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Full text of "Investigation of concentration of economic power; monograph no. 1[-43]"

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Northeastern University 





School of Law 
Library 



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^^3d SessSn^^l SENATE COMMITTEE PRINT 

INVESTIGATION OF CONCENTRATION 
OF ECONOMIC POWER 



TEMPOEAEY NATIONAL ECONOMIC 
COMMITTEE 

A STUDY MADE FOR THE TEMPORARY NATIONAL 

ECONOMIC COMMITTEE, SEVENTY-SIXTH CONGRESS, 

THIRD SESSION, PURSUANT TO PUBLIC RESOLUTION 

NO. 113 (SEVENTY-FIFTH CONGRESS), AUTHORIZING 

AND DIRECTING A SELECT COMMITTEE TO MAKE A 

FULL AND COMPLETE STUDY AND INVESTIGATION 

WITH RESPECT TO THE CONCENTRATION OF ECONOMIC 

POWER IN, AND FINANCIAL CONTROL OVER, 

PRODUCTION AND DISTRIBUTION 

OF GOODS AND SERVICES 



MONOGRAPH No. 16 
ANTITRUST IN ACTION 



Printed for the use of the 
Temporary National Economic Committee 




UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASmNGTON : 1940 



TEMPORARY NATIONAL ECONOMIC COMMITTEE 

JOSEPH C. O'MAHONEY, Senator from Wyoming, Chairman 

HATTON W. SUMNERS, Representative from Texas, Vice Chairman 

WILLIAM H. KING, Senator from Utah 

WALLACE H. WHITE, Jr., Senator from Maine 

CLYDE WILLIAMS, Representative from Missouri 

B. CARROLL REECE, Representative from Tennessee 

THURMAN W. ARNOLD, Assistant Attorney General 

♦WENDELL BERGE, Special Assistant to the Attorney General, 

Representing the Department of Justice 

JEROME N. FRANK, Chaim^n 

♦SUMNER PIKE, Commissioner, 

Representing the Securities and Exchange Commission 

GARLAND S. FERGUSON, Commissioner 

♦EDWIN L. DAVIS, Chairman, 

Representing the Federal Trade Commission 

ISADOR LUBIN, Commissioner of Labor Statistics 

•A. FORD HINRICHS, Chief Economist, Bureau of Labor Statistics, 

Representing the Department of Labor 

JOSEPH J. O'CONNELL, Jr., Special Assistant to the General Counsd 

♦CHARLES L. KADES, Special Assistant to the General Counsel, 

Representing the Department of the Treasury 



Representing the Department of Commerce 

LEON HENDERSON, Economic Coordinator 
DEWEY ANDERSON, Executive Secretary 
THEODORE J, KREPS, Economic Adviser 



MONOOBAPH No. 16 

ANTITRUST IN ACTION 
WALTON HAMILTON 

AND 

IRENE TILL 



ACKNOWLEDGMENT 

This monograph was written by 

WALTON HAMILTON 

Professor of Law, Tale Vnwersity Law School 

AND 

IRENE TILL 

Social Science Analyst, Temporary Nationail Economic Committee 

Staff 

The Temporary National Economic Committee is greatly indebted 
to these authors for this contribution to the literature of the subject 
under review. 

The status of the materials in this volume, is precisely the same as 
that of other carefully prepared testimony when given hy individual 
loitnesses; it is infomnation submitted for Committee deliheration. 
No matter what the official capacity of the witness or author may he, 
the publication of his testimony, report, or monograph by the Com- 
mitt6e in no way signifies nor implies assent to, or approval of, any 
of the facts, opinions, or recommendations, nor acceptance thereof in 
whole or in part by the members of the Temporary National Economic 
Committee, individually or collectively. Sole and undivided respon- 
sibility for every statement in stich testimony, reports, or monographs 
rests entirely upon the respective authors. 

(Signed) Joseph C. O'Mahonet, 
Ghairrrum, Temporary National Economic Gorrrndttee, 



TABLE OF CONTENTS 



Page 

Letter of transmittal vii 

SECTION 1. THE TASK OF INDUSTRIAL REGULATION 

1. The question of antitrust 3 

2. The charter of freedom ^ 5 

Scruples and the Constitution 5 

Back to the common law , 8 

The intent — if any — of Congress 10 

3. The current ways of restraint 12 

Old style and new _ 12 

The proprieties of restraint 13 

The sanction of defense 16 

The matter of more or less ^ 18 

Competition as the mother of restraint 1 19 

SECTION 2. ADMINISTRATIVE PROCEDURES OF ANTITRUST 

1. Big act little stick 23 

The shortage of funds- 23 

The path of unpoliced policy 24 

2. The law reflects the agency 27 

Policy and politics 27 

The change in models 30 

The lawyer's approach to antitrust 32 

3. The origin of the suit 36 

Trouble spots and complaints 36 

Check and foUow up 39 

Promotion to a case 41 

4. Building the case 45 

The staff and its task 45 

The witness — eager or obstinate _. 46 

Evidence by conscription 49 

Research by grand jury _ 51 

The thrust at weakness 54 

Strategy in the choice of action 55 

6. Antitrust in the courtroom 58 

The way of business — and of courts 58 

Fact into legal proof 60 

Analysis as a lawyer's art ' i 64 

A pawn with a will of his own 66 

Intent and many intents 67 

The judge's lot is not a happy one. 70 

The appeal to Olympus 72 

6. The efficacy of sanctions _ 75 

Equity as industrial arbiter 75 

Criminal suit as economic control 78 

Suit against the ware.. : 81 

Private suit and treble damages 82 

7. The reach after new weapons :__ 86 

The advisory opinion . 86 

The consent decree 88 

Oversight without an overseer .._ 92 

V 



VI TABLE OF CONTENTS 

SECTION 3. A PROGRAM OF ACTION 

Page 

1. Streamlining the act 101 

2. Toward an administrative base 106 

To borrow and adapt 106 

Hazards and questions 109 

The task of retooling . 112 

3. Antitrust faces the future 116 

The residual estate 116 

A final caveat 119 

APPENDIX A 

Convictions of Imprisonment Under Federal Antitrust Law, July 1890- 

July 1940- - 12-1 

APPENDIX B 

Fines Imposed Under Federal Antmast Law, July 1890-July 1940 122 

APPENDIX C 

Analyses of Fines Imposed Under Federal Antitrust Law, July 1890-July 

1940 . 124 

APPENDIX D 

Consent Decrees Entered Under Federal Antitrust Law, July 1890-July 

1940 --- - --- 126 

APPENDIX E 

Disposal of Criminal Cases Under Federal Antitrust Law Where Fines or 

Imprisonment Were not Imposed, July 1890-July 1940 130 

APPENDIX F 

Disposition of Equity Cases Under Federal Antitrust Law, July 1890- 
July 1940 . 132 

APPENDIX G 

Cases Instituted Under Federal Antitrust Law, July 1890-July 1940, by 

Fiscal Years Ending June 30 135 

Index 145 



LETTER OF TRANSMITTAL 

September 5, 1940. 
Hon. Joseph C. O'Mahonet, 

GThairman^ Temporary National Economic Commdttee^ 

W ashvngton^ D. C. 

Mt Dear Senator : I have the honor to transmit herewith a study 
on Antitrust in Action, which analyzes in detail the process of en- 
forcement, including that which does or (notably) does not happen 
in industries after legal action in a case has been closed. 

