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The administration of the law is placed in the hands of an Interstate Commerce Commission which is entirely separate from the Department of Commerce and Labor. This commission consists of seven members appointed by the President and Senate and paid a salary of $10,000 each.
The Act to Regulate Commerce, as the law is called, applies to corporations and persons carrying oil or other commodities, except water and gas, by means of pipe lines, or transporting passengers or property by railway or by rail and water from one state or territory into another state or territory, or from one place in any territory to another place within the same territory, or from any place in the United States to a foreign country.1
A large number of restraints are laid upon the carriers and corporations to whom the Act applies. All charges for services in connection with transportation of passengers or property must be just and reasonable; no common carrier can grant free passes or free transportation except to certain specified persons and institutions; and railroad companies are forbidden to transport commodities in which they have a direct property interest, except timber and its products. Common carriers must construct switches and make connections with lateral and branch lines of railways. They cannot grant rebates, drawbacks, and special rates, thus discriminating and making lower charges to some persons than to others for similar services; they cannot give any undue or unreasonable preference or advantage to any particular person, company, corporation or locality; and they are forbidden to make arrangements for pooling freights of different and competing railways, or for dividing among themselves the net proceeds of the earnings of such roads. They must print and keep open for public inspection schedules showing rates, fares, and charges for transportation, and no change can be made in the rates, fares, and charges so published except after thirty days' notice to the Interstate Commerce Commission. Finally they must also render full and complete annual reports to the Commission in the manner prescribed by that body; and there is now established
'The Act does not apply to the transportation of passengers or property or to receiving, delivery, storage or handling of property wholly within one state. The Elkins law of February 19, 1903, prohibits rebating and allows proceedings in the courts by injunction to restrain common carriers from departing from the published rates.
one uniform system of railway accounting throughout the United States.
Certain specific powers and duties are vested in the Interstate Commerce Commission by law. The Commission is required to investigate the manner in which business is conducted by those carriers to whom the law applies; and on the request of the Commission any district attorney of the United States must prosecute, in the proper court, offenders against the law. The Commission is empowered to summon witnesses and compel the production of books, papers, and other documents relating to any matter under investigation. Any person, corporation, body politic, or municipal organization complaining of anything done or omitted to be done by any common carrier, contrary to the provision of the law, may apply to the Commission by a petition stating the facts, and the Commission must thereupon make an investigation into the alleged violations. The Commission is empowered, after full hearing upon such a complaint or upon complaint of any common carrier, to determine and prescribe just and reasonable maximum rates and charges, as well as just and reasonable regulations and practices. The Commission may furthermore award damages to persons injured by a violation of the law on the part of any common carrier.
It is thus apparent that the federal government has taken upon itself the supervision of the entire transportation system of the United States so far as it involves interstate and foreign commerce; and inasmuch as practically all local carriers are now absorbed into the great corporations, it may be said the power of the Commission extends to the utmost ramifications of our network of railways. Undoubtedly the federal government is, by this process, drawing to itself an ever greater amount of power. Without question, the tendency of Congress to increase and extend this national system of regulation will result in concentrating in Washington more than ever the conflict between the government and the representatives of the railway and transportation interests.2
1 The Commission cannot punish any one for refusing to testify; it must apply to a federal court in such a case.
2 A law providing for an interstate commerce court and still stricter supervision over commerce is recommended by President Taft and is now (1910) before Congress.
In the meanwhile the government is also endeavoring to control the great trusts and corporations engaged in interstate business. The way in which one industry after another has been absorbed by corporations, national and even international in the extent of their operations, is a matter of recent and familiar history. All great staple industries are now consolidated; and everywhere competition is being stifled by the combination of competing concerns. Moreover the control over the bank deposits throughout the whole United States is tending likewise to centralize in the hands of large financial institutions which work in conjunction with the business organizations.
In the very beginning of this revolution there were a few statesmen who saw that the arm of the government must be used in some way to check and control the men in whose hands this enormous power over capital, commerce, and industry was concentrating; but it can hardly be said that there has been any general agreement either as to the temporary or final nature of that control. A protest against the inaction of the federal government in the face of this great economic centralization was made by the radical minor parties shortly after the Civil War; and they grew more insistent as time advanced. At length, in 1890, Congress passed a law designed "to protect trade and commerce against unlawful restraint and monopolies," the famous Sherman Anti-trust Act. By this law, it was provided that every contract, combination, in the form of a trust or otherwise, or conspiracy in restraint of trade or commerce among the several states and territories and with foreign nations was illegal; and appropriate penalties were prescribed for violations. Under the interpretation of the Supreme Court, the law has been held to forbid all combinations among common carriers in restraint of trade, whether reasonable or unreasonable; and in the Northern Securities case the Court declared that even the formation of a holding company controlling a majority of the stock in two competing railways was an illegal combination.
