FEDERAL LICENSING OF CORPORATIONS MONDAY, JANUARY 25, 1937 UNITED STATES SENATE, ON THE JUDICIARY, The subcommittee met, pursuant to call, at 10:45 a. m., in the committee room, Capitol, Senator Joseph C. O'Mahoney presiding. Present: Senators O'Mahoney (chairman of the subcommittee), King, Van Nuys, McCarran, Logan, Norris, and Austin. Senator O'MAHONEY. For the purpose of the record, let me say that this subcommittee, consisting of Senators King, McCarran, Van Nuys, Logan, Hatch, Norris, Austin, and the chairman, has been appointed by the chairman of the Judiciary Committee to consider S. 10, a bill to regulate interstate and foreign commerce by prescribing the conditions under which corporations may engage or may be formed to engage in such commerce, to provide for and define additional powers and duties of the Federal Trade Commission, to assist the several States in improving labor conditions and enlarging purchasing power for goods sold in such commerce, and for other purposes. I suggest that it may be well to incorporate in the record at the very beginning a copy of the bill. (S. 10 is here printed in full, as follows:) [S. 10, 75th Cong., 1st sess.] A BILL To regulate interstate and foreign commerce by prescribing the conditions under which corporations may engage or may be formed to engage in such commerce, to provide for and define additional powers and duties of the Federal Trade Commission, to assist the several States in improving labor conditions and enlarging purchasing power for goods sold in such commerce, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, TITLE I FINDINGS OF FACT AND DECLARATION OF POLICY SECTION 1. The Congress finds and hereby declares (1) That the Constitution of the United States of America vests in the Congress of the United States full and complete power to regulate all commerce with foreign nations and among the several States, and with the Indian tribes, including all that commerce which concerns more States than one and all that commerce, whether or not carried on wholly within a particular State, which affects other States and which is not completely within a particular State; that the power to regulate such commerce includes the power to promote a more equitable distribution of the benefits thereof among the people of the United States, to foster and enlarge such commerce by improving the standard of living among ultimate consumers and purchasers of commodities and to conserve the future development of such commerce by conserving the natural resources of the Nation. (2) That the franchises, powers, and privileges of all corporations are derived from the people and are granted by the governments of the States or of the United States as the agents of the people for the public good and general welfare; that to a rapidly increasing and, in many industries, to a dominating extent, commerce with foreign nations and among the several States is carried on through the instrumentality of corporations created by the several States which are without jurisdiction in the field in which such corporations principally operate; that it is the right and duty of the Congress to control and regulate all corporations engaged in such commerce and that to effectuate the policy herein declared it is necessary and proper to provide a national licensing system and a national system of incorporation. (3) That, as a necessary and integral part of the process of producing commodities for subsequent sale, exchange, transportation, and resale and reexchange in the channels of interstate commerce, corporations engaged in such commerce normally assemble, at their respective places of production within the several States, raw materials and equipment previously purchased and transported in interstate commerce, that such materials are frequently incorporated in and become a part of the commodities produced by such corporations for sale in interstate commerce, and that the investment in such materials and equipment is recouped primarily from profits made on commodities sold in interstate commerce. (4) That the capital of such corporations is frequently furnished by citizens and residents of many States other than the State from which their corporate existence is derived; that the officers and directors of many such corporations as well as their stockholders are likewise, in many instances, citizens or residents of States other than such parent States; and that such corporations are in truth and in fact instrumentalities of interstate commerce and ought to derive their charters by authority of the Congress. (5) That such corporations employ a substantial percentage of all labor employed in the production of manufactured goods commonly sold in interstate and foreign commerce; that the wages and salaries paid by such corporations for the production and distribution of such goods constitute a substantial and vital part of the purchasing power which makes interstate and foreign commerce possible; that less than 1 percent of all the corporations making incometax reports have owned and controlled more than 50 percent of all the reported assets of all such corporations; and that such maldistribution of national wealth has prevented the expansion of public purchasing power for consumer's goods, has been a major cause of business depressions, and has had a substantial and directly restrictive effect on interstate and foreign