The anti-trust laws with special reference to the Mennen co. decision, the hardwood limber decision and the Edge resolution;

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GIFT OF

The Anti-Trust Laws
Special Reference to the Mennen Co. Decision
The Hardwood Lumber Decision
And the Edge Resolution

An Address hy

FELIX H. LEVY

Of the New York Bar
Former Special Counsel to Dept. of Justice

Delivered Before the

AMERICAN SUPPLY & MACHINERY

MANUFACTURERS ASSOCIATION

At Its Annual Convention

Held at
Atlantic City^ N. J.
May 9, 1922.

/J-0 3.-77 ^

Gift

THE ANTI TRUST LAWS, WITH SPECIAL REFERENCE
TO THE MENNEN CO. DECISION, THE HARDWOOD
LUMBER DECISION, AND THE EDGE RESOLUTION.

Mr. Chairman and members of the Convention: I desire
at the outset to express my appreciation and thanks for the
privilege involved in your invitation to appear before you to-
day. Upon the courteous suggestion of your Secretary, Mr.
Mitchell, I came here from' New York a day or two in advance
of the time set for my address. The result has been that I
have been able to mingle with you and to listen yesterday, with
more than ordinary interest, to the proceedings of your Con-
vention so that, if I may say so, I feel in a certain sense like
one of your number rather than like a stranger from without
the gates.

I also had the opportunity of reading the stenographer's
transcript of the proceedings of your recent Birmingham Con-
vention, and I hope you will believe that I say it not in idle
words of flattery but with sincerity and as an observer outside
of your own field of combat, who perhaps therefore can get a
better perspective, that I have rarely read anything of more
genuine interest than the proceedings of that Convention.

I listened yesterday with great interest not merely to
the general proceedings of your Convention, but also to the
eloquent and inspiring address by Captain Gorby on ^'optim-
ism". And then, when I reflected on the proceedings of your
Birmingham Convention and, without making invidious com-
parisons, bore in mind the masterly presentation of various
topics affecting not merely your own industry but also the
country at large, by your President, Mr. Gladding, and the
scholarly and statesmanlike speech made by Mr. Williams, I
felt like adding to the catalogue pronounced by Captain Gorby
of the elements and items which ought to make us all optimistic,
the further element that a country which possesses an industry
like yours, containing men of the marked talents and vision
shown by Mr. Gladding and Mr. Williams and by many others

53953^

of your membership, that a country possessing such men need
not fear for its future.

If the majority of the members of the two houses of
Congress, were customarily men of the business experience
and acumen and of the vision and foresight of men like Mr.
Gladding and Mr. Williams, the welfare of our country would
be greatly promoted.

The gentlemen whom I have thus named, leaders in your
industry, are but types of the forceful, . aggressive and far-
sighted men who are to be found in every kind of industrial
activity in this country. Are our business men — endowed as
they are with rare gifts of energy, initiative and vision — free
to use their talents without hindrance? They are not, for,
aa I shall endeavor to demonstrate (to you today, they are
shackled and fettered by antiquated and out-worn legal
doctrines which have long ago been abandoned by Great
Britain and by all other civilized countries. I refer to the
ancient common-law doctrine known as "restraint of trade",
a doctrine born in England centuries ago to meet conditions
then existing but now utterly changed.

In England, with a system of jurisprudence vastly superior
to our own, the changed conditions of modern business have
progressively brought about an amelioration of this ancient
legal principle, so that today it rests very lightly upon the
shoulders of British industry; whereas in this country it re-
tains, virtually without change, its old-time rigor, to the great
detriment, as I shall endeavor to show, of our trade and com-
merce.

Economists who have studied the subject, maintain that
the greatest obstacle and hindrance to the legitimate exercise
of their natural powers and capabilities by the business men
of our country, is to be found in our own laws, framed by our
own servants, interpreted and enforced by our own ofiScials.
For such is the situation which the Anti-Trust Laws of the
United States have created as a result of a grave and funda-
mental misconception which has befallen those laws.

I shall devote a brief part of your time to a discussion of
the history and the evolution of the Sherman, Law.

It was passed in 1890 for a definite, distinct and exact
purpose. It was passed in order to disrupt, and prevent the

recurrence of, great trusts — the whiskey trust, the oil trust,
the sugar trust, and the like. The debates in Congress indis-
putably show that to be the only purpose for which the Sher-
man Law was enacted. To a substantial extent it has per-
formed that duty. In breaking up, ineffectually, the oil trust
and the tobacco trust, the Sherman Law was not at fault, but
the officials were at fault who permitted farcical dissolutions
of those trusts — dissolutions which resulted in the greater
enrichment of the owners of those monopolies, but in little or
no benefit to the public. But that is not a criticism of the
Sherman Law. Court decisions without number show, on the
contrary, that it has performed, in a very substantial degree,
the purpose for which that law was enacted.

But when we examine the subject further, what do we
find ? We find that the operation of that law has been extended
far (beyond its original purpose of breaking up these great
combinations which did so much harm. They did great harm,
indeed. They did things which were oppressive and wicked
and, as Mr. Chief Justice Taft once said, it would "miake you
choke" to think that men would do to others what the con-
ductors of those great trusts did to their small rivals. The
result was that the people of this country were so inflamed,
their righteous indignation was so aroused, that it has not yet
cooled off and they have permitted that law to be extended to
the multitudinous details of daily business, so that there is
scarcely an act that a^erchant or a manufacturer can do by
way of concert with his competitor, which is lawful. As every-
one knows, it prohibits the discussion of price agreements. You
would be just as indictable for making a price agreement, or
an agreement to prevent overlapping of territory, as if, by
way of illustration, you committed arson. It is a crime in the
one instance and in the other.

A speaker who preceded me at your Convention, said that
this is "the most governed and the worst governed country on
earth". I adopt his phrase as a basis for saying that there
is not a country on earth that has a law which is interpreted as
is our Sherman Law. I took the trouble before I came here to
look up the laws of England on this subject. Now, I think
England is a pretty good example with respect to industrial
matters. Napoleon called it a nation of shop-keepers and
Britain is proud of the appellation. I believe the controlling

thought of Lloyd George at Genoa today is the restoration of
trade activity, because that is the mainspring of the life of
nations.

