ticularly as to the provisions regarding the compulsory attendance of witnesses and production of evidence. A number of legal questions indirectly affecting the work of the Bureau have been considered, and further examination made of the State and Territorial statutes relating to industrial corporations and their organization. The digest of all anti-trust legislation has been completed, and is now practically ready for publication.

SPECIAL INVESTIGATIONS.

1. Beef industry. The published portion of this report dealt chiefly with the question of prices and the margin of profit in the packing business. In the course of this investigation the Bureau had also obtained much information bearing upon the question of combination as between the large packing companies. At the time of the publication of the report the Department of Justice had under advisement proceedings against certain packing companies and their officers for violation of the Federal anti-trust law. It was obvious, therefore, that the publication of the information possessed by the Bureau on the subject was inexpedient at that time, and accordingly, by the direction of the President, all the information possessed by the Bureau on the subject of such combination was withheld from publication. Although this fact was set forth in the published report, the failure to treat therein of the question of combination was the subject of criticism. A further ground of criticism was the failure of the report to treat of discriminations by means of private car companies. At the time of making the report, the extent and nature of governmental control over such companies was the subject of pending litigation, and it would have been improper to anticipate the decision by assuming in advance any jurisdiction over them.

Other criticisms were directed at the accuracy of the figures and conclusions relating to prices and profits, but only a few tended to disprove any specific statement in the report, and those particular criticisms were based upon figures secured by estimates, or taken from a very few isolated instances, and hence did not disprove the results stated in the report, which were based on general averages obtained from figures covering the entire industry and the slaughter of several millions of animals. In no case was any information thus given that would be of real assistance in correcting figures had they been found inaccurate.

The investigation developed the line of division between the work of the Department of Justice and the Bureau. The Bureau, in obtaining facts upon which the President may make recommendation to Congress, necessarily will obtain facts which might require prosecutions under the anti-trust law. As stated in my former report, such facts must be reported to the President for such action as he may

deem necessary to take. He may find it necessary to report them to the Attorney-General. The Department of Justice and the Bureau often deal with the same questions, but for different purposes and in different ways. The Department of Justice has to do with prosecutions for violation of law-this Bureau obtains facts for Congressional consideration; the lines of work may at times cross and overlap, but they do not conflict. If prosecutions are pending or intended, the Bureau would of course not take such action as would interfere therewith. In this particular investigation cases were pending in the courts under the direction of the Department of Justice; hence it was not proper that the Bureau should use its powers in such manner as would embarrass the Department of Justice in its action relating to combination or other violation of law.

2. Oil and steel industries.-The House of Representatives passed two other resolutions directing inquiries into the oil and steel industries. On both of these subjects the Bureau had already made extensive inquiries, and was ready to take up immediately, in addition to the general work, the special lines indicated by the resolutions. A special report on the oil industry will shortly be made to the President.

3. Other industries.-Investigations of the sugar, tobacco, coal, and lumber industries are in progress.

4. Insurance. The compilation of State insurance laws has been finished, and some special phases of the question of Federal supervision have been examined, but in view of the decisions of the Supreme Court I have not felt warranted in trying to assume jurisdiction over insurance companies for the purpose of investigation. The fact that State supervision has failed to prevent great abuses in the management of some companies does not of itself justify Federal action. It must be shown, first, that insurance is subject to Federal regulation under the commerce clause of the Constitution; second, that Federal supervision would be of such a character as to correct existing abuses and prevent future ones, and, third, that such supervision would result not only in greater security to policy holders, but would relieve them, through their companies, of the great and unnecessary expense of duplicated inspections and investigations by different States. Seemingly the most effective way to settle the question is for Congress to so legislate upon the subject as to afford an opportunity to present to the Supreme Court the question whether insurance as now conducted is interstate commerce, and hence subject to Federal regulation.

The position of the Bureau at the time of its creation was unique. It owed its existence largely to a public feeling arising from unusual industrial developments. Public opinion thereon was vigorous, but

confused and vague. In general, the tremendous concentration of industrial power, the obvious use, in many cases, of improper industrial methods of competition, and the instances of clearly unsound or fraudulent finance connected with corporations, led to the general belief that there had arisen a new industrial problem, a set of conditions not adequately met by existing laws. No solution of this problem had then received general acceptance, nor had the problem itself been clearly stated. Numerous experiments at solution had been made by way of anti-trust laws, but the admitted futility of most of these laws led only to the negative conclusion that such was not the way to treat the great industrial changes of which every one was cognizant.

Upon only one point can it be said that public opinion was fairly clear and unanimous, and that point was the desire for " publicity "in other words, the desire for information. It was not clearly understood to what use this information should be put, nor, indeed, what subjects it should cover; but the demand for accurate information was fundamentally sound. The policy of the Bureau has been framed in accordance with this demand. Its field may be divided into subjects relating to law on the one hand, and subjects relating to economic industrial facts on the other. It must examine and compare the statutes under which the corporations are doing business with industrial and statistical facts.

