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The law of the land ought long ago to have made punishable these crimes against industrial society. If trade competition be the industrial war we are told it is, at least let us have those laws of war that modern humanity demands. It is the disgrace of the law that it did not see sooner that business policies which were not especially harmful in the older days of free competition had become too deadly to be allowed when employed by a monopoly. Such an excluding policy as the refusal to sell to retailers who persist in buying anything of a rival manufacturer is one example. Making a lower price in certain localities where incipient competition has appeared is another. When such policies appear, the deliberate design to get monopoly at all costs is apparent. And what the trusts get by these policies they intend to hold by the same means. They are not content to win their. position by doing better by the public than their competitors. They mean to take from the public what they please, now that they have got the power to do as they will. Some of these policies are plainly illegal, others are not. What we need is an inter-state trade act, to make them all clearly illegal, so that no one can raise a doubt as to the law or plead ignorance of it.

Let me apply these generalizations to the great trust decisions of

last spring, the Standard Oil case and the American Tobacco case-and to the spectacular disorganizations of this fall in obedience to the decrees in those cases. The court has given it as its solemn judgment that these reorganizations have brought about a compliance with the law, and doubtless this is sound technically. But does any one believe that competition has been restored, or that it can ever again appear in those businesses? One need only remember what followed when the dissolution of the original trusts was ordered by the courts not so very many years ago. There was a compliance with the decrees of the courts by the distribution of the stocks held by the trustees. But no competition among the concerns

that were formerly combined in those trusts has ever been discerned by any observer. You may take away all legal obstacles to competition and you may declare illegal all contracts restraining trade. But you cannot make people compete who have seen the advantage of concentration, which any man can see in a business that is naturally monopolistic. In every branch of the oil business, we have numerous corporations without entangling alliances now: in every department of the tobacco business, we have at least three separate concerns. But they have the same owners as before and the

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H. C. Folger, Jr., president of the Standard Oil Company of New York, succeeding William Rockefeller

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John D. Archbold (top), new president of the Standard Oil Company of New Jersey: John D. Rockefeller (right), and deft) his son, John D. Rockefeller, Jr. A view of "26 Broadway," the famous head office of the Standard Oil, is given in the background. The cut below shows Rockefeller s home in Tarrytown, New York

What I would urge would be not a repeal of the Sherman act; I would leave that for its appropriate work of dissolving combinations in restraint of trade. But I would supplement it by an act to regulate concerns that have established a control of their market. My own idea in drafting such an Inter-state Trade act would be to follow the Inter-state Commerce act, as far as that could be done. In doing this, we should have the advantage of using a well-tested code. As the President in his trust message declares himself ready to accept an Inter-state Trade Commission, it is not improbable that the present Congress will provide for one upon somewhat the same basis as that of the Inter-state Commerce Commission. Only legitimate concerns, however, will be permitted to register themselves under this commission; the illegitimate monopolies will be turned over to the tender mercies of the anti-trust law, although the commission might well be invested with the power to superintend the dissolution of these monopolies.

First-Establish an Inter-state Trade Commission of seven members, with salary and tenure like the Inter-state Commerce Commission. The present Bureau of Corporations should be made a bureau of the Commission, to serve it as an investigating agency. A year ago, the proposal of an Inter-state Trade Commission would have aroused a storm of protest. We would have been told that it meant Socialism and nothing less for the Government to attempt to regulate these businesses thus. But governmental regulation-even to the extent of fixing prices has been urged so often during the past few months by such influential persons that I assume there are very many of you who are quite ready to have such a Commission tried, and your interest will be in the details of this proposal.

Second-Require every manufacturing and trading concern of a certain size to register itself with the Commission in order to get a Federal license to engage in inter-state commerce. There is, it seems to me, no need of requiring Federal incorporation of the trusts under the control of a trade commission any more than there has proved to be need of Federal incorporation of the railroads subject to the Commerce Commission. Demand of every concern registering, a full statement of its condition, including particularly its capitalization and the basis of

that capitalization. Require each registered concern to make an annual report, including its balance sheet, income account, volume of output, value of output, etc.

Third-Give the Inter-state Trade Commission power to regulate all concerns that have substantial control over their market. This can be determined in the first instance by the Commission upon the basis of the returns that have been filed by the various concerns upon taking out their Federal licenses. Concerns that have a substantial control over their market are so affected with a public interest that they may properly be controlled to the extent that the public services are. Moreover, the Commission should have full powers to make investigations and report thereon. If they find that any concern is party to an illegal pool, they should bring the matter to the Attorney-General for appropriate action.

Fourth-Define what are unfair practises; for destructive competition in a monopolistic business has various forms such as (1) selling in one locality at discriminating prices in order to force out local competition; (2) selling one grade or variety at discriminating prices in order to force out competition; (3) discrimination against purchasers who will not agree not to deal with a rival; (4) imposing terms in leases that the lessee shall not buy anything from any one else; (5) fixing the terms and prices upon which the product shall be resold; (6) spying on competitors, bribing employees, buying trade secrets, establishing bogus competition, etc. In other words, prohibit making discriminations against customers who refuse to obey the dictates of the trusts. Make this plain by requiring sale to all purchasers upon equal terms under substantially similar circumstances.

Fifth-Give the Inter-state Trade Commission power to give relief against extortionate charging. At first, confine its power over prices to reducing prices against which specific complaint has been made to it, but in disposing of such complaints let it fix the price in question for the future. Provide that full returns shall be made as to the outstanding securities and actual capital of the concerns subject to the act as the basis for such regulation. But at first provide that dividends shall not be reduced when the concern in question is not making more than a fair per cent. of profit upon each transaction. I would go very slowly in this

matter at first, giving the Commission only power to give relief in particular cases of outright extortion. Here,as elsewhere, I believe in preserving individual initiative. I am for state control, not for government management.