The decisions of the English Courts are plainly to the
effect that cooperative activities of business competitors, which
are declared unlawful by our Sherman Law, are entirely law-
ful in England. Striking confirmation of this fact is furnished
by the definition or description of trade associations given
in the ''Encyclopaedia Brittanica", as showing the functions
of such associations in England. It is stated in these words : —
"Those which are themselves engaged in trade, ....
or which result from the combination of firms or individuals
in the same or connected trades, for the purpose of facilitating
or restricting Ipjroduction, limiting cofmpetition, regula^ting
prices, etc.". This is an open, avowed public declaration that
such is the purpose of trade associations in Great Britain.
What a striking contrast it presents to the permissible activ-
ities of trade associations in this country ! And now to show
you that in England the purposes thus stated are in fact per-
formed, I shall read to you briefly from a notable book, treating
of trade practices in Great Britain. It is written by a learned
professor, Prof. Macrosty of the University of Birmingham',
and is entitled "The Trust Movement in British Industry".
The book shows that every industry in Great Britain has a
trade association. The author, in describing their functions
and purposes, says: "Price Associations, the next highest
grade, aim at the regulation of sale prices as well as of the
conditions of bargaining, and exhibit a great variety of struc-
ture The simplest form is where the manufac-
turers or traders meet, either as individuals or as members
of an association for general trade purposes and determine on
a rise in prices to meet some special circumstance, such as an
increase in the price of raw materials. The agreed rise may
either be for an indefinite period so long as the conditions re-
main the same, or for a fixed period, after which competition
is once more free. Thus we find the Associations of Coal
Masters raising the price of coal at the beginning of Winter
and Associations of Grocers trying to make the retail price
of sugar follow advances in the wholesale price. The next
stage is where the members combine for a definite period,
usually a year, for the specific purpose of fixing prices from
time to time."

It goes without saying that procedure of this nature on
the part of trade associations in this country would be grossly
violative of the Sherman Law. In order, however, to show you
that this procedure in England is done openly and not under
cover, and is done without legal interference, I call your atten-
tion to these succeeding statements made by Prof. Macrosty,
in which he specifically names two associations. In succeeding
sentences of his book other associations are also named, but
time will not permit me to read them now.

His further statement to which I refer, is this : "Regulation
may take place irregularly as trade demands, as is done by
the Fife Coal Association, or normally at meetings weekly,
monthly, or even quarterly, as in the case of the Midland Un-
marked Bar Association Generally speaking,

the rules of a Price Association provide the ordinary machinery
of a Committee, President, Secretary and Treasurer, annual
and other meetings. Sometimes a deposit of money, or secur-
ities, or a promissory note is required, out of which penalties
for breach of the rules are levied." (Laughter).

When you consider the contrast which the foregoing state-
ment of conditions prevailing in England present, as compared
with the conditions affecting trade associations in this coun-
try, you may well laugh. Of course, in speaking thus, I do
not mean to be flippant, for the subject involves too many seri-
ous aspects to be treated jestingly. I venture to suggest, as
I shall later more fully point out, that if Secretary Hoover,
in his laudable efforts to increase the efficiency of trade asso-
ciations in this country, would investigate the conditions thus
shown as prevailing in England, and determine whether the
more liberal policy prevailing in England may not, at least
to some extent, be utilized in this country, he would greatly
advance the useful efforts which he has been making in behalf
of trade association activities.

It may be said by the advocate of the strict enforcement
of the Sherman Law, that the practices thus disclosed as pre-
vailing in England are done without sanction of law. I have,
however, shown that they are done publicly and openly, and
I will now show that they have the highest judicial sanction
and support. I refer to the important decision rendered in
1912 by the Privy Council of England, one of the highest

courts in that country, in a case which has become widely
known as the Australian Collieries case.

That important case arose in the following manner. The
great and progressive commonwealth of Australia has a statute
largely resembling our Sherman Law ; but, as you will see, very
differently enforced. Some years ago the entire coal industry
of Australia got together in one combination; the members
of the combination were the coal operators, the coal-carrying
steamships and railways, the wholesalers and the retailers.
Now that is A to Z, from the ground to the consumer. They
got together and agreed on how much each operator should
produce, at what price he should sell, what freight rates the
railroads and steamships should charge, and at what price the
retailer should buy and should sell. And a suit was brought
by the Attorney- General of the Commonwealth of Australia,
who asserted that this was a violation of the law; but the
Privy Council declared it lawful and stated:

"It can, in their Lordships' opinion, never be of
real benefit to the consumers of coal that colliery
proprietors should carry on their business at a loss,
or that any profit they make should depend on the
miner's wages being reduced to a minimum. Where
these conditions prevail, the less remunerative col-
lieries will be closed down, there will be great loss
of capital, miners will be thrown out of employment,
less coal will be produced and prices will consequently
rise until it becomes possible to re-open the closed col-
lieries or open other seams. The consumers of coal
will lose in the long run if the colliery proprietors do
not make fair profits or the miners do not receive fair
wages."

Now, I say, that is an astonishing statement when con-
trasted with Court decisions in like cases in this country, and
with the speeches you hear in Congress. For there they say
that the only one to be considered is the ultimate consumer,
that anything that prevents prices being reduced is detrimental
to the public, that therefore competition must be carried on to
the (Uttermost extreme and that competitors cannot get to-
gether in great emergencies and say, "We agree that the price
should be raised thus and so", in order that weaker members
of an industry shall not be ruined. The prevailing American

8

argument is that competition is the life of trade. The dis-
tinguished Judge who wrote the sentence which I have read to
you, apparently believed that if competition is the life of trade,
it is usually the death of the competitors.

It is not open to the slightest question that if a situation
similar to that which was disclosed in the Australian Collieries
case had been presented to the courts of this country under the
Sherman Law, our courts would have declared the combination
thus disclosed to be unlawful. Indeed, there is not the slightest
doubt that persons comprising such combination would, under
the Sherman Law, have been subject to indictment and criminal
prosecution.

It will be observed that the controlling thought in the
minds of the Privy Council, which led it to declare the
Australian Collieries agreement to be lawful, was that such
agreement enabled the parties thereto to conduct their business
without loss, and that consumers of coal would "lose in the
long run if the colliery proprietors do not make fair profits".
In other words, the principle upon which the decision was
based is that competitors should be permitted to combine if
such a course is necessary in order to prevent the closing down
of the less remunerative units in the industry, and the con-
sequent loss of capital and reduction of the number of men
employed in the industry.

The courts of this country, in their decisions under the
Sherman Law, have acted in direct disregard and contradic-
tion of this principle. This is amply shown in numerous deci-
sions of our Supreme Court, of which the following are typical
instances. In the famous Danbury Hatters' case, the Supreme
Court declared certain acts to be unlawful, although, to use
the Court's words, "the impelling motive of the combination
was an effort to better the conditions of the combiners, which,
except for the anti-trust act, might be proper and lawful". In
another decision, the Supreme Court used the following lan-
guage :

"It is argued that the main purpose of this agree-
ment being to increase the trade of the parties, to en-
hance competition in a larger field, and improve the
character of the product, these objects are beneficial
to the public as well as to the private parties, lawful

9

in their scope and purpose, and justifying the indirect
and partial restraint of trade involved in the execution
of the agreement .... Wider markets and
more trade may be the inducements to such agree-
ments, but they are purposes which the Act of Con-
gress does not permit to interfere with the freedom of
interstate traffic."

