May 16, 1911

Ur. BORAH. I ask unanimous consent to call up the joint resolution (H. J. Res. 39) proposing an amendment to the Constitution providing that Senators shall be elected by the people of the several States. - There being nQ objection, the Senate, as in Committee of the Whole, resumed the consideration of the joint resolution.

The PRESIDING OFFICER. The question is on the amendment offered by the Senator from Kansas [Mi'. BRISTOW].

l\lr. NEWLAl\"'DS. Mr. President, whilst I was addressing the Senate yesterday upon the importance of taking up immediately certain questions upon which public opinion has been formed, and crystalizing them into legislation, I referred, among others, to the great questions of the combinations of capital called trusts which have assumed of late years so powerful and menacing an aspect.

I stated that although the antitrust act had been passed over 23 years ago, no substantial result had been reached under it; that if the Supreme Court in pending cases should declare these great organizations to be valid organizations, then it would be necessary to have legislation which would treat them as public monopolies and regulate them as we do other public utilities; that if, on - the other hand, the Supreme Court should determine that these great organizations should be broken up into their constituent elements, it would be important for us to legislate regarding interstate trade, as to the size and the extent of the operations and the extent of the capitalization of corporations engaged in interstate trade; so that on the one hand we would have the benefit of the combination of great capital in the enterprises of the country, and, on the other hand, we would be able so to regulate them as to protect the country from the abuses which have up to this time existed.

The Supreme Court yesterday acted upon this matter with reference to one of the great trusts in a decision which applies to them all, and, as the result probably of the inertia and the inaction of Congress, has taken upon itself what the dissenting member of that court, Mr. Justice Harlan, declared to be judicial legislation, and has written into the statute words which Congress never put there. An · d so to-day we have a decision upholding the antitrust act so far as it applies to unreasonable restraint of trade.

The question therefore presents itself to us whether we are to permit in the future the administration regarding these great combinations to drift practically into the hands of the courts and subject the question as to the reasonableness or unreasonableness of any restraint upon trade imposed by these corporations now existing and to be brought into existence in the future to the varying judgments of different courts upon the facts and the law, or whether we will organize, as the servant of Congress, an administrative tribunal similar to the Interstate Commerce Commission, with powers of recommendation, with powers of condemnation, with powers of correction similar to those enjoyed by the Interstate Commerce Commission over interstate transportation.

NATIONAL INCORPORATION,

We are told that the President is now about to urge upon Congress the passage of a national incorporation act with a view to meeting this question, and doubtless determining the extent to which these combinations may capitalize themselves the number of plants which they may own, · the extent of their operations, placing them all under national jurisdiction as national creations.

So far as I am concerned, Mr. President, for years I have advocated the full exercise of the power of Congress over inteI>­ state commerce, even though it led to the organization of the artificial beings that are to enter into interstate commerce. But I have confined my advocacy of the latter proposition entirely to corporations organized for transportation-to the railways of the country-for I realized that railroads were natural mono.p­ Party. olies and must be treated as such, that we could not rely upon the States to create the agencies for interstate and national purposes, and that the very necessity of long and continuous interstate lines, extending from ocean to ocean and from the Lakes to the Gulf, requiring that the Nation itself should act in the creation ?f the artificial agents that would carry on these great enterprises.

My feeling upon this question was accentuated by reason of the fact that the railroads themselves had fallen into the custom of resorting to the States that had the least restriction upon corporate powers, to States which had not within their jurisdiction a mile of the railroad affected, for the creation of the corporate agents that would undertake these great interstate and national functions; and I thought that it was an abdication of the functions . of the National Government to permit a single State, which under the Constitution has no power whatever over interstate commerce, which with the other States granted that power · in its entirety to the Government of the United States, to organize the corporation which is to operate in many States. I thought it was an outrage to permit this thing to be done by legislation of a single State in which the people of the other States had no participation, and that the proper exercise of the national functions required that the Federal Government should take hold of the entire subject matter. -

I felt that such corporations would be more likely to be efficiently restrained by legislation in which the people of all the States participated than by legislation in which the people of only a single State participated. But even with reference to this question, the incorporation of _ interstate railroads, I gradually modified my views, for I realized that many of the States were unwilling to give up their jurisdiction over the State corporation within their boundaries, engaged, as they were, in State transportation as well as interstate transportation; and so my mind gradually drifted to a method of procedure by which the National Congress would organize not corporations that would own interstate railroads, but would organize corporations that would simply own the stock of State railroads, thus substituting national holding companies for the holding companies now created under the laws of such a State as New Jersey. I felt this would leave the individual corporations in the respective States now engaged in railroad transportation as State creations, absolutely subject to the jurisdiction of the State, so far as taxation, the police power, and State commerce were concerned, and would permit the unionizing, or, if we may so term it, the federalizing, of these State corporations through a national holding company, which would bind them together for the great national purposes of interstate commerce.

SENTIMENT OF PARTIES.

Now, Mr. President, I must admit that, so far as my own party in the Senate is concerned, the views which I entertain upon this subject have not made the headway I could wish. The Democratic Party believes in keeping power as near as possible in the hands of the people in the various localities in the States, and entrusting to the National Government ~nlv those powers which are necessary for the national defense and for national purposes and in carefully scrutinizing the granted powers with a view to preventing any enlargement ot national jurisdiction within the boundaries of the States. So the traditions and the principles of the Democratic Party have rather militated against the views which I have entertained, though I have absolute confidence of their correctness and am confi dent that these views will some time be incorporated in the laws of our country.

