section:-"Every person who shall monopolize," apply to one who became the sole trader because his competitors went out of business without his having anything to do with it? It is apprehended not -no one certainly could be punished for the legal acts of another done without participation by the former. Yet in sober fact would not the monopoly be greater, and the effects worse, and is not this the thing that is really feared,-the unregulated big thing,―the thing that has, because of its size, extent of operation, and interest, the power to do harm if not harnessed? And what is here said of the telegraph company applies to railroad, trading, or manufacturing as well. Most people are more afraid of one uncaged lion than of a thousand properly caged, and the danger is vastly greater. The road to regulation through anti-trust, anti-contract-in-restraint of trade, and anti-monopoly acts, is long, uncertain, inefficient, and inadequate in the end,-and may destroy the very thing, which if properly regulated, is desirable or necessary for the welfare of all.

But suppose all these were held to be within the act as it now stands, or one that might be made. What would be the result? The vast bulk of our business would be under the ban of illegality, and have to be reorganized. How? Under the same state corporation laws as before, or as they might be amended to meet the changed conditions. Has any one any reason to believe the new regime would be better than the present? Would not the same diversity of view, policy, legislation, and result as now exist soon grow up again if organization had to proceed under state laws.

After all does it not come back to a question of size and power? Can anything less than marking a limit as to size, or strict regulation otherwise, be effective? No state can fix a limit of size except for its own corporations; and no state can fully and completely regulate any but its own corporations. Never can or will the action of all the states be uniform in these particulars. As has been said before, the thing to be regulated is the big thing, the big, menacing corporation; its national commerce is to be regulated; its holding of stock in other companies is to be regulated; its power to consolidate is to be regulated; its issue of shares is to be regulated; its promotion and organization are to be regulated; its capitalization is to be regulated; its competition with others throughout the country is to be regulated. These are the things necessary to be done for the welfare of all. One state might do all these things except regulate the interstate commerce of the corporation it formed,-and do them well. Another state might do the same things,—but do them

wrong; and in the forty-five states there would be some that would do them all wrong; that is the condition in which we now are and from which we seek relief.

3.

The third method. A national incorporation law. No power or authority to do these in the proper and uniform way resides anywhere except in the National Government. The government, of course, could act either by prescribing the conditions under which corporations to engage in interstate commerce might be formed by the states, and forbid others from carrying on such commerce; or might itself provide for the formation of corporations to carry on the interstate commerce of the country. In the former case, in every particular except what the government prescribed, there would be variation among the states that would breed differences, conflicts, and litigation; and besides the state alone would have direct and positive authority over the corporations it created. Of what possible advantage could this be, except to retain certain taxing privileges, many of them unjust, or to retain litigation within the state courts. But if the foregoing enumerated things are necessary to be regulated in order to give relief from the ills we suffer, the conditions necessary to prescribe would be so nearly equivalent to passing an incorporation act by the government itself,-without retaining control over the creature created, that it seems to me it would be much wiser to enact a national incorporation law, in such a manner as to give the National Government unequivocally the ordinary powers of complete control that any state has over its own corporations.

That such an act will, in the future, after we have tried and failed in every other way, be the only simple and adequate remedy is generally admitted by several who have closely studied the matter, yet nearly all shrink from advocating it because of various imaginary dangers, some of which may be enumerated: (1) Enormous centralization of our government: (2) Overburdening the United States courts. (3) Substantially bringing all our property and civil rights under the jurisdiction of the National Government. Mr. Stimson has stated the general objections as strongly as any

"The notion of 'state rights,' what remains of it, would be riddled. Ninety per cent of the business of the people would be taken from the control of their own states and their own courts and put under the control of the

1 Indus, Com. R. Vol. XIX, p. 645; Mr. Stimson's Opinion as Advisory Counsel, to the Commission, Vol. XIX, p. 711; Mr. Huffcut, Statement to Commission, Vol. XIX, p. 722.

federal government. For in regulating these federal corporations Congress would control not only their relations with sellers and buyers,1 with their creditors and stockholders, but with the labor they employed, national eight hour laws would become possible without constitutional amendment."

