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The law of the land ought long ago to have last spring, the Standard Oil case and the made punishable these crimes against in- American Tobacco case—and to the specdustrial society. If trade competition be tacular disorganizations of this fall in obedithe industrial war we are told it is, at least ence to the decrees in those cases. The court let us have those laws of war that modern has given it as its solemn judgment that these humanity demands. It is the disgrace of the reorganizations have brought about a comlaw that it did not see sooner that business pliance with the law, and doubtless this is policies which were not especially harmful sound technically. But does anyone believe in the older days of free competition had that competition has been restored, or that it become too deadly to be allowed when em can ever again appear in those businesses? ployed by a monopoly. Such an excluding One need only remember what followed policy as the refusal to sell to retailers who when the dissolution of the original trusts persist in buying anything of a rival manu was ordered by the courts not so very facturer is one example. Making a lower many years ago. There was a compliance price in certain localities where incipient with the decrees of the courts by the discompetition has appeared is another. When tribution of the stocks held by the trustees. such policies appear, the deliberate design to But no competition among the concerns get monopoly at all costs is apparent.

that were formerly combined in those And what the trusts get by these

trusts has ever been discerned by policies they intend to hold by

any observer. You may take the same means. They are

away all legal obstacles to not content to win their

competition and you may position by doing better

declare illegal all contracts by the public than their

restraining trade. But you competitors. They mean

cannot make people comto take from the public

pete who have seen the what they please, now

advantage of concentrathat they have got the

tion, which any man can power to do as they will.

see in a business that is Some of these policies are

naturally monopolistic. plainly illegal, others are

In every branch of the not. What we need is an

oil business, we have inter-state trade act, to make

numerous corporations them all clearly illegal, so that

without entangling alno one can raise a doubt as

liances now; in every to the law or plead igno

department of the rance of it.

tobacco business, we Let me apply these

have at least three generalizations to

separate concerns. the great trust

But they have the same decisions of

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


John D. Archbold (top), new president of the Standard Oil Company of New Jersey: John D. Rockefeller (right), and (left) 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 that capitalization. Require each registered of the Sherman act; I would leave that for concern to make an annual report, including its appropriate work of dissolving combina- its balance sheet, income account, volume tions in restraint of trade. But I would of output, value of output, etc. supplement it by an act to regulate concerns Third-Give the Inter-state Trade Comthat have established a control of their mission power to regulate all concerns that market. My own idea in drafting such an have substantial control over their market. Inter-state Trade act would be to follow the This can be determined in the first instance Inter-state Commerce act, as far as that by the Commission upon the basis of the recould be done. In doing this, we should have turns that have been filed by the various the advantage of using a well-tested code. concerns upon taking out their Federal As the President in his trust message de- licenses. Concerns that have a substantial clares himself ready to accept an Inter-state control over their market are so affected Trade Commission, it is not improbable with a public interest that they may propthat the present Congress will provide for erly be controlled to the extent that the one upon somewhat the same basis as that public services are. Moreover, the Comof the Inter-state Commerce Commission. mission should have full powers to make Only legitimate concerns, however, will be investigations and report thereon. If they permitted to register themselves under this find that any concern is party to an illegal commission; the illegitimate monopolies will pool, they should bring the matter to the be turned over to the tender mercies of the Attorney-General for appropriate action. anti-trust law, although the commission Fourth-Define what are unfair practises; might well be invested with the power to for destructive competition in a monopsuperintend the dissolution of these monop olistic business has various forms such as (1) olies.

selling in one locality at discriminating First-Establish an Inter-state Trade prices in order to force out local competiCommission of seven members, with salary tion; (2) selling one grade or variety at disand tenure like the Inter-state Commerce criminating prices in order to force out Commission. The present Bureau of Cor- competition; (3) discrimination against purporations should be made a bureau of the chasers who will not agree not to deal with Commission, to serve it as an investigating a rival; (4) imposing terms in leases that the agency. A year ago, the proposal of an lessee shall not buy anything from any one Inter-state Trade Commission would have else; (5) fixing the terms and prices upon aroused a storm of protest. We would have which the product shall be resold; (6) spying been told that it meant Socialism and noth on competitors, bribing employees, buying ing less for the Government to attempt to trade secrets, establishing bogus competiregulate these businesses thus. But govern- tion, etc. In other words, prohibit making mental regulation even to the extent of discriminations against customers who refixing prices-has been urged so often during fuse to obey the dictates of the trusts. the past few months by such influential per Make this plain by requiring sale to all pursons that I assume there are very many of chasers upon equal terms under substanyou who are quite ready to have such a tially similar circumstances. Commission tried, and your interest will be Fifth-Give the Inter-state Trade Comin the details of this proposal.

mission power to give relief against extorSecond-Require every manufacturing tionate charging. At first, confine its power and trading concern of a certain size to reg- over prices to reducing prices against which ister itself with the Commission in order to specific complaint has been made to it, but get a Federal license to engage in inter-state in disposing of such complaints let it fix commerce. There is, it seems to me, no need the price in question for the future. Proof requiring Federal incorporation of the vide that full returns shall be made as to the trusts under the control of a trade commis- outstanding securities and actual capital of sion any more than there has proved to be the concerns subject to the act as the basis need of Federal incorporation of the rail for such regulation. But at first provide roads subject to the Commerce Commission. that dividends shall not be reduced when Demand of every concern registering, a full the concern in question is not making more statement of its condition, including par than a fair per cent. of profit upon each ticularly its capitalization and the basis of transaction. I would go very slowly in this

matter at first, giving the Commission only session of monopoly, that should subject a power to give relief in particular cases of out concern to prosecution under the law in the right extortion. Here,as elsewhere, I believe in future. The essence of the wrong of mopreserving individual initiative. Iam forstate nopolization is the exclusion of others from control, not for government management. the market, not the mere growth of the con

