original drafts of the laws show beyond discussion that the proposers of this legislation had in mind measures which would mete out retributive justice to an extent elsewhere imposed only upon high crimes and misdemeanors. Even the milder type of procedure implied in the arbitrary power to fix prices or to appoint supervisors has been eliminated in the laws as actually passed, and the harshness approaching a state of vindictiveness so apparent in the Sherman Law, is altogether wanting here. In a report by a Committee of Congress, the language employed is:

"✶✶✶ it was thought best, especially in view of the experimental state of this legislation, that the harshness of the criminal law should not be applied, but the enforce* should be given to the Federal Trade

ment

Commission."

While the passage quoted is specially directed to one class of provisions of the Clayton Law, the attitude is that adopted by Congress when approaching the subject as a whole.

It must be understood, however, that this attitude was not intended to produce a body which would be incapable of enforcing as well as promulgating its decrees. At another place in the record of the conferences and discussions leading up to this legislation, its purpose and purport are shown to be by no means of a passive or nugatory character:

"The trade commission would constitute what might be termed a 'commercial police,' to maintain a constant guard over our vast and complex interstate commerce. It would be a strong arm to aid the courts in the enforcement of the laws passed by Congress. The trade commission *** is just as much needed, as an aid to our national commerce, as policemen are needed in the enforcement of traffic regulations in a great city. It would be just as absurd to expect the courts to enforce adequate laws for the protection of interstate commerce against unfair competition and monopoly, without the aid of such a trade commission, as it would be to expect a police court to enforce traffic laws without the aid of policemen-policemen, too, with power

3 Report No. 698, 63d Congress, 2d Session,-Senate Committee on Judiciary, July 22, 1914.

to make and enforce traffic rules, and not merely power to 'investigate and report." "

Merger of Bureau of Corporations Considered.-Perhaps some color might be lent to the suggestion that the power of the Commission is mainly ministerial by the fact of the merging therewith of the Bureau of Corporations. The latter body was created under Act of February 14, 1903. Its powers were rather extensive within its own sphere, i. e., the investigations of the organization and management of corporations, to the end that the President might make recommendations to Congress for new legislation. The great defect was in the failure specifically to confer upon it power to compel annual reports from industrial corporations engaged in interstate commerce."

In 1913, the Bureau was placed under the jurisdiction of the Department of Commerce, and by Section 3 of the Federal Trade Commission Act its powers are transferred to and merged in the jurisdiction conferred upon the Federal Trade Commission.

System of Interstate Commerce Commission Followed.In the details of organization of the Trade Commission, the provisions of the act (with its amendments) creating the Interstate Commerce Commission are followed wherever practicable; and the innocuousness of the limited scope of power which characterized the Bureau has ceased to pervade the legislation whereby the Anti-trust laws are now sought to be enforced.

Supplementary Legislations Suggested by Statute.-While the infliction of the usual penalties incident to criminal statutes is in general avoided, there are frequent intimations that severer measures will be resorted to, if experience proves they are required to accomplish results. In fact, the Federal Trade Commission Act, Section 6, paragraph (f), makes it obligatory upon that body when reporting to Congress, "to submit therewith recommendations for additional legislation."

With these introductory comments upon the comparative predominance of civil over criminal features in the law supple

4 Report No. 533, 63d Congress, 2d Session,-House Committee on Interstate and Foreign Commerce, April 14, 1914.

5 See Act creating the Bureau of Corporations, Appendix E, pages 284-5. 6 Interstate Commerce Act, entitled “An Act to Regulate Commerce," approved April 4, 1887,-24 U. S. Statutes at Large 379. For text of original act, see Appendix O, pages 345-361.

mentary to the Anti-trust laws, and the accompanying Act which formulates the machinery for the enforcement thereof,-we now proceed with the specific consideration of the subject-matter of this chapter.

1. FEDERAL TRADE COMMISSION ACT.

Essential Element in Statute.-The law itself is mainly declaratory of a new ethical code in business dealings. The essential feature is contained in Section 5, paragraph 1:

"That unfair methods of competition in commerce are hereby declared unlawful."

Method of Procedure.-Various steps are required, as therein provided, to bring the defendant before the Commission and after a trial, to authorize the issuance of a restraining or mandatory order, where the charge is proven to the satisfaction of the Commission by competent evidence. Until reversed or modified these orders have all the force and effect of judgments by a duly constituted court, with the exception that infractions thereof are dealt with by the Federal courts, and not by the Commission itself. So far the administration of justice is confined to the civil side of the tribunals, and the enforcement is accomplished entirely by restraining orders of the Commission or courts, with the right upon the application of the Attorney-General, at the request of the Commission, to add the compelling force of writs of mandamus, as well. Willful failure of witnesses to attend before the Commission and produce documents and papers, is also punishable by proceedings for civil contempt, Section 9, paragraph 2.