Professor Hamilton, formerly a member of the National Industrial 
Recovery Board, has served for more than 2 years as adviser to the 
Antitrust Division. Miss Till was for 3 years a member of the staff 
of the President's Committee on Price Policies. In addition to the 
considerable number of persons who have been consulted on various 
portions of this study inside and outside the Government, special 
acknowledgment is due those who have read it in its entirely, notably, 
Blackwell Smith, of the firm of Wright, Gordon, Zachry & Parlin, 
lawyers. New York City; Dean Acheson, chairman of the Attorney 
General's Committee on Administrative Procedure, Department of 
Justice; Walter Gellhom, associate professor of law at Columbia Uni- 
versity, and Oscar S. Cox, assistant to the general counsel, Treasury 
Department. Their comments and suggestions have been most en- 
couraging and helpful. 

Respectfully submitted. 

Theodore J. Keeps, 

Economic Adviser. 



SECTION I 

THE TASK OF INDUSTRIAL REGULATION 



1. THE QUESTION OF ANTITRUST 

A half century ago the Sherman Act became the law of the land. 
In our hurried world 50 years is a long time, quite long enough to 
turn legislative intent into current reality. Yet today, in talk and 
in fact, the trust problem is as acute, as fresh, as unsolved as when 
first the National Government made the matter its concern. 

The popular will, as expressed by Congress, is clear enough, A 
competition which keeps a free field and grants no favors is to 
maintain the life of trade. As a policeman with a big stick, the 
Government is to keep occupations open to all who desire to take 
their chances, to secure to individuals the "common right" to the 
unmolested pursuit of their callings, to remove obstructions from the 
avenues of 'Opportunity, to free from restraints big and little the 
channels of trade. Hedged by such liberties, business enterprise is to 
work out its own salvation. 

Amid the resounding clash of economic forces, the market is to 
hold the dominant place. Its function is to fix price, adjust produc- 
tion to the demand for goods, regiment the lines of enterprise to 
ever-novel situations, measure- out success and solvency. As seller 
strives with seller and buyer vies with buyer, competition is the be-all 
and end-all of industrial order. It is an arena for restless energy; 
within a scheme of checks and balances clashing interests move to- 
ward an equilibrium. Yet that equilibrium can never be attained — 
for the volcanic urge of a dynamic society forbids. 

But somehow public policy and current reality are at serious odds 
and industries have not been subdued into such well-behaved affairs. 
Hardly a trade exhibits the neat purposive lines of the legislative 
pattern. Every industry has its vocabulary, its trade practices, its 
common understandings, without which it could not carry on. On 
all sides the rivalry of isolated firms has been tainted by custom, by 
compromise, by collusion. Industries in their several designs present 
their zones of competition and their points of Qonstraint ; and across 
the industrial landscape lies a network of constriction — open here, 
loose there, tight over yonder — which abridge the liberty of the trade 
or deny the freedom of the market. It is an odd fact that restraint 
of trade and competitive practice are inextricably mingled ; together 
they form a shifting pattern of control for an industry. Outright - 
"monopoly" is as nonexistent as "pure competition," both concepts 
belong to picture books rathe^j* than to everyday activity. Every- 
where departures blur the sirhple iines of black and white into a 
motley outline streaked with many colors. 

Yet, despite this rift between legislative standard and industrial 
fact, the Sherman Act has become a great American tradition. For 
decades an antitrust plank has adorned the platforms of the major 
parties; phrases, hoary with age, remain vital from one campaign 
to the next. The general public apparently makes antitrust an article 



4 CONCENTRATION OF ECONOMIC PpWER 

of political faith. The will to depart is greatest among executives 
in rather closely-knit corporate domains; yet their illustrations come 
almost wholly from trades in which cut-throat competition threatens 
destruction. Small businessmen extoll "free enterprise" but their 
everyday practices are hardly in accord with its profession. There 
is little doubt that the halo about the law serves the practical pur- 
pose of forestalling any substitute measure for the control of in- 
dustry. Yet a myth, long venerated, develops strong compulsions of 
its own. In the minds of many businessmen the belief in antitrust 
belongs to one world and the actualities of business conduct to quite 
another. 

The Sherman Act has been called "a charter of freedom" for Ameri- 
can industry.^ "V\niy has it not been a success? Is the crux of the 
trouble the congressional failure to implement the law with adequate 
fimds? Or is its weakness due to an insecure foundation? Is a 
statute enacted in the far-away nineties adequate to the problem of 
restraint five decades later? Is the machinery for its administration 
subject to the wear and tear of* time, and has it become obsolescent? 
Can the basic issues of industrial government be transmuted into 
causes of action? Can the process of litigation be made to put an 
erring trade back on the right track? Have courts the distinctive 
competence to bring order and justice into the affairs of industry? 
Can a series of suits be depended upon to hold the national economy 
true to the competitive ideal? Are the sanctions of the statute of a 
character to induce compliance? In a word, can antitrust be made 
the answer ? 

A"next step" in making industry serve the general welfare is immi- 
nent. Issues neglected can hardly be postponed longer. A question 
which persists is why the national economy, in spite of an up-to-date 
technology and a wealth of material and human resources, does not 
operate efficiently. Problems of surplus capacity, unemployment, 
under-consumption, inadequate standards of life, all drive_ back to 
orf: anization of industry. In such a critical reyiew, the Sherman Act 
is in for close scrutiny. 

The edge of inquiry is being sharpened by the drive for national 
defense. As a method of regulation, trust-busting belongs to an era 
of laissez faire. In time^ of stress its freedom is likely to be curtailed. 
•Antitrust was forgotten in the last war and it was effectively abated 
in the economic crisis of 1933. Its role in the future is most uncertain. 
Whether increased "power" is to be put behind the Sherman Act, its 

{)rovisions are to be modernized, its resort to litigation is to be stream- 
ined, awaits decision. It is even possible that antitrust will give way 
to some more up-and-coming mode of regulation. 

The tangle of affairs to which the old, the amended, or the new 
measure will be applied come straight out of the past. Only from 
the knowledge of how it has worked can the law be remade and set 
on its way. The line gives position to the point; the sweep through 
time endows with meaning a problem of here and now. 

; *Mr. Chief Justice Hughes, AppalaoMan Ooala v. U. 8. (228 U. S. 344, at 359 (1933)). 



2. THE CHARTER OF FREEDOM 

SCRUPLES AND THE CONSTITUTION 

The Sherman Act is a weapon of policy from another age. As the 
eighties became the nineties, the Nation was becoming uncomfortably 
conscious of an industrial revolution. Although dinky little railways- 
were a commonplace, the trunk line was still a novelty. The landi 
was dotted with factories using simple mechanical processes; yet 
chemistry and biology had not been subdued into technologies and 
electricity had just ceased to be a toy. The telephone was still a 
novelty; the electric light had just passed its eleventh birthday; the 
wonders that lie within the vacuum tube were still to be explored. The 
automobile was a rather impious hope; the airplane, an adventurous 
flight in wishful thinking. The motion picture and the radio broad- 
cast were as yet hardly tangible enough to be subjects of fancy. Agri- 
culture, once the foundation of national wealth, was being driven 
back country. Petty trade had been forced to make a place beside 
itself for a big business which seemed tg masses of the people to be 
strange, gigantic, powerful. 