In another case, the Supreme Court, speaking of the pro-
visions of the Sherman Law, said:

"Nor can they be evaded by good motives. The
law has its own measure of right and wrong, of what
it permits or forbids, and the judgment of the courts
cannot be set up against it in a supposed accommoda-
tion, of its policy with the good intention of the parties,
and it may be, of some good results."

The comprehensive contradiction involved in the words
just quoted, to the principle upon which the Privy Council
acted in the Collieries case, is strikingly obvious. Our Supreme
Court viewed the case then before it from Alpha to Omega,
that is, from its motives or inception, to its results or con-
clusion ; and stated that even though its inception be character-
ized by good motives, and its conclusion be characterized by
good results, the provisions of the Sherman Law may never-
theless declare it to be unlawful. Can sharper contrast be-
tween the liberal policy of England and the drastic policy of
our country on this important subject be conceived? Can
any man, properly informed, doubt the severity, not to say
the harshness, of our Sherman Law ?

It is hard to realize that such contradictory conditions
can exist in Great Britain and in the United States. The prin-
ciple which I have shown as prevailing in England, prevails
in all other countries except ours. We are the only country
on earth which forbids cooperation. Why, the very principle
of our Government is, in a way, symbolized by the motto "e
pluribus unum", out of many, one, meaning strength from
union, or by the other motto, '^united we stand, divided we
fall." Children's copy books are full of these maxims. But
our laws say you cannot cooperate. You cannot cooperate on
anything that is really vital to your business progress, such as

10

prices, territory, production and the like. Why, during the
depth of the business crisis last year, in my practice, which
often consists of advising trade associations and groups of
manufacturers, a number of them came to me in an unnamed
industry — I mean one I must leave unnamed^ — and said, "We
are in a terrible condition; we were prosperous in the flush
period which has just passed, but now we are nearly 'broke' and
if we continue to operate our factories we will be 'broke' ; there
are about fifty belonging to our group and we find it a most
urgent business necessity to shut down our factories". And
they said to me, "Can we under the Sherman Law through our
trade association pass a resolution that our factories shall be
closed up?" And, I said, "If you do, you will violate the law.
It involves a curtailment of j^our unrestricted competition and
it is unlawful." And they said, "We are not going 'broke' by
virtue of any such notion as that; and we will shut our fac-
tories. We absolve you from any blame. We will shut our
factories." They shut the factories and thereby husbanded and
retrenched their resources and when times improved tliey
opened them again and were ready to go on and continue busi-
ness, but they violated the law in doing it as surely as if they
had violated the law against grand larceny, burglary or any
other like offense.

This is a very extraordinary situation. It is very extra-
ordinary that manufacturers and merchants should be for-
bidden from cooperating with one another in matters like those
which I have mentioned, where such cooperation would be
clearly beneficial to them and to their industry. But the laws
of this country forbid such cooperation. In my opinion that
is a very extraordinary situation. The reason for it is that
the public in this country has regarded with suspicion all
acts of cooperation among competitors, ever since the flagrant
violations practised by the great and notorious trusts in the
earlier days — violations which the Sherman Law was enacted
to prevent and for the continued prevention of which that law
should be maintained. Still aft'ected and influenced by the
righteous wrath of a time that has gone, Congress has set its
face implacably against any amelioration of that law, which,
in this country alone, of all countries on earth, compels its able
and farsighted leaders of industry to refrain from utilizing one
of the most important and fundamental factors in the promo-

11

tion of efficieucy, namely, cooperation, and forces them to cut
one another's throats in relentless competition.

But, I beg that in what I have said and shall say today,
I will not be misunderstood as seeking to justify the many
instances of wrongful restraints of trade which still exist in
this country, or as advocating the repeal, or even the relaxa-
tion in severity, of the statutes which are intended to prevent
and to punish monopolistic practices and injurious agreements
calculated to hinder free competition with resultant detriment
to the public and to the commonwealth. I hope you will pardon
the personal element when I say that I regard with pride the
fact that for a period of some years under President Roosevelt's
admjinistration, I was of Government Counsel in the prosecu-
tion of one of the great trusts, so that it is but natural that I
should regard with approval, as, indeed I do, the power given
to the Government by the Sherman Law to disrupt the great
monopolistic aggregations of capital which, until a decade ago.
infested the highways of commerce in this country. It is often
said in Congress and elsewhere that the Sherman Law has
proven ineffectual, or, as it was called on the floor of the Senate
a few days ago, a "dead-letter". The basis for this characteri-
zation is believed by expert students of the subject to be the
ineffective decrees of dissolution in the Standard Oil case and
the Tobacco Trust case. That these decrees were ineffective
in the restoration of true competitive conditions, and particu-
larly in the creation of a new situation whereby independent
competition on the part of relatively small traders could arise
and flourish, cannot be doubted. But those who have carefully
studied the subject agree that it is equally indisputable that the
unfortunate outcome of the Government's prosecution of those
two notorious trusts under the Sherman Law, was in no way
attributable to any defect or weakness in that Statute, but
was due entirely to the way in which the decrees of the Supreme
Court directing the disintegration of those great monopolies,
were executed. Authorities agree that the Sherman Law, as
an agency and an instrument for the disruption and repressing
of trusts or other like monopolistic combinations, is the embodi-
ment of the highest legislative and judicial wisdom. It was the
creation of the most able lawyers who have been members of
the United States Senate since the Civil War.

Even the most hostile critic of the effectiveness of the

12

Sherman Law will not question its potency and infinite value
when he recalls that that Law was the basis upon which the
Government rested its prosecution of the Northern Securities
Company — a prosecution which resulted in complete success,
namely, a decree of the Supreme Court directing the dis-
memberment of the Securities Company and the release of
the two great railway systems which had been held in its
grasp. History will record many achievements of that great
American, Theodore Roosevelt, upon which his imperishable
fame will be founded; but it is a matter of regret to students
of economics that it will not be long remembered that it was
Theodore Roosevelt, as President of the United States, who
directed the prosecution of the Northern Securities Co. and
pressed it to a successful conclusion. His brave and far-
sighted action in so doing ought, indeed, to be inscribed high
up on the roll of the courageous and patriotic deeds performed
by him to the lasting benefit of his countrymen, for it is gen-
erally admitted that if he had not thus successfully invoked the
power of the law against the Northern Securities Co., all of the
railway systems of the land would speedily have been brought
within the grasp and control of a small number of "holding"
corporations similar to the Northern Securities Company, these
"holding" companies, in turn, controlled by a small group of
men, with a resultant condition which would have been truly
menacing to the well-being of the, Republic.

