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1. The first of the bills defines a trust as a combination or agreement between corporations, firms or persons for the following purposes: (1) creating or carrying out restrictions in trade, or acquiring a monopoly, either in intrastate or interstate business or commerce; (2) limiting or reducing production and increasing prices; (3) preventing competition in production, transportation or marketing of any commodity; (4) fixing a standard price with a view to controlling the price of any commodity; (5) making any agreement by which, directly or indirectly, free and unrestricted competition among the parties to the agreement is precluded, either by pooling, withholding a commodity from the market, or fixing the price of sale; and (6) making any secret oral agreement or understanding with the object of accomplishing any of the abovementioned purposes. Any person or corporation violating the law in any of these particulars is to be regarded as guilty of a misdemeanor. In the case of a corporation the offense shall also be deemed to be that of the individual directors of the company, and the charter of the offending company may be revoked.

stroying the American future markets, | American History). The provisions of will demoralize the whole system by the seven acts may be summarized as which the cotton crop is moved, and follows: will, in consequence, bring distress upon all concerned in the cotton trade." As a result of the protests against the imposition of this prohibitive and destructive tax, Mr. Underwood, in the first week of October, submitted a substitute amendment, which was adopted by the House by a vote of 171 to 161. This so-called Smith-Lever amendment imposed only a slight tax on future contracts made on domestic exchanges, provided such contracts conformed to certain specific requirements as to the grades of cotton which may be delivered and the method of valuing the several grades thus delivered. Contracts, however, involving the future delivery of cotton on foreign exchanges, if made by American residents, remained subject to the prohibitive tax irrespective of the grades delivered and the method of valuation of such grades used. Through disagreement between the Senate and the House the proposed tax on cotton futures was omitted entirely from the Tariff Act. There is every likelihood, however, that legislation similar to the Smith-Lever bill will be pressed in future sessions of Congress. If it should be enacted into law about 20 per cent. of the nation's cotton crop in normal years and from 30 to 50 per cent. in years of abnormal rains or early frosts will be excluded from contract deliveries. (See also I, American History.)

Anti-Trust Legislation in New Jersey.-Several anti-trust bills (the socalled "Seven Sisters," known as Chapters 13 to 19 of the laws of New Jersey, 1913), passed by the New Jersey legislature, were approved by Governor Wilson on Feb. 19. These acts, having for their purpose the prevention of monopolies, have been widely discussed, partly because many of the largest industrial combinations have been organized under the laws of New Jersey, which have been extremely liberal for organization purposes, and partly because they were inspired by President Wilson, and have therefore been regarded as indicative of the policy which the national Administration is likely to pursue with reference to combinations (see also I,

2. All corporations, firms or persons engaged in the production, manufacture, distribution or sale of any commodity are forbidden to discriminate between different corporations, firms, persons, etc., or different sections, cities or communities by charging one a lower price than another for a given commodity or service.

3. Corporations may purchase real and personal property, and the stock of any corporation necessary for its business, and may issue stock to the amount of the value thereof in payment therefor, provided the purchasing corporation "receive in property or stock what the same is reasonably worth in money at a fair bona-fide valuation." No fictitious stock can be issued, nor may stock be issued "for profits not yet earned, but only anticipated." When a corporation issues stock on the basis of the stock purchased from any other corporation, the amount of new stock issued thereon

quiring the bonds, securities or other evidences of debt created by any noncompeting corporation in payment for any debts which it may owe; (2) purchasing as a temporary investment out of its surplus earnings, the capital bonds and other securities created by any non-competing corporation; or (3) investing its funds in such securities when held by it for the benefit of

cannot be for a greater amount "than the sum actually paid for such stock in cash or its equivalent." Moreover, the property purchased by a corporation, or the property owned by a corporation whose stock is purchased, "shall be cognate in character and use to the property used or contemplated to be used by the purchasing corporation in the direct conduct of its own proper business." The direc-its employees or any funds held for tors of the purchasing company, or a insurance, rebuilding or depreciation majority of them, must file a state- purposes. ment in writing with the Secretary of State certifying to the various facts coming under this Act, and any false representation in this certificate makes all the officers who signed the same, knowing it to be false, guilty of a misdemeanor.

7. Mergers of corporations shall not in any way impair the rights of any creditor of either of the merged corporations. The approval for any merger of corporations must be obtained in writing from the Board of Public Utilities Commissioners of the state, such approval when obtained by said corporations to be filed in the office of the Secretary of State before the merger can be made.

Anti-Trust Prosecutions.

