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The CHAIRMAN. Mr. Richberg, you have touched a very vital spot in that statement, and it is a spot that will occupy our attention most assiduously.

Could you suggest to us what sort of an agency could be devised to determine at what point this concentrate would warrant the consideration of something akin to a pubile utility?

Mr. RICHBERG. Mr. Chairman, it is very dangerous, of course, to advance offhand broad suggestions in regard to legislation, but I have a few principles in my own mind in that regard.

I think one thing necessary for the improvement of the antitrust laws is to have established an authority, which I have referred to later in my statement, an authority of some sort, a Federal authority, which would have the power and duty to pass upon agreements and combinations and arrangements that were made public and required to be submitted to it, to determine prima facie whether they created a monopolistic power, and if so to call for their dissolution.

Mr. WILSON. Do you not think the Attorney General has that power now, Mr. Richberg?

Mr. RICHBERG. The point that I would want to make right here is this: that I do not think the prosecuting attorney should be the man who should do the investigating and determination of a question of voluntary compliance with the laws.

One of the weaknesses that I have seen in the Federal Trade Commission-and I may say I had something to do with the original establishment of the Federal Trade Commission, and the theory of it has always been very close to me-one of the weaknesses that I have seen is the combination of the investigating power, the consenting power we may say in approval of trade codes and industrial agreements, and the prosecuting power on the other hand.

When you begin to combine those in one public body, for one thing, you get more emphasis on prosecution than you do on peaceful settlement, because that is what the public body tends to do. There is a strong tendency to investigate and prosecute.

I think one of the weaknesses of the antitrust laws is the very vagueness and the inevitable uncertainty, to some extent, that will exist in any antitrust laws as to whether particular agreements or arrangements are really the creation or the exercise of monopolistic power. It is a very complicated and difficult question. I think it would improve the laws, the understanding of the laws, and the enforcement of the laws enormously if an authority was created to deal with that. I will pass to the next point, in which I discuss that, and then I will be very glad to return to this subject.

The CHAIRMAN. Before you leave that point, would you advocate some program of public-utility control where the market would be dominated, not by one concentrate but by three or four concentrates like the so-called oligopolies?

Mr. RICHBERG. I would say this: In my judgment, the essential objective of monopoly is price control, even more than quality and quantity.

I would say that at least this principle might be put in operation, and that is to establish an authority which, under such circumstances as the existence of a monopolistic power to control price policy, would have the power to review the prices of the industry, and to proscribe

not to prescribe the correct price, but to proscribe excessive prices— so that it would have a negative effect in preventing the maintenance of a price policy which was unfair to the consumer.

Mr. WILSON. Would that not tend toward uniformity, Mr. Richberg, in prices?

Mr. RICHBERG. Perhaps, to some extent.

On the other hand, it would not, if consideration were given, as should be given, to different production costs in different sections of the country and different distribution costs and all the other factors which would enter into a normal and reasonable and not artificially controlled price structure.

Let me just read this fourth point, because it comes into what we have just been discussing, and perhaps I have stated it in short com


I might finish my third point regarding this limitation I have suggested on the size of operations, that what I wanted to point out was that thus it would lie within the wisdom of an aggressive business management itself to restrain its expansion of power within bounds wherein it could operate free from public regulation.

Mr. KEATING. That would almost certainly happen as a practical


Mr. RICKBERG. It would be a very severe deterrent.
Mr. KEATING. Extremely so.

Mr. RICHBERG. My fourth point is this: Antimonopoly legislation should define in understandable terms-and, I will say parenthetically, so far as you can make them understandable-those combinations or agreements or concentrations of economic power which would unlawfully restrain competition, and then distinguish from them those trade codes or agreements which should not unduly restrain competition, but should improve the orderliness and integrity of business operations. There should be a complete prohibition of all secret arrangements or agreements which in any degree restrict competition in interstate commerce, with the requirement that all such arrangements or agreements must be made public, and, when involving large enterprises, must be filed by the makers with an appropriate Federal authority. This authority should then be required, before initiating any prosecution, to notify the prospective defendants of its opinion that, their arrangement or agreement, either in itself or in its practical application violates the law.

Mr. KEATING. And you would permit that to be subject to court review?

Mr. RICHBERG. Yes; I immediately follow with this.

It is not my suggestion that any Federal authority should be authorized to grant an immunity from prosecution. But it is my proposition that if agreements which are made in good faith and brought to the attention of a public authority are officially regarded as violative of the law, it would be a much fairer and more expeditious method of enforcing the law to call upon the parties themselves to abrogate such agreements, than to subject such persons to unnecessary and expensive prosecutions of dubious merit, such as now burden alike the Government and law-abiding businessmen.