The unruly times offered opportunity to the swashbuckling cap- 
tains of industry, whose ways were direct, ruthless, and not yet cov- 
ered over by the surface amenities of a later age. In sugar, nails, 
tobacco, copper, jute, cordage, borax, slate pencils, oilcloth, gutta 
percha, barbed fence wire, castor oil they bluntly staked out their 
feudal domains. The little man caught in a squeeze play — the inde- 
pendent crowded to the wall by "the Octopus" — the farmer selling his 
wheat, corn, or tobacco under the tyranny of a market he did not 
understand — the craftsman stripped of his trade by the machine — ► 
the consumer forced to take the ware at an artificial price or go 
without — here were dramatic episodes. Industry was in the clutch 
of radical forces — and of iniquity. It was a period in which the 
ordinary man was confused, disturbed, resentful. 

Of this confusion, disturbance, resentment, Congress became 
aware.^ It was led by protest ai;d petition to the necessity of doing 
something about it. Yet a number of obstacles blurred the vision 
and arrested the action of the Fifty-first Congress. At the time there 
had been little experience with administration. The regulatory 
commission was almost unknown. The Interstate Commerce Com- 
mission, but 3 years old, had not yet found its footing; the dominant 
purpose behind it was not to regulate the railroads but to put an end 
to rebates and discriminations upon which favored shippers thrived- 
Spme of the State commissions were a bit older, but they had little 
to offer in the way of usage, device, invention. Just as little was 

1 The materials for this chapter come very largely from the bills Introduced by variom 
Senators and Representatives and from the debates in the Plf.ty-flrst Congress as reported 
in the Congressional Record. To equip each sentence, almost each phrase, with its 
particular citation would be as cumbersome as it is unnecessary. 

5 



g OONCENTRATION OF ECONOMIC POWER 

known about industry, whose curious ways had not yet become a 
subject of detailed study; a speculative account of how competition 
was supposed to work was enough. Since, barring collusion, the 
general theory was applicable to any ware of trade, the bewildering 
variety of industrial activity was hardly suspected. 

A restraint of trade was looked upon as a malicious act. All that 
was needed was an eradication of the evil. It was utterly foreign to 
the age to regard industry as an intricate affair, to control it through 
an administrative agency, to entrust oversight to a corps of special- 
ists. Above all, it was hard for the fact of the rising national econ- 
omy to register. The idea of petty trade lingered on long after 
industry had ceased to be local. The notion that business could gov- 
ern itself or that its regulation belonged to the States was a matter 
of common sense just beginning to be challenged. 

In direct attack a great many bills were introduced. In Senate 
and House Member after Member, with his ear to the ground and his 
head full of scruples, put on paper his own proposal for banning 
monopoly from the land. As their authors were unlike in courage, 
vision, knowledge, forthrightness, so did the bills differ in orbit of 
influence, range of remedy, agency of enforcement, making life 
mildly uncomfortable or distinctly disagreeable for enemies to the 
public good. Directness went straight to the mark with prison sen- 
tences for "malefactors of great wealth" ; decorum countered with the 
proposal of a constitutional amendment to ease the way for "a strong 
measure". Nor could "the thumbscrew of monopoly" be considered 
as| a question apart. As a possible "mother of trusts", at least to 
free-trade Senators, the protective tariff became a new-born iniquity. 
Thrusts at scarce money, at high money, at the money trust, at high 
finance, were constantly in evidence- The urge to trust busting went 
forward to overtones of the currency, investment banking, the tariff, 
options in grain, the sins of the other party. 

To men of simple faith the ends came easily. As text of bill and 
gloss of debate indicate, their aim was to make monopoly in all its 
forms as odious at law as morally it was outrageous. In tenns of a 
public policy, not yet overcharged with legalisms, they proclaim the 
norm of a free competition too self-evident to be debated, too obvious 
to be asserted.^ The real task was to implement the act — an under- 
taking which had to run the gantlet of the supreme law of the land. 
A number of Senators believed that in granting to the Congress power 
over commerce among the several States, the Constitution meant what 
it said. But it was customary to make a mystery of the sacred word; 
and for the meaning of the clause the general disposition was to 
explore the recesses of conscience, the body of reputable belief, the 
hearsay of the law reports. A joy in the higher dialectic was not 
to be sacrificed to so earthly an end as effective legislation. In politi- 
cal thought it was a rather arid time; logic chopping was at the 
height of fashion 5 the immortal document was an intricate mosaic of 
rigidities, categories, citations. 

.» It l8 not to be understood that those who would do nothing about it were completely 
Absent. ■ The simple notion of evolution was in the air, and it was fashionable to assume 
that the trend toward bigness was inevitable and universal. Although such a concpsainn 
ill became a representative of the people, one Senator vas bold enough to assert that th«> 
Congressmen were trying to arrest the course of Nature itself. 



OONCENTRATION OF E<X)N0MIC5 POWER 7 

Among holy things likeness passes by contagion, and the Constitu- 
tion took on attributes of divinity. It ceased to be an instrument of 
national purpose and became a jealous God.^ As a fetish, greedy for 
reverence, it indulged its limited tolerance and demanded its living 
sacrifice. "The people complain, they look to us with longing eyes." 
Yet, although senatorial hearts are touched with agony, "alas there 
is little that we can do." The world is still the great penitential ; the 
concern of the body politic, the pilgrim's progress. The question 
ceased to be what ought to be done and became what the Constitu- 
tion allowed. The end of legislation was the utmost in relief con- 
sistent with "satisfaction" of that immortal document. 

As a voyage into the unknown, antitrust would have had hard 
going, even under a single authority. But the paradox of the Fed- 
eral system made the venture doubly difficult. A division of powers 
between Nation and State was assumed to be marked by a simple, 
clear-cut line and raised the question of jurisdiction. iDecades oi 
inactivity lay between the concern of the Fathers to establish legisla- 
tive control over the national economy and the curent legislative 
stage ; powers no longer animated by dialectic and kept alive by cita- 
tion seemed unreal ; the necessities of the people under industrialism 
were not yet insistent enough to refresh the entry. An old Confed- 
erate soldier, skilled in dialectic, from his seat in the Senate read the 
avowed rights of the Lost Cause into the power of Congress over 
Commerce among the several States.* It was the fashion of the pe- 
riod to ground jurisdiction in a mechanistic analog; to make State 
and Nation alike sovereigns in their independent domains, and to 
regard the physical movement of goods across a boundary line as the 
test of Federal authority. As a division of powers is frozen into 
stifling severities, eyes cannot recognize the national economy when 
they experience it. Where reality is kept on tjie side lines, decision 
emerges from the verbal play of an ordeal. 

Thus Senators turned the little end of the telescope to the Con- 
stitution in their search for power. Not that within the sheaf of 
bills there was wholly a lack of breadth or of courage. One or 
another of them boldly asserted national authority and proposed that 
a cause of action be available to any person damnified in his business 
by collusion ; that the consumer stung with an outrageous price have 
his suit ; that the courts be closed to litigation seeking to give effect to 
a contract in restraint of trade ; that the creation and maintenance of 
a trust — a generic for a multitude of evils — ^be made a high misde- 
meanor. Nor was there lack of ingenuity in the discovery of sanc- 
tions. Trust-made goods were to be denied access to interstate com- 
merce — upon their journey they might be seized as contraband — the 
franchises of corporations producing them might be forfeited — ex- 
cise taxes, up to 40 to 80 percent of their value, might be levied 
against them — the wretches who boosted their price might be denied 
the use of the mails. The tariif, especially to the Southerners, was a 

» The Preamble of the Constitution, stating the national aims in the light of which the 
instrument of government was to he construed, was, to the majority of the Senate and 
among reputable authorities upon constitutional law, terra incognito. 

