The recent referenda (Nos. 7 and 8) of the Chamber of Commerce of the United States of America to its constituent members is announced by the official organ of the association, The Nation's Business, to have had “an extraordinary effect in enlightening the business men of the United States relative to the principles involved in the complicated subject of trust legislation" by Congress.

These referenda were based on the reports of the Special Committee of the Chamber on Anti-Trust Legislation. The pamphlets submitting the questions to the members were necessarily lengthy, as The Nation's Business points out, and of course dealt with subjects that called for expression and discussion in legal phraseology. Nevertheless both pamphlets were "so clear in the questions presented and in the supporting arguments relative to the recommendations of the Committee," says the account, "that nationally much clear opinion has come upon the subject and this has reacted to the clearing of the situation in Washington."

The importance of the result of the votes of the members will be appreciated when it is understood that there was remarkable unanimity of opinion in respect of most of the questions considered, and when it is remembered that this national body is composed of nearly six hundred chambers of commerce, boards of trade and manufacturers' and merchants' associations, with an individual membership of more than 250.000 located in the principal cities and industrial centers all over the country.

With reference to the Interstate

Trade Commission, the Special Committee of the National Chamber made seven recommendations.

The first was that, if created, the proposed Commission should be composed of five instead of three members, as provided in the bill passed by the House of Representatives, and that not more than a mere majority should be of the same political party. The argument in support of the recommendation was that, since a large proportion of interstate business is now transacted by corporations, the duties of the commission would be so important that so small a membership as three would be inadequate; that experience has shown that when there are only three, one member is usually dominant, also that a commission of five is more representative. The Committee also thought that the larger membership would provide more opportunity for different points of view and make room for the inclusion of men of business experience. This recommendation was adopted by the Chamber by a vote of 522 to 124 and an amendment embodying it has been offered by the Senate Committee on Interstate Commerce, to which the House bill was referred referred when it reached the Senate after having been passed by the House.

The second recommendation of the Special Committee was that for the purposes of investigation, the Commission be given jurisdiction over all corporations engaged in interstate commerce, instead of only over certain classes, as provided in the House bill, but excepting such as are now amenable to the Interstate Commerce Commission. The

Special Committee believed that there. ought to be no discrimination with respect to the kinds of corporations with which the Commission would have to deal, for such a limitation might develop suspicion of favoritism. In its report the Committee said: "Neither size nor any other arbitrary standard of classification is a sure criterion of lawfulness or unlawfulness under the anti-trust acts or under any other laws,"

The Committee was of opinion, however, that the general jurisdiction of the Commission should not extend to persons and memberships for the reason that "as a matter of business judgment, individuals and partnerships, as such, will not engage in interstate or foreign trade on a scale sufficiently large to have the potentiality of effecting a restraint of trade or creating a monopoly. Before their business assumes a character or a volume that creates possibilities of illegality under the anti-trust acts they are under a practical necessity of adopting the corporate form with its limited liability and other advantages."

This recommendation was adopted by the National Chamber by a vote of 531 to 89. The form of the provision as proposed to be amended by the Senate is: "The powers and jurisdiction herein conferred upon the Commission shall extend over all trade associations, corporate combinations and corporations, as hereinbefore defined, engaged in or affecting commerce, except banks and common carriers."

The third recommendation of the Special Committee was that for the present the Commission be not given authority to advise applicants respecting the legality of proposed contracts, combinations, trusts, etc., under the Sherman act. In its report the majority of the Special Committee discusses both the legal and practical aspects of this phase of the subject at length. As it views the provision, it would be a physical impossibility for the Commission to pass upon the multitudinous plans that corporations have in regard to commerce that is interstate or foreign in character.

It says: "Every unfavorable deris ion would lead to a new presentation of the same plan with the least number of changes the applicants estimated the Commission would accept. The decision in no case, whether favorabk or unfavorable, could be used as a precedent in other cases, for each case would contain not only questions of law but of fact and in no two cases would the facts be the same." The argument of the minority in support of the contention that the commission should be given this power is also presented in detail. It is contended that there would be great advantage i business men could know in advance. on the authority of the Commission what latitude would be permitted ther before engaging in important undertakings.

This recommendation of the majority was rejected by the Chamber by vote of 308 to 303. In the Horst bill no advisory powers are provided for, but, as it is proposed to amend it in the Senate, Sec. 5 empowers and directs the Commission "to prevent corporations from using unfair methods of competition in commerce" and confers on it authority, in any case in which it shall have reason to believe that unfair methods are being employed, to issue an order to show cause why a further order prohibiting such practices should not be issued. and provides for supplemental court proceedings for injunction in the event that the order shall be disobeyed.

