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York,

and corporations, forfeiture of goods and franchises, liability for damages, and deprivation of the right to enforce contracts or collect debts. Imprisonment might be as short as thirty days or as long as ten years in the penitentiary. Georgia, Indiana, North Carolina, North Dakota, South Carolina, Tennessee and Texas went to the limit of ten years. The possible fines for individuals ranged from $50 to $5,000, Arkansas, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New York, North Dakota, Ohio, South Carolina, Tennessee and Texas naming the larger amount. In South Dakota, Montana and North Carolina a fine of $10,000 was possible. In Arkansas, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Nebraska, New York, North Dakota, Ohio, South Carolina, Tennessee and Texas the fines of corporations ran as high as $5,000. In Montana, South Dakota, Utah and North Carolina the guilty corporation might be mulcted to the amount of $10,000, and in Utah the fine for any offence subsequent to the third was $15,000.

To a considerable extent, this legislation was successfully contested, mostly on the ground of unconstitutionality. Because they exempted certain special industries, the first antitrust laws of Illinois, Texas, Georgia, Indiana, Louisiana, Michigan and Tennessee were thus declared by the courts to be invalid. More effectual defence for the corporations was

found in the protection afforded them in several States, notably New Jersey, Delaware and Virginia. Those States, instead of following the example of others in passing exacting laws, extended their protection by liberal corporation legislation and became in popular parlance "the home of the trusts" especially true of New Jersey. More than 90 per cent. of the large corporations which came into existence at that time were incorporated in one of these States, which had no anti-trust laws. There corporations were unmolested, and their charters and to a considerable exwere protected

tent their business tent their business

from attack in other States under the interstate commercial comity guaranteed by the Federal Constitution.

Nevertheless some progress was made in the enforcement of the State laws, and under them some court decisions were rendered which added much to the distinction of American jurisprudence. The Missouri law made it a criminal conspiracy to maintain a pool, combine, agreement, confederation or understanding to regulate prices or to fix the premiums for fire insurance. Under this statute action was brought against the insurance companies doing business in the State and the case State vs. Firemen's Fund Insurance Company et al. - was carried to the State Supreme Court, where it was decided to be constitutional. Seventy-two foreign insurance companies were convicted of combining and conspiring to fix and

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maintain uniform premium rates and all were forbidden to do further business in the State. In every instance, the sentence was changed to a fine of $1,000, which the companies paid and continued to do business in the State under the new law. Under the same act it was held that the National Lead Company, a holding corporation controlling between 50 and 75 per cent. of the white lead in the United States, was doing business in violation of the State law and therefore could not en

force payment for goods purchased by its customers in Missouri.

Statutes and cases under them in other States contributed much to the anti-corporation jurisprudence of this period. Under the Illinois Act the Distilling Feeding Company, a purchasing corporation formed to acquire the properties previously united in the Distillers and Cattle Feeders Trust, was compelled to surrender its charter in 1895. Under the same act the law was enforced in 1899 against a New Jersey corporation, the American Glucose Company, a constituent member of the Glucose Sugar Refining Company, which controlled more than 90 per cent. of the output of the country. In its decision the court forbade the company to sell its properties or contract with the holding company, holding it liable to the State law inasmuch as most of its business was done in Illinois, adding in the opinion:

"Citizens of Illinois cannot evade the laws of Illinois passed against trusts and combines and defy the public policy of the State, by going into

a foreign State, and chartering a corporation to do business in this State in violation of its laws. When these foreign corporations come into this State to do business they must conform to the laws and public policy of this State."

"Any combination of competing corporations for the purpose of controlling prices, or limiting production, or suppressing competition is contrary to public policy and void. It makes no difference whether the combination is effected through the instrumentality of trustees and trust certificates, or whether it is effected by creating a new corporation and converging to it all the property of the competing corporations."

The decision in this case was of special interest and importance, in being one of the earliest to set forth clearly and strongly the legal status of combinations in restraint of trade and to assert the rights of the State over foreign corporations. In these particulars it followed the decision of the Missouri courts rendered in the

insurance cases a year before.

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In its report of 1900 the United States Industrial Commission reviewed the legislation of the preceding ten years, explained the statutes that had been passed, and presented some of the most important decisions by the United States and State courts. Commenting upon the subject, the Commission expressed the opinion that possibly at times the fear of a new form of business organization may have led to the extension of legal privileges of interference with private business beyond what the public welfare demands. Some of the statutes, if read literally, would seem to forbid many perfectly innocent associations among individuals; but the courts seem invariably to have assumed that

only monopoly - at least virtual monopoly - was attacked and the decisions have been made accordingly.'

State legislation seeking to restrain or control business enterprises has concerned itself more with railroads than with any other form of corporate property. When the modern transportation system began in the United States (in the third decade of the Nineteenth century), no one had any conception of the magnitude this form of modern enterprise would assume and of the abuses of power that might develop to the public injury. The only thought then was to encourage the building of railroads as rapidly as practicable so as to give the people the quickest and greatest benefits to be derived from the new transportation service, and to that end to keep the enterprises as free as possible from any restrictions that might hinder their growth. More than a century had passed before the necessity of a reversion of policy in this particular began to be realized.

Early legislation to restrain the railroads originated in the States. Primarily it took the form of taxation, the fixing and enforcing of liabilities, and the supervision or control of charges. For the most part, this legislation was desultory, hasty and unscientific. Much of it was ill-considered, and, as a whole, ineffective.

Report of the United States Industrial Commission, vol. ii., p. 8.

