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Section 5 provides that a final judgment or decree in any suit brought by the United States under the antitrust laws, to the effect that the defendant has violated those laws, shall be prima facie evidence against such defendant in any suit or proceeding brought by any other party against him or it under the same laws. The House bill would have made such judgment or decree conclusive evidence, but the words prima facie were substituted in the Senate. No one can seriously doubt the propriety of this new provision. It is a needless burden upon a state, or upon a person injured by a violation of the anti-trust laws, to have to prove independently that the trust laws have been violated when the matter has already been determined in a government suit.

III. MISMANAGEMENT OF RAILROADS

The revelations of the Pujo investigation, of the New Haven investigation and of other recent investigations with reference to mismanagement of railroads and the mulcting of their stockholders have led to some drastic provisions, placed, perhaps somewhat illogically, in the new anti-trust act.

Those investigations had shown that great banks had often made unreasonable gains from the financing of railroads; that dummy construction companies and equipment concerns in which railroad officers were interested had made fat profits at the expense of the stockholders of the road. The anti-trust bill, as it passed the House, simply prohibited interlocking of directors or officers between a railroad and a concern of the kind specified with which it did business. In the

Senate, however, it was suggested that there might be cases where such relations were proper and desirable and that regulation rather than prohibition was called for. Substantially the provisions adopted by the Senate have now become law (§ 10). No common carrier may have dealings in securities or in supplies or may make contracts for construction or maintenance, to the amount of more than $50,000 in any one year, with a concern in which any director or any of certain specified officers of the railroad is interested, except under the conditions specified in the act.

These conditions are, virtually, competition, publicity and supervision by the Interstate Commerce Commission. If the concern in question is the most favorable bidder under competitive bidding, the railroad may do business with it, but it must report the transactions to the Interstate Commerce Commission in detail and the commission may investigate to see whether there has been any abuse. Penalties are provided for violation of this section.

Another outcome of the recent revelations of railroad abuses is in section 9 of the anti-trust act, which declares that an officer or director of a common carrier who embezzles, steals, abstracts or wilfully misapplies or wilfully permits to be misapplied ”its money, securities or property is guilty of a felony. Such acts are, in general, already made crimes under the laws of the individual states, but it will perhaps be possible for the federal government to enforce them more effectively in the case of interstate carriers.

IV. THE FEDERAL TRADE COMMISSION

By all odds the most important feature of the new trust legislation is the creation of a Federal Trade Commission. The commission is composed of five members, appointed by the President with the advice and consent of the Senate. Not more than three may be of the same political party - a provision which is of doubtful merit, as it really recognizes party lines in the administration of that which should be looked upon as wholly outside of those lines. The term of office is seven years and the salary $10,000. The commission is in fact to be a body of similar dignity with the Interstate Commerce Commission, tho the latter has seven members.

The commission is to take over the Bureau of Corporations and the head of that bureau, Honorable Joseph E. Davies, has been appointed a member of the commission. The expert employees of the bureau will be a useful nucleus for the force of the commission. It may be noted that the special experts and examiners which the commission is authorized to employ are exempted from the classified civil service. It is a long step from a bureau of corporations headed by a single commissioner at a salary of $5000 to a board of five members, each paid twice that salary. Useful as have been the investigations of the bureau, the public has a right to expect from this great new connission results of a far more important character.

The new act contains full provisions as to the investigatory powers of the Trade Commission. In substance it gives the commission complete power to investigate

the affairs of all corporations engaged in interstate or foreign commerce, except common carriers and banks. The commission and its agents have access to the books and records of corporations and may require by subpoena the production of any or all of their papers. Witnesses may also be required to appear and testify. There are the usual provisions regarding testimony tending to incriminate its giver; he may not refuse to testify on that account, but is thereafter immune from prosecution.

The investigatory powers of the commission thus far mentioned are not materially greater than those heretofore possessed by the Bureau of Corporations. But the law creating that bureau made no definite provision for annual or special reports from corporations, and the general powers of investigation conferred on it have never been assumed to empower the bureau to demand such reports. The new law, however, explicitly authorizes the Trade Commission to require annual or special reports from any corporation engaged in interstate or foreign commerce except banks and common carriers. The commission is not compelled to call for reports from every corporation; it can determine what classes of corporations or what particular corporations must report and also determine the scope and character of the information to be furnished. The commission may require the reports to be under oath.

These powers of the commission with respect to reports from corporations are approximately the same as those given to the Interstate Commerce Commission with respect to railroads. The Trade Commission, however, lacks the power possessed by the latter to prescribe systems of accounts for corporations and to

prevent them from keeping other accounts. It would doubtless be premature to give the Trade Commission that power. To devise satisfactory accounting systems for the multiplicity of corporations in different lines of business would take years. Obviously the accounts cannot be uniform to any such degree as those of railroads. For this reason the reports to be required from corporations will necessarily at first be less detailed than those made by railroads, and will probably not be so reliable, even tho made in entire good faith.

The new act prescribes penalties for failure to make reports required by the commission or for making false reports. But it goes much further. Any person who wilfully makes or causes to be made any false entry in any account or record kept by a corporation is declared guilty of a misdemeanor. So too is any one who neglects or fails to make full and correct entries in such accounts and records of all facts and transactions appertaining to the business of the corporation. This certainly is a drastic provision and will have to be interpreted with reasonable liberality. Finally, penalties are prescribed for altering or falsifying any documentary evidence of a corporation or for removing it out of the jurisdiction of the United States. The salutary character of these provisions is obvious.

The information secured from the reports of corporations to the Trade Commission will not merely be of great aid to that commission itself in the exercise of its other powers, but if the more important data are published they will serve other most useful purposes. It has been a common contention that publicity alone will go far toward preventing excessive charges and other corporate abuses. The benefits of publicity in this

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