commerce. (6) That the growth of such corporations and such concentration of wealth in corporate hands has effectively impaired the economic bargaining power of labor employed by such corporations. (7) That the causes of such maladjustments of wealth have been and are national in their scope and effect and have been found to be beyond the practical or legal ability of the several States to control or eliminate effectively, and that such causes and effects can be effectively controlled or eliminated only through congressional legislation. (8) That for the purpose of executing and exercising the power granted to the Congress of the United States in the commerce clause of the Constitution of the United States, for the purpose of preventing the channels, facilities, and corporate instrumentalities of interstate commerce from being utilized to promote unfair or monopolistic methods of competition in or relating to such commerce and for the purpose of protecting, fostering, and increasing such commerce to the end that the capacity of the people to purchase commodities sold, exchanged, transported, or delivered in the course thereof may be increased with consequent reduction of unemployment and correction of the maldistribution and concentration of economic wealth and power, it has become and is necessary to regulate the terms and conditions on which corporations may produce and distribute commodities for the purposes of interstate commerce. DEFINITIONS SEC. 2. As used in this Act (a) "Business" shall mean an entrepreneur, partnership, corporation, association, trust, or any other business unit. (b) "Commerce" shall mean trade or commerce in all it branches with foreign nations or among the several States or between the District of Columbia and any territory of the United States, and any State, Territory, or foreign nation, or between any insular possession or other places under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States and the District of Columbia, or any foreign nation, or within the District of Columbia, or any Territory or insular possession under the jurisdiction of the United States, or with the Indian tribes; the collection of raw materials and equipment in commerce for the production and the production of any article or commodity to enter the flow of, or which affects commercial intercourse with foreign nations or among the several States, or between the District of Columbia and any Territory of the United States and any State, Territory, or foreign nation, or between any insular possession or other places under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States and the District of Columbia or any foreign nation, or within the District of Columbia or any foreign nation, or within the District of Columbia or any Territory or insular possession under the jurisdiction of the United States, and with the Indian tribes, and the sale or transportation of any article or commodity so produced in the course of commerce as above defined to retail dealers in any State, Territory, or possession of the United States and the District of Columbia. (c) "Representative" shall include an individual, group, committee, corporation, or labor organization. (d) "Books and records" shall include any books, records, correspondence, papers, documents, memoranda, contracts, and other written matter. (e) "Subsidiary" shall mean any business subject to the direct or indirect actual or legal control of any other business or person, whether by stock company or in any other manner. (f) "Affiliate" shall mean any person or business who or which has a subsidiary. (g) "Commission" shall mean the Federal Trade Commission. SEC. 3. (a) The membership of the Federal Trade Commission is hereby increased from five to nine Commissioners, of whom four shall be appointed, as hereinafter provided, by the President, by and with the advice and consent of the Senate. One of such additional Commissioners shall be appointed from a list of not less than five persons whose names shall be submitted to the President by a recognized national organization of employees, one shall be appointed from a list of not less than five persons whose names shall be submitted to the President by a recognized national organization of employers, and one shall be appointed and designated to represent the consuming public and their successors shall be appointed in the same manner. Each such Commissioner shall receive a salary of $10,000 a year, payable in the same manner as the salaries of the judges of the courts of the United States. Not more than two of such Commissioners shall be members of the same political party. No such Commissioner shall engage in any other business, vocation, or employment, and any such Commissioner may be removed by the President for inefficiency, neglect of duty, or malfeasance in office. The additional Commissioners first appointed shall hold office (as designated by the President at the time of nomination) as follows: One until September 25, 1938, one until September 25, 1939, one until September 25, 1942, and one until September 25, 1943. The term of office of a successor to any such Commissioner shall expire seven years from the date of the expiration of the term for which his predecessor was appointed, except that any Commissioner appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term. The persons appointed to succeed the three additional