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4. Persons incorporating any corporation under the laws of the state with fraudulent or unlawful intent, or for the purpose of restraining trade or acquiring a monopoly, shall be guilty of a misdeameanor when such corporation engages in interstate or intrastate commerce. The officers, directors and managers of corporations organ-modity such as cotton is an act in ized for such fraudulent or unlawful purposes shall also be guilty of a misdemeanor.

sion of the U. S. Supreme Court on Jan. 6, 1913, declared that a conspiracy to run a "corner" in a com

commerce

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violation of the Sherman Anti-Trust Act. This case was the outcome of an indictment returned as a result of the 5. In case two or more corporations Government's inquiry in 1910 into an are merged or consolidated, the con- alleged cotton pool agreement which solidated corporation may issue bonds it was charged constituted a or other obligations "to an amount spiracy in restraint of interstate trade sufficient with its capital stock to and proin cotton, and a vide for all the payments it will be "corner" in the commodity on the required to make, or obligations it New York Cotton Exchange. The Suwill be required to assume, in order to preme Court's decision reversed the affect such merger or consolidation," opinion of Judge Noyes of the U. S. provided that such bonds shall not Circuit Court for the Southern Disbear more than six per cent. interest trict of New York, which contended per annum. that while "corners" are illegal, they are not combinations in restraint of interstate trade.

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6. No corporation heretofore organized, or to be organized, can "hereafter purchase, hold, sell, assign, transfer, A suit was filed by the Federal Govmortgage, pledge or otherwise dispose ernment in Chicago charging the of the shares of the corporate stock of Chicago Board of Trade with violaany other corporation or corporations ting the Sherman Anti-Trust Act by of this or any other state, or of any arbitrarily fixing the price of leading bonds, securities or other evidences of cereals to be received in Chicago. The indebtedness created by any other cor- suit was aimed against the practice poration or corporations of this or of fixing the so-called "call price" of any other state, nor as owner of such grain each day at the close of trading stock exercise any of the rights, hours. The Government's contention powers and privileges of ownership, is to the effect that grain bought by including the right to vote thereon." members of the Exchange is desigProvision, however, is made that a cor-nated as "grain to arrive," and that poration is not prevented from (1) ac- the Exchange establishes a "call price"

under its rules for this "to arrive" grain. In this way, it is charged, the Exchange "fixes the price to be offered for such staples bought or sold from the closing hour to the opening hour of the following day." Since the session of the Exchange is limited to four hours, these fixed "call prices" thus control the bids of grain dealers for the remainder of the day. The practice is regarded in the charge as amounting to a combination having in view the prevention of competition, especially since the Exchange is held to dominate the grain market in a large section of the country.

United States of regulations for the supply of books to retailers laid down by the American Publishers Association, which authorized the sale of books only to such booksellers as would agree to maintain the prices fixed by the publishers. In accordance with these regulations R. H. Macy & Co., of New York, who refused to enter into an agreement to maintain prices. were refused supplies by the publishers, and various means were used to prevent them from obtaining books through indirect channels. They brought suit in the New York courts to have the alleged A decision of the U. S. Supreme combination of publishers declared ilCourt on Dec. 2, 1912, reversed the legal under both the state and Federal decision of the U. S. Circuit Court of anti-trust laws. The New York Suthe Eighth District at St. Louis on preme Court held the fixing of prices June 24, 1911, and unanimously held to be illegal under the state law so that the Harriman merger of the far as it concerned uncopyrighted Union Pacific and Southern Pacific books, but refused to enjoin the deRailroad Companies constituted a fendants from continuing the agree combination in restraint of trade with- ment concerning copyrighted books, a in the meaning of the Sherman Anti- decision subsequently confirmed by the Trust Act, and must be dissolved. state Court of Appeals (177 N. Y., One of the most important points 473). The unanimous decision of the in the case dealt with the question Supreme Court holds the agreement to as to whether the Union Pacific be illegal with regard to both copyactually obtained control of the South-righted and uncopyrighted books and ern Pacific when it had acquired only declares that "no more than the pata minority interest in the stock. On this point the Court explained that, while "it may be true that in small corporations the holding of less than a majority of the stock would not amount to control, the testimony in this case is ample to show that, distributed as the stock is among many stockholders, a compact united ownership of 46 per cent. is ample to control the operations of the corporations." (See also IX, Law and Jurisprudence; and XXII, Railroads.)

ent statute was the Copyright Act intended to authorize agreements in unlawful restraint of trade and extending to monopoly in violation of the terms of the Sherman Act."

Other Supreme Court Decisions.Two other important Supreme Court decisions of the year vitally affecting the future conduct of business are considered elsewhere in this volume. The first of these was the decision in the Minnesota Rate Cases, reversing the decision of the U. S. Circuit Court and affirming the right of a state to regulate railroad rates on traffic moving wholly within its borders (see IX, Law and Jurisprudence; and XXII, Railroads). The other was the decision in the case of Bauer et Cie. and the Bauer Chemical Co. v. James O'Donnell, denying the right of the holder of a patent to maintain the retail price of the patented article by notice on the package warning the retailer that sales made at a price lower than that fixed would be regarded as infringement of patent (see IX, Law and Jurisprudence.)

