desist entered June 10, 1938.-Docket 2990. Schenley Distillers Corporation. Order to cease and desist entered June 10, 1938.-Docket 2988. Seagram Distillers Corporation. Order to cease and desist entered June 10, 1938.

The respondents in the above list of cases are among the largest distillers and distributors of alcoholic liquors in the United States. In connection with the sale and distribution of their respective lines of products, in order to stabilize and make uniform resale prices on said products in the District of Columbia, these distillers adopted, established, and maintained what is known as the Beechnut system of merchandising, whereby they fixed specified standard and uniform resale prices, discounts, and mark-ups at which their said products should be resold by wholesale and retail dealers; and received and accepted the active support and cooperation of said wholesalers and retail dealers in the maintenance of that system. In pursuance of this plan, they had agreements with their wholesale distributors whereby said distributors agreed to sell only to retailers who maintained prices, and to cooperate in all respects in order to see that such prices were maintained.

8. Docket 3107. Shelton Tubular Rivet Co. et al. Order to cease and desist entered June 14, 1938.

The respondents in this case comprised some 12 concerns in Connecticut, Massachusetts, Illinois, Wisconsin, Virginia, Pennsylvania, New York, and Delaware, engaged in the manufacture of industrial rivets. In fact, they are the principal manufacturers in this industry and constitute a substantial majority of all manufacturers of these products in the United States. For the purpose of eliminating price competition among themselves, they conspired and agreed to fix and maintain uniform prices and discounts, enforcing such agreement by the use of intimidation and persuasion to raise prices and influenced members with the use of pressure, coercion, and other means to execute the agreements.

9. Docket 2161. Viscose Company et al. Order to cease and desist entered July 3, 1937.

This case involved 10 manufacturers of viscose rayon yarn, which yarn was sold to makers of rayon cloth, who in turn sold to manufacturers of rayon clothing. In the aggregate, these manufacturers produce all the viscose yarn manufactured in the United States. The practice involved was combination and conspiracy to fix and maintain uniform prices, which practice prevented price competition and increased prices of yarn, prices of cloth made from the yarn, and prices of all rayon articles of wear to the consumer.

10. Docket 3154. Pittsburgh Plate Glass Co. et al. Order to cease and desist entered October 30, 1937.

This company and seven competing glass manufacturers comprised the membership of the Window Glass Manufacturers Association. These manufacturing and distributing firms conspired and combined to enforce, by coercive means, observance of certain policies and sales methods by distributors who were not permitted to be, or did not desire to be, members of the association. The manufacturer issued price lists for window glass to carload-lot buyers and refused to sell carload lots directly to the buyers except "approved quantity buyers," and sought and obtained assurances of cooperation from one another in making these practices, policies, and price methods effective. The distributors combined to induce the manufacturers to grant the discriminatory prices and received and accepted such prices, all of which tended to place control over the channels of distribution in the particular manufacturers and distributors who had so combined.

11. Docket 2941. General Electric Co. et al. Order to cease and desist entered April 2, 1937.

This case involved practices on the part of the General Electric Co., Westinghouse Electric & Manufacturing Co., Allis-Chalmers Manufacturing Co., and Elliott Co., manufacturers of turbine generators. They combined to eliminate price competition by agreeing to fix and maintain uniform prices and performance guaranties for turbine generators. They adopted and adhered to as their own, delivered pricing sheets and confidential performance data compiled by one of them without giving consideration to their respective costs or to the theoretical performance of their turbine generators. These practices monopolized the busi

ness of seal-turbine generators and unreasonably restrained, stifled, and suppressed competition in the industry, depriving the public of price service and other advantages which would otherwise have accrued.

12. Docket 3186. Covered Button and Buckle Creators, Inc. and desist entered September 4, 1937.

Order to cease

This case involved some 150 concerns engaged chiefly in New York in the manufacture of covered buttons, buckles, and novelties for use in the manufacture of wearing apparel and sale to dress manufacturers and those engaged in kindred industries. They agreed, combined, and conspired among themselves to fix and maintain uniform prices and discounts at which their products should be sold. Said practices prevented competition and increased the price of covered buttons, buckles, and novelties paid by dress manufacturers, and indirectly the price paid by the public for clothing on which those articles were used. 13. Docket 2812. Millinery Quality Guild, Inc. Order to cease and desist entered April 29, 1937.