Sixth-Persons aggrieved by "unfair competition" or by extortionate prices, may bring complaint before the Inter-state Trade Commission, which shall give appropriate relief. Aggrieved persons may also bring suit in courts for unfair competition or extortionate prices. The Commerce Court The Commerce Court shall have the same powers in relation to appeals from the Inter-state Trade Commission that it now has over the Inter-state Commerce Commission. The Commission of its own initiative may investigate unfair business by any registered company and report its results. The Commission might perhaps be empowered to pass upon new issues of securities by the corporations subject to its control.

This program ought to accommodate the conflicting interests involved in this issue. It should be the abuse, not the pos

session of monopoly, that should subject a concern to prosecution under the law in the future. The essence of the wrong of monopolization is the exclusion of others from the market, not the mere growth of the concern itself. In other words, it is unnatural growth by unreasonable tactics that should be punished, not natural growth by deserved success. Monopolization by exclusive policies and unjustifiable discriminations is the thing to be prevented. With an open market, a rival concern may succeed on its merits, but not if the trusts are allowed to control the market. If this opportunity is preserved, there will be protection against any injury to the public, if not by competition itself, by the potentiality of competition. If the unfair competition of the trusts is forbidden, competition by outside concerns will always be possible. Only those trusts that deserved to survive would survive. Unless they can produce cheaper than their rivals, they are doomed. legal solution we might solve the trust problem by the natural method.

By this

Standard Oil Decision Futile

E

By

J. H. Parker

President and General Manager of the United Oil Refineries Company

VERY time I hear any one talking about the dissolution of Standard Oil it makes me laugh. The decision of the United States Supreme Court has had absolutely no effect upon the conduct of the Standard's business; it had no effect upon the virtual monopoly which that concern enjoys, and it will bear no results for the consumer in the way of lower prices or raised quality in the goods he purchases.

The profits of the business, which formerly gravitated to the stockholders of the parent company, the Standard Oil Company of New Jersey, in the form of dividends, will now reach their pockets via the stock of the numerous subsidiary companies.

What these big stockholders did, in effect, was to exchange securities in the holding companies for the stock in the branch companies that actually conduct the business.

Each subsidiary company, the Standard Oil of California, for example, has always managed its own territory, subject only to directions as to policy from 26 Broadway. What difference is there now?

Each company is the same as before, entirely competent to manage things within its territory and entrenched with the power of years of monopoly in an invulnerable. trade position. Even if the various local branches of Standard Oil have no secret agreement, it is not likely that they, as members of the same family, so to speak, would not act together for mutual interest as they have so profitably done heretofore.

The monopoly of Standard Oil is not broken, it is not even cracked or dented. The independent operator in California, and I suppose elsewhere, has just the chance now that he had before the famous suit of the Government was begun-no more and no less.

T

Good and Bad Trusts

The Test is Whether or Not a Monopoly is Artificial

By

J. Laurence Laughlin

Professor of Political Economy, University of Chicago

HE results of the prosecutions in the case of the Standard Oil, Tobacco, and other trusts are neither "flesh, fowl, nor good red herring."

Wherein is the country better off as a consequence? From the point of view of the consumer, it is not likely that the products of any of these trusts will be sold cheaper because of the breaking up of a single organization into a number of smaller companies.

It may be a satisfaction to some that the trust act has been enforced on powerful combinations of capital; but to whom is that a benefit, if the outcome is an increased cost in the production and distribution of commodities?

Even if the margin between the retail price and the cost of production has been narrowed, what advantage is it to the public that the profits of the producer have been lessened on selling at the same old price to the buyer?

Even if it be assumed that practices have been proven contrary to the law, what boots it, if the enforcement of the law brings no public gain?

Such a result only proves that the law was incapable of accomplishing its intended

purpose.

In short, we are forced, from whatever angle we may view the matter, to confess that the act itself is highly unsatisfactory. It is obvious that it has not prevented the formation of large combinations; for, since its enactment, the whole list of trusts and holding companies has come into existence.

It may be said that this situation is due to the fact that the law has not been enforced; that stringent enforcement would rid the country of the domination of large interests in all branches of business. Now, as a matter of common sense, does any one believe that the disintegrated trusts,

such as the Tobacco Company or the Standard Oil Company, will do any less business than before? Did the decision in the Northern Securities Company really produce any changes in the control and management of the constituent railroads? These disintegrated companies have complied with the law; but they will not cease to go on doing business. They will continue to produce the major part of the goods marketed for the same general reasons that have given them predominance in the past.

Apart from any special privileges-which of course, they ought not to have-they will survive, if at all, on the basis of superior business skill.

If they do not, then there will arise others who will surpass their competitors, and these others will become dominant. That is the law of freedom; and how do we propose to stop it?

Indeed, why should we wish to stop the inevitable results of superiority, whether in production of goods or in any walk of life?

There is no doubt that the law of the land ought to be enforced; there is no doubt that the anti-trust act can be enforced; but there is no doubt that the act, when enforced, is not accomplishing the ends intended by reasonable legislation. If the letter of this law were strictly enforced, scarcely any business, or labor organization, could continue its existence. It is obsolete; it was passed long before business organization had completed a transformation into which it had been impelled by economic forces beyond the control of legislation. The qualification of "reasonableness" insisted upon by the Supreme Court has not removed the uncertainty under which men are now doing business. Indeed, the bane of the business world to-day is the uncertainty as to what is allowed under the anti-trust law; and business is slowing up accordingly.

To my mind, it is clear that we should

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