substantially at the whim and caprice and by the favoritism or enmity of the head of the bureau, influenced by Senators, Speakers, and Presidents, whose "pull" would be in favor of "good trusts" and whose frowns would be for "bad trusts." In such a case "good" would come to mean subservient. The remedy is to exclude trusts from interstate commerce, but to exclude them not by the fiat of a bureau (which in the last analysis is a man influenced by other men and acting secretly, with subordinates forbidden to give out information), but to exclude them by fiat of law, providing that corporations having charters conferring powers broad enough to establish monopoly or near-monopoly and unlimited in the interest of the public shall be excluded.

That is the theory upon which Senator John Sharp Williams introduced a bill in the Senate on April 20, 1911, the first session of the Sixty-eighth Congress, S. 1377. I shall have that bill incorporated in the record at this point.

(The bill S. 1377 is here set forth in full, as follows:)

[S. 1377, 62d Cong., 1st sess.]

A BILL To prescribe the conditions under which corporations may engage in interstate commerce, and to provide penalties for otherwise engaging in the same

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That no corporation shall engage in commerce between the States or Territories, or in the District of Columbia, by the purchase, sale, or consignment of any article of commerce, or otherwise, unless it is organized, conducted, and managed as follows:

First. It shall be organized under the laws of a State or Territory in which its chief place of business and executive offices are located and its directors' meetings regularly held. It shall have only such powers as are incidental to the business in which it is authorized to engage, which shall not include any express power to hold the stock of any other corporation or to do anything outside of the State or Territory of its incorporation which it is not permitted to do therein. All of its stockholders or members shall have an equal right to vote the number of shares held by them, respectively, at all meetings and for all directors, subject to any general limitation on the number of votes that may be cast by a single member, and excepting that no other corporation or association shall be entitled to any such vote or any voice, directly or indirectly, in its affairs. Its directors shall be required to be actual owners of stock, and not to be directors, officers, stockholders, or employees of any corporation engaged in the same business. Its stock shall be full paid, or payable in cash or in property or services where the issuance of such stock for such property or services has been authorized upon application to a competent court and under its order finding upon competent and specific proof that it is based on a fair valuation of such property or service. It shall be specifically stated in the certificates or articles of incorporation that such corporation intends to engage in commerce between the States, subject to all Acts of Congress regulating such commerce or limiting or affecting the rights, powers, or duties of corporations and associations engaged therein.

Second. The capital stock of such corporation shall not exceed $5,000,000, nor shall its surplus be permitted to exceed 50 per centum of its capital stock, nor shall its indebtedness be permitted to exceed its full paid capital stock and surplus: Provided, That the limitation as to its capital stock shall not apply to a corporation whose capital stock in a larger amount has been authorized upon application to a competent court for a specific purpose or purposes and in a specific amount and under its order finding upon competent proof that authorized use of such capital stock does not involve any violation of paragraph three and providing that such capital stock may be thereafter reduced to remedy or prevent any such violation or any unauthorized use thereof.

Third. Such corporation shall not be formed or operated for the purpose or with the effect of monopolizing or unreasonably restraining trade in any article of commerce not the subject of any patent, trade mark, or copyright held by it, or be a part of or controlled directly or indirectly by any combination formed or operated for such purpose or with such effect. It shall not directly or indirectly of itself, or in connection with others, destroy fair competition in any part of the United States in the manufacture, production, mining, purchase, sale, or transportation of any such article of commerce, either by making or affecting

exclusive contracts, rights, or privileges relating thereto by restricting its customers or other persons with regard to price, territory, or otherwise in freely buying, selling, or transporting any such article by securing the monopoly or control of raw material or sources of supply or of any business connected therewith by accepting rebates or by any other act, device, or course of business that is unfair and tends to secure an unfair advantage and unreasonably and unfairly to destroy competition.

SEC. 2. That the prohibition of section 1 shall apply to any association. membership in which is represented by shares, but shall not apply to any corporation or association not engaged in business or engaged exclusively in any one of the following businesses: A railroad or other common or public carrier of property or persons or messages; banking; insurance; the supply of water, light, heat, or power; or engaged in any business or businesses the substantial bulk of which is carried on in foreign countries or in any one State or Territory or district, and which does not involve the customary transmission of goods from one State or Territory or district to another, nor the purchase, sale, or consignment of articles commonly the subject of commerce between the States and Territories, and actually intended for or becoming the subject of such commerce.

SEC. 3. That every contract made in violation of this Act shall be void. SEC. 4. That no person or persons shall form, operate, or act as or for a corporation or association for the purpose or with the effect of violating this Act, or conspire thereto and of themselves or by a coconspirator do any act or things to effect such conspiracy.

SEC. 5. That every corporation, association, or person violating this Act shall be subject upon conviction thereof, in case of a corporation or association, to a fine not exceeding 10 per centum of its capital stock or to a perpetual injunction against engaging in interstate commerce, or both, and in the case of a person, to a fine of not exceeding $10.000, and, if the violation is willful with intent to defraud or to create a monopoly, to such fine and imprisonment for not exceeding five years.