* Senator George, of Mississippi. A brother rebel from the same State, speaking for the 
United States Supreijie Court, had found a seaon in the seamless web of an industry and 
had thrown "production" to the States, "comilxerce" to the Nation. — ^Mr. Justice Lamar, 
Kidd V. Pearson (128 U. S. 1 (1888)). 



g OONCENTRATION OF ECONOMIC POWER 

persistent source of mischief. If a person or persons deliberately 
gave an upward tilt to a price curve, the article was to be put on the 
tree list."* Even the protection accorded inventors was to be exposed 
to the crusade. Legal rights were to be forfeited whenever combina- 
tions or conspiracy was discovered in respect to any productive proc- 
ess "partially or wholly covered" by letters patent from the United 
States. Equally numerous were the agencies to be charged with 
Enforcement— the district attorneys, the Commissioner of Patents, the 
Secretary of the Treasury, the Postmaster General, the Department 
of Justice, the President of the United States himself.^ 

In even this bold enumeration a desire to keep within the four 
corners of the Constitution is apparent. The ordeal of debate reveals 
a general determination to see that so exacting a master was com- 
pletely satisfied. A barrage of suggestion and countersuggestion was 
provoked by the question of the proper ritual with which to invoke 
the jurisdiction of the Federal courts. National authority was not 
to be asserted without myopic survey and proper rubric. The attack 
direct had to be bent into a circumlocutions assault upon some un- 
guarded salient of the higher law. Sanctions were to be speared to 
the Constitution -rather than bottomed upon it. 

BACK TO THE OOMMON LAW 

As a creature of such currents of thought the statute took shape. 
The original Sherman bill was a very tentative proposal. It pro- 
fessed to outlaw all arrangements which prevented "full and free 
competition," to open the Federal courts to suits by parties damni- 
fied by such agreements, to provide for the forfeiture of the charter 
of the offending corporation. Its terms were uncertain, it invited 
constitutional attack, its author was timid in its. defense. Twice it 
was rewritten by the Committee on Finance; yet it remained the 
target for the kind of shafts which the statesmen of that generation 
loved to hurl. The author, confused, yielding, anxious to placate, 
time after time would concede objection and accept amendment. 
As thus from many desks rather incongruous bits came into place, 
members became quite uncertain as to the objective and content of 
the proposed measure. After running the gauntlet of "the habitudes 
of the lawyer," the bill retained its legal ban upon interference with 
competition and its right of private suit for double the amount of 
damages and costs. As for implementation, a clause — really a broad 
sheet of paper whereon judges might freely write — gave to the cir- 
cuit courts of the United States jurisdiction over "all suits of a civil 
nature at common law or in equity" and authority to "issue all 
remedial process, orders or writs proper or necessary to enforce its 
provisions." A postscript granted a limited exception to trade unions 
in their resort to collective action to shorten hours and to raise wages, 
and to farmers' cooperatives in the sale of their own products. 

But a posse of Senators on the warpath was not enthusiastic about 
so lukewarm a measure. Nor were statesmen from the Grain Belt 
content to let slip the opportunity to have the law on processors 
and speculators. Senator Reagan, of Texas, had gone trust-busting 

•In a diluted form such a prohibition was 4 years later read Into the Wilson Tariff Act 
^28 Stat. 509 (1894)). 

• Since he was supposed to Itnow everything, the Librarian of Congress would nave been 
made by a hardened legislator the chief among trust busters. 



CONCENTRATION OF ECONOMIC POWER Q 

across the wide open spaces ; no punctilios of an eastern etiquette de- 
terred his sturdy soul from naming names. To him a "trust" was 
a crime; the persons perpetrating it, criminals; and he wanted the 
United States statutes bluntly to say so. In a bill untainted by dec- 
orous compromise he drove at the heart of the michief . In concrete 
terms it set down a list of activities any one of which tended to 
create a trust ; made participation in any plan to abridge unrestricted 
competition a "high misdemeanor" ; punished with a fine not to exceed 
$10,000 or imprisonment at hard labor for 5 years or both; and, 
that the punishment might be worthy of the crime, made each day 
of violation a separate offense. Senator Ingalls, of Kansas, who 
knew what the farmet* was up against, sponsored an elaborate pro- 
posal to restrict trading in grain options. For a time Senators Reagan 
and Ingalls each sought to amend the Sherman bill by replacing it 
with his own. In the course of debate a colleague suggested that the 
Reagan measure was a complement, not a substitute, for the original 
bill. So bright an idea w^^s bound to prevail, and the inexorable 
logic which joined the twain presently caught up the third in its 
sweep. Among statutes-to-be competition gave way to combination; 
the three bills had become one. 

Step by step all seemed right. Yet somehow the whole of the 
resolve seemed different from the sum of the motions. A majority 
had gone along, yet only a straggling of supporters remained faith- 
ful to the completed work. Once — and then again — a motion had 
been made to recommit the bill, not to the Finance Committee whence 
in lean form it had come, but to the Judiciary Committee. . On 
former occasions the proposal "to deliver the child for nurture to 
persons who have most interest in its death" had been voted down 
and for the time the measure was saved from "this great mausoleum 
.of senatorial literature." Now for the third time the motion for 
reference was put and carried ; and the Judiciary Committee — stung 
by criticism or avid to exploit an opportunity — within 6 days re- 
turned to the Senate a bill with the same caption. The committee had 
scrapped all that had been sent along; and, with Senator Hoar, of 
Massachusetts, as draftsman, had written its own law. 

The new bill simply recited for "commerce among the several 
States," the rule of the common law against restraint of trade. This 
recitation was deemed necessary for it was believed that there was 
no "Federal common law." A statirt'e was regarded as necessary to 
bring the body of ancient usage within reach of the United States 
courts. The statement was framed in familiar legal symbols, not in 
the language of industry or the idiom of public policy. The prohi- 
bitions, which had grown out of the experience with petty trade, were 
taken over intact. 

The element of novelty was the public character of the act. The 
older rule against restraints had been largely an affair of private law. 
Contracts in restraint would not be enforced in the courts ; the per- 
son injured might have his damages ; he was entitled to relief from 
a collusion against him. It was only when the combination smacked 
of a criminal conspiracy that the offense clearly took on a public 
character. The States had led the way in calling the practice of 
monopoly a crime, and the Hoar bill now followed. The threat of fine 
and jail was meant to deter men of affairs from straying do\<^n for- 

259564— 40— No. 16 2 



10 CONCENTRATION OF ECONOMIC POWER 

bidden paths ; and, even upon the chance of their guilt, to ioad upon 
them a protracted and expensive defense. The confiscation of goods 
shipped in violation of the proposed act was also new. This sanction 
had been suggested in debate by an eminent lawyer as an easy way 
around the Constitution into the Federal courts. The Government 
might also resort to equity, dissolve illegal -combines, enjoin unlawful 
practices. But if the Government made the matter its concern, the 
right of private action was not abandoned. It had attended the 
Sherman bill in all its vicissitudes; and was now set down in the 
Hoar bill as triple damages and costs. In this ultimate form it 
was copied straight out of the Statute of Monopolies. Thus a crim- 
inal action, a plea in equity, a libel against the goods, a private suit 
for three times the damage and the recovery of cost were intended 
to put teeth in the act. An old offense was made a violation of Federal 
law and fitted out with a number of remedies. Yet no one of these 
borrowed sanctions was adapted to its nfew employment. 