This case involved 14 New York corporations engaged in the designing and manufacturing of millinery at their factories located in the States of New York and California. These, together with some 10 other New York corporations, designated as affiliate members, formed a substantial majority of the originators of leading styles in high-grade millinery. Through the guild, members adopted a plan to avert as far as possible the pirating of designs. A registration bureau was established for the registration of models, which, upon registration, were regarded as original designs to the registrant. Approximately 1,600 high-grade retail dealers of women's hats were solicited to sign a cooperative agreement to the effect that, after July 16, 1934, none of them would make, sell, or show merchandise in any retail store which had failed to enter into a so-called "Declaration of Cooperation Agreement." This agreement provided in substance that the retailer would instruct its buyers not to buy any copies of pirated styles created by members of the association, and would place all orders for hats conditionally upon the seller's warranty. The styles so ordered were not copies of styles originated between members of the guild. These arrangements limited the retail outlets for such products and interfered with retail-dealer sources of supply, deprived the public of the benefits of normal price competition, and prevented retailers from purchasing the requirements of hats in interstate commerce, except subject to the limitations and restrictions of the plan. Prices to retailers and consumers were increased and the control of the business practices in the industry was placed in the hands of members.

14. Docket 3309. Pyrotechnic Industries, Inc. Order to cease and desist entered April 14, 1938.

This case involved eight manufacturers of fireworks operating in New York, Massachusetts, Arizona, California, Connecticut, and New Jersey. They combined for the purpose of controlling pricing practices in the industry in the sale of fireworks to jobbers and others. Agreement was entered into providing for uniform prices and discounts to jobbers and also determined should-be jobbers. They organized and held meetings of groups of jobbers in various parts of the United States; devised means of enforcing the agreement through the use of pressure and coercion. Lists of stores were compiled to show which stores they would recognize as being entitled to special discounts. Through concerted refusal to sell, they boycotted certain jobbers, cutting off their supply of fireworks, and maintaining a schedule of special discounts to such concerns as would purchase fireworks in certain specified amounts. These practices unduly restricted the sale of fireworks in commerce, and unlawfully enhanced prices to the public in maintaining them at artificial levels.

15. Docket 3305. United Fence Manufacturers Assn. Order to cease and desist entered July 13, 1938.

The association respondent in this case was composed of eight companies who made and sold snow fence. These concerns were located in New York, Maine, Nebraska, New Jersey, New Hampshire, and other points in the Middle West. It was the purpose of the association to raise prices in the sales comprising the States of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, West Virginia, and Ohio. Of all snow-fence products sold in this area, members sold about 95 percent. By concerted action and agreement they established a system of identical delivered prices for fence sold to customers within

the aforesaid area. Delivered price lists, discounts, and terms of sale were filed with the secretary of the association and were maintained until revised. Delivered prices for carload lots in less than carload quantities were identical on products of each standard group. Discounts and terms of sale were also identical. Maintenance of resale prices was undertaken and distributors were urged to report all instances of price cutting. Agreements to refuse to sell anyone who would not maintain prices were entered into. Enforcement was had by threats to cut off all supplies from price-cutting dealers.

Senator BURKE. I have here a short statement that I would like to have inserted following all of that; it was prepared by my research assistant. It is headed "Comments on Senate Bill 2719." expressing or suggesting some changes that might be made. It is not a long document and can go at the end of the hearing.

The subcommittee has received a great many requests for hearings from all sections of the country. How many of them will actually appear it is impossible to say.

I think the very full and helpful statement made by the sponsor of the bill this morning will do a good deal to alleviate the feeling that there is something wrong in the bill. However, that may be, there are quite a number of people who wish to be heard; but in view of the fact that Congress wants to adjourn by the middle of the week, the majority feel that it will not be possible to go on with the bill at this session.

Senator O'MAHONEY. I quite agree with that view. I think it is essential in a matter of such importance that there should be an understanding of what is sought to be accomplished, and that no one should be under the impression that there is any intention to rush through a particular type of legislation, and particularly that no one should be in a position to send out word to the businessmen of the country that there is an attempt to rush things through in a matter of this importance.

