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that, for example, are not limited to 50 years; charters that are not held only at the pleasure or whim of the Government; charters that do not require
Senator O’MAHONEY (interposing). Let me interrupt you for a moment.
Senator Austin. Not unless you force me to yield. I wish to finish my question.
Charters that do not require an 80-percent vote in order to sell all the property of the corporation; charters that do not require 48 offices instead of 1 office; charters that do not submit themselves to absolute dissolution for violation of law. Would not the economic effect of this bill be that citizens seeking to do business would go to the States to secure their charters instead of coming to the Federal Government.
Mr. BEARD. If they have the authority to go to the States and take out charters authorizing them to engage in interstate commerce, they certainly would go to the States, Senator.
Senator O’MAHONEY. But, of course, it is obvious from the bill that they could not engage in interstate commerce until they secured a Federal license. Senator King clearly understood that purpose of the bill, as indicated by his question.
What I wanted to point out to Senator Austin a moment ago was that there is nothing in this bill which would justify the use of the word “whim" in connection with any administrative officer. Of course, Congress might adopt whimsical legislation, but that is scarcely to be anticipated, but whether to be anticipated or not, is inherent in our system.
Senator AUSTIN. If that is offensive, I would like to have it taken from the record.
Senator O'MAHONEY. It is not at all offensive, Senator. Senator Austin. I want to justify myself by turning to page 76 of the bill, lines 1 and 2, where I find the following language:
This act may be amended or repealed at the pleasure of the Congress, and every corporation created under this act shall be bound by such amendment.
And on page 75, lines 6, 7, 8, and 9:
The charter of every corporation formed hereunder shall be subject to alteration, suspension, and repeal in the discretion of the Congress, and the Congress may at pleasure dissolve any such corporation.
Senator O’MAHONEY. Of course, those provisions are in the corporation laws of many States, as the Senator is aware.
Senator Austin. I do not know that I am aware of any power of any sovereignty to dissolve a corporation at pleasure. If that is not about the limit of prudence, I do not know what is.
Senator Norris. Let me suggest, because I believe it is necessary to run along with the hearing, that these matters of discussion will be very proper in the committee when we come to analyze the bill or on the floor of the Senate.
Senator O'MAHONEY. Of course, that is correct.
Senator King. While I concur in that view, it may be that questions are suggested by the witness which call for some interrogation.
Senator O'MAHONEY. Yes.
Senator King. I have been very quiet as to interrogating him, because we do want to get along.
Senator O'MAHONEY. Senator Norris was calling me to order for my debate with Senator Austin.
Senator King. Let me ask you one question before the Doctor proceeds.
Senator O’MAHONEY. Certainly.
Senator King. Dr. Beard, is it your purpose before you conclude your testimony, to define what you conceive to be interstate commerce, and to decide that practically everything that we do in the United States, if corporations are to be handled in this manner, is or is not interstate commerce?
Mr. BEARD. It is rather a large order, Senator, to undertake that in a few minutes, even if I had the power to do it. The Supreme Court has had a good deal of difficulty with it.
Senator NORRIS. They have not settled it yet.
Mr. BEARD. That definition, according to my point of view, was made clearly by the counsel for the Government of the United States in the Guffey Coal Act case. There is the most admirable statement of the nature of interstate commerce with which I am familiar.
It deals not only with the theory, but shows the physical movement years ago.
I have but little more to say, except a brief summary of the result of 50 years' effort on the part of the Federal Government to break up, prosecute, and dissolve corporations. The first was in 1904 by John Moody. It was made in his epoch-marking book, The Truth About the Trusts. The Sherman antitrust law had been on the statute books for 14 years. Mr. Moody showed that, despite that law, the concentration of wealth and industrial control had gone forward rapidly.
The second period in our history dates from 1904 to 1931. In this period trust dissolving went on as before. In this period the Federal anti-trust law was extended and amplified by the Clayton antitrust law. In this period also there were speeches, orations, threats, prosecutions, and harassing of good business along with bad business, because good business was uncertain, too. The number of Federal agencies having to do with regulating, controlling, and prosecuting corporations was increased. To my deaf ears the volume of the uproar was enormous.