It must be noted, however, that under the law, corporations or trusts, as such, cannot be regulated; they must be engaged in interstate or foreign commerce in order to come within the terms of the act. In the Sugar Trust case,' for example, the Court held
1 This Act is in the Readings, p. 358.
2 United States v. E. C. Knight Co., 156 U. S. R., 1.
that the Anti-trust law did not control a great sugar company which had secured practically a monopoly of the manufacture of sugar in the United States by purchasing the stock of the various refining companies. The ground of the opinion was that the monopolies forbidden by the law were those actually involving interstate or foreign commerce, not those simply controlling the manufacture of commodities, even though such commodities afterward entered interstate and foreign traffic. In this connection the Court said that if Congress could regulate the great corporations that merely happened to own property in a large number of states, it could practically exclude the states from control over commerce and manufactures.
Where, however, a number of companies, engaged in the manufacture of some article, form an organization, divide the territory of the United States among themselves for the sale of that article, and suppress competition, the Act applies. The Court has so held on the ground that, when the direct, immediate, and intended effect of a contract or combination among dealers in a commodity is the enhancement of prices and suppression of competition, it is a restraint in that commodity.1
The Anti-trust Act likewise applies to trade unions whose operations affect interstate commerce, as well as to other combinations. For example, in the case of Loewe v. Lawlor the Court held that when a labor organization, by the use of labels and notices in labor papers and other means, boycotts a manufacturing concern doing a large interstate business, the said organization becomes a combination in restraint of trade and is liable to the penalties of the Anti-trust Act.2
In spite of the formidable appearance of the Sherman law, its effect in checking the formation of trusts and combinations has been very slight. To facilitate the enforcement of the law, there was established in 1903, on the recommendation of President Roosevelt, a bureau of corporations in the Department of Commerce and Labor. The head of the bureau, bearing the title of the commissioner of corporations, is authorized to investigate the organization, conduct, and management of corporations (other than common carriers 3) engaged in interstate commerce; to com
1 Addyston Pipe and Steel Co. v. United States, 175 U. S. R., 211.
3 Subject to the Interstate Commerce Act.
pel by subpoena the attendance of witnesses and the production of books, papers, and documents for such purposes; to administer oaths; to require reports from such corporations; and to investigate the legal conditions applicable to them in a word, to collect and make public information of every sort bearing upon the organization and conduct of great concerns engaged in interstate and foreign commerce. The business of the bureau, therefore, is not the prosecution of criminals, but the investigation of law and fact for the purpose of furnishing to the government a sound basis for remedial legislation.
Within recent years there has come a clearer understanding of the nature of our economic development, and the undiscriminating criticism of all corporations is being replaced by saner views based upon the recognition of the fact that the era of small competing business concerns is at an end. Nevertheless there still is a large variety of views as to the fundamental nature and tendency of our economic development. Only relatively few men in public life to-day assume the attitude of the past generation that trusts and corporations, as such, should be broken up. A large number of publicists would discriminate between what they are pleased to call "good" and "bad" trusts, placing in the former category those business concerns which do not attempt complete monopolies and unreasonable enhancement of prices and in the latter category those corporations which are constantly violating the law and endeavoring to create monopolies. Finally there are the socialists, who contend that monopoly is the inevitable result of competition, that competition is a crude and wasteful method of doing business, and that the ultimate outcome will be the assumption of the ownership of the great monopolies by the government. At all events there is, at the present time, a decided movement away from the old blind hostility to corporations, in the direction of some form of government regulation. In this movement, Mr. Roosevelt has taken a prominent part. When governor of New York, he said in a message to the legislature: "Much of the legislation, not only proposed but enacted against trusts, is not one whit more intelligent than the medieval Bull against a comet, and has not been one particle more effective." As President, he said in his annual message to Congress in 1905: "It is generally useless to try to stop all restraint on competition, whether this restraint be reasonable or unreasonable; and when it is not useless,