Nor was there any attempt to devise new machinery of enforce- 
ment. In the thought of the nineties the law should be as nearly 
self-enforcing as possible. The main reliance seems to have been 
placed upon the private suit. A man knew when he was hurt better 
than an agency or government above could tell him. Make it worth 
their while — as the triple-damage clause was intended to do — and 
injured members could be depended upon to police an industry. If 
more were needed, the resort was to the usual course of Federal 
justice. Another duty was added to the overlarge obligations of 
the Attorney General and of the several district attorneys scattered 
throughout the land. 

After the briefest of discussions the Senate adopted the Hoar bill. 
Its sponsors were apologetic for the very little distance the statute 
went ; but the zeal for argument had long since been spent. It was 
accepted as a "first installment," presently to be amended as ex- 
perience pointed the way. In the House a time limit forced an early 
vote; leave to print crowded the inaudible debate from the floor 
into the Congressional Record. A single amendment led to a strug- 
gle in conference and was eventually abandoned; the text was left 
intact. There was no enthusiasm; but here was something at least 
for the people back home — and the congressional campaign was 
warming up. Besides there were matters of real consequence, such 
as the McKinley Tariff Act, which wanted legislative attention. So, 
with only a single vote in dissent — ^though in both Houses Members 
answered "present" or were conveniently absent — on the 2d of July 
1890, the bill became the law of the land. It is to this day 
strangely enough called the Sherman Act — for no better reason, ac- 
cording to its author, than that Senator Sherman had nothing to do 
with it whatever.^ 

THE INTENT — IF ANY — OF CX)NGRESS 

A great deal has been said about the purpose of Congress in pass- 
ing the act. At best legislative intent is an evasive thing. It is 
wrapped in the conditions, the problems, the attitudes,, the very at- 
mosphere of an era that is gone. But aside from saying that the 

'' George F. Hoar, Autobiography of Seventy Years, vol. II, p. 363. To Senator Sherman 
"the Sherman Act" was the Silver purchase act, John Sherman, Recollection of Forty Years,- 
vol. 11, pp. ior.2 1070 



OONCENTRATION OF ECONOMIC POWER H 

act reflects its date, there is little more in the way of concretion to 
recite. Instead, as a creation of the process of legislation, the statute 
bears the confused marks of its origin. A remedy is never neatly 
shaped to the annihilation of a clearly perceived evil ; nor is the will 
of the people borne along an insulated current into its image at law. 
In this case a scattered mass of opinion and of feeling was never 
distilled into an articulate statement. As always, hazards marched 
with the emerging act — the clash of interests, the passing of the buck, 
the pressure of other matters, the delicate amenities of horse swap- 
ping, the clash of personality upon personality, the parade of good 
reasons for real ones, the rumblings from the approaching elections. 
Amid the pull and haul of myriad forces the common understanding 
was far from a meeting of minds. 

In a search for intent the record has been thumbed through with 
meticulous care and to little purpose. The debates exhibit heat, 
passion, righteous indignation against the devil of monopoly. The 
bills proposed went much farther than the Hoar Act. In learned 
books and before learned judges, passage after passage has been cited 
to prove what the framers did — and did not — have in mind. The 
great bother is that the bill which was arduously debated was never 
passed, and that the bill which was passed was never really dis- 
cussed. The House, in fact, never had a chance at the measure which 
provoked discussion. 

A ruse, whose cleverness only legislative experts can appreciate, 
drove a barrier between debate and eventual statute. The matter 
went to a committee notoriously hostile to the legislation. The com- 
mittee turned a deaf ear to all that the Senate had said and done and 
went its own way. Intent, therefore, forsakes the Congressional 
Record for the -capacious recesses of that flexible corpus called the 
common law. When the bill was reported back the session was late, 
interest had died, apathy ruled. Yet the statute — untouched except 
for the Miller-Tydings amendment of 1937* — has for 50 years 
remained the basic act for the control of American industry. 

The Fifty-first .Congress sensed the rush of an oncoming indus- 
trialism. Its task, facing the future, was to create a barrier against 
shock, a road to order, a guaranty of justice. In debate it laid bare 
evils within the emerging national economy, but could bring itself to 
do something about it only in a babble of voices. Except for words, 
it made no thrust at present danger^; it came to no grip with the 
trends of the times ; it made no attempt to chart a course for Ameri- 
can industry. When the voters would no longer tolerate delay, it 
acted. When the need was to shape the future, it looked to the past. 
On the eve of the greatest of industrial revolutions, the National 
Government was fitted out with a weapon forged to meet the prob- 
lems of petty trade. Out of an inability of Congress to face the 
economic problems of its day the "charter of freedom" for American 
industry was bom. 

•The proviso easing the way for the manufacturer who would price-fix a trade-marked 
«ood can hardly be referred to as a deliberate act of legislation since it was sneaked- 
through as a rider to an appropriation bill. 



3. THE CURRENT WAYS OF RESTRAINT 

OLD STYLE AND NEW 

A rule of the common law, emerging from petty trade, was thus 
evoked to control the affairs of industry. An instrument of a static 
society, it was accepted amid the din ot economic change. As it has 
endured, it has had to serve a national economy whose structure, 
arrangements, and problems have departed farther and farther from 
the world of its framers. 

The rule against restraints doubtless does nicely enough in an econ- 
omy of farms and petty trades. Under a subsistence agriculture it 
is only the surplus that goes to market. Farms are scattered; 
farmers are as numerous as they are contentious. A gathering of 
neighbors from the four corners over impassable roads to fix prices 
is not even a temptation. In respect to it the law may remain in 
repose. Nor does petty trade require more than an occasional use of 
the weapon. The industrial techniques change slowly, the simple 
ways of trade are taken for granted, dickering is still an art, the 
buyer and the seller each shops around, men haggle long and loud 
over a bargain. A collusion between buyers to cheapen goods, or a 
conspiracy among sellers to boost prices, is occasional, quickly noted, 
indignantly resented. It is only in the exceptional instance that the 
law is called upon to interfere with freedom of contract. A corner 
upon wine presses at harvest, an engrossing of geese at Christmas, 
a monopoly of corn in time of harvest are conspicuous wrongs beyond 
legal tolerance. They are evils in themselves, and ignorance of the 
ways of the trade is no hindrance to their correction. To the law 
falls only the negative task of smashing the restraint. That done, 
an interminable process of bargaining between noisy men, each intent 
upon his own advantage, can be depended upon for positive control. 

The very appearance of the Sherman Act testifies to the passing 
of so primitive a situation. The change that came was not uniform ; 
the old lingered as the new came into play; its tempo, quality, inci- 
dence varied from trade to trade and from place to place. Its march 
followed no simple line of evolution; it left, in its passing, a rich 
colorful, variegated pattern of industry, pieces as it were from many 
systems. As big business came into place alongside little business, 
conditions emerged which the common law had never presumed. Ques- 
tions once left to the free play of buying and selling came to invite 
personal or corporate discretion and it was inevitable that, as the. 
governor of industrial activity, the open market should be supple- 
mented, compromised, superseded. The corporation often forsook 
the spot market for long-term contracts or integration. An automobile 
concern, by a series of covenants which run for years ahead, takes con- 
scious steps to assure itself of adequate supplies of all needful parts 
and materials. An oil company, whose domain stretches from well 
12 



CONCENTRATION OF ECONOMIC POWER 13 

to tilling station, establishes a single discretion over an entire pro- 
ductive process. The result is to substitute managerial discretion at 
many points where the market once controlled and to remove many- 
areas of industrial activity from "the automatic play of supply and 
demand." In instances in which the activities of huge concerns con- 
verge upon a sensitive price structure, a spot market responding to 
competitive forces has come to be regarded as too dangerous to be 
employed as an instrument of industrial regulation. 