What was the upshot? In 1931, Berle and Means looked over the results as John Moody had done in 1904. They reported their findings in one of the most important books ever written in this country. It deserves to stand beside Hamilton, Madison, and Jay, in my opinion. It is called The American Corporation and Private Property. In that book Berle and Means demonstrated that, despite all the regulation and prosecution, the concentration of corporate control over wealth had increased, not diminished; that 200 powerful corporations controlled 38 percent of the business wealth of the United States, exclusive of banks. What the facts are since 1931, we do not know; but I hazard the guess, sir, that since 1931 thé concentration of corporate control over wealth and the concentration of wealth has increased, and is greater today than it was in 1931.
It is on the ground of such a historical record that the people of the United States have a right to expect action by the Congress along
it shall go.
the lines of this bill. I do not profess to be technically competent to handle its details, but I call your attention to the statement I made in the beginning. I said: “This bill begins to come to grips with the problem before us”. It is for you, who are more familiar with legal and technical questions, to say how far and in what manner
Senator O’MAHONEY. Dr. Beard, in view of your study of the Constitution and of the circumstances surrounding the Convention which framed it, I should like to ask what, in your opinion, was the purpose of the commerce clause?
Mr. BEARD. I should like to call your attention to the fact that, as it has come down, there is no distinction between the two kinds of commerce over which power was given to the Federal Government-foreign and among the States. Now, how are we to interpret that? I interpret it under the covering resolution instructing the committee which wrote it. The convention in one of its proceedings adopted a resolution to the effect that the new Government should have all the power enjoyed by the old Government under the Articles of Confederation, and also power to legislate on all matters of general interest for which the several States were not competent, or in which the several States might interrupt the harmony of the Union by their actions. That is a paraphrase. I do not recall the exact language. That was the covering resolution that covered everything that was drawn up, and in my opinion it was the intention to confer upon the Government of the United States the power to legislate on all matters of general interest, as distinguished from State or local interest, which includes coinmerce in the broad sense.
Senator O'MAHONEY. So that, in your opinion, if it should appear from the economics of the situation that the general public of the United States is interested in the conduct of commerce by these corporate instrumentalities, it is within the meaning of the Constitution for Congress to exercise regulatory powers over all such corporations!
Mr. BEARD. Yes; general interest as distinguished from purely local interest.
Senator O'MAHONEY. Are there any questions by any other members of the committee?
Senator Hughes, do you care to ask any questions?
Senator O'MAHONEY. Thank you very much, Dr. Beard. We are very grateful for your presence this morning. STATEMENT OF CHARLTON OGBURN, GENERAL COUNSEL, AMERI
CAN FEDERATION OF LABOR, WASHINGTON D. C.
Senator O'MAHONEY. I will say for the record and to the members of the committee that Mr. Ogburn is counsel for the American Federation of Labor; that he and I first became acquainted shortly after the decision invalidating the N. R. A., when I called upon the President and suggested to him that, in my opinion, the way to meet the pressing national problem of commerce among the States was to enact a law of this kind. On leaving the White House I was asked by some of the newspaper correspondents what I had been there for, and I told them what I had said to the President. My
statement received considerable publicity, and within 24 hours Mr. Ogburn called me up and said that he had been at work upon a bill to license corporations engaged in commerce among the States, and that he wondered if I would be interested in going over it with him. I most decidedly was, and title I of this bill, with the possible exception of section 1, is practically the bill as Mr. Ogburn presented it to me.
Mr. Ogburn, will you proceed with your statement?
Mr. OGBURN. Mr. Chairman and gentlemen of the committee, I would like the privilege of making a very brief statement regarding this bill. I would like to make this statement from what I consider a conservative point of view, because I believe that my point of view is a conservative point of view. My background and education and generally my legal practice in New York has been of a conservative character. That practice during a good many years has acquainted me in detail with corporate law, and I feel a certain qualification for discussing some features of this bill, because of the experience I have had in representing corporations and in the last 2 or 3 years in representing the American Federation of Labor.
