CORPORATIONS

PUBLICATION OF INFORMATION.

309

panies and combinations subject to the provisions hereof, as is conferred on the Interstate Commerce Commission in said "Act to regulate commerce" and the amendments thereto in respect to common carriers so far as the same may be applicable, including the right to subpoena and compel the attendance and testimony of witnesses and the production of documentary evidence and to administer oaths. All the requirements, obligations, liabilities, and immunities imposed or conferred by said "Act to regulate commerce" and by "An Act in relation to testimony before the Interstate Commerce Commission," and so forth, approved February eleventh, eighteen hundred and ninety-three, supplemental to said "Act to regulate commerce," shall also apply to all persons who may be subpoenaed to testified as witnesses or to produce documentary evidence in pursuance of the authority conferred by this section. (Commerce and

Labor Act of February 14, 1903, § 6.)

Publication of Information. It shall also be the province and duty of said bureau, under the direction of the Secretary of Commerce and Labor, to gather, compile, publish, and supply useful information concerning corporations doing business within the limits of the United States as shall engage in interstate commerce or in commerce between the United States and any foreign country, including corporations engaged in insurance, and to attend to such other duties as may be hereafter provided by law. (Statutes 1903, chap. 552, approved February 14, 1903, § 6.)

Purpose of the Statute.- Congress has no control of a corporation created under the laws of a State and engaged wholly in

domestic commerce. Congress has exclusive supervision of the business of interstate commerce when conducted by such a corporation in a manner to restrain trade or commerce among the States or with foreign nations. In many States corporations are not required to make reports which will disclose their financial condition. Many great industrial corporations transact business aggregating millions annually. They issue their capital stock upon which handsome dividends are sometimes paid. This stock is listed or offered in the open market, and investors are invited to buy. Often those who purchase such stocks for investment are obliged to rely entirely upon the business standing and commercial integrity of the directorate. A prudent investor seeks information as to the value of the assets and earning capacity of a corporation, upon which to base his judgment as to the value of the stock or securities offered.

In many instances, howover, millions are invested in stocks of a corporation, the reason for the purchase being based altogether on the character of the men who control and manage its affairs. One who invests under such circumstances, in the language of the Street, puts his money into a "blind pool." There seems to be no adequate legal method of getting all the information a prudent investor requires under such circumstances, although in some States the laws require every corporation to furnish detailed statements and proper security which will safeguard the investors' interests. In many States, however, adequate safeguards are not provided and the information desired must be secured, if at all, through expensive and tedious litigation.

Many of the great combinations of capital and syndicated wealth engaged in commercial pursuits claim that secrecy is absolutely essential to success. That information which is open to the public is open to the competitor and business rival, and that unless a measure of secrecy is preserved success is difficult if not impossible.

The combinations of great industrial businesses operating in every State of the Union, and in every country in the world, may be so conducted by an alliance with the carriers to create a monopoly, destroy competition, enhance prices, and drive out of business rivals not absorbed by the trust. To remedy this phase of exclusive commercialism Congress passed the Sherman Act,

OBJECT AND SCOPE OF BUREAU.

311

July 2, 1890, entitled "An Act to protect trade and commerce against unlawful restraints and monopolies." The cases in which the power of the Supreme Court of the United States has been invoked to restrain and dissolve these unlawful combinations are reported ante under the Sherman Act. The court has decreed a number of such combinations to be unlawful, has ordered their dissolution, and authorized the Circuit Courts of the United States to grant relief by mandatory injunction, prohibiting the unlawful acts complained of shown to be in violation of the statute.

Complaints have been made that the remedies provided by the act of Congress and applied by the courts are being constantly evaded; that injunctions do not seem to prohibit, although the letter of the law may be complied with. It is charged that the methods employed by powerful syndicates are such as to make it impossible to get the evidence necessary to secure the remedies which the law affords. The claim is made that the weapons of the trusts are the "boycott," the "black list," and the employment of the most potent of all weapons, an alliance with the great carriers to secure the granting of rebates which make competition with the trust extremely difficult if not impossible. That it is impossible to secure witnesses or get persons who have suffered damage to make complaints for fear that their business will be ruined or their means of livelihood taken away through the secret methods employed by those against whom redress is sought.