The fourth recommendation of the Special Committee-which was adopted by vote of the Chamber of 512 to 91-was that, at least at first, the provision in the House bill for annual reports should, if such reports are to be required at all, apply only to the larger corporations and such other classes as the Commission might determine. In the form in which.it is proposed to be amended in the Senate. the bill would require no annual reports, but only from time to time, and from any corporation that the Commission might designate, "information, statements and records concerning its organization, business, financial condition, conduct, practices, management

and relation to other corporations, or to individuals, associations or partnerships," etc.

The fifth recommendation of the Special Committee was that in the reports made to the Commission, corporations ought not to be required to disclose trade processes, shop costs, classification of sales and profits among particular articles, names of customers, or other like private information. The majority of the Committee contended that there should be a reasonable limitation as to the kind of information asked for.

"If," it declared, "a corporation were compelled to place or file with the Commission data of the sort indicated, it would in many cases be placing beyond its control facts which lie at the foundation of its existence as a competitive business, which it has always guarded with the utmost jealousy because their disclosure to a competitor would seriously affect its own ability to compete, and for which it felt any penalties provided by law for persons who disclosed information in the possession of the Commission. would offer insecure and inadequate protection."

The dissenting opinion is "that it is obviously the intention of the bill that the Commission is to acquire complete understanding of the business of the country and its needs. The facts of business are so inter-related that if access to part of the facts is barred the Commission will not be able to interpret properly other facts and conditions." The recommendation of the majority, however, was adopted by the Chamber by a vote of 542 to 75. (See proposed Senate amendment quoted at end of following paragraph.)

The sixth recommendation was that the publication of facts that might be obtained by the Commission should be confined to such as are of public

concern.

This was adopted by the Chamber by a vote of 573 to 47. The bill as it passed the House of Representatives provided that such information might be "made public in the discretion of the Commission". The proposed Senate amendment 、 adds: "Except so far as may be necessary, to

protect trade processes, names of customers and such other matters as the Commission may deem not to be of public importance."

The seventh and last recommendation respecting this trade commission. feature of the pending legislation_was that Congress should direct the Commission to investigate and report at the earliest practicable date as to the advisability of amending the Sherman act to allow a greater degree of cooperation in the conduct, and for the protection of, the foreign trade-this because of the severe handicap under which American industries are working in foreign markets as against competitors from other countries.

The House bill makes no mention of foreign trade, nor has the Senate. Committee on Interstate Commerce proposed any amendment with a view to liberalizing the Sherman law in this respect, but an amendment that has been offered by the Senate Committee reads: "The Commission is hereby directed to investigate, as expeditiously as may be, trade conditions in foreign countries where associations, combinations or practices of buyers, dealers or traders may injuriously affect the export trade of the United States, and also to investigate whether American. exporters have combined with each other or with foreign producers or dealers to control prices abroad."

THE REFERENDUM AS ΤΟ

THE

POSALS OF THE CLAYTON ANTI-TRUST BILL

PRO

After having fully considered the report of the Special Committee of the National Chamber, on which was based referendum No. 8. the Chamber has expressed the opinion, by vote of 531 to 22, that there ought to be no attempt to forbid discriminations in prices of commodities. "The practice forbidden by the House bill," the Committee thought, "is discrimination in prices for reasons other than considerations of quality, quantity and cost of transportation and for the purpose of 'destroying or wrongfully injuring' the business of a competitor. So far as discriminations in price are used as

a means to effect monoply or to restrain trade, they are already within the inhibitions of the Sherman act.

"Nineteen states have passed legislation on the subject. Conditions within the area of a state may be so similar as to justify uniformity of prices but there cannot be said to be any such uniformity of conditions throughout the area of the United States. In thirteen of the states the laws have been adopted since 1910 and there has not yet been such enforcement of these statutes as to afford convincing evidence of their usefulness, even in the restricted areas of individual states." The Senate bill proposes no new legislation on this subject.

By a vote of 527 to 32 the National Chamber has also declared that the proposal to compel persons controlling the product of mines to sell to all applicants "who may be responsible" is wrong in principle and unworkable in practice. "Concerning the products of mines of all kinds," argued the Special Committee (we quote from The Nation's Business), "the House bill contains a proposal which, if enacted, would initiate a new policy. Under penalties of fine and imprisonment any person controlling the product of a mine sold in interstate or foreign commerce would be compelled to make sales to any responsible applicant who wished to make purchases for use in domestic trade. The Senate bill contains no such provision.

