not distant when a decision will have to be made between these two principles, namely, between the toleration of monopoly or extreme consolidation, subject to regulation-or, to use a briefer phrase, "regulated monopoly”—and, on the other hand, the continued attempt to prevent monopoly and to preserve in substance the competitive principle, subject to such modification as the modern development of industry or the peculiar circumstances of special cases may seem to require.

Should a trade commission succeed to the present Bureau of Corporations, this will almost certainly force a choice between the two principles now under discussion. Up to the present time the idea of a trade commission has been in the main associated with regulation rather than with maintenance of competition. Indeed, any proposal for a trade commission with substantially the same jurisdiction over private business corporations as is now given to the Interstate Commerce Commission over common carriers is in large measure a proposition for the abandonment of competition and for the acceptance of concentration and combination on the ground that regulation will sufficiently protect the public welfare. For there can be no doubt that the old idea that unrestricted competition among railroad companies is desirable has been largely abandoned. Instead, public opinion has recognized that, to a considerable extent at least, such enterprises do not permit of free competition, although even here it is noteworthy that where competition has been virtually destroyed, as in the case of certain New England railroads, the results have proved exceedingly unsatisfactory from the public standpoint. However, it may be conceded that, so far as railroad and certain other quasi-public corporations are concerned, the public has definitely accepted the principle that competition must largely be subordinated to regulation. But to assume that the same principle should be adopted in dealing with the private corporations of the country is a radical departure. It means the substitution of a marked degree of paternalism for that freedom of individual action under which, despite admittedly flagrant abuses, the country has attained an almost unparalleled prosperity.

Undoubtedly there are industries outside the field of railroad transportation and other public-service enterprises where the competitive principle is not entirely applicable, but these instances present exceptional problems to be dealt with on their individual merits.

The recent decisions under the Sherman antitrust act have demonstrated that that statute is effective to reach those consolidations which so cross the border line of monopolistic control as to be detrimental to the public interest. It is remarkable that after years of effort to maintain the vital principle of the Sherman antitrust act the first

real success in this direction, so far as industrial combinations are concerned, should be accompanied by a rather widespread demand for the practical abandonment of that principle and the substitution therefor of regulated monopoly. It should not escape notice that among the foremost advocates of such regulated monopoly are the representatives of some of the most powerful consolidations of the time.

One fact seems obvious: The opportunity for regulating monopoly can not be lost by attempts to maintain the competitive principle. If, on the other hand, the experiment first be tried of regulating monopoly, there is grave danger that competition may be destroyed to an extent which would make its restoration exceedingly difficult. Certainly it seems the part of wisdom, just as the competitive principle has been sustained and vitalized by the highest court of the land, to continue its application under new conditions, instead of hastily abandoning it for an experiment involving obvious difficulties and grave dangers.

REVIEW OF BUREAU'S WORK.

The creation of the Bureau was undoubtedly attributable in large measure to the general public concern which developed in the late nineties over the rapid growth of industrial consolidations. The organization of certain "trusts" from time to time during the eighties, or earlier, was followed in 1890 by the enactment of the so-called Sherman antitrust law, which, however, largely on account of early decisions thereunder, resulted not so much in checking the growth of consolidations as in changing their form. In the late nineties there came the phenomenal concentration of industrial capital, frequently referred to as the "consolidation craze." The distrust of this development was reflected in, and no doubt partly responsible for, such discussions as those of the Chicago Trust Conference in 1899 and again for the creation of the Industrial Commission, which devoted especial attention, among other subjects, to industrial combinations. From time to time, in reports of public officials and in presidential messages, as well as in writings and statements of private individuals, and in the public press, there was set forth a demand for some power or tribunal which should deal with the new economic problem with which the public was thus sharply confronted. Finally, in December, 1901, there was introduced in the United States Senate a bill (No. 569) "to establish a Department of Commerce." This bill, with the title amended to read "Department of Commerce and Labor," was passed in January, 1902, and referred to the House. In January, 1903, a report was submitted by the House Committee on Interstate and Foreign Commerce, in which for the first time the Bureau of Corporations was provided for. The House

bill was not accepted by the Senate, but in February, 1903, the bill finally enacted was reported out of conference and speedily passed by both Houses. On February 14, 1903, it received the signature of the President of the United States.

SCOPE OF THE BUREAU'S WORK.

Thus far the work of the Bureau of Corporations has been economic rather than legal. In large part it has consisted of special investigations of conditions in certain leading industries where a dominating position has been secured by some one great corporation doing an interstate business. To a considerable extent these investigations have been concerned with industries involving natural resources. Thus, the most extended investigations of the Bureau have been those concerned with the petroleum industry, the steel industry, and the lumber industry. Another important, though somewhat less extensive, investigation involving the control of a natural resource, was that on the development of water power. Another investigation of great public importance, because of its direct relation to the agricultural interests of the country, is that of the International Harvester Co. Certain other investigations have been especially concerned with conditions involved in the sale and distribution of articles of very general consumption, as, for instance, those of the beef industry and the tobacco industry.