There is high authority for the statement which I have
just made to the effect that the Sherman Law, in bringing
about the disruption of the Northern Securities Co., proved
its inestimable value to this country. In an address recently
delivered by Mr. Justice Clarke, an Associate Justice of the
Supreme Court of the United States, he said, referring to the
Northern Securities case, that if the Supreme Court had
decided that case against the Government, and had thereby
decreed the legality of the Northern Securities Co.,

"no man can overstate what the effect would have
been upon our country. If the case had been decided
the other way and men had been left free, through
corporate organization, to combine the other great
transportation lines of the country and other great
departments of business, it seems very clear that our
free institutions would long ere this have been sub-

13

jected to a test of strength and endurance to which
every patriot must hope they may never be exposed.
This one case .... illustrates the fact that
the scope of the jurisdiction of the Supreme Court
has become so fateful that the effects of many of its
decisions upon the welfare of our country are as
great as would be the results of decisive battles in
a great war."

I submit that the forceful language just quoted, emanating
from the high source from which it did emanate, is proof of
the highest character that the Sherman Law has proven of
immeasurable value to our country, and that it ought forever
to remain upon our statute books as a warning and as a defer-
ent to great monopolistic aggregations of capital which, until
their power was broken by the force of the Sherman Law,
threatened, as has been so aptly expressed by Mr. Justice
Clarke, the very existence of the Republic.

I hold no brief for "big business" in the sense that I would
seek to mitigate or condone the wrongful and oppressive
methods which, a decade or more ago, were frequently used
by the great corporations of this country. We all remember
the public indignation that was aroused by the methods em-
ployed years ago by the oil trust, the whiskey trust, the sugar
trust, the tobacco trust and other like monopolies. We also
well remember the irregular practices of the railway, companies
with respect to the granting of secret rebates. I challenge,
however, contradiction by any student of the subject who is well
versed therein, of the statement that these practices have to
a substantially complete extent been abandoned. Such aban-
donment, it will also, I think, be agreed, was the result of the
exertion, primarily under the leadership of President Roosevelt,
of the majesty of the law as embodied in the Sherman Act,
and in the statutes forbidding rebating. In these respects, the
Sherman Law has fully vindicated its wisdom. It follows
that the criticisms of that statute so often heard in Congress
and on the political hustings, to the effect that it is a "dead-
letter" or that it has been "emasculated" (both of these expres-
sions are much favored by critics of the Sherman Law), have
no basis in fact.

Many other instances, quite familiar to the expert student

U

of the subject, could be cited where the Supreme Court, acting
under the Sherman Law, has issued decrees of drastic and
compelling force in bringing about the disruption of other
great combinations.

No mian, versed in the subject, can, therefore, doubt the
high wisdom and effectiveness of the Sherman Law in its dis-
ruptive force and power against the great trusts ; and no right-
minded and patriotic man, so versed, could wish that the force
and power of the Sherman Law, in that respect, should be
abated one "jot or tittle". In what has just been said, I am
by no means unmindful of the decision of the Supreme Court
which declared the U. S. Steel Corporation (the so-called "Steel
Trust") to be lawful under the Sherman Law. An adequate
exposition of the distinction thus involved would require more
time than is permissible on this occasion. The steel industry
is so closely related to your own, that I venture to believe that
such an exposition would be interesting to you and I indulge
the hope that at some later Convention of your Association, I
may be given the privilege of presenting the legal aspects of
the "Steel Trust" decision, as showing that the Sherman Law
still remains as the most drastic and efficient statute of that
character upon the statute-books of any country on earth.

Nor, in what I have said and shall say today, am I unmind
ful of the shocking disclosures recently made and still being
made in, New York City by the Lockwood Committee under the
guidance of that brilliant lawyer and cross-examiner, Samuel
Untermyer. With a display of skill and of incredible industry
amounting to genius, he has uncovered and disclosed a con-
geries of unlawful combinations and practices, both on the part
of capital and of labor, that has astonished and shocked the
country. No man in his senses, would dream of condoning such
offenses, nor dare to suggest any amelioration of the laws which
proscribe such grave misdeeds.

But even Mr. Untermyer, with a sense of discrimination
which justly denotes, and does credit to, his high abilities,
admits, I believe, that there are many forms of co-operative
activity among competitors, now forbidden by law, which could
with advantage to all, be made lawful, provided that the exer-
cise of such co-operative power be placed under suitable govern-
mental supervision so that it may not be abused. In that, if

15

I may say so, I fully concur. In short, my contention is only
that the statutory condemnation against co-operative agree-
ments should be based upon a common-sense foundation of just
discrimination, to the end that on the one hand oppressive and
injurious combinations or agreements in restraint of trade
should as now be deemed unlawful, while on the other hand,
co-operative agreements among competitors, calculated to pro-
mote, and resulting in the promotion of, the general welfare
of an industry and of the general public, should, under adequate
supervision, be deemed lawful and permissible. By so doing,
this country would but take its place by the side of Great
Britain — good company, I make bold to say, in the high enter-
prise of commercial and industrial progress.

I find that I have trespassed upon your time and patience
so much that I must, with all dispatch, proceed to some par-
ticular phases of the subject having a special application to
your industry, and other like industries.

There have recently been two further developments of the
law of this subject intimately affecting the trade and commerce
of this country. One is the recent decision of the Federal
Trade Comission in the Mennen Co. case, and the other is the
decision of the United States Supreme Court in what is known
as the Hardwood Lumber Co. case. I read in the report of
your proceedings at your recent convention held last month at
Birmingham, Ala., that a letter was read by your president
from some business concern calling attention to the Mennen
Co. decision and asking the attitude of your Association con-
cerning it; and that it was referred to this adjourned meeting
of your convention now being held at Atlantic City. So, with
your permission, I shall say something about the Mennen deci-
sion.

THE MENNEN CO. DECISION

By way of appreciation of your courteous invitation to
address you here today, and in order that I might be able to
discuss that decision more intelligently, I have obtained from
the Federal Trade Commission at Washington, all of the papers
and documents necessary to an understanding of the decision
in that case. As a result of a close study of these papers, I
feel justified in asserting that it is a most surprising decision.

16

In substance the Menuen case is this : Complaint was made
against the Mennen Co. to the effect that they would not give
the same discount and therefore would not make the same
prices for the same quantities, to non-wholesalers as they
would to wholesalers. Apparently, in that industry there had
been developed a system of cooperative buying, by which re-
tailers grouped themselves together and bought through a
common source in what may be called wholesale quantities,
and the Mennen Co. refused to give to the retailers thus pur-
chasing in wholesale quantities the same price as it gave to
wholesalers. Apparently, the position taken by the Mennen Co.
was that the wholesalers were a necessary part of the plan
of distribution of that company, being in substance, you might
say, salesmen of the company, so that it seemed to the com-
pany to be good policy and calculated to advance the best
interests of the company to give a lower price to wholesalers
than to retailers even where the latter purchased the same
quantities as the former. The subject was fully considered by
the Federal Trade Commission which reached the astonishing
conclusion that this procedure on the part of the Mennen Co.
is unlawful.