As a trade becomes an industry, it develops its own customary 
ways of getting things done. In time these arrangements get to be 
more detailed and more intricate. They harden into fixed rules 
which are generally followed in the industry. They may have their 
origin in a deliberate effort to control price; remain as a hang-over 
from earlier days; emerge as expediencies which persist through 
sheer inertia ; or just happen into being. As events beat upon them, 
trade practices may retain their integrity, respond to changed condi- 
tions, be diverted to new uses. But however they come into being or 
whatever their character — a discount structure, a classification of 
customers, a basing point system, bureaus of estimate, market infor- 
mation surveys — they all tend to deflect the unbridled forces of. com- 
petition. The market performs its office within an impinging net- 
work of institutions. 

THE PROPRIETIES OF RESTRAINT 

Such an industrial stage has developed its own type of actor. The 
Sherman Act has been the initial instrument of education and the 
Government itself has supplied the stimulus. As the crude combina- 
tions of old were attacked in court, the men who lord it over oil, 
tobacco, meat packing, steel, began to give conscious thought to their 
le^al defenses. As good citizens they were concerned to be law- 
abiding; as able business men they were loath to refrain from activ- 
ities which were to their advantage. Where values clash, a formula 
must be found — one which will reconcile the pursuit of gain with the 
prohibition against monopoly. Old ends came to be served with mod- 
ulated means; coercion was dissipated into a discipline of gentle 
reminders; crude restraint was subdued into a fine art. Once edu- 
cation was under way, lessons were eagerly learned ; and those who in 
defense had forged nimble weapons taught their use to men of 
affairs not yet under attack. Thus as business has become civilized, 
its leadei"S have professed the amenities. They are now versed in 
propriety, indirection, circumlocution. They operate in fin economy 
so intricate as to give full play to ingenuity and finesse. Its pat- 
tern of usages presents many strategic points at which discretion may 
be exercised; its assorted controls are so many counters in an ac- 
quisitive game. Its devices and procedures, its tactics and strategy, 
represent a defense that keeps up with the times. 

Current restraints bear the stamp of their industrial culture. The 
overt, the blatant, the outrageous is gone, or dwells only on the 
fringes of polite industry. The agent of common accord may be 
independent of all the participating firms. The four large building 
contractors of a city depend upon the same bureau of proven relia- 
bility for their estimates. Nine major companies quote oil prices 
based upon market reports published in a single journal. A number 



14 CONCENTRATION OB^ ECONOMIC POWER 

of corporations separately pivot their prices upon a figure given in 
file papers. Surely all cheese should be sold at "the market price" ; 
if a "kept" auction market at Plymouth, Wis., supplies the only 
quotation, there is nothing to do but follow. 

Men may move in lockstep, not by agreement among themselves 
but in automatic response to identical stimuli. A large manufac- 
turer of brass converts his judgment of "market prospects" into 
price. The little fellows, seriatim, follow the leadership of the big 
boy. If his prices rise, they raise theirs and appropriate the "gravy" ; 
if his fall, they meet the quotations to hold their customers. Even 
an innocent pursuit of knowledge may become the brotherly tie that 
binds. An engineer of scientific bent, deeply touched by ignorance of 
accounting among the brethren, contrives a "cost formula" for the 
price of canvas goods. All the firms buy his book, experience con- 
viction of pecuniary sin, in penance put the gospel into practice. In 
such instances combination is diluted into sheer coincidence; the act 
of discretion occurs outside the affairs of the rival corporations. 

If the situation allows, personal discretion may be obliterated from 
the picture. A delivered price system is now native to steel, cement, 
cast-iron soil pipe. In steel one may purchase from any concern and 
take delivery from any mill. But the charge to the consumer is invar- 
iably the price the nearest basing point — Pittsburgh, Birmingham, or 
Sparrows' Point — plus freight to destination. In cast-iron soil pipe 
a similar scheme prevails with Birmingham as the dominant base. In 
cement, a heavy commodity of low value, the points are numerous 
and subject to change; but along an unbroken front a rigid price 
structure confronts the consumer. He may wish to choose his own 
source of supply, to provide his own transport, to save expense by 
using truck or boat, yet the option is not h'-s.^ 

The guilt for restraint may even be dissipated into a general irre 
sponsibility. The paper industry carries on through a durable agree 
ment among gentlemen. Since no others are admitted to the closed 
club, a ceremonial meeting of minds would serve little purpose. Sta- 
bility is maintained through ways of action taken for granted. In 
lead pencils and fertilizers "quality standards" have been used to do 
the pioneer work. A multitude of brands has been reduced to a few 
grades, plainly marked, easily identified. The resulting simplicity 
invites a uniform price structure, makes departures easy to detect 
enables "persuasion^' to be brought to bear upon erring members. In 
cottonseed the appeal to reason is the torch of enlightment. Each 
firm is to shape its decisions in the light of the facts; the consulta- 
tion of an up-to-date file of all the prices charged by all the firms 
in the industry is an essential of sound judgment. A definitive state- 
ment of "true and real costs" provides a uniform reference for price 
which falls little short of verity itself. 

A mass of petty restraints lies like a blanket over a group of kin- 
dred trades. Origins may be unknown, yet restrictive practice, like 
a clock wound up long ago, may continue to click on. The building 
industry has been plastered over with a hierarchy of minor controls. 
Contractors, subcontractors, investment agencies, supply houses, pro- 
ducers of materials, trade-unions great and small, have each their 

1 A scheme like this promotes competition to the extent it allows producers, wherever 
situated, access to distant markets. But since In their rivalry for trade no price-cutting 
is to be tolerated, the consumer's option Is between like units of a standard good. 



OONCUNTEATION OF ECONOMIC POWER 15 

codes of usage which with command and taboo impose a medley of 
impeding tentacles upon a backward, easy-going, myopic industry. 
Together they engulf derhand, technology, finance, enterprise, em- 
ployment in lethargy. Collusion and conspiracy — ^between union and 
union, union and contractor, contractor and contractor, contractor 
and official — is to be found here and there. But far more significant 
is the freezing of what should be a developing technology of building 
into a bedlam of medieval domains. In general, persons of high and 
petty command merely maintain an institution. Restraint has become 
convention ; they carry on rather than create. 

As the open market recedes the fabric of industrial control is 
woven. At strategic points parties move to their own advantage. In 
automobiles the chiefs of the assembly line have won authority over 
a far-flung business empire. They have, to their own gain, learned 
to play the parts manufacturers off against each other. A franchise 
from one of the Big Three means far more to the ordinary dealer 
than any ordinary dealer can mean to the manufacturer^ Only the 
exceptional marketer can bargain with the company which controls 
his supply. It is all a kind of feudal regime in which the manufac- 
turer is liege lord, the parts-maker vassal, the dealer merchant and 
peon. 