SEC. 6. That the Act of February 11, 1903, relative to the expedition of certain suits in equity, and sections 4 and 5 of the Act of July 2, 1890, known as the Sherman Antitrust Act, shall apply to all proceedings and suits in equity under this act.

SEC. 7. That the foregoing provisions of this act shall take effect January 1, 1912, but shall not apply to corporations or associations having a capital stock and surplus under $10,000,000 until September 1, 1913.

SEC. 8. That any corporation or association organized, conducted, and managed as required by section 1, shall, after the passage of this Act, be entitled to engage in commerce between the States and Territories, and to carry on its authorized business relative to such commerce in any State or Territory and in the District of Columbia, subject to all present or future Acts of Congress and to the general laws and taxing powers of any State, Territory, or District in which it may do business.

Senator O'MAHONEY. I shall also ask to have inserted in the record another bill, a revision of the first, which Senator John Sharp Williams introduced in the second session of the Sixty-second Congress, S. 4747.

(The bill referred to, S. 4747, 62d Cong., 2d sess., is here set forth in full, as follows:)

[S. 4747, 62d Cong., 2d sess.]

A BILL To prescribe the conditions under which corporations may engage in interstate commerce and to provide penalties for otherwise engaging in the same

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That no corporation shall engage in commerce between the States or Territories or in the District of Columbia by the purchase, sale, or consignment of any article of commerce, or otherwise, directly or indirectly—

First. Unless it is organized under laws with a charter that

(a) State the business in which it is authorized to engage and the properties it is authorized to acquire;

(b) Provided that it shall have only such powers as are incidental to such business and shall not have any power to hold the stock of any other corpora

tion or association, to do any Act or thing in restraint of trade, or to do anyth.ng outside of the State of its incorporation which it is not permitted to do therein;

(c) Provide that all its stockholders shall have an equal right to vote according to the number of shares held by them, respectively, at all meetings and for all directors, subject to any general limitation on the number of votes that may be cast by a single stockholder;

(d) Provide that no other corporation, association. or partnership shall have any vote or voice, directly or indirectly, in its affairs, and that no person representing, directly or indirectly, any competing business as owner, stockholder, officer, employee, or agent thereof or otherwise shall have any such vote or voice, directly or indirectly, in its affairs or be eligible as a director or officer thereof;

(e) Provide that its capital stock shall be fully paid or payable, and permit it to be paid in property or services only when the value of such property or services has been determined according to the fact upon competent and specific proof under oath filed in a designated public office;

(f) Limit its surplus at any time to fifty per centum of its outstanding capital stock and its indebtedness at any time to not more than its outstanding capital stock and surplus;

(g) Provide that such corporation shall by an amendment of its charter be subject to and comply with, and, if necessary, shall accept, any requirement that may be made by the State of its incorporation and with any requirement that may be imposed by Congress as a condition of its right to engage in interstate commerce.

Second. Unless it is conducted and managed in conformity with the said provisions and limitations, and is organized under the laws of a State, Territory, or District in which its executive offices are located and its directors' meetings regularly held.

Third. If it directly or indirectly, of itself or in connection with others, destroys or seeks unfairly to stifle fair competition in any part of the United States in the manufacture, production, mining, purchase, sale, or transportation of any articles of commerce not the subject of any patent, copyright, or trade mark held by it either by making or effecting exclusive contracts, rights, or privileges relating thereto, by restricting its customers or other persons with regard to price, territory, or otherwise in freely buying, selling, or transporting any such article, by securing the monopoly or control of raw material or sources of supply or of any business connected therewith, by temporarily or locally reducing prices with intent to stifle competition, by accepting rebates, or by any other act, device, or course of business that is unfair and tends to secure an unfair advantage and unreasonably and unfairly to destroy compe tition.

SEC. 2. That every contract made in violation of this Act shall be void, and no corporation or association shall bring or maintain any suit or proceeding in any court of the United States unless it is organized, conducted, and managed as required by section 1, nor shall this provision prevent the removal of any such suit or proceeding to such courts where such defense may be available to the defendant.

SEC. 3. That the prohibitions of section 1 and section 2 shall apply to any association membership in which is represented by shares, and the word “association" used in this Act shall include any joint-stock company, business, trust, estate, or any form of association used for business purposes; but said prohibitions shall not apply to any corporation or association not engaged in business for profit or engaged exclusively in any one or more of the following businesses : Education; a railroad or other common or public carrier of property or persons or messages; banking; insurance; the supply of water, light, heat, or power; or engaged exclusively and independently in any business or businesses the substantial bulk of which is carried on in foreign countries or exclusively in any one State or Territory or District, and which does not involve the transmission of goods from one State or Territory or District to another, nor the purchase, sale, or consignment of articles commonly the subject of of commerce between the States and Territories, and actually intended for or becoming the subject of such commerce.

SEC. 4. That no person or persons shall form, operate, or act as or for a corporation or association for the purpose or with the effect of violating this Act or conspire thereto and of themselves or by coconspirator do any act or thing to effect such conspiracy.