A decision of the U. S. Supreme Court on Dec. 3 reversed the decision of the Supreme Court and Court of Appeals of the state of New York in the case of Straus v. American Publishers Association et al., and held that agreements entered into by publishers and booksellers not to sell copyrighted books to concerns who retail books at less than the prices fixed by the publishers are in violation of the Sherman Act. This case has been in the courts about 11 years. It arose out of the acceptance by about 75 per cent. of the publishers of the

XIV. PUBLIC FINANCE, BANKING, AND INSURANCE

PUBLIC FINANCE

C. C. WILLIAMSON

FEDERAL FINANCE Appropriations for 1914.-Total appropriations for 1914, regular, miscellaneous and permanent, amount to $1,098,647,960, or $79,011,817 more than the appropriations for 1913, and $6.559,003 less than the estimates. (See also I, American History; and V, National Administration.)

Receipts and Expenditures.-The following tables show the ordinary receipts and expenditures, and the financial transactions for the Panama Canal, for the years ending June 30, 1912, and June 30, 1913, in millions of dollars:

ORDINARY RECEIPTS

1912 1913

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228, Postal Savings 1912.

bonds,

1,074,980

Miscellaneous.

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United States notes (green

National Bank notes (redemp

$346,681,016

tion account).

22,092,806

ORDINARY EXPENDITURES

Old demand notes.

53,153

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Fractional currency.

6,854,610

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Debt on which interest has ceased:

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Funded loans of 1891.

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Loan of 1904..

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Funded loan of 1907

$28,650 13,250 700,400

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Refunding certificates.

Interest on public debt.

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Old debt...

Certificates and notes issued on

deposits of coin and silver

Total interest bearing debt.. Total debt on which interest has

ceased

.$1,086,727,169

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337

Total debt bearing no interest..

35

42

Total interest and non-interest

483,550,000 2,660,000

$ 965,706,610

1,659,550 375,681,584

bearing debt, June 30, 1913. $1,343,047,744

Certificates and Treasury notes offset by cash in the Treasury..

.$1,572,937,169

13,570

903,680

change was to put the Government's business transactions abreast of the methods employed in all well regu lated businesses. It also has the advantage of giving an exact daily knowledge of the Government's finances and adds to the convenience of Gov. ernment creditors.

Budget Reform.-President Taft's revenue receipts should be deposited fruitless efforts towards securing a in the sub-treasuries in the form of much needed reform in our budgetary currency; checks drawn on the submethods were recorded in the last treasuries have also been paid in issue of the YEAR BOOK (p. 331). On currency. Under the new order the Feb. 26, 1913, he transmitted to Con- Treasury's debits and credits are offgress a message in which he outlined set in the banks and only the excess again the whole budgetary situation (where there is an excess) passes inand repeated his recommendations. to the Treasury. The purpose of the That the matter was not entirely dropped with the change of administration gives some ground for hope that relief will not be long delayed. The first caucus of the new Democratic House authorized the appointment of a special committee which worked out a plan for a standing Committee on the Budget, to be composed of the chairman of the Ways and Means Committee, the chairman of the Appropriations Committee and the chairmen of each of the other House committees having power to report appropriation bills. At the beginning of each session this budget committee would determine what the total amount of appropriations should be and apportion it among the various spending committees. While this would not have accomplished all that President Taft's proposals aimed at, it would have done something toward coördinating income and expenses and eliminating wasteful appropriations. On June 25, however, the House caucus voted against the plan, the opposition growing partly out of the fear that the proposed committee would absorb too much of the power now lodged in the hands of independent appropriating committees. The defeat of this particular plan is important only as showing again the nature and source of the opposition which any reform measure must over

Interest on Public Deposits.-Beginning on June 1, 1913, all banks holding deposits of public money are required to pay interest at the rate of two per cent. per annum on monthly balances, to be credited semi-annually, Jan. 1 and July 1. Previous to May, 1908, the Government received no interest on any of its deposits. Under authority of the Aldrich-Vreeland Act, the Secretary of the Treasury required an interest payment of one per cent. on special deposits after June 15, 1908. Beginning with July 1, 1912, the rate was raised to two per cent. on "inactive" accounts. Secretary McAdoo's order, issued April 30, 1913, extends the two per cent. rate to both "active" and inactive" accounts. An agitation started in Congress in 1912 to obtain legislation requiring public depositaries to be selected competitively resulted in an investigation of the entire subject of Government deposits in national banks and the amount of surplus working capital in the Treas ury by the Committee on Expenditures in the Treasury Department. New Method of Handling Receipts Its report (Feb. 24, 1913) assumes and Disbursements.-Beginning with that interest at the rate of two per Feb. 1, 1913, the daily receipts from cent. could have been collected, and customs, internal revenue, and other finds that the Government has theresources, have been placed in deposi- fore lost in the last 26 years the sum tary banks to the credit of the Treas- of $84,211,783, $36,600,923 on non-inurer of the United States. From the terest bearing deposits and $47,610,same date all checks of Government 860 on surplus unnecessarily retained disbursing officers have been drawn on in the Treasury. For the sake of the the Treasurer and are payable at the additional revenue, and also because Treasury, any sub-treasury, or any the designation of certain banks as national bank depositary in the coun- Government depositaries is regarded try. The Government has hitherto as a species of "special privilege" or insisted that customs and internal "government favoritism,' the Com

come.

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