After the Civil War had been brought to a close, many questions as to the relative rights of the railroads and the public pressed for solution. The first attempt to meet the situation was made in 1869 with the establishment of the Massachusetts Railroad Commission. This commission had little or no real power. It was merely supervisory and its influence, which gradually became considerable, was exercised entirely by an intelligent conservative policy of advice and direction, behind which grew up a strong supporting public opinion. In 1870 Illinois initiated a broader measure for control of railroads by establishing a State Railroad Commission vested with powers to prescribe maximum rates, prohibit discrimination, and generally to regu

late the roads. late the roads. In the course of time similar commissions were established in Connecticut, Iowa, Maine, Michigan, Minnesota, New Hampshire, New York, Ohio, Rhode Island, Vermont, Wisconsin, Georgia, Kansas, Kentucky, Missouri, California and other States. Some of these were patterned upon the Massachusetts idea, but most of them followed Illinois. The trend of the period was steadily toward broadening and increasing the power of the commissions. Everywhere they acquired a more positive position of authority and in some instances notably in several Western Statestheir assumption of power to control the transportation corporation was little short of revolutionary. A few

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Coincident with the period of establishing railroad commissions was the Granger movement of the West in 1870-1877, directed almost entirely against the railroads of the country. One immediate result of this movement was anti-railroad legislation in several Western and Southern States, principally in the direction of fixing rates. Illinois passed the first law of this kind in 1871 (amended in 1873); afterward similar laws were passed by Iowa, Minnesota, Wisconsin, Wisconsin, Georgia, South Carolina, Alabama, Tennessee and other States. Although the constitutionality of these laws was affirmed by the Supreme Court of the United States in 1877, they did not always work so well industrially as their promoters had expected. They were most successful in some Southern States.

For a few years after 1900, there was a decided disposition to leave to the National Government the duty of regulating and controlling the large corporations engaged in inter-state commerce. So far had this gone that Secretary of State Root, in a notable speech in December of 1906, warned

*Katherine Coman, Industrial History of the United States, p. 324.

the people that the failure of the States to curb predatory wealth would result in the continuous strengthening and centralization of power in the Nation.

Presently, however, the pendulum began to swing in the other direction. Several of the Western States, notably Nebraska and Michigan, took vigorous action against the railroads on rate questions, and when the protection of the United States courts was sought the State authorities denounced this as subverting the powers and the rights of their commonwealths. The historic State rights principle was awakened again after its long slumber.

Several pieces of legislation in New York in this period show the growing popular demand for some sort of State supervision of corporate business. These included the new corporation act of 1897, a scientific, conservative and powerful statute, probably unsurpassed as a whole by any similar measure of any State in the Union, the establishment of the principle of a franchise tax upon corporations engaged in the public service; and the creation of the two Public Service Commissions in 1907. The commissions thus created succeeded the railroad, gas and electricity and rapid transit commissions with increased powers that gave them almost arbitrary control of the corporate management and public service of the steam and electric railroads, gas, telephone, telegraph and electric light companies. The act was the most advanced legis

lation for State control of public utilities that had ever been enacted anywhere in the country. The general

success of the New York idea influenced New Jersey to create a similar commission.*

CHAPTER VII.

1865-1912.

HISTORY OF INTERNAL IMPROVEMENTS.

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Early opposition to water transportation - Principal canals completed since 1860 - Canals and rivers utilized in 1880- The Erie and other canals - The extent, importance, and history of the Panama Canal — Irrigation and land reclamation - The Desert Land Act - The National Irrigation Act - River and harbor improvement by the Federal government — Their cost and importance.

The ravages of the Civil War in the South and its repressive influences in the North had first a deterrent and next a stimulating effect upon internal improvements. What had been destroyed in the South and what had been neglected in the North called for prompt and vast undertakings after 1865. More attention than ever before was given to the canal system of the country and to the improvements of rivers and harbors.

Despite the destructive competition of railroads, there was still in many quarters a strong feeling in favor of the continuance and development of the canals of the country to meet the transportation needs of the commercial interests. That water transportation — interstate and, to the seaboard, feeding export- was cheaper than railroad transportation was not disputed. The influence of the railroads, however, was everywhere against the canals, and the political power exercised by those corpora

tions as well as the quicker service rendered by rail, even though at

Charles Fisk Beach, Sr., A Treatise on the Law of Monopolies and Industrial Trusts in England and in the United States (St. Louis, 1898); Richard T. Ely, Monopolies and Trusts (New York, 1900); Edward W. Bemis, Municipal Monopolies (New York, 1899); Robert B. Porter, Municipal Ownership (New York, 1898); Arthur T. Hadley, Railroad Transportation (New York, 1885); A. B. Stickney, The Railway Problem (St. Paul, 1891); F. H. Dixon, State Railroad Control (New York, 1896); Frank Hendrick, Railway Control by Commission (New York, 1900); J. W. Jenks, The Trust Problem (New York, 1900); A. B. Nettleton, Trusts or Competition? (Chicago, 1900); Lyman Horace Weeks, The Other Side, A Brief Account of the Development of Industrial Organizations in the United States (New York, 1900); H. D. Lloyd, Wealth against Commonwealth (New York, 1894); William Miller Collier, The Trusts (New York, 1900); James Edward Le Rossignol, Monopolies Past and Present (New York, 1901); Gilbert Holland Montague, Trusts of To-Day (New York, 1904); George L. Bolen, The Plain Facts as to the Trusts and the Tariff (New York, 1902); Albert Stickney, State Control of Trade and Commerce by National or State Authority (New York, 1897); William Hudson Harper, Restraint of Trade: Pros and Cons of Trusts in Facts and Principles (New York, 1900); Francis A. Adams, Who Rules America? (New York, 1899); Charles W. Baker, Monopolies and the People (New York,

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