A statute is the formal expression of public opinion. Hence statutes designed to improve industrial conditions will not be based upon sound economic principles unless public opinion which they express is the result of an accurate knowledge of industrial methods. Not only is legislation dependent upon public opinion, but likewise moral standards in business and the rules of daily commercial intercourse, which can not be enforced by statute, are created and sustained by public opinion. Current events have strikingly demonstrated the tremendous reformative force of public opinion without the intervention of law. Existing business methods will be changed in accordance with public opinion. Heretofore the wide scope of corporate operations and the baffling diversities of Federal and State laws have made an intelligent public opinion impossible. The average man can easily judge of an isolated commercial transaction between himself and his neighbor, but he utterly lacks the statistical and legal information necessary to view justly the operations of the great corporations doing business throughout the country.

Industrial conditions are extremely complex, far-reaching, and composed of a multitude of detailed facts. To form an intelligent opinion of permanent industrial tendencies it is necessary not only to know accurately all the facts found in industrial conditions, but especially to be able to arrange these facts in their proper relations.

Many mistakes of public opinion have been due to a failure to separate the essential from the non-essential, to give proper weight to the various facts. Much legislation has been enacted which is futile and often harmful because directed either at the modification of great economic laws, which can not be modified by statute, or at the treatment of sporadic and sensational facts. Estimates, guesses, prejudices, and limited individual experience have been the bases of action, rather than broad and final conclusions based upon accurate, properly arranged masses of facts.

The Bureau, therefore, has endeavored not only to obtain accurate, reliable information, and facts sufficient in number to be representative, but also to draw conclusions that shall represent permanent tendencies rather than individual instances. To this end it has, with a force of carefully trained employees, taken up given industries dealing in important staples, and collected statistics and facts relating thereto; has then digested this information so as to obtain what might be called reliable general averages, and has endeavored to deduce from them conclusions as to permanent corporate methods and tendencies.

It is strongly felt that preventive rather than remedial means must be used in dealing with the entire problem. The Government must deal beforehand with causes, not merely afterwards with their effects. In order to ascertain proper methods of prevention it is necessary to know the causes of industrial evils. The work of the Bureau has brought out, to an extent not reached before, the actual methods used in certain industries; their methods of competition, of economies in production and distribution, of discriminations in distribution and transportation; and also the results of such methods in obtaining or tending to obtain monopolistic control. Its work has shown, in the case of the several great industries already investigated, or now under investigation, the fact that the predominant control enjoyed by certain great concerns is based usually upon one or two, or a very few, single factors, such as the control of transportation, of trade-marks, of patent rights, of raw material, special legislation, or a combination of one or more of these factors.

Such information will afford the basis for an intelligent public opinion, and it will constitute "publicity" of a sort that will be efficient in correcting some prevalent abuses. An illustration of this principle has already been obtained in numerous cases where the Bureau has been investigating oppressive and unjust methods of competition. In a considerable number of cases the victims of such methods have informed the Bureau that the mere investigation of these facts has led to a discontinuance of the methods, and have assured the Bureau that from their individual standpoint great good has already resulted to them from the Bureau's work.

The year's work upon the investigation of special industries and particular corporations has strengthened my conviction that no permanent remedy for existing industrial evils can be expected until Congress exercises more fully its power of affirmative action under the commerce clause of the Constitution. No fact of industry is more obvious than that modern business has outgrown and wholly disregards State lines, and that the jurisdictions of single States, as applied to the operations of a great interstate business, are futile and even harmful. A close study of the methods of organization and operation of the greater industrial corporations, their relation to transportation companies, both rail and water, their methods of competition, the extension of their business throughout many States, and the sale of their commodities throughout the world proves that they have actually gone beyond the possibility of proper supervision or control by the single State which gave them corporate existence. Their relation to the transportation companies alone is a sufficient reason for bringing them under Federal regulation. It is idle to claim that the railroads are wholly at fault for rebates, discriminations, and other devices for afforing to one shipper improper advantages over a competitor.

It is impossible to prevent such abuses by purely penal legislation. This does not mean that the enforcement of the anti-trust law has not been beneficial, for it has. Its enforcement has compelled some respect for the law, which, until recently, was wholly lacking. But so far as effecting a permanent change of the conditions which that law denounces, but little has been done. The imposition of a penalty upon a combination simply drives the men in that combination to the formation of another device for accomplishing the same purpose, and this for the reason that combination is an industrial necessity, and hence will be engaged in despite penal legislation.

By the exercise of the affirmative power granted under the commerce clause Congress can with safety provide a method by which reasonable combination may be permitted. This method must be founded upon an act of the Federal Government which will give to corporations engaged in interstate and foreign commerce standing and recognition under a Federal act. It may be accomplished either by a license to engage in such commerce or by a charter granted by the Federal Government. Under either form Congress should provide all requirements necessary to insure publicity and honesty in promotion, organization, capitalization, and conduct of the corporation, reserving to, the Government the right of inspection of the books of such corporation and the further right-the most important of all to stop the operations of such corporation if it becomes a violator of the Federal statutes, at all times preserving to the corporation and its stockholders the right of judicial appeal against the improper exercise of executive authority.