I am glad the chairman was kind enough at the outset to allude to the fact that in the appointment of this subcommittee I did not choose to take advantage of the rule or the privilege which is accorded to Senators who are sponsors of bills by the Judiciary Committee when the Senators introducing a bill are members of that committee; and I call attention to the fact that my purpose in taking advantage of that was to make sure that there was a full and complete examination of this proposal.

Senator BURKE. The comments to which I have referred will be inserted in the record at this point.

(The statement referred to is as follows:)

COMMENTS ON SENATE BILL 2719, TO PROVIDE REMEDIES FOR VIOLATION OF THE

ANTITRUST LAWS

The bill provides for an amendment to section 14 of the Clayton Act; section 14 of the Clayton Act as it now stands is as follows:

"SEC. 14. Whenever a corporation shall violate any of the penal provisions of the antitrust laws, such violation shall be deemed to be also that of the individual directors, officers, or agents of such corporation who shall have authorized, ordered, or done any of the acts constituting in whole or in part such violation, and such violation shall be deemed a misdemeanor, and upon conviction therefor of any such director, officer, or agent, he shall be punished by a fine of not exceeding $5,000, or by imprisonment for not exceeding 1 year, or by both, in the discretion of the court."

The present bill reenacts section 14 of the Clayton Act, but in slightly different language, and adds that any officer having knowledge of a violation of

the antitrust laws by his company shall be presumed to have authorized the violation, and that any officer of a company violating the antitrust laws (1) shall suffer a fine or imprisonment, (2) shall forfeit to the United States twice the total compensation received from the company during the period of violation, (3) shall be enjoined from rendering any service to the company permanently or for a specified period, (4) shall be enjoined from receiving any compensation from the company during the same period, and (5) shall be enjoined from engaging in business in competition with the company during the period.

The added provisions are more fully stated in the amendment contained in the bill, which is as follows:

"SEC. 4. Section 14 of such act is amended to read as follows.

"SEC. 14. (a) Any violation of any provision of the antitrust laws by any company shall be a violation of such provision by each officer or director of such company who shall have done, or authorized, ordered, or caused to be done, any act constituting in whole or in part such violation. In any proceeding against any officer or director of any company in respect of any such violation by such company, such officer or director, if he shall have had knowledge of any act constituting in whole or in part such violation, shall be presumed to have authorized, ordered, or caused such act; and if evidence shall be introduced in behalf of such officer or director adequate to rebut such presumption, the fact of such knowledge shall, nevertheless, be submitted to the jury, or in any action tried by the court without a jury, shall be taken into account by the court, as evidence of such authorization, ordering, or causation. "(b) Any officer or director chargeable under subsection (a) of this section with a violation of any penal provision of the antitrust laws shall be guilty of a misdemeanor, and upon conviction therefor he shall be punished by a fine of not exceeding $5,000 or by imprisonment for not exceeding 1 year, or by both, in the discretion of the court.

"(c) Any officer or director chargeable under subsection (a) of this section with a violation of any provision of the Sherman Antitrust Act, the antitrust provisions of the Tariff Act of 1913 or section 3 or section 7 of this Act by any company shall forfeit to the United States a sum equal to twice the total compensation, direct and indirect, whether in the form of salary, commission, bonus, share or profits or otherwise, received by or due to such officer or director from such company or on account of services to or in behalf of such company, in respect of each month during which any such violation or any part thereof shall have occured: Provided, That if the sum computed as aforesaid should amount to less than $5,000, such forfeiture may nevertheless be fixed by the court in an amount not exceeding $5.000: Provided further, That in respect of any compensation received by or due to such officer or director which is not computed on a monthly basis, the portion of such compensation attributable to each such months shall be one-twelfth of such compensation as computed on an annual basis. Such forfeiture shall be payable into the Treasury of the United States and shall be recoverable in a civil action by the United States.