"Such a proposal, applying to all mines, regardless of size and of the nature of the product, has no relation to monopoly or restraint of trade, which are the subjects of the Sherman act. If in interstate trade a monopoly of any natural resource--such as iron ore is created, there is already an offense under the Sherman act. This proposal not only goes beyond the Sherman act but begins a policy in which the fixing of prices for commodities by governmental authority is a part. Before such a policy is undertaken, its need should be demonstrated, its effect upon small as well as large businesses should be weighed, and its validity under the limitations of the Constitution should be considered. As

the annual product of mines approaches one billion dollars in value, the interests involved require careful deliberation before the policy is put in effect."

By vote of 514 to 35 the Chamber has further declared that there shoul be no statutory prohibition of conditions accompanying sales and leases to the effect that buyers or lessees shall not handle or use the products of competitors. "The House bill provides,” the Special Committee says, "that. under the penalties of the Sherman act, no sales can be made, or leases entered into, upon condition that the buyer or the lessee is not to buy or use the products of a competitor. The Senate bill contains no analogous proposal. Exclusive sales arrangements with middle men are widely used by manufacturers. In ordinary business practice they are not a means of monopoly; they simply afford manufacturers of limited resources an opportunity for representation of their goods in distant markets and they encourage effective competition.

"There should be no legislative denunciation of a settled business custom used generally in situations where there is no suggestion of attempt at monopoly. As to conditions attached to leases, proceedings now pending in federal courts may be expected to result in an interpretation of the Sherman act. (United States v. United Shoe Machinery Co., et al). Legislation should at least await the result of this case. As the Committee indicated at the beginning of its report, as well as under its separate recommendations, it believes that any attempt at prohibition of unfair practices in competitive business through detailed definition will be harmful.

"A different method of dealing with questions of competition has been proposed and incorporated in a bill introduced in Congress (H. R. 15,660) by Mr. Stevens. Under the terms of this bill, all unfair and oppressive competition is declared illegal, and, upon complaint, the proposed Interstate Trade Commission is given authority to decide whether a practice, in the circumstances shown, is in fact unfair

and oppressive. If the Commission determines there is unfairness and oppression, it will issue its order that the practice be stopped."

By vote of 484 to 62 the Chamber also declared that the final decree in an equity suit brought by the Government establishing the existence or non-existence of a monopoly or restraint of trade ought to be conclusive evidence only as to the general fact in private actions brought against the same defendants under the anti-trust laws. "According to the House bill," says the Special Committee, "a final decree in an equity suit brought by the United States under the anti-trust laws would, as to the same facts and the same questions of law at issue in a private suit for three-fold damages, be conclusive evidence both in favor of and against the defendants. The Senate bill contains no provision bearing directly upon this point.

"The purpose of this proposal is to increase the efficiency of the means for enforcing the anti-trust laws. This purpose would be equitably attained. by the Special Committee's recommendation, for on the one hand the decree in an equity proceeding brought by the Government would be conclusive subsequently in actions brought by private persons only concerning the general and essential question whether or not there has been a restraint of trade or a monopoly, and on the other hand the decree would not be conclusive upon specific acts Occurring between defendants and individual members of the public. If decrees in a Government suit were to be conclusive as to specific acts, every Government suit would necessarily become an inquisition of such dimensions that final decision would be postponed until the questions involved had ceased to have practical importance."

By vote of 491 to 41 the Chamber also declared that the interlocking of directors among competitive business and railroad corporations should not be prohibited regardless of the size of the corporation, unless elimination of competition among the corporations in question would con

stitute a violation of the Sherman act; also (by vote of 494 to 33) that the interlocking of officers and directors as between railroad and industrial corporations with which they transact a substantial volume of business-for

example, in the relation of buyer and seller-ought not to be prohibited except in such instances as the Interstate Commerce Commission might determine such interlocking to be detrimental to the public interest.

"The Senate bill," the Special Committee points out, "makes it unlawful for a corporation to engage in com merce which Congress can regulate if among its officers or directors there is any person who is an officer or director in a competitive corporation, unless within one year the proposed Interstate Trade Commission, upon application and after public hearings. at which the petitioner, the Attorney General and any persons who are engaged in competitive business may be heard, shall have certified that the community of officers or directors does. not substantially impair competitive. conditions.

"The House bill contains an outright prohibition, without means of approval for a particular case, but this prohibition is only effective (1) if one of the corporations in question has capital, surplus and undivided profits aggregating more than $1,000,000, and (2) if the corporations concerned are by virtue of business or location such competitors that an elimination of competition by agreement among them would violate any of the anti-trust laws. * * *

"Both the Senate and House bills include provisions regarding interlocking of directors between railroads and other businesses. The Senate bill contains a sweeping prohibition. The House bill has separate and more detailed prohibitions respecting the several classes. *** The Senate bill expressly exempts banks. Concerning banks, the House bill, however, has extended provisions, expressed with two limitations, one referring to amount of resources regardless of the location of the banks in question, the other affecting banks located in the