To these something in the way of answer may be suggested. (1) There is no concentration of power,-all that is to be exercised' now exists in the National Government; there is therefore no shifting of the balance of powers. (2) It has become apparent that the state governments are unequal to the task,-because they have not, and never since the Constitution have had, the power. Because they can not exercise the power, shall the National Government refuse to exercise it when the occasion demands, and when it was conferred upon that government to be exercised "in order" to promote the general welfare" as much as any other power?X (3) But all the civil rights that are to be so seriously affected, we now hold and always have held, under the same possibility of being limited, expanded, and controlled for the benefit of all, when occasion demanded.+4) But also, it is "we the people" that control in the Federal Union as well as in the states. The National Government was created to do for the benefit of all, what the states could not do, within the terms of the Constitution. (5) The burdening of the courts might occur temporarily, but not likely to any greatextent. Complexity, diversity, conflict, uncertainty, beget litigation. Simplicity, uniformity and certainty have the reverse effect. But even if otherwise the creation of the necessary courts is not often made a plea for refusing to relieve a threatening condition of national extent and operation. (6) Such, or similar, dire results !! were predicted from the establishment of National banks, but they proved to be imaginary and not real.

There seems to be but one supreme legal test involved in this method, and that is could the National Government, if it found it necessary, or desirable, classify corporations according to their size and extent of operation, and require if found necessary, all above a certain size to forego the privilege of engaging in interstate commerce, or tax them so it would be unprofitable, unless they organize under a national act? We believe this question will be answered in the affirmative. The rest would depend on the wisdom of Congress.

1 This is what Mr. Jefferson argued was the design of the Commerce clause. See quotation given above from him.

• Opinion to Indus. Com. Vol. XIX, p. 700.

X

Such a national incorporation act should be liberal enough to encourage honorable industrial enterprises; strict enough to prevent fraud and oppression; should protect from unjust state exactions, but require complete compliance with all the laws; should permit large profits commensurate with great risks undertaken, and require the risks and liabilities to be assumed and discharged by those undertaking them; should allow extensive operations and the power and capital necessary to carry them on, but prevent their use as a club to obstruct or destroy others as legal as they; and in general allow great things to be done or undertaken, in subservience to, but not in defiance of, the general welfare; be great to strengthen the hands and add energy to the capital of the honorable and dutiful, and be administered by a power strong and quick to smite the dishonorable and disobedient.

Such an act might preserve for the benefit of all the manifold economies that can come from large associations for carrying on large, useful and necessary or beneficent enterprises, and at the same time shield all from the menace of unregulated greed or cupidity, so far as such ends can be accomplished by law administered by human officers and tribunals.

UNIVERSITY OF MICHIGAN

H. L. WILGUS

IN

A PROPOSED NATIONAL INCORPORATION LAW

N an article in the February number of this magazine1 the writer discussed the need of a national incorporation law. The following is proposed as such; its object is to set forth what, perhaps, may be possible under such a law; what some will think necessary or desirable; what some will think unnecessary and undesirable; and what others will undoubtedly think is all wrong, if not vicious. Whatever view is taken the writer's purpose will be accomplished if consideration and discussion of the proper details of such a law, are provoked. There are two classes who desire a national incorporation law,-those who believe such is necessary for the proper regulation of the large corporations engaged in national commerce, in order to promote the general welfare; and those engaged in such commerce who wish to be relieved from the inconvenience and unequal or unjust burdens arising from conflicting state regulations; the former will be inclined to favor a law something similar to this, and the latter only such a national law as would give all the rights and powers the most liberal state law now gives, and relieves from all the restraints that more rigid state laws impose. As between these two the former have been in mind rather than the latter. There are probably also two classes opposed to a national law, those who believe such a law would shift the balance of powers from the states to the national government, and be disastrous; and those who find opportunity for floating fraudulent schemes, or securing powers and privileges that enable them to enrich themselves at the expense of others, without danger of punishment,-reap all the benefits and escape all the burdens. As between these two, the latter have been in mind rather than the former.

It is not the duty of the government to act as a parent of its people; neither is it the duty of the government to clothe a part of its people with great powers and privileges, peculiarly susceptible of

1 2 MICHIGAN LAW REVIEW, D. 358.