Right of Enquiry into Corporation's Affairs.-The right to enquire and conduct searching examinations is an essential prerogative and characterizing feature of the Commission; without it important provisions of the extensive jurisdiction conferred by Congress would accomplish no definite end. Consequently, the power to require the attendance of persons and the production of documentary evidence is not left to civil means of enforcement,willful failure to testify is by Section 10, made a criminal act, punishable as a penal offence; in this instance the maximum fine is $5,000, while the prison term that may be imposed is one year.

7 Federal Trade Commission Act, Section 9, paragraph 4, page 256, post.

Correctness in Corporate Records Required.-In and by the terms of paragraph 2 of Section 10, practices not altogether unknown in corporate management or preparation of documents and records for an impending investigation or suit, will in future be rendered more dangerous even if they do not become less frequent.

Presumably beneficial results will ensue. In brief, “doctoring" records, concealing or mutilating them or removing them outside of the jurisdiction, will in future be subject to a penalty more severe than in the event of mere refusal to testify or to produce documentary evidence at the Commission's command.

The essential points in this important provision are that any person who shall—

"willfully make or cause to be made, any false entry or statement of fact in any report required to be made by this Act, or who shall willfully make, or cause to be made any false entry in any account, record or memorandum kept by any corporation subject to this act, or who shall willfully neglect or fail to make, or to cause to be made, full, true and correct entries in such accounts, records, or memoranda of all facts, and transactions appertaining to the business of such corporation, or who shall willfully remove out of the jurisdiction of the United States, or willfully mutilate, alter or by any other means falsify any documentary evidence of such corporation, or who shall willfully refuse to submit to the Commission or to any of its authorized agents, for the purpose of inspection and taking copies, any documentary evidence of such corporation in his possession or within his control, shall be deemed guilty of an offence against the United States,"

is punishable by a fine of not less than $1,000, nor more than $5,000, and is liable to a period of imprisonment that may extend to three years. The enforcement is by criminal prosecution in any Federal court of competent jurisdiction.

This enactment creates a situation which cannot fail to result in a new era in respect to gaining public confidence for corporate records and accounts. Honest book-keeping and maintenance of records at once accurate and complete are the badges of permanent success in business. While it is true that maintenance of accurate records and accounts may not of itself imply a high

standard in the transaction of business affairs, such a means of procedure will tend to create an atmosphere that is opposed to "unfair methods of competition in commerce." Plain dealing will be more congenial to such control and flourish far more naturally than amid an atmosphere where falsification, mutilation or removal of records and books of accounts is permitted or desired.

If Demanded, Reports by Corporations Required.-As we have seen, the right to demand the preparation of reports by corporations and the filing thereof with the Commission was specifically included within the statutory enlargement of the system of corporate control it acquired when the right to investigate corporate affairs was transferred by amalgamating the Bureau of Corporations with the Federal Trade Commission. This right to demand reports by corporations is not, however, enforceable by criminal proceedings. Disobedience, if continued for a period of thirty days after the date fixed for such filing, is made the basis of a civil action to recover $100 for each day of the continuance of such failure, see Section 10, paragraph 3. In large corporations, however, this item of expense would not be very burdensome, and probably it will later be made a criminal offence.

Unauthorized Publicity Penalized.-Since the publication of the reports or other informations is made discretionary with the Commission, excepting that it is positively prohibited from disclosing trade secrets and names of customers (paragraph b, of Section 6), the ability to keep private its counsels, proceedings and records, is an important factor in the successful carrying out of the legislative scheme. Accordingly, a criminal penalty consisting of a fine not exceeding $5,000, together with maximum imprisonment of one year, is affixed to conviction of any employee of the Commission guilty of unauthorized disclosure of information, unless thereto directed by a court.

Penalties are Cumulative.-These penalties are cumulative so far as the various Anti-trust laws and acts to regulate commerce are concerned. Section II declares that nothing contained in the Federal Trade Commission Act shall be construed to prevent or interfere with the enforcement of those laws; nor shall such construction alter, modify, or repeal those statutes or any part thereof.

8 For provisions creating Bureau of Corporations, see Appendix E, pages 284-5.