The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-04-11
CLAYTON ACT HITS
SHORT LINES HARD
Section Newly Operative Com
pels Advertising for Bids
for Supplies.
Special DespatcA TO Tar SIM.


WASH rNGroN, April 10. - The Inter i.
state Commerce Commission prescribed
| regulations to-day under section 10 Of
the Clayton act covering all purchases
by the railroads and requiring the car
| riers TO call for bids for all securities
! and supplies aggresating more than $780,
600 year where the railroad has an in
terlocking directorate
The short line railroads Of the country
are particularly hard hit by the regula-
tons for enforcement of the act. II was
declared to-day. The larger roads are
not so deeply concerned. because they
are under Government control and pur-
chases are made on account Of the Direc-
tor-General of Railroads.
Mr.. Hines was made a party by the l.
g. G. In issuing the regulations and q
copy will be served on him for answer
1t seems plain. however. that purchases
or other operations under Government
control will not be affected. as the Direc-
tcr-General holds no directorates and
purchases are made on his account.
Should tho Director General determine
that purchases made should be in the
spirit OF the law Government price sta
oilization by the Industrial Board Of the
Department OF Commerce would be de-
cislvely hit.
The commission ordered that all COM
mon carriers. including the Director
General. be served with copies Of the
regulations and that they must show
cause by objections In writing on or be-
fore May Is why the regulations shall
not become effective.
Section 10 of the Clayton act provides :
That after two years from the ap-
prevail of this act no common carrier en-
gagged in commerce shall have any deal
ings In securities, supplies or other
articles OF commerce or shall mako or
have any contracts for construction or
maintenance of any kind to the amount
of more than $4,000 In the age regate
in any one year with another corpora
ton. firm. partnership or association
when the said common carrier shall have
upon its board of directors or as its
president, manager or as its purchasing
or selling officer or agent in the particu-
lar transaction. any person who Is at the
same time director. manager or pur-
chasing or selling officer of, or who has
any substantial interest in such other
corporation, firm, partnership or associa-
ton unless and except such purchases
shall be made from or such dealings
shall be with the bidder whose bid Is
the most favorable to such common car
rier, to be ascertained by competitive
bidding under regulations to be pre-
scribed by rule or otherwise by the l..
c. C. No bid shall be received unless
the name and address OF the bidder or
the names and addresses OF the officers.
directors and general managers thereof.
IL the bidder be corporation. or OF the
members IL 1t be partnership or firm.
be given with the bid"
The section further provides heavy
penalty of fine for companies and fine
and Imprisonment for directors or officers
guilty of violation OF it's provisions.
Because of the industrial confusion
that would be entailed by enforcement
of this section It's effective date was
postponed by joint resolution of Congress
until January l OF this year, similar
resolution for further postponement was
| introduced in the present Congress. but
| because OF the rush of legislative bust
ness failed OF passage. Section 10 is
| consequently effective.
The short line roads. those which are
not under Government control, contend
that they will be ruined by it's enforce
ment. Being without the Government
pale they are compelled TO do their own
| financing. They have been hit hard by
war costs and their representatives said
they cannot do their financing or pur-
| chasing except through their friends or
allied organizations because they cannot
get the necessary credit in an open
market
These arguments were presented TO
| Congress and led 10 favorable committee
report for extension of the effective date
of section 10, Many OF the short lines
are owned by organizations furnishing
| their supplies Notwithstanding they
will be compelled to advertise publicly for
! bids.
| An attempt to repeal the section Is
anticipated In the next Congress. With
the end OF Government control more or
| less definitely in view, the larger roads
are deeply concerned, Their directors
have banking and other interests and
are In a great many cases involved with
| supply or equipment companies or at
least with the financial Institutions
which have carried their accounts and
with which they have been doing bust
ness. This is also particularly true of
the short lines that have been financed
through comparatively small banks.