Federal Licensing of Corporations

Senator O'MAHONEY. The committee will please come to order. This subcommittee of the Judiciary Committee, on January 25, 1937, began hearings on S. 10, a bill to regulate interstate and foreign commerce by prescribing the conditions under which corporations may engage or may be formed to engage in such commerce, and so forth. At the beginning of the present session of the present Congress Senator Borah and I introduced another bill, which is designated as S. 3072, which was a revision and modification of S. 10 and of a bill that had previously been introduced by Senator Borah for the same general purposes. There is now before the subcommittee a revision of S. 3072, an amendment in the form of a substitute, which is under consideration by the subcommittee. That substitute will be the subject of this hearing. It may be incorporated in the record at this point. (Said S. 3072 is here set forth in full, as follows:)

[Committee Print, February 19, 1938, Showing matter proposed to be inserted in lieu of the present text of the bill]

[S. 3072, 75th Cong., 3d sess.]

A BILL To regulate interstate and foreign commerce by prescribing the conditions under which corporations may engage or may be formed to engage in such commerce, to provide for and define additional powers and duties of the Federal Trade Commission, to assist the several States in improving labor conditions and enlarging purchasing power for goods sold insuch commerce, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

FINDINGS OF FACT AND DECLARATION OF POLICY

SECTION 1. The Congress finds and hereby declares

(1) That the Constitution of the United States of America vests in the Congress of the United States full and complete power to regulate all commerce with foreign nations and among the several States, and with the Indian tribes, including all that commerce which concerns more States than one and all that commerce, whether or not carried on wholly within a particular State, which affects other States and which is not completely within a particular State; that the power to regulate such commerce includes the power to foster and enlarge such commerce. (2) That the franchises, powers, and privileges of all corporations are derived from the people and are granted by the governments of the States or of the United States as the agents of the people for the public good and general welfare; that to a rapidly increasing and, in many industries, to a dominating extent, commerce with foreign nations, and among the several States is carried on through the

instrumentality of corporations created by the several States which are without jurisdiction in the field in which such corporations principally operate; that it is the right and duty of the Congress to control and regulate all corporations engaged in such commerce and that to effectuate the policy herein declared it is necessary and proper to provide a national licensing system.

(3) That the capital of such corporations is frequently furnished by citizens and residents of many States other than the State from which their corporate existence is derived; that the officers and directors of many such corporations as well as their stockholders are likewise, in many instances, citizens or residents of States other than such parent States; and that such corporations are in truth and in fact instrumentalities of interstate commerce and ought to derive their charters by authority of the Congress.

(4) That a constantly increasing proportion of the national wealth has been falling under the control of a constantly decreasing number of corporations, and that the growth of such corporations and such concentration of wealth in corporate hands has effectively impaired the economic bargaining power of labor employed by such corporations.

(5) That many of the causes of such maladjustments of wealth have been and are national in their scope and effect and have been found to be beyond the practical or legal ability of the several States to control or eliminate effectively, and that such causes and effects can be effectively controlled or eliminated only through congressional legislation.

(6) That for the purpose of executing and exercising the power granted to the Congress of the United States in the commerce clause of the Constitution of the United States, for the purpose of preventing the channels, facilities, and corporate instrumentalities of interstate commerce from being utilized to promote unfair or monopolistic methods of competition in or relating to such commerce and for the purpose of protecting, fostering, and increasing such commerce to the end that the capacity of the people to purchase commodities sold, exchanged, transported, or delivered in the course thereof may be increased with consequent reduction of unemployment and correction of the maldistribution and concentration of economic wealth and power, it has become and is necessary to regulate the terms and conditions on which corporations may produce and distribute commodities for the purposes of interstate commerce.

DEFINITIONS

SEC. 2. For the purposes of this Act

(a) "Commerce" shall mean trade or commerce in all its branches with foreign nations or among the several States or between the District of Columbia and any Territory of the United States, and any State, Territory, or foreign nation, or between any insular possession or other place under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States and the District of Columbia, or any foreign nation, or within the District of Columbia, or any Territory or insular possession under the jurisdiction of the United States, or with the Indian tribes. It shall include also the collection of raw materials and equipment in commerce as above defined for the production, and the production therefrom, of any article or commodity to enter the flow of, or which affects, commercial intercourse with foreign nations or among the several States, or between the District of Columbia and any Territory of the United States and any State, Territory, or foreign nation, or between any insular possession or other place under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States and the District of Columbia or any foreign nation, or within the District of Columbia or any foreign nation, or within the District of Columbia or any Territory or insular possession under the jurisdiction of the United States, and with the Indian tribes, and the sale or transportation of any article or commodity so produced in the course of commerce, as above defined, to retail dealers in any State, Territory, or possession of the United States, or the District of Columbia.'

(b) "Corporation" shall include any body corporate, association, trust, jointstock company, limited partnership, or syndicate.

(c) "State", unless the context otherwise indicates, shall mean any one of the several States, Hawaii, Alaska, Puerto Rico, the Virgin Islands of the United States, or the District of Columbia.

(d) "Books and records" shall include any books, records, correspondence, papers, documents, memoranda, contracts, and other written matter.

(e) "Subsidiary" shall mean any corporation subject to the direct or indirect actual or legal control of any other corporation, whether by stock company or in any other manner.

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