Sixth-Persons aggrieved by “unfair com cern itself. In other words, it is unnatural petition” or by extortionate prices, may growth by unreasonable tactics that should bring complaint before the Inter-state Trade be punished, not natural growth by deserved Commission, which shall give appropriate success. Monopolization by exclusive polirelief. Aggrieved persons may also bring cies and unjustifiable discriminations is the suit in courts for unfair competition or thing to be prevented. With an open marextortionate prices. The Commerce Court ket, a rival concern may succeed on its shall have the same powers in relation to merits, but not if the trusts are allowed to appeals from the Inter-state Trade Com control the market. If this opportunity is mission that it now has over the Inter-state preserved, there will be protection against Commerce Commission. The Commission any injury to the public, if not by comof its own initiative may investigate unfair petition itself, by the potentiality of combusiness by any registered company and petition. If the unfair competition of the report its results. The Commission might trusts is forbidden, competition by outside perhaps be empowered to pass upon new concerns will always be possible. Only issues of securities by the corporations sub those trusts that deserved to survive would ject to its control.

survive. Unless they can produce cheaper This program ought to accommodate than their rivals, they are doomed. By this the conflicting interests involved in this legal solution we might solve the trust issue. It should be the abuse, not the pos- problem by the natural method.

Standard Oil

Oil Decision

Decision Futile


J. H. Parker
President and General Manager of the United Oil Refineries Company


VERY time I hear any one talking Each subsidiary company, the Standard about the dissolution of Standard Oil of California, for example, has always Oil it makes me laugh. The de- managed its own territory, subject only to cision of the United States Su directions as to policy from 26 Broadway.

preme Court has had absolutely What difference is there now? no effect upon the conduct of the Standard's Each company is the same as before, business; it had no effect upon the virtual entirely competent to manage things within monopoly which that concern enjoys, and its territory and entrenched with the power it will bear no results for the consumer in of years of monopoly in an invulnerable the way of lower prices or raised quality in trade position. Even if the various local the goods he purchases.

branches of Standard Oil have no secret The profits of the business, which for agreement, it is not likely that they, as memmerly gravitated to the stockholders of the bers of the same family, so to speak, would parent company, the Standard Oil Company not act together for mutual interest as they of New Jersey, in the form of dividends, will have so profitably done heretofore. now reach their pockets via the stock of the The monopoly of Standard Oil is not numerous subsidiary companies.

broken, it is not even cracked or dented. What these big stockholders did, in effect, The independent operator in California, and was to exchange securities in the holding I suppose elsewhere, has just the chance now companies for the stock in the branch that he had before the famous suit of the companies that actually conduct the Government was begun-no more and no business.


Good and Bad Trusts

The Test is Whether or Not a Monopoly is Artificial


J. Laurence Laughlin
Professor of Political Economy, University of Chicago


THE results of the prosecutions in such as the Tobacco Company or the Stand

the case of the Standard Oil, ard Oil Company, will do any less business Tobacco, and other trusts are than before? Did the decision in the neither “flesh, fowl, nor good red Northern Securities Company really proherring.”

duce any changes in the control and manWherein is the country better off as a agement of the constituent railroads? These consequence? From the point of view of disintegrated companies have complied with the consumer, it is not likely that the prod the law; but they will not cease to go on ucts of any of these trusts will be sold doing business. They will continue to procheaper because of the breaking up of a duce the major part of the goods marketed single organization into a number of smaller for the same general reasons that have given companies.

them predominance in the past. It may be a satisfaction to some that the Apart from any special privileges—which trust act has been enforced on powerful of course, they ought not to have—they will combinations of capital; but to whom is that survive, if at all, on the basis of superior a benefit, if the outcome is an increased cost business skill. in the production and distribution of com If they do not, then there will arise others modities?

who will surpass their competitors, and Even if the margin between the retail these others will become dominant. That price and the cost of production has been is the law of freedom; and how do we pronarrowed, what advantage is it to the public pose to stop it? that the profits of the producer have been Indeed, why should we wish to stop the lessened on selling at the same old price to inevitable results of superiority, whether in the buyer?

production of goods or in any walk of life? Even if it be assumed that practices have There is no doubt that the law of the land been proven contrary to the law, what boots ought to be enforced; there is no doubt that it, if the enforcement of the law brings no the anti-trust act can be enforced; but there public gain?

is no doubt that the act, when enforced, Such a result only proves that the law was is not accomplishing the ends intended by incapable of accomplishing its intended reasonable legislation. If the letter of this purpose.

law were strictly enforced, scarcely any busiIn short, we are forced, from whatever ness, or labor organization, could continue angle we may view the matter, to confess its existence. It is obsolete; it was passed that the act itself is highly unsatisfactory. long before business organization had comIt is obvious that it has not prevented the pleted a transformation into which it had formation of large combinations; for, since been impelled by economic forces beyond its enactment, the whole list of trusts and the control of legislation. The qualification holding companies has come into existence. of "reasonableness" insisted upon by the \ It may be said that this situation is Supreme Court has not removed the undue to the fact that' the law has not certainty under which men are now doing been enforced; that stringent enforcement business. Indeed, the bane of the business would rid the country of the domination of world to-day is the uncertainty as to what large interests in all branches of business. is allowed under the anti-trust law; and Now, as a matter of common sense, does business is slowing up accordingly. any one believe that the disintegrated trusts, To my mind, it is clear that we should

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