With all of the respect and deference that a law-abiding
citizen must have for a governmental tribunal, I venture to
assert that this decision is wrong and cannot prevail. I have
here the brief of the Government counsel showing that he based
his demand that the Commission decide against the Mennen
Co., upon the contention that the company's procedure vio-
lated Section 2 of the Clayton Law. There never was a greater
misconception as to a proposition of law, as I respectfully
believe. Section 2 of the Clayton Law says in substance:
"It shall be unlawful for any person engaged in
commerce .... either directly or indirectly
to discriminate in price between different purchasers
of commodities .... where the effect of such
discrimination may be to substantially lessen compe-
tition or tend to create a monopoly in any line of
commerce."

Basing his contention upon the mere letter of this section
as thus quoted, and, as I respectfully believe, disregarding its

17

history and its true intent as disclosed by such history, and
overlooking court decisions to the contrary, the Government
counsel claimed in his brief, and the Federal Trade Commis-
sion sustained the claim, that the Mennen Co. violated that
section. In my opinion, it did no such thing. Any one who
has studied the history of the Clayton Law knows that Section
2 was enacted for a totally different purpose. The section was
written in order to prevent the recurrence of practices fre-
quently employed by the great trusts in former years. For
example, the records of the Federal courts will show that some
years ago there was a minor cigarette company in the South
which had begun to make a cigarette which proved attractive
and a good seller, so that this minor company was beginning
to make some headway in the cigarette industry. Thereupon
the Tobacco Trust, in order to choke off and destroy the com-
petition of this minor company, started to sell a certain very
popular cigarette in the same territory in which the minor
company was selling its product, and, in order to prevent the
latter company from having a market for its product, the
Tobacco Trust not only cut the selling price of its popular
cigarette in that territory but actually gave away packets of
its cigarettes gratis on the streets of towns in the territory
in which the minor company was selling its product. During
this time the Trust was selling its popular cigarette throughout
the rest of the country at its regular prices. The result of the
discrimination thus practiced by it against the minor company
was only what might have been expected. Confronted with
the vast power of the Trust and unable to meet the ruinous
competition mentioned, the minor company failed in business
and went into bankruptcy. The court records will show similar
discriminatory methods which, in days now long past, the
Standard Oil Trust employed to drive out of existence smaller
competitors in particular territories. The purpose and the
effect of such procedure is manifest. The two trusts just
mentioned, and, perhaps, other trusts, resorted to a species of
discrimination in prices for the avowed purpose of driving out
of existence particular competitors in particular districts or
territories. It is this character of discrimination against
which Section 2 of the Clayton Law is aimed. In substance,
that section says to manufacturers occupying a dominating
position in an industry:

18

"You cannot go into a particular district where
some competitor is selling his product in competition
with your product, and by discriminating in the sales
price of your product in that territory as compared
with your regular selling price elsewhere, drive that
competitor out of existence. For, experience has shown
that, with the power you possess, you can keep up
this price-cutting procedure until you drive your com-
petitor out of existence and then you will restore your
prices in that district to the same level as you have
maintained throughout the rest of the country, the
final result being that the community in question has
been deprived of the existence of a business establish-
ment whose continued existence would be helpful to
the community, and you have caused loss to the owners
of the competing industry which you have thus
destroyed and have driven into bankruptcy. This
procedure shall not be permitted, and, accordingly,
this section forbids you ^to discriminate in price be-
tween different purchasers of commodities', that is,
between the purchasers of your commjodities in the
particular district referred to as compared with the
purchasers of your commodities in the rest of the coun-
try, for the result of such discrimination will be 'to
substantially lesKsen competition or tend to create a
monopoly' in your line of business."

The point which I am now endeavoring to present is of
the essence of the matter under consideration, and I therefore
desire to emphasize that, in my opinion, the true intent and
meaning of Section 2 of the Claj^ton Law was to prevent con-
cerns of the nature of the great trusts which occupj^ a dominat-
ing position in their respective industries from destroying
competitors by discriminating in prices the territory in
which such competitors operate, while maintaining their regu-
lar prices elsewhere.

But the situation occupied by the Mennen Co. is quite dif-
ferent. It is not claimed by the Government, nor can it be
claimed, that the procedure adopted by that Company has
hurt or can hurt any competitor of that Company. The Mennen
Co., by the procedure referred to, does not aim, nor could it, if
it wished to, aim to drive out of business some competitor or

19

some particular brand manufactured by a competitor. The
effect and purpose of the Mennen system is to encourage and
keep alive wholesalers as a necessary element in the company's
scheme of distribution. This could not be done if retailers,
grouping themselves together and thereby being able to pur-
chase in wholesale quantities, should be able to obtain from
the Mennen Co. the same price as the wholesaler obtains. Obvi-
ously in such a case the wholesaler would lose the business
which he would otherwise obtain from the retailer, for if the
latter were unable to obtain the wholesaler's price from Mennen
Co., he would make his purchases from the wholesaler. If the
requirement of the decision made by the Federal Trade Com-
mission should be carried to its logical conclusion, it would
mean the destruction of the wholesaler. Clearly this would
be to the great disadvantage of Mennen Co. and of other like
large manufacturers. For with the multiplicity of articles
dealt in by such manufacturers, with the infinitely varied
quantities which retailers from time to time require, with the
vast number of accounts which the manufacturer would have
to carry, clearly the cost of doing business on the part of the
manufacturer would be enormously increased if he were de-
prived of the wholesale scheme of distribution and were com-
pelled to make his sales directly to the retailer. I digress to
say that every merchant knows that there are some lines of
industry where the number of articles dealt in are not numerous
and the quantities required by retailers are not necessarily
small and the number of accounts dealt in not necessarily large,
where direct dealing by the manufacturer with the retailer is
economically possible. But in a business like Mennen's, and,
for example, in the dry goods business, the jewelry business,
the hardware business, and the like, it is not economically
feasible for the manufacturer to deal directly with the retailer.
I repeat that it is presumably upon this sound economic basis
that Mennen has established his policy of preferential treat-
ment of wholesalers. The Federal Trade Commission has, how-
ever, in this important decision, declared this to be unlawful
and in violation of the Clayton Law.