But we must take a practical view of this question. There was a time when a national incorporation act could pass Congress, and that was under the recommendation of a Republican President and by the action of a Republican House and a Republican Senate. But that condition of things exists no longer. The House is now Democratic. It will probably remain Democratic for years. The Republican ascendency in this body has been constantly diminishing and is now in danger. So I can not see any possibility within a reasonable time of the enactment of a national incorporation law even regarding railroads much less regarding the commercial business of the country. ' Now, the . President contemplates this as his remedy for existing abuses, and we are told by the press that that recommendation is to be renewed and the bill which has been sleeping for .. so long a time in the Committee on the Judiciary will again be pressed. We all realize how futile such an endeavor will be; and it .is therefore all the more incumbent upon us to determine at this session of Congress what is practicable, what will secure the assent of a Democratic House, what will secure the assent of a Senate under the control of a divided Republican It is absolutely necessary, therefore, for us to dismiss all partisan considerations. If anything is to be done we must establish a modus vivendi as between the two great' parties of the country, and passing some measure that does not contradict the principles or the traditions of either party, wait for the time when one or the other party is in complete and absolute power both m Congress and in the executive department. _ Mr. President, why should we not, then, upon this great question, avail ourselves both of the lamp of reason, alluded to in a recent · Supreme Court decision, and of the lamp of experience? What has been our experience regarding that branch of interstate commerce which covers transportation? Our experience has been that 20 years ago, just about the time the antitrust act was passed, Congress passed the interstate-commerce act, cre­ political ating a commission as its servant to attend to its duties under rules prescribed by Congress. The regulation of interstate commerce belonged to Congress. Congress wisely saw that it could not undertake that regulation in all its details; that it could not pass rate bills which would be satisfactory to every section of the country; that it could not reduce rates that were claimed to be excessive and increase rates that were claimed to be too low; that it could not correct the varying abuses which creep into the administration of every great enterprise. Therefore it created this commission as its servant to carry out its will under rules established by it.

The history of the last 23 years proves the wisdom of our action. By a gradual process of evolution this commission, as the result of gradual improvements in legislation and as the result of constantly increasing powers recommended by it and affirmed by Congress, has become a tribunal second in importance only to the Supreme Court of the land. It has made transportation a science. It has studied all the intricate questions relating to it, and in a recent illuminating decision has formulated a great state paper that has impressed the country and the world with its wisdom.

Now contrast that action with the other action taken by ConO'ress regarding the trusts. It would have been possible 23 ;ears ago, when the interstate-commerce act was passed, , with reference to interstate trade to have established an industrial or trade commission or board similar to the Interstate Commerce Commission with reference to transportation. If we had done so and had put upon that commission the same class of men who have been appointed upon the Interstate Commerce Commission, we would have had the constant corrective power of that commission applied both to the existing trade corporations and to the trade corporations afterwards created. :M any abuses would have been prevented. l\fall\T abuses would have been corrected. As a result of the constant study and inquiry of a competent board engaged in this work as a specialization recommendations would have been made to Congress which would have been accepted, as were those recommendations made with reference to interstate transportation, and a great body of administrative law would have been built up and combinations of capital would have been effected without the abuses which have existed during the past 23 years.

ENFORCEMENT OF ANTITRUST A.CT BY ATTORNEY GENERAL.

But instead of that we determined to trust the matter to the courts and we gave the enforcement of the antitruSt act to the tion? Attorney General's office. So far as the Attorney General's office is concerned, I have no criticism to make regarding the present incumbent, Mr. Wickersham. I believe that he has discharged his full duty under the law and that he has prosecuted these trusts with a vigor and a determination unequaled in the history of the Attorney General's office. But it must be apparent, if we finally get a decision from the Supreme Court of the United States correcting existing abuses only 23 years after the passage of the act, that there has been negligence in the past upon the part of the Attorney General's office. It is necessarily so. The Attorney General's office is an office of shifting incumbency. During one administration there were as many, I believe, as five Attorneys General. How could you have any or financial . sequence of action, any logical policy, with such constant changes.

The Attorney General's office is also, in a measure, a political office. The chief of that department is subject to the direction and control of the President of the United States. We know how in times of great political exigency these great corporations summon their powers and make even governmental administrations tremble when an election is at hand. We know that a great, vigorous, strenuous, courageous President was brought to his knees at a time of great financial exigency, when a crisis had involved the entire country in its embrace, when a process of destructi v e liquidation was threatened, when the bank reserves of the country were tied up in New York and were there loaned out in enterprises of speculation and promotion, when there was universal suspension of payment upon the part of the banks of the country, and a great and powerful corporation, the Steel Trust, anxious to absorb a rival, the Tennessee Coal & Iron Co., persuaded Mr. Roosevelt to believe that the only way of relieving the tension without panic and saving the country was to permit it to absorb the rival corporation. We all recall that he wrote a letter to the Attorney General practically instructing him to commence no proceedings regarding it

So, whilst these matters have been made public, I can not doubt that in numerous other emergencies the zeal of the administration and the zeal of the Attorney General's office was restrained by the exigency of the hour, whether financial oi:

Mr. STONE. I wish to ask the Senator a question, with his permission.

The VICE PRESIDENT. Does the Senator from Nevada yield to the Senator from Missouri?

Mr. NEWLAlU)S. Certainly.