In all of the investigations above noted the concentration of ownership or control has been a very important feature. In the case of the Bureau's investigation of transportation by water the element of control was involved in the ownership of terminals and water carriers; this investigation also had a vital bearing on the entire subject of Federal development of waterways. The Bureau's study of the rules and practices of cotton exchanges involved a problem differing rather sharply from most of its work, but one of very great public interest, and of direct concern to the cotton producer.

A special feature of the Bureau's early work was a study of the corporation statutes of the various States. This developed somewhat naturally into an investigation of State taxation of corporations, on which the Bureau has already submitted four installments of its report, with the intention of covering the entire country in a similar

manner.

The last paragraph of the act creating the Bureau and defining its duties with respect to the investigation of corporations expressly mentions corporations "engaged in insurance." In the early years of the Bureau's existence considerable attention was paid to that subject. Later on it was definitely decided to abandon this field, owing to doubtful jurisdiction. Insurance has been repeatedly held by the Supreme Court of the United States not to be commerce.

DISCRIMINATING CHARACTER OF THE BUREAU'S WORK.

One of the first essentials in the conduct of the work of the Bureau has been the treatment of each individual investigation on its own merits, with the scientific aim of ascertaining the exact facts. This has resulted in a marked degree of discrimination and in clear definition of the particular principles involved in a given case. Striking instances of this are found in the water-power industry, where it was readily seen and clearly set forth that a water-power privilege is inevitably in the nature of a local monopoly, and that the problem of control of water powers must be considered with this fundamental fact in view. It is obviously impossible for a water power in Michigan to compete with a water power in South Carolina. Moreover, even within a circumscribed area, a given water-power privilege ordinarily finds no competition from another water power in its own market. These facts have a vital bearing upon the water-power problem, which is clearly recognized in the report.

Again, in the case of standing timber it was found that the distribution of timber lands from the public domain in small parcels, or under conditions such as those imposed in several land grants which apparently insured the eventual widespread distribution of this timberland in competitive ownership, had been speedily followed by a marked degree of concentration. Furthermore, owing to the rapid depletion of the supply of standing timber its value tends rapidly to increase under any form of ownership. In this case the Bureau took the stand that the remnant of the public timber supply should be retained in Government ownership, and that such ownership should extend to certain other timberland, such, for instance, as that recovered under forfeiture suits, with, moreover, an indorsement of the principle of Government reforestation in the hope of increasing the supply of publicly owned timber. It might seem at first sight that this is directly in conflict with the foregoing indorsement of the competitive principle. As a matter of fact, it is probably safe to say that few influences are contributing more to the present discontent and to the agitation for indiscriminate Federal control of business than the rapid increase in the cost of those necessities of life, the ownership of which is becoming largely concentrated. Among such commodities standing timber is peculiar, if not unique, in that the supply is practically known, thus relieving the owner from those risks attendant upon new discoveries which occur in the case of many of the mineral resources, while its value is rapidly increasing because of the depletion of the supply and the growth of population. Some of the largest holders of timber, moreover, show practically no disposition to develop by manufacture, but instead are holding for the expected further increase in value. To dispose of the remnant of publicly-owned timberland under the old methods, in the face of

these conditions, is therefore little more than a gift from the public treasury, which experience has shown is almost sure to benefit not a multitude of home-seeking settlers but a comparatively few timber speculators. The Bureau did not advocate Government ownership of timber in general, but simply the retention in public ownership of certain timber until the time of actual use. This recommendation, instead of being an indorsement of the principle of Government ownership in general should have a contrary effect by preventing conditions for which Federal control and Federal ownership are now so often sought as a panacea.

Again, in the case of the Bureau's investigation of cotton exchanges, a sharp distinction was drawn between speculation itself and the rules under which it was conducted. Whereas for years there had been persistent attack upon the speculative system as a whole, with a minimum of practical result, the Bureau's report, by pointing out specific evils and abuses of the system, as applied to cotton, has been followed by a very marked improvement in conditions, with the prospect of still further reform in the future.

The discriminating character of the Bureau's work is, furthermore, well illustrated in the case of its report on costs of production in the steel industry. Here it is shown that the book costs frequently are more or less meaningless because of their inclusion, for the larger companies, of very large amounts of intercompany profit, particularly in the case of raw materials of integrated concerns; that is, those concerns which link up with the various successive stages of production. At the same time, while pointing out this fact, the Bureau was careful to show that the costs arrived at by eliminating these intercompany profits must be related to the entire investment and not simply to that involved in the final process of manufacture. The Bureau's discussion of ore values pointed out distinctions that before had hardly been recognized.

RESULTS OF PUBLICITY.

As already stated, the vital principle contemplated in the organic act was that of publicity. The act provided that the Bureau of Corporations should make diligent investigation of the conduct and affairs of corporations engaged in interstate commerce other than those subject to the jurisdiction of the Interstate Commerce Commission, and report thereon to the President of the United States. For some time thereafter, both in annual reports of the Bureau and in presidential messages, special emphasis was laid upon publicity as the chief activity of the Bureau. It seems worth while, therefore, to show briefly what has been accomplished under such publicity.

There can be no doubt that the results have been substantial. The interest manifested in the Bureau's various reports has been referred