I have stated that, in my opinion, the decision is contrary
to the purpose for which Section 2 of the Clayton Law was
enacted. I now venture to go a step further and to say that
this decision is directly in conflict with two of the most recent

20

decisions of the United States Supreme Court under the
Sherman Law, namely, its decision in the Colgate & Co. case
and in the Beech-Nut Packing Co. case. In those cases Colgate
& Co. and the Beech-Nut Co., respectively, undertook to require
their customers to observe certain resale prices by refusing to
sell such customers as failed to observe such prices. In both
of those cases, the Supreme Court decided that this was law-
ful. I may add that the Federal Trade Commission, in the
Beech-Nut Co. case, had declared it unlawful and was reversed
by the Supreme Court in that respect.

The language used by the Supreme Court on this point
in the Beech-Nut case is :

"It is settled that, in prosecutions under the
Sherman Act, a trader is not guilty of violating its
terms who simply refuses to sell to others, and he may
withhold his goods from those who will not sell them
at the prices which he fixes for their resale."

Now you will observe that, although the Supreme Court
said, in substance, "You are not compelled to sell your cus-
tomer at all if you do not wish to do so", the Federal Trade
Commission now says to the Mennen Co. "You must for like
quantities sell to the retailer at the same price as you sell to
the wholesaler." This is equivalent to saying to the Mennen
Co. "that you are obliged to sell to the retailer and also that
you are obliged to sell to him, for the same quantities, at the
same price as you sell to the wholesaler." I respectfully sub-
mit that, as a matter of law, this dictum involves a contradic-
tion of the decisions of the Supreme Court in the Colgate and
in the Beech-Nut cases.

Now, permit me to read to you from the brief of the
Government counsel in the Mennen case, where he sums up the
accusations made against the Mennen Co. and points out what
he claims to be the objects that Mennen had in mind in estab-
lishing the policy under consideration. He says the purposes
of Mennen were threefold ; namely, that, in making a discrimi-
nation in price as between wholesaler and non-wholesaler his
purpose was, first, to force the resale of its products at its
suggested prices. I submit that the Supreme Court, in the
Colgate and Beech-Nut cases, has decided that Mennen had a
perfect right to do this.

21

Second, that the object of Mennen was "to penalize eflfi
ciencj and economy." I say, quite respectfully, that it seems
incredible that such a proposition should be seriously asserted.
But it was asserted, in the words as above quoted, by the
Grovernment counsel. I venture to say that it is a surprising
thing to assert of Mennen, or of any business concern, that
its object under any circumstances is "to penalize efficiency and
economy." Of course, what was meant was that Mennen, in
endeavoring to keep alive the wholesale scheme of distribution,
was tending to minimize the field of operations sought to be
occupied by what are known as "cooperative purchasing
agencies". I shall not stop to explain the meaning of this term,
as it is well understood by you and by merchants generally.
But surely Mennen did not have in mind any onslaught upon
such purchasing agencies, or any purpose to penalize them, or
to lessen their efficiency. His aim clearly was to keep alive the
wholesaler as a necessary element in his scheme of distribu-
tion ; and if in doing so the "cooperative purchasing agencies"
should lose business or otherwise suffer, clearly this was not
because Mennen was endeavoring to "penalize efficiency and
economy".

Can you imagine the executive head of the Mennen Co.,
or any sane executive head of any business concern, having in
his mind or in his heart any such foolish — nay, detestable —
purpose as the "penalizing of efficiency and economy"? And
yet the Government counsel has seriously urged this as one
of the motives actuating the Mennen Co. in the matter now
under consideration.

The third purpose stated by the Government counsel is
to "satisfy complaints and demands of individual members of
the National Wholesale Drug Association — competitors of
cooperative wholesale houses".

Now, what is there wrong about that, either legally or
morally? Under what kind of a government are we living if
Mennen has not the right to endeavor to please its customers,
if it does so by methods which are economically, moralh% and
legally correct? Clearly the procedure is unobjectionable from
an economic and a moral standpoint. And with all confidence
I venture the assertion that no legal decision can be cited to
show that such a procedure is objectionable from a legal stand-

22

point, bearing in mind that the objection as above quoted
which was made by the Government counsel is that Mennen
sought to satisfy the complaints and demands of individual
memhers of the Drug Association. There are decisions that,
if a manfacturer yields to the united demands of the memlbers
of an association thereby acting under the coercion of numbers,
it may be unlawful. But there is no decision which holds that
a manufacturer may not of his own free will and accord meet
the individual requests or demands of the members of an asso-
ciation. I respectfully submit that none of these three grounds
of objection urged by the Government counsel and sustained
by the Federal Trade Commission, is sound in law. And yet
they are the accusations made against the Mennen Co. which
have resulted in the Federal Trade Commission denouncing the
policy established by that Company.

I respectfully, and with all deference, venture to say that
the order tbus made by the Commission will not stand, if, as
provided by law, it is reviewed by the Circuit Court. I cannot
imagine that any court of law would permit such an order to
stand.

THE HARDWOOD LUMBER DECISION

The next topic which I shall discuss is the decision of the
Supreme Court rendered a year or so ago in the Hardwood
Lumber case. This was a prosecution instituted by the Govern-
ment under the Sherman Law against a number of associations
and companies in the hardwood lumber business. In the
aggregate they constituted an important proportion of the
hardwood lumber industry. They had formed an "open price
competition system", and the evidence showed that they had
pushed to the full limit, the possibilities afforded by such a
sj^stem for the fixing of prices and the curtailment of produc-
tion.

Advocates of the open price plan contend that the purpose
of such plan is merely to acquaint its members with prices in
past transactions. They argue that thereby members are placed
in a more intelligent position to conduct their business, inas-
much as a knowledge of the trend of prices in past transactions
will enable them the better to forecast the future tendency of
prices and in that way the members will be able to govern their
selling policies more judiciously. Such advocates contend,

23

however, that the open price plan is not intended to be the
basis or the medium, and is in fact not the basis or the medium,
for agreeing upon or fixing future prices or for doing anything
with respect to curtailing production by concerted agreement.

The court records in the Hardwood Lumber case show that
the Supreme Court viewed the purposes of the open price plan
employed in that case as having the definite purpose and
result of fixing future prices and of curtailing production.
In other words, the Supreme Court decided that the open price
plan was employed in that instance not for the limited pur-
poses urged by its advocates, namely, the obtaining of infor-
mation as to past transactions, but was employed to the full
limit of its possibilities for the purpose of fixing by agreement
future prices, and, likewise, for the purpose of agreeing upon
a curtailment of production. I quote the following from the
opinion of the Supreme Court in that case :

"But not only does the record thus show a per-
sistent purpose to encourage members to unite in
pressing for higher and higher prices, without regard
to cost, but there are many admissions by members,
not only that this was the purpose of the 'plan' but
that it was fully realized .... the 'plan' is,
essentially, simply an expansion of the gentleman's
agreement of former days, skilfully devised to evade
the law. To call it open competition because the
meetings were nominally open to the public .
cannot conceal the fact that the fundamental pur-
pose of the 'plan' was to procure 'harmonious' indi-
vidual action among a large number of naturally com-
peting dealers with respect to the volume of produc-
tion and prices . . . ."