Mr. DENTON. Would that be like the NRA?


Mr. KEATING. It would be a legalized NRA.

Mr. RICHBERG. No; I do not want to legalize the NRA. I have too many criticisms of NRA to wish to guide anybody back toward that direction.

But my point is this: That leaving the question of prosecution to the prosecuting authorities, there should be at least this safeguard in this uncertain realm of what is and what is not a creation and exercise of monopolistic power. There should be, at least, this safeguard that where arrangements are made and carried on publicly, when they are submitted, as they should be in the case of large import, to a public authority so that they are informed of it, so that the question of good faith is disposed of at the start, and the parties say: "This, in our judgment, is not in violation of the law." Then, if the authority to which they are submitted is of the opinion that they are violative, I would not anticipate that the Department of Justice, for example, would start a prosecution, but I would not bind the hands of the prosecuting officers by the determinations of this other body, and that is the reason I would have it a separate body because the department might say: "This has been in bad faith all along; they should have known about it. Any intelligent person should have known that this agreement was a violation of the law, and we are going to prosecute them for it."

Mr. KEATING. Of course, you would encounter some rivalry and conflict between this authority and the Office of the Attorney General. Mr. RICHBERG. Well, now, let me refer to an experience I had with the Department of Justice some years ago. I do not know how far they got with the policy, but various questions came up, and at that time in the Antitrust Division they had economic advisors, as I assume they still have, but it was also a part of their function to go into matters where there was a threatened prosecution and analyze the matters that were about to be subjected to prosecution.

As a matter of practical effect, the Department of Justice did not accept the mere good faith of the persons who were before them, but they made their own determination on the advice of their economic advisors as to whether this was a monopolistic practice or not, and they were very likely to disagree with the prospective defendants, but that opened the door in a very proper way to the consent decree to which Assistant Attorney General Bergson referred this morning, and I think referred rightly with some enthusiasm because I think the consent decrees have saved a great deal of needless litigation and have provided a fairly swift method of laying down the law and then providing for quick punishment if the law was violated.

Now, in one instance that I happen to have had some participation in some years ago, the so-called Six Percent case involving all the automobile companies, there was no question of

Mr. KEATING. Six Percent?

Mr. RICHBERG. That was on the financing of automobiles. There was no question about the publicity on it. What was done was done openly, and the companies all insisted that what they did was what they were entitled to do, and what they did was not violative of the law and was not collusive.

What happened there was that some companies accepted a consent decree in which they agreed to abandon the practice and also the practice of controlling finance companies.

I think, if I am correct in my recollection, that General Motors refused, and carried the case on through the courts, but there was a sample of complete difference of opinion on the effect and the question of violation of the law on a matter which was open and above board, and everybody knew about it.

Now, those who accepted the Government's determination in the matter, although they did not agree with it, gave up their practice. The other man had his right to fight it in court, a far more intelligent way, it seems to me, of administering the law than a great many of these hit-or-miss prosecutions which, by the time you get to the Supreme Court, then you get a 5-to-4 opinion as to whether you are right or wrong, which is pretty unsatisfactory for Government and business, and a tremendous waste of time.

I wanted to make a little concluding statement here, if I may, just to point up my own personal relationship to this situation.

In order to make this statement brief and pointed I may seem to have oversimplified my analysis of your problem and my suggestions as to a solution. For this reason I would like to explain that since 1907 I have been deeply concerned with antimonopoly legislation.

I will say parenthetically that I made a suggestion at the time the antimonopoly law was being discussed, which I discussed with the Attorney General, that being some 42 years ago, and you will see that I have been studying this problem for some time.

In 1913 I was the chief draftsman of three bills introduced by Representative Victor Murdock which provided for the creation of a Federal Commission to deal with all the problems of unfair competition and monopolies affecting interstate commerce. In this work I had the counsel and approval of a distinguished committee headed by William Draper Lewis, former dean of the University of Pennsylvania Law School, and later director of the American Law Institute. On the committee were also such eminent lawyers as James R. Garfield, former Secretary of the Interior, George W. Kirchwey, dean of Columbia University Law School, and Herbert Knox Smith, former Commissioner of Corporations; and, among other notable citizens, Charles E. Merriam, former head of the department of economics of the University of Chicago.