In cigarettes the lines of the feudal pattern stand out even more 
sharply. The heights are occupied by the managements of the large 
concerns. The ranking officials graciously accept generous salaries; 
then, with a keen eye to the unique quality of their own services, they 
vote themselves sizable bonuses as "incentive compensation." Stock- 
holders are lulled by regular dividends. At one frontier the farmer 
receives for leaf a price that nets less than a decent living. At the 
other the dealer is forced to carry the article upon the thinnest of 
margins. For the manufacturer encourages price cutting, and the 
merchant who sells other things cannot afford to have the buyer walk 
out of the shop because it does not carry his favorite brand.^ It is 
all very subtle; no formal conspiracy meets the naked eye; there is 
no technical resort to duress. Yet, with little in the way of holdings, 
a small group of men lord it over the whole trade. 

Industry is on the move, and restraint moves with it. As the fabric 
of industrial organization emerges, restraints are woven into its 
pattern. At a strategic ' point an advantage is asserted, extended, 
fortified. The usage which is its defense gets caught up into the 
whole scheme of working arrangements. In steel the basing point no 
longer attests mere willful collusion ; it is inseparable from the con- 
duct of the business. The location of plants, the industrial design, 
the growth of cities are all pivoted upon it- It has insinuated itself 
into the community life, taken hostages in far-flung connections, be- 
come an aspect of the whole economy. Its sudden overthrow would 
bring shock to the industry,- a dozen cities, the ways of commercial 
life. As it weaves into the structure of an industry, restraint shifts 
its home from collusion to the folkways. In case after case the 
strictures have become self -operative. The picture of conspiracy as 
a meeting by twilight of a trio of sinister persons with pointed hats 
close together belongs to a darker age. 

^At the factory the labor costs per carton run lower than the sums expended in the 
competitive armament of advertising. In salaries and bonuses voted to themselves for 
the uniaue character of their services, the executives take the cream. 



IQ CONCENTRATION OF ECONOMIC POWER 

THE SANCTIONS OF DEFENSE 

Yet restraint may be direct — if a legal sanction is at hand to offset 
the act. A manufacturer in an unguarded moment scribbles, "the 
patents upon which we pay royalties are of dubious validity, but they 
provide a device by which the industry may maintain a collective 
security and for such a defense against the chaos of competition the 
price is small." In a word, "we of a trade can exempt ourselves from 
antitrust, if a patent is at hand to take off the curse." The Consti- 
tution seeks "to. promote the progress of Science and the useful Arts," 
and a furthering statute grants to the inventor an "exclusive right" 
to his novelty for a period of 17 years. The lawyer's art can commute 
such a sanction into a formidable defense. 

In these days the higher finance plays about the ways of discovery. 
The inventor assigns his rights to a corporation ; the corporation li- 
censes various concerns to manufacture. Into the license agreements, 
as circumstances and profit-making may decree, are written restrictions 
in respect to territory, output, market channel, price. Such agree- 
ments present endless permutations. In shoe machinery a single 
patent-owning concern manufactures, leases, and services all the ma- 
chines employed in the shoe industry. Its complement of techniques 
covers the whole art; the machines are never sold outright; the 
owner of the patents drives a monopoly horizontally through the 
whole industry. The fashioning of the optical lens — which reaches 
its wearer as a pair of spectacles — is by one company broken down 
into a series of operations which are assigned to the manufacturer, 
the wholesaler, the retailer. A price-fixing scheme, running from 
factory to consumer, parallels the productive process, defending with 
public warrant the ingenious restraints. 

A concern, whose office is the maintenance of a strict discipline over 
technology, is overlord to the glass-container industry. Its task is 
to advance the art just fast enough to keep alive a few basic patents. 
It must stagger invention, prolong the life of old processes, withhold 
novelty until it is needed. The company, a creature of the dominant 
concerns, capitalizes its command of the productive process and upon 
its own terms grants or withholds the right to enter the industry. 
It apportions the national market 'and appoints to concerns local 
boundaries. It licenses its patents for specific uses ; one concern may 
manufacture beer bottles alone, another has milk bottles for its 
province, the domain of a third is fruit jars. Its authority extends to 
all the firms within the industry and reaches to all the matters with 
which they may be concerned. A private corporation has in short 
established an industrial government; it maintains law and order 
within a province of the national economy. 

The argument is that such restraints fall within an immunity 
which derives from the national authority itself. If such a protec- 
tion is valid, the patent owner becomes sovereign to an industry. The 
sole condition of his feudal tenure is that he keep alive a few patents 
essential to production. He must shape invention and discovery, not 
to an advance of the technical arts, but as a defense against public 
policy. If he can do so, his czar-like power extends to quality, 
grades, brands, capacity, output, price, channels of trade, allocation 
of wares, division of territory, terms of sale. His authority has, in 
fact, banished the. market from the control over the conduct of the 



CONCENTRATION OF ECONOMIC POWER 17 

industry. Hi3 power to condition, to abridge, to deny opportunity 
IS far more plenary than the Supreme Court has been willing to 
allow to the legislature of a State of the Union.^ All modern in- 
dustry fests upon the machine teclinology; there is hardly a process 
or a product which a patent, a measure of ingenuity and a bit of luck 
cannot obstruct. If the magic of letters patent makes innocent 
whatever it touches, a large industrial domain is put outside the law. 

Other legal sanctions may be turned to the same defensive purpose. 
A police power invoked to serve the public health has on occasion 
become a smoke-screen for vested interest. In the name of milk 
pure, clean, and undefiled, municipal law has outlined the milkshed, 
erected barricades against the outsider and created a closed industry. 
Inspection, half forgetful, or even divorced from its function, has 
been elaborated into a very purposive ceremonial. Its elaborate 
ritual has enlarged administrative discretion, opened the door to 
favoritism, invited restriction of output and frozen channels of trade 
with legal sanctions. Almost the country over a scheme of payment 
by use has driven a price line through the whole industry. ^ A high 
price is made for fluid milk for domestic use, a lower one for surplus 
milk which is canned, evaporated, made into butter, processed into 
cheese. Upon the legal foundation of inspection an intricate scheme 
of arrangements for the operation of the industry has been estab- 
lished. As an agency of control the free and open market belongs 
to the dim almost forgotten past. 

Nor is milk an isolated case.. In many States the legislature has 
decreed oleomargarine impure, taxed, or colored it off the market, 
thrown a protective tariff about butter. Local ordinances, professing 
solicitude for the public safety, have covered the building of a house 
with petty restraints and have kept the work in the hands of the 
orthodox. In the liquor industry only the sky fixes the limit of re- 
straint if "public morals" can be plead in justification. In public 
utilities the oversight of the State has been as evident in saving 
established concerns from the competition of newcomers as in insuring 
fair rates to consumers. 

A scrutiny of legal text for sanctions often encounters blurred 
edges. It has been argued — quite in vain — that the indulgence in 
collective activity, granted by Congress to farmers' cooperatives, ex- 
tends to the commodity and by contagion makes valid the collusive 
activity of milk distributors.^ Trade unions in a search for im- 
munity have variously contended that "the labor of a human being 
is not a commodity"; that their activities are so local as to escape 
Federal jurisdiction; that the intent of the framers of the Sherman 
Act was to create for them a blanket exception ; that the Clayton Act 
in specific terms accords exemption; that the protections which the 
Wagner Act throws about the jorocess of collective bargaining extends 
to all that a trade union or its ofiicers may do.^ Even the American 
Medical Association has. argued that the sanctities which attach to 
the name of physician creates a benefit of clergy for all who follow 
the calling and throws an immunity about their collusive acts.^ 

3 Neio State Ice Co. v. Liebmann (285 U. S. 262 (1932)). 

^ Brief for appellant U. 8. v. Borden Go. (308 U. S. 188 (1939)). The argument did not 
appeal to the U. S. Supreme Court. 