Inasmuch as the Sherman Law by its own plain language,
reinforced by countless decisions of the Federal Courts, has
indisputably declared to be unlawful, concerted action among
competitors for the purpose of fixing prices and regulating
production, nothing is more natural than that the Supreme
Court should declare, as it did declare, the plan thus pursued
in the Hardwood Lumber case to be unlawful. As the Sherman
Law now stands, the Supreme Court could not reasonably do
otherwise. It is quite another thing to argue that, from an

24

economic standpoint, agreements with respect to prices and
with respect to production, under suitable supervision and for
the purpose of meeting industrial emergencies, are commend-
able and should be deemed lawful. In Great Britain, as has
been pointed out, such is the law of the land. But it is not the
law of this land, and the Supreme Court, in my opinion,
decided the lumber case correctly ; and I venture to predict that
it will stand hereafter as a correct interpretation of the Sher-
man Law until and unless that law shall in that respect be
amended.

THE EDGE RESOLUTION

What I have just said brings me logically to a considera-
tion of the third topic which I desire to present to you today,
namely, the brave and commendable but diflScult enterprise
undertaken by Senator Edge, of New Jersey, as embodied in
what has now become widely known as the "Edge Resolution".
The resolution is thus entitled :

"Joint Resolution creating a committee to in-
vestigate existing conditions of industry and com-
merce in the United States for the purpose of recom-
mending to Congress legislation defining the rights
and limitations of cooperative organizations as dis-
tinguished from illicit combinations in restraint of
trade."

The resolution was elaborately debated on the floor of
the Senate, on April 17, 1922, but no action was taken thereon.
These debates contain the statement made by Senator Edge
that he is not a lawyer. Although the subject involves ques-
tions of a strictly legal nature. Senator Edge, with commend-
able courage and animated by the laudable purpose of liberat-
ing trade associations and the industries of the country gen-
erally, from the handicaps imposed by the Sherman Law,
undertook to present and to argue his resolution although he
knew he would be confronted, as he was in fact confronted,
by astute lawyers in the Senate who look upon any amendment
of the Sherman Law with horror.

The substance of Senator Edge's argument is that the
decision in the Hardwood Lumber case has caused such ob-

25

scurity on the part of trade associations with respect to the
meaning of the Sherman Law and of its application to trade
association activities, as greatly to hamper their efficiency.

I regard the effort which Senator Edge is making as most
commendable, and, while I believe that he has set in motion
a suggestion which will eventually accomplish much good, I
am, nevertheless, strongly of the opinion that he is in error
when he states to be the basis of his resolution, the correction
of obscurity growing out of the Hardwood Lumber decision,
and when he further states, as he did state in the Senate
debates, that he did not aim at any amendment of the Sherman
Law for the purpose of carrying out his object of liberating
trade associations from the handicap under which they are
now resting. I say that, in my opinion, he was in error in say-
ing that there is any obscurity in the Hardwood Lumber deci-
sion, because there is, in fact, no obscurity. It is the same thing
that we have heard throughout the country for years past,
namely, that business men do not know what they may lawfully
do or may not lawfully do under the Sherman Law. That
assertion is not correct for, in the broadest sense, they do, or
can, know what they may do and what they may not do, if
they take the least effort to find out. Leaving aside mere
mjatters of administration or of executive management, they
cannot do anything lawfully under the Sherman Law which is
in the nature of genuine and practical cooperation, such as is
freely permitted in Great Britain and in all other countries
except this. The Hardwood Lumber decision does not in the
least involve any obscurity in this respect. It definitely and
clearly declares that trade associations may not lawfully fix
prices or agree upon production. The obscurity to which
Senator Edge alludes is not with respect to what that decision
means; but with respect to the wisdom of the law upon which
the decision is based. In other words, the question should not
be, "What does the Hardwood decision mean" for its meaning
is plain enough, but the question should be, "Why is it the
law as shown in the Hardwood decision, that trade associa-
tions are prevented from acting in cooperation with respect
to those subjects which, above all others, require cooperation,
namely, the fixing of prices when an emergency requires it,
and the curtailment of production when an emergency requires
such curtailment?" Of course this question should not com-

26

prise the consideration of such a right when an emergency does
not exist, nor when the purpose is to fix prices extortionately,
nor when the production is curtailed so as to do damage to the
community. In such instances the law should remain as it is.
But where the continued existence of an industry in the face
of some emergency requires concerted and cooperative action
with respect to the fixing of prices and the curtailment of pro-
duction, it seems most logical and natural that such coopera-
tion should be permitted. This is true in England and in all
other civilized countries except ours. I have read to you to-
day, but it is worth reading again, the illuminating statement
made by one of the distinguished judges of the Privy Council
of England in the Australian Collieries case as follows:

"It can, in their Lordship's opinion, never be of
real benefit to the consumers of coal that colliery pro-
prietors should carry on their business at a loss, or
that any profit they make should depend on the miners'
wages being reduced to a minimum ....
The consumers of coal will lose in the long run if the
colliery proprietors do not make fair profits or the
miners do not receive fair wages."

Now I submit that when Senator Edge was confronted
by objections made by other senators to the effect that any
amendment of the Sherman Law was not to be dreamed of, his
correct reply should have been :

"My resolution is not aimed at clearing up any
obscurity in the Hardwood decision, for there is no
such obscurity. It is intended to liberate the trade
associations of this country and likewise the legitimate
trade and commerce of this countr^% as distinguished
from illicit combinations in restraint of trade and as
distinguished from trusts and monopolies, from the
antiquated and illogical handicap placed upon them
by the Sherman Law in forbidding resort to coopera-
tive agreements where the result of such agreemlents
will be beneficial to the industries involved and not in-
jurious to the community at large. The Commission
which the Edge Resolution seeks to create should be
given the power to investigate this important subject
in order to ascertain why it is that, in this country

27

alone, trade associations and merchants generally are
forbidden to act in concert with respect to questions
like prices and production, even if such concerted
action be necessary for the continued existence of an
industry and cannot be harmful to the community.
In other words, the Edge Resolution boldly asserts
that the Sherman Law, in its just effort to repress
trusts and other monopolistic combinations, has gone
too far and commits a grave injury^ to the commercial
welfare of this country by extending its prohibitions
to concerted action upon the part of legitimate busi-
ness units possessing no power or purpose of creating
a monopoly. The Edge Resolution therefore aims at
an amendment to the Sherman Law which will provide
that, under suitable governmental control and super-
vision, trade associations and competitors generally
may agree with one another as to prices, as to produc-
tion, and as to other like fundamental matters, all of
which are now forbidden by the Sherman Law.