The CHAIRMAN. Do you have any objections to putting those bills into the record at this point?

Mr. RICHBERG. I will have to get copies.

The CHAIRMAN. We can get them.
(The documents referred to follow :)

[H. R. 9299, 63d Cong., 1st sess.]

A BILL To create an Interstate Trade Commission

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That there is hereby created and established an Interstate Trade Commission, which shall consist of seven members. On January 1, 1914, the Bureau of Corporations shall cease to exist, and all the employees, officials, funds, and records of said Bureau, and all the powers and duties thereof and of the Commissioner of Corporations shall be transferred to and conferred upon the Interstate Trade Commission. The Commissioner of Corporations holding such office on said date shall be ex officio a member of the Commission for the first year of its existence. The remaining six members of the Commission shall be appointed by the President, by and with the advice and consent of the Senate, and the terms of office of such Commissioners so first appointed shall be for two, three, four, five, six, and seven years, respectively,

from January 1, 1914, as designated in each case by the President, and thereafter all the Commissioners shall hold office for seven years and be appointed by the President, by and with the advice and consent of the Senate. Any Commissioner may be removed by the President for inefficiency, neglect of duty, or malfeasance in office. The Commission shall choose a Chairman from its own membership and appoint a secretary, who shall receive a salary of $5,000 a year. The Commissioners shall each receive a salary of $10,000 a year. A majority of the Commission shall constitute a quorum for the transaction of business, but any one of the members of the Commission may administer oaths and affirmations and sign subpenas. The Commission may, by one or more of the Commissioners, prosecute any inquiry necessary to its duties in any part of the United States into any matter or question of fact pertaining to the business of any corporation or association subject to the provisions of this Act. All orders adjudicating matters in controversy before the Commission shall be approved by a majority of the Commissioners.

SEC. 2. That every corporation or association shall be subject to the jurisdiction of the Commission which is engaged in commerce among the several States or with foreign nations, and which, by itself or with one or more other corporations or associations owned, operated, controlled, or organized in conjunction with it so as to constitute substantially a business unit, has annual gross receipts exceeding $3,000,000 from business within the United States, excepting corporations or associations subject to the Act entitled "An Act to regulate commerce," approved February 4, 1887, as amended, but including pipe-line companies.

SEC. 3. That the term "corporation" or "association," as used in this Act, shall include all incorporated associations of two or more persons organized to carry on business as co-owners with a view to profit and all unincorporated associations of two or more persons organized to carry on business as co-owners with a view to profit.

SEC. 4. That it shall be the duty of the Commission and the Commission shall have the power

(a) To determine whether any corporation or association engaged in commerce among the several States or with foreign nations, excepting corporations and associations, subject to the Act entitled "An Act to regulate commerce," approved February 4, 1887, as amended, but including pipe-line companies, is subject to the jurisdiction of the Commission, and to determine whether any particular number or group of such corporations or associations are so owned, operated, controlled, or organized as to constitute substantially a business unit, having annual gross receipts exceeding $3,000,000 from business in the United States and are therefore subject to the jurisdiction of the Commission. The determination of such questions of jurisdiction by the Commission shall be final.

(b) To require from all corporations or associations, subject to the jurisdiction of the Commission, information as to their organization, conduct, management, security holders, financial condition, and business transactions to such a degree and extent and in such form as the Commission may require, and to require from such corporations or associations complete access at all reasonable times to their records, books, accounts, minutes, papers, and all other documents, including the records of any of their executive or other committees.

(c) To make, alter, enforce, and repeal regulations proper and necessary to enforce the provisions of this Act.

(d) To require, by regulations duly made, uniform or comparable methods of accounting by the corporations or associations subject to the jurisdiction of the Commission, and to prescribe the forms of accounting necessary to that end. (e) To make public, from time to time, the information received by it in such form and to such extent as the Commission shall by regulations prescribe.

(f) To point out and make public, from time to time, specifically and separately, in such form and to such extent as in the discretion of the Commission will best advance fair, honest, and efficient business, all cases of material overcapitalization, unfair competition, misrepresentation, or oppressive use of credit of which any corporation or association subject to the jurisdiction of the Commission may have been guilty, and whenever any action of such corporation or association shall, in the opinion of the Commission, constitute a violation of the laws of the United States, to present such case to the Attorney General for prosecution.

(g) To make an annual report which shall be transmitted to Congress, setting forth data obtained by the Commission relevant to the general question of the regulation of interstate commerce, together with any recommendations for further legislation which the Commisison may desire to present.

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