« Brief for appellee, Apex Hosiery Co. v. Leader (60 S. Ct. 982 (1940)). 

•Brief for appellee, V. S. v. American Medical Association (110 F. (2d) 703 (1940)). 
The argument did not appeal to the Circuit Court of Appeals and the U. S. Supreme Court* 
refused to disturb the judgment. (60 S. Ct. 1096 (1940)). 



18 OONCENTEATION OF ECONOMIC PO^ER 

In fact all regulatory measures, however righteous their intent, 
run the risk of becoming legal defenses for private restraints. Where 
business takes to politics, the police power becomes a counter in an 
acquisitive game. All over the country the use of a legal sanction 
as a defense against authority is widespread. Such instances do not 
prove that sheer contact with a regulatory measure creates an im- 
munity. But it does allow privilege to dig in behind a fortified line 
and calls for enforcement to look well to its strategy. 

THE MATTER OF MORE OR LESS 

Yet, with or without legal sanction, restraint is no longer the 
restraint of old. In a world without an absolute, we can hardly 
speak of a total monopoly. The ancient law would pronounce a 
single aluminum concern "malum in se"; and public policy today 
frowns upon the power to put "the squeeze play" upon competitors 
by raising the price of their raw material and depressing the price 
of the finished product. But to the scope of even such an authority 
there is qualification in the potential demand which a lower price 
might quicken. Our deposits of sulphur are confined to a narrow 
strip of Texas coast and two concerns regimented to money-making 
exploit the bulk of them. Yet, even where nature has done so much 
to help it along, restraint is not without its check. Other chemicals 
can do the work of sulphuric acid and substitutes dictate limits to 
sovereignty. Science, invention, and discovery are everywhere pres- 
ent with their quickening touch. The synthetic opposes the organic ; 
the old art is confronted by the new process ; the way blocked invites 
the channel around. In an economy like ours a myriad of techniques 
and a multitude of ingredients are every-day matters; a new trick 
may at any time turn the obscure into the ordinary. 

Like other wrongs at which the law thrusts all is a matter of quality 
and degree. The tightest of trades may have its points of compe- 
tition ; a widely competitive industry may have its points of constric- 
tion. Kestraint is always somewhat less than a total eclipse of trade. 
In the contracts of sale which keep a business moving, buyer and 
seller may not be of a kind. Whether on the one side or the other 
the firms are large or small, many or few, affects materially the terms 
of the bargain. If a gigantic concern deals with a host of little 
fellows, its greater power tells. It may fall short of a monopoly; 
its conduct may be untainted by conspiracy, yet it may enjoy an 
overshadowing advantage. The vendors of farm machinery, com- 
mercial fertilizers, electric current, telegraph service are in a position 
to say to the customer, "take it or leave it." The dominant buyer, 
set over against a host of insecure sellers, can likewise capitalize 
strategic position. The processor holds the upper hand in dealing 
with the grower of wheat, tobacco, cotton, corn. The chain store or 
the mail-order house — in respect to shoes, radios, toothpaste, imitation 
pearls — plays one source of supply off against another. It wears its 
industrial connections loosely; in shoppinoj around for better bar- 
gains it brings the threat of insecurity to all the firms with which it 
deals. Exclusion from a trade — a curb upon output — a control over 
price — restraint in its every manifestation is a matter of more or 
less. 



OONCENTRATION OF ECONOMIC POWER JQ 

As often as not elements of competition and of restraint are woven 
into the same industrial pattern. A minimum of understanding is 
essential to an orderly struggle for trade; there are limits to which 
the firms in an industry will allow the most brotherly accord to go. 
The major oil companies stand together in keeping production in 
line and in banning hot oil from the market. Yet offsetting wells 
and rival filling stations on opposite corners present giant enterprises 
confronting each other in militant formation. All taxes aside, the 
high- and low-price zones scattered across the country present a 
design marked both by rivalry and restraint. The large movie in- 
terests, which stretch out fanwise from Hollywood to chains of 
captive theaters are here in deadly, there in lax, struggle for patron- 
age. But bonds of union exclude the newcomer, impose vassalage 
upon the independent exhibitor, and deny to a modern art adequate 
opportunity for expression. Even gentlemen in agreement may main- 
tain a private police, and bear down heavily upon the trouble makers, 
yet vie avidly for custom. The price structure must be guarded and 
all heroically will maintain the fiction of the quoted price. Yet price 
is a complex thing and somewhere within its intricate terms a place 
may be found for a hidden concession. 

Inevitably the accord — formal, unexpressed, in the mores — seeks 
to defend the front against which the threat of security comes. 
Gentlemen are in agreement ; yet severally they have their own separ- 
ate interests. If so uniform a commodity as cement invites a trim 
price list, steel can be had in a multitude of forms and fashions, and 
electrical goods can fill the three dimensions of a large catalog. In 
dull times, and even times not so dull, a large order may tempt a 
manufacturer to keep the letter of the accord and break with its 
spirit. The quoted price remains the same; but amid the intricacies 
of the terms of sale, ways may be found to make the real price some- 
what less. Against such contingencies the unified industry must be 
ever watchful. In the face of a falling market, a shift of technical 
base, "the appearance of a substitute, vigilance is essential. Where 
an article cannot be strictly defined or a commoditj^ may be had in 
a bewilderingly large number of forms, the operation of the price 
system demands formal guidance. Without its "book" showing how 
"extras" are to be figured, the steel industry could not carry on in 
lockstep. And although it makes no concession to quality, brand, 
grade, even cement in its simplicity could not confront every buyer 
with a single price were it not for its official book of freight rates. 
Even established usages are not fixtures; as armament against attack 
they are always exposed to industrial change. 

COMPETITION AS THE MOTHER OF RESTRAINT 

In instances competition itself may become the mother of restraint. 
There can be a plethora, as well as a dearth, in rivalry for trade. A 
glutted market, an excess output, a surplus capacity are unruly forces. 
They tend to drive price below cost, to touch off secret discounts, to 
turn quotations into fictions, to invite bankruptcy. In such a situa- 
tion firms are prone to take counsel together to create a protection the 
market seems unable to provide. In women's dresses fashion has more 
to say than efficiency about the survival of firms. A multitude of 



20 OONCENTRATION OF ECONOMIC PQWER 

petty establishments are pawns in an acquisitive game in which any- 
thing goes. In bituminous coal disorder has become the normal thing 
and the industry seems by universal testimony to have reached a state 
of perpetual unbalance. In women's dresses- the life of the average 
firm is a scant 5 years ; in bituminous coal the mortality rate does not 
lag far behind. As a result of the leasing policy of the patent owner, 
anyone with a small amount of capital may become a shoe manufac- 
turer. The resulting competition in production i^ intense and de- 
moralizing; manufacturers have sought fruitlessly to come to some 
understanding — restrictive if you will — to bring stabilization into the 
industry. Automobile dealers have conferred again and again to find 
a way to abate the intense rivalry which the quota system of the manu- 
facturers has forced upon them. Even in a big business like gasoline 
the drilling of wells, to an accompaniment of competition, makes for