SEC. 5. That every corporation, association, trust, or person violating this Act shall be subject, upon conviction thereof, in case of a corporation or association, to a fine not exceeding 10 per centum of its capital stock, or to a perpetual injunction against engaging in interstate commerce, or both, and in the case of a person, to a fine not exceeding $10,000 for each violation, and, if the violation is willful with intent to defraud or create a monopoly or unfairly to stifle competition, to such fine and imprisonment for not exceeding five years. SEC. 6. That the Act of February 11, 1903, relative to the expedition of certain suits in equity and sections 4 and 5 of the Act of July 2, 1890 known as the Sherman Antitrust Act, shall apply to all proceedings and suits in equity under this Act.

SEC. 7. That the purchase, sale, or consignment of any article intended to become and actually becoming an article of commerce between the States or Territories shall be deemed to be an act of engaging in such commerce under this Act.

SEC. 8. That the foregoing provisions of this Act shall take effect January 1, 1913, but shall not apply to corporations or associations having a capital stock and surplus under $10,000,000 until January 1, 1914.

SEC. 9. That any corporation or association organized, conducted, and managed as required by section 1 shall, after the passage of this Act, be entitled to engage in commerce between the States and Territories, and to carry on its authorized business relative to such commerce in any part of the United States, subject to the provisions of this Act and to all present laws of the United States and to future Acts of Congress, and to the general laws and taxing power of any State, Territory, or District in which it may do business. Senator O'MAHONEY. If either of these bills had been enacted, we might easily have avoided the depression.

The importance of corporations to the economic life of the United States has been recognized for 50 years and during that time Congress has been trying to meet the problems resulting from their growth. The problem with which this bill deals today has been before Congress and the people of the United States throughout that period. Practically every President who has held office during this period, with the exception of those who have been inaugurated since the World War, has sensed the danger and urged the exercise of Federal power over corporations. I would like at this point to read into the record a statement made on December 3, 1888, by Grover Cleveland in his annual message to Congress. He said, after having described the condition of the country:

We view with pride and satisfaction this bright picture of our country's growth and prosperity while only a closer scrutiny develops a somber shading. We discover that the fortunes realized by our manufacturers are no longer solely the reward of study, industry, and enlightened foresight, but that they result from the discriminating favor of the Government and are largely built upon undue exactions from the masses of our people. The gulf between employers and the employed is constantly widening and classes are rapidly forming, one comprising the very rich and powerful, while in another are found the toiling poor.

As we view the achievements of aggregated capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear or is trampled to death beneath an iron heel.

Observe this sentence:

Corporations which should be the carefully restrained creatures of the law and the servants of the people are fast becoming the people's masters.

Senator O'MAHONEY. If one goes back in the history of the development of this idea of Federal incorporation, one finally finds its origin in the first administration, the administration of George Washington, where one reads of the controversy between Alexander Hamilton and Thomas Jefferson. Hamilton, as we all know, was

the sponsor of the idea of incorporating a United States bank. The argument was made by Jefferson that there was no specific power in the Constitution to authorize the Federal Government to grant a charter to a corporation. One of the most interesting things that I have run across in the study I have been making of this subject is the paper that Thomas Jefferson wrote in opposition to that charter. First, there was this point which perhaps proves better than anything else the character of the man and, which I may mention as an aside. After having made a very potent argument against the bank Jefferson closed his speech with some such words as these. They were very formal in those days. He said:

It must be added, however, that unless the President's mind on a view of everything which is urged for and against this bill, is tolerably clear that it is unauthorized by the Constitution; if the pro and the con hang so even as to balance his judgment, a just respect for the wisdom of the legislature would naturally decide the balance in favor of their opinion.

In other words, having made a forceful argument against the incorporation of the bank, he, nevertheless, said to the President:

If I have not entirely convinced you and your mind is in any degree uncertain, then do what the lawmaking power believes should be done.

I mention this because it seems to me the time has come in the development of our country when the lawmaking power should assert itself to a much greater degree than it has in the past 25 or 30 years. I think the time has come when Members of Congress, both of the Senate and the House of Representatives, ought to give their undivided attention to this business of meeting the economic situation which confronts us.

There was another statement in Jefferson's argument to which I should like to call attention. His opposition to the bank was based almost exclusively, after all the legal arguments had been made, upon the conviction that, if the Federal Government should undertake to charter a bank, it would in effect empower the incorporators to over-awe the States. He feared for the people and the people's government if aggregations of capital were to be permitted, without let or hindrance, to dominate the economic life of the country. His fear was that Federal corporations would over-awe the States and, therefore, he was against Hamilton's plan, because he was for government by the people. But what we have lived to see is that corporations to which charters have been issued by State governments are, to all intents and purposes, over-awing not only the States, but are almost able to over-awe the Federal Government itself.

The modern corporation has become an economic state. It is not in any sense a private business. It is a public business because it is composed frequently of hundreds of thousands of persons, stockholders upon the one hand who exercise no control over or responsibility for their property, and hundreds of thousands of employees upon the other, who are likewise without voice, not only over the policies of the corporation but over the terms of their own employ

ment.

These corporations are created by the States, which have no jurisdiction to regulate the commerce they carry on, commerce among the States. In many they have become more powerful than the