Mr. Chairman, your committee is called upon to receive testimony and to make a report thereon concerning one of the most fundamentally important questions with which this Congress has been called upon to deal; and this Congress is going to be called upon, surely, to deal with this question. It is of such importance that it has created, to a certain extent, a constitutional crisis in the United States, which, to my mind, is the third crisis of that kind that this country has gone through, the first being the contest between the principles of our Government as enunciated on the one hand by Thomas Jefferson and on the other hand by Mr. Hamilton; the second being the question of slavery.
The fundamental question is, as I see it, Can the United States Government exercise supervision and regulation over large corporations which are engaged in interstate commerce? It seems to me that question, if we are to have a national government in any sense, must and shall, sooner or later, be answered in the affirmative. The framers of the Constitution met primarily to amend the Articles of Confederation, because they were too loosely drawn and did not create sufficient strength for a national government. They had in mind, undoubtedly, the creation of a national government which would be competent to deal with national problems. I believe the reading of Madison's notes clearly shows that was in the minds of most of the framers of the Constitution.
Now, this Government has heretofore had to meet a similar problem in dealing with the railroads. There was a time when the States, only, really regulated the railroads. Fifty years ago the Interstate Commerce Commission was created, because the regulation of the railroads had become a national problem of such importance that the States could not deal with it, and the Interstate Commerce Commission, supported by the Supreme Court of the United States, has upheld the right of the Commission to regulate rates on intrastate railroads, where they had an effect upon interstate rates.
Now, we face the problem of other corporations, not railroads, but of the magnitude of railroads, national in their scope, really beyond the power of any one State to control them, certainly beyond the power of the State in which they incorporated,
because their ramifications extend throughout the United States. This committee has available to it, not only the numerous books which have been written about it, but the proceedings of other committees of Congress, a good deal of which has been correlated and analyzed, which is the matter upon which this committee should act. It seems to me it is not necessary for the committee to go into the facts very much. Professor Beard has outlined some of those facts. You can go back to the hearings before the Pujo committee in 1913, where a good deal of evidence was adduced, not so much with regard to corporate wealth, as the financial control of those corporations, but the subjects are very closely allied. There have been other investigations. Numerous Senate committees have brought forth facts that are available to this committee.
It is not so much, it seems to me, a presentation of the facts. Everybody in this country must be aware of this problem. The question to consider is how this problem is going to be met by the United States Government. We must meet that problem within the Constitution, of course. We cannot say the Constitution must be amended to meet it. In my opinion, the Constitution does not have to be amended to meet it. In my opinion, the power that is in the Congress, under the Constitution as it exists today and as it has been interpreted by the Supreme Court, can deal adequately with this problem. I believe, when I say that, I am only expressing the opinion of several justices of the Supreme Court, the opinion of several prior justices, including Mr. Justice Holmes, that the power is in Congress to deal adequately with this problem without amendment.
Now, this bill, therefore, must be regarded by the Senate as being constitutional. We have had prior laws in recent years declared unconstitutional. We want to avoid the defects of those laws, as the Supreme Court saw them. I would like very much, Mr. Chairman, to have the privilege within the next few days of submitting to your committee a memorandum which I have very nearly completed, dealing with the constitutional basis of this biil. I think we have got to get our minds settled on that. I would like to say that in this memorandum I touch upon other laws which have been upheld by the courts, under which corporations have been licensed in one way or another to engage in interstate commerce, licensed by Congress.
We have, for instance, passed the Radio Act, followed by the Federal Communications Act, under which the Congress of the United States, through a commission, has licensed certain corporations to engage in interstate commerce under the commerce clause of the Constitution. The Radio Act and the Federal Communications Act have been upheld by the court. The Federal Communications Commission, in determining whether a given corporation should be allowed a license, goes into matters which, to some minds, might seem purely local. The Federal Communications Commission goes into questions of even the employees, the personnel, of the applicant for a radio permit, matters which seem to be local; but the Commission satisfies itself on those points, and if it is satisfied of the standing of the corporation, its financial integrity, its business personnel, even the personnel of its employees, then the Federal Communications