"(d) Upon a proper showing in a civil action brought by the United States

"(1) any officer or director chargeable under subsection (a) of this section with a violation of any provision of the Sherman Antitrust Act, the antitrust provisions of the Tariff Act of 1913 or sections 3 or section 7 of this act by any company shall be enjoined (A) from rendering any service directly or indirectly to or in behalf of such company, permanently or for a specified period not less than ninety days in the discretion of the court; (B) from receiving any compensation, direct or indirect, whether in the form of salary, commission, bonus, share of profits or otherwise, from such company or on account of services to or in behalf of such company, during or in respect of such period; and (C) from engaging in business, whether on his own account or as an officer or director of any other company, or otherwise, in competition with such company, during such period; and

"(2) such company shall likewise be enjoined (A) from receiving any service, direct or indirect, whether voluntary and uncompensated or otherwise, from such officer or director, during such period; and (B) from paying any compensation directly or indirectly, whether in the form of salary, commission, bonus, share of profits or otherwise, to or in behalf of such officer or director or in respect of such period."

The remainder of the amendment applies similar penalties to the company.

The purpose of section 14 of the Clayton Act was to apply the punishments for violation of the antitrust laws to the individuals who committed or commanded the acts, as distinguished from the corporation or the business with which they were connected. President Woodrow Wilson in his message recommending the legislation which is now section 14, stated:

"Penalties and punishments shall fall not upon the business itself, to its confusion and interruption, but upon the individuals who use the instrumentalities of business to do things which public policy and sound business practice condemn. Every act of business is done at the command or upon the initiative of some ascertainable person or group of persons. They should be held individually responsible and the punishment should fall upon them, not upon the business organization of which they make illegal use. It should be one of the main objects of our legislation to divest such persons of their corporate cloak and deal with them as with those who do not represent their corporations, but merely by deliberate intention break the law. Businessmen the country through, I am sure, would applaud us if we were to take effectual steps to see that the officers and directors of great business bodies are prevented from bringing them and the business of the country into disrepute and danger." (51 Congressional Record, p. 1963, January 20, 1914.)

Enactment of section 14 was not necessary to make officers, directors, and agents of corporations responsible under the antitrust laws as they theretofore existed. As they then existed, the antitrust laws, i. e., the Sherman Act, expressly applied to "every person," and in the more than 80 criminal cases which had been brought prior to the enactment of the Clayton Act, individuals, officers, directors, and agents of corporations, had been included and convicted of defendants. Section 14, therefore, was a mere statement of existing law, both statutory and common law, as to the criminal responsibility of corporate agents. This was, of course, very well known to the eminient lawyers promoting the legislation. It was the intention, not to enact a new rule of law but, rather, to embody in the statute a rule to govern the law-enforcing officers in bringing cases, and to cause them to proceed primarily against the individuals who have used a business organization to break the law.

The first sentence of section 14 of the amendment is as follows: "Any violation of any provision of the antitrust laws by any company shall be a violation of such provision by each officer or director of such company who shall have done, or authorized, ordered, or caused to be done, any act constituting in whole or in part such violation."

This makes no substantial change in section 14 as it exists today, except that the reference to agents in existing law is omitted. This omission may leave the antitrust laws open to the construction that that Congress intended that agents of corporations other than officers and directors now are to be exempt. Such a construction will be strengthened because the statute is a criminal one, and, therefore, is to be strictly construed in favor of an accused. Strict construction will be favored especially because the statute contains numerous and severe penalties.

The first clause of the second sentence of section 14 of the amendment is as follows:

"In any proceeding against any officer or director of any company in respect of any such violation by such company, such officer or director, if he shall have had knowledge of any act constituting in whole or in part such violation, shall be presumed to have authorized, ordered, or caused such act;

This clause enacts a rule of evidence. In effect, it makes knowledge a crime, because upon a showing of knowledge the act of authorizing, etc., "shall be presumed.' The purpose of enacting this presumption that the doing of an act shall be established by the fact of knowledge is to solve a problem of proof with which the prosecution in antitrust cases sometimes is confronted. That problem arises out of the difficulty of showing tangible acts, or authorization or orders given by the principal officials of a corporation connecting them with a restraint of trade. In many cases the tangible acts are committed by the minor personnel of a corporation; for example, in a case dealing with coercive methods of acquiring business. Such practices are devised by the controlling personnel, a fact of which there is little tangible evidence other than their position of control, their knowledge of the practices and their failure to order a cessation thereof.

The clause states that "any officer" who shall have knowledge of an act in such violation shall be presumed to have authorized it. The clause is not limited to officers having jurisdiction and control of the business and affairs