^'In conclusion, the Edge Resolution asserts that
the obscurity which now exists is not an obscurity
as to the meaning of the law, but an obscurity as to
why it is that the law of this country, ignoring the
dictates of sound economy, disregarding the well-con-
sidered doctrines and judicial decisions of a leading
commercial country Uke Great Britain, forbids its
merchants from acting in harmony with one another
and compels them to compete with one another in the
dark and to the extent of relentless, cut-throat hostil-
ity."

SECRETARY HOOVER'S EFFORTS

Now, with all possible respect and admiration for Mr.
Secretary Hoover, whose notable achievements during the
European War have gained for him lasting fame, I venture to
point out that Mr. Hoover is laboring under the same misap-
prehension with respect to this important subject as Senator
Edge has labored. I think it was on the same day upon which
the Senate debated the Edge Resolution, namely, April 17,
1922, that Secretary Hoover met in his office in Washington,
by his own invitation, from five hundred to one thousand sec-

28

retaries of important trade associations for the purpose of
discussing the means whereby the efficiency of such associa-
tions could be promoted. In doing this Mr. Hoover did a most
commendable thing, for the trade associations of this country
— and I refer to those whose purposes are entirely legitimate
and proper — have been and are laboring under great disad-
vantages— disadvantages which I respectfully believe are un-
justly and unnecessarily placed upon thenn by the laws of this
land.

I respectfully believe that just as Senator Edge has over-
looked the fact that trade associations are not handicapped
by any obscurity in the law, but are handicapped by definite
barriers created by the law, so, also, Mr. Hoover has overlooked
the like fact.

I believe that Mr. Hoover will perform a service to his
country equal in its importance to the inestimably valuable
services which he has already rendered, if he will boldly state
that the Sherman Law requires amendment for the reason
that it forbids cooperation among merchants in broad fields
where cooperation is vitally important; that no other country
does this; that other countries like Great Britain have forged
far ahead of us in the world's commerce ; that they have done so
largely because of the handicaps placed by our laws upon the
trade and commerce of this country; that these laws should
be amended so as to permit such cooperation in the same
manner that is permitted in Great Britain ; that such permis-
sion should be safeguarded against the abuses which human
cupidity has shown will arise, by the creation of suitable Gov-
ernmental supervision and control in order to make sure that
the permission thus given will not be abused by utilizing it
for the purpose of practising extortion or suppressing compe-
tition or creating monopoly.

The courts of England have found no difficulty in thus
safeguarding the similar liberty given by the laws of Great
Britain to the merchants of Great Britain. There can be no
reason why similar safeguards cannot be established and en-
forced in this country, to the end that the merchants of this
country (I speak of plain business units and not of great mon-
opolistic combinations) may be liberated from the obstacles
and barriers imposed upon them by the laws of this country —

29

obstacles and barriers which check their initiative, impair
their energies, prevent reasonable and sensible cooperation and
drive them, against their will and against their interests, into
relentless and senseless competition with one another.

THE SUGGESTED REMEDY

I believe that if the state of the law on this subject, which
has resulted in such an anomalous and potentially hurtful
decision as that which was rendered in the Mennen case, and
which has been exemplified in the Hardwood Lumber case,
and which Senator Edge and likewise Secretary Hoover have
by mistaken methods, laudably sought to correct — if this state
of the law of this country were plainly set forth before the
people of this country and before the Congress of this country,
a just understanding of the subject would result, and a just
and proper discrimination would be created with respect to
the distinction between the wrongful practices of monopolistic
combinations and the beneficial activities arising from coopera-
tive measures on the part of plain merchants — all to the end
that the incubus and burden placed upon the trade and com-
merce of this country shall be removed and our merchants
placed upon a par with the merchants of Great Britain. We
have all recently read the courageous statement made by
Senator Borah, of Idaho, a man of statesmanlike stature and
calibre. He had the courage, a few weeks ago, to say on the
floor of the Senate that, even if it cost him his re-election, his
conscience compelled him to declare himself in opposition to
the so-called "Bonus Bill", because he thought it was based
upon erroneous financial, economic and patriotic foundations.
I venture to suggest that, if statesmen of the courage and fore-
sight of Senator Edge and of Senator Borah (others also could
be named), could, through the efforts of trade associations
such as yours, acting in conjunction with other like important
associations, be persuaded to take up this subject in the force-
ful and vigorous manner in which both of these distinguished
senators have taken up and pressed forward other important
measures, a proper understanding of the question would result
and, remedial legislation would be adopted whereby the diffi-
culties which I have mentioned as resting upon the industries
of this country would be corrected and the merchants of this

30

country be placed upon an even footing with the merchants of
Great Britain and of other countries, all to the lasting benefit
and advancement of the trade and commerce of the United
States.

CONCLUSION

I beg your indulgence for a final word. The trade and
commerce of the entire world has been shaken to its founda-
tions by the destructive effects of the European War. The
countries of Europe are, for the most part, bankrupt. The
business of this countrj^ during the years 1920-1921 underwent
an experience the like of which has not been seen since the
Civil War. Bankruptcies occurred to an amazing extent. It
is generally believed that, except for the beneficial influence of
the Federal Reserve Law, the number of bankruptcies would
have been vastly increased. Many business concerns which
were hot driven into actual bankruptcy, have to a large extent
been so imipaired financially that they are barely able to con-
tinue. It is generally believed that the worst of this condition
has passed and that the commerce of this country is gradually
regaining its vitality. While this recovery will be steadily
progressive, the best opinion is that a period of years must
elapse before the commerce of this country will regain its
normal vigor and prosperity. This slowness of recovery will
be attributable largely to the badly crippled condition of most
of the European countries, especially Russia and the countries
formerly known as the "Central Empires".

Under these circumstances can any reasonable man doubt
that there is a paramount duty upon the part of the public
of this country and upon the part of the Congress of this coun-
try, to view the problems which beset the business men of
this country, with a sympathetic and a helpful mind — to the
end that the business of this country may be placed in the
most advantageous position to overcome the difficulties which
now rest upon it as a result of the most destructive war that
human history has recorded; and to the end that the business
of this country may be equipped to regain its former position
of vigor and prosperity and to meet the competition of the
business men of other countries upon an equal footing?

31

Finally, if "in union there is strength", if it be admitted
that cooperation is a natural human tendency, and if it be
admitted that the laws of Great Britain have found a way by
which cooperation among its merchants is permitted without
at the same time permitting injury to the Commonwealth, why
may not this country throw off the burden which is the nega-
tion of all of the foregoing and by suitable amendment of its
laws permlit its merchants helpfully to cooperate with one
another and no longer be obliged, against their will and against
the general interests of the Republic, to-dfisd^oy one another

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