Commissioners whose terms expire on September 25, 1938, September 25, 1939, and September 25, 1942, shall be appointed in the same manner as in the case of the additional Commissioners herein provided for. (b) To effectuate the policy of this Act, the Commission is authorized to establish such agencies, to accept and utilize such voluntary and uncompensated services, and to appoint such employees, and, without regard to the provisions of the civil-service laws, appoint and fix the compensation of such attorneys and special experts, as it may find necessary. (c) The Commission is authorized to utilize, with the consent of the State, such State and local officers and employees as it may find necessary. (d) The Commission may delegate any of its functions or powers under this Act to any such agencies, officers, or employees as it may designate or appoint. (e) The Commission is authorized and directed to develop a general program for the coordination, stabilization, and orderly development of the basic industries of the United States and for a more equitable distribution of the earnings of commerce, trade, and industry to those employed therein and to the investor of capital therein, and for that purpose, under rules and regulations which it may prescribe, to summon from time to time a national industrial conference in which employers, employees, the investing public, and the public generally may be represented. There shall be submitted to each session of the Congress, a full report of the recommendations of such conferences and of the activities of the Commission in developing such program. (f) The Commission is further authorized and directed to investigate the several basic trades and industries of the United States, and from time to time submit to the Congress its findings concerning the general economic conditions prevailing therein, with recommendations for methods of fair competition designed to eliminate unfair trade and labor practices in these several trades and industries. (g) Whenever the Commission shall find that abuses in the form of low wage scales, contrary to the public interest and to the policy of this Act, exist in the production, manufacture, processing, or distribution of any article or commodity shipped, transported, or delivered in commerce, and that such abuses have not been eliminated through collective bargaining, the Commission may recommend a minimum wage for the lowest paid classes of unskilled labor engaged in the production, manufacture, processing, or distribution of such articles or commodities. SEC. 4. On and after January 1, 1938, it shall be unlawful for any corporation organized under the laws of any State, Territory, or possession of the United States, or of any foreign country, or for any corporation heretofore or hereafter organized under the laws of the United States or the District of Columbia to engage directly or indirectly in commerce without first having obtained a license therefor from the Commission. This provision shall extend to any person engaged in such commerce if by virtue of any stock ownership, security ownership, advance, loan, trust or trusts, holding company or companies, or any other device or means, direct or indirect, he controls or attempts to control except by participating in a regularly called meeting of stockholders, any corporation engaged in such commerce, and any corporation shall be deemed to be engaged in such commerce if, for the purpose of controlling or influencing the management of any corporation subject to this Act, it owns stock or securities of such corporation, or if by means of any advance, loan, voting trust or trusts, holding company or companies, or any other device or means, direct or indirect, it exercises or attempts to exercise direction or control over a corporation subject to this Act. SEC. 5. Every license and every charter issued under this Act shall provide (a) That no female employee who performs services approximately equivalent to those performed by male employees shall be discriminated against as to rates of pay or in rights granted or in any other manner. (b) That (1) no person less than sixteen years of age shall be employed; and that (2) no person less than eighteen years of age shall be employed in a hazardous occupation, or at any other time than between the hours of 7 antemeridian and 7 postmeridian. (c) That employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in concerted activities, for the purpose of collective bargaining or other mutual aid or protection; and that the licensee shall refrain from (1) Discriminating in regard to hire or tenure of employment or any terms or conditions of employment to encourage or discourage membership in any labor organization: Provided, That nothing in this Act or in any other Act of Congress shall preclude a licensee from making an agreement with a labor organization (not established, maintained, or assisted by any action defined in the National Labor Relations Act, approved July 5, 1935, as an unfair labor practice) requiring as a condition of employment membership therein, if such labor organization is the representative of the employees as provided in section 9 (a) of that Act, in the appropriate collective bargaining unit covered by such an agreement when made. (2) Interfering with, restraining or coercing employees in the exercise of the rights guaranteed in this subsection. |