A court cannot act without evidence. A statute cannot be framed to remedy an evil unless all the facts surrounding the case are disclosed. The authorities, whether the courts or the Legislature, cannot act without reliable information.

The object of the act creating a department of commerce and labor was to create an official agency giving the government of the United States full power and authority to secure the information necessary, not only to protect the investor who has purchased the stock of a corporation, but to enable such action by the courts or by the Legislature as may be necessary to enforce the laws to "protect" commerce, or to frame such new legislation as may be proper to that end.

Diligent investigation is the object and aim of the statute affecting "the organization, conduct, and management of the

business of any corporation, joint stock company, or corporate combination," excepting only common carriers engaged in interstate commerce.

The powers conferred upon the Commissioner of Corporations in the performance of his duties under the act are identical with the powers conferred on the Interstate Commerce Commission under the Interstate Commerce Act, including the right to compel witnesses to testify and produce books and papers. The law giving a cabinet officer supervision over all corporations except common carriers with respect to interstate commerce is experimental. It has been suggested by the necessities and conditions arising from a monopoly of trade and commerce by vast aggregations of capital, whereby not only is competition practically destroyed, but thousands are deprived of the opportunity to engage ir business or pursue their callings. In other words the great object of a republican form of government, based upon the fundamental principle of equality of opportunity, is in a measure defeated by the absolute denial of opportunity.

Necessity of Means to Secure Evidence. The importance of this new law giving a department of the government power to investigate, and affording the means of securing reliable information is illustrated by the action of the United States v. Swift, 122 Fed. Rep. ante, page 286, known as the beef trust. The injunction issued in that case by Judge GROSSCUP, ante, page 289, it was supposed would be adequate to secure the relief sought and open the markets to the stockraisers and grain growers of the West. The result has shown that conditions remain about as they were before the injunction was issued. How is it that the mandatory order of a United States court seems apparently ineffectual? It is believed that the diligent investigation which the Commissioner of Corporations is required to make may furnish an answer to the inquiry. Such investigation has been made, and is being made, and the results are expected to be laid before Congress at its next session.

Market Price of Beef. The unreliable character of the information as to the cause of fluctuation in the price of meat and live stock, gathered from officers of the constituent companies in the trust, is illustrated, by inter

EVIDENCE AS TO BEEF TRUST.

313

views recently secured by representatives of the New York HERALD, which instituted a very thorough investigation of the subject. That enterprising journal published such information as it was able to obtain from representatives of the packers with regard to the inquiry as to how it happened that the cattle raiser receive such insignificant prices for his stock, while the consumer was compelled to pay so much. In answer to these inquiries the HERALD of July 3, 1904, says:

J. Ogden Armour, head of the corporation of Armour & Co., was asked this question recently. His answer was:

"The high price of beef is due to the fact that the live stock production of the United States has not kept pace with the increase in the population."

Louis Swift, president of Swift & Co., was asked why it is that the cattle growers of South Dakota, Montana, Iowa, Nebraska, Kansas, and Texas receive hardly enough for their cattle to pay for the corn fed while fattening them. His answer was:

"The high prices paid for cattle in 1902 persuaded many farmers to load up with a lot of fatteners. The ranges were filied and the result was overproduction. The supply is greater than the demand, and in consequence the price of beef on the hoof has fallen."

Another explanation is that offered by an employee of the International Packing Company, one of the few independents still remaining in the field. The International has been in the hands of a receiver and it is well understood that when its affairs are finally settled it will be absorbed by the trust. For that reason those connected with the concern refuse to permit the use of their names. One of those seen by a reporter for the HERALD said:

"The reason why the prices of cattle are low and the prices of dressed meats are high is that competition has been stifled by the beef trust. Arbitrary prices are made both ways. The cattle raiser, the retail butcher, and the consumer are all at the mercy of the trust. The machinery of the beef trust is perfect. A gentlemen's agreement' has taken the place of the written contracts that existed two years ago. It matters little to the cattle grower whether he receives one bid for his beeves or four bids, so long as only one price is quoted to him.

The beef trust has the cattle grower at its mercy. It controls the stock yards at Kansas City, St. Joseph, St. Louis, Omaha, Sioux City, St. Paul, Chicago, Fort Worth, and the various smaller cities of the country. The beef trust controls the facilities for shipping, and it has, by the creation of the National