have the knowi- edge and data that may he required prop erly to enforce competition and 10 carry out the Intent of any decree of dissolution entered under the antitrust law.
 Convincing Object Lesson A convincing object lesson on the need of such administrative system Is now before US The American Tobacco company and The Standard oil company having beon disIntegrated, the resultant units are now started on new career. These integra- lions have been accomplished only afte~ long litigation and at much expense. flse purpose was to benefit the public by broad reform in economic conditions. And yet the country has no effective means of ascertaining how far the desired reform will really be carried out No one can foresee the future of these new units in the two great industries. It Will be purely an economic and financial process. No judicial machinery is adapted to nam dle this novel problem. Indeed, the cir cult court expressly refused the spges- ton of the Attorney General that the Tobacco case be kept open for tfTee or more years for such purpose of super vision.
 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 ill., spection by q federal office organized on lines similar to those suggested above. In these two cases. which are but cur rent examples of a general principle, both public and private rights are involved. The public has no means of following the development of competition therein through succeeding years. nor have tho security holders in those corporations l certainly, at least, those not ''on the n- side''-any means of judging the value of their holdings under the novel conditions now operative.
 Administrative Office Necessary l In short under present conditions as well as in whatever future course may | herea fter be followed. a permanent ad- ! ninistrative office will be absolutely nec- esaarv The vast complexity of corporate 1 business and it's constantly changing con ditions make it wholly impossible to en- force effectively any real system of re- straint through the courts alone.
 The exact form of such an admuistra- tive office is a matter for further de- tailed consideration. The essentials are ,.o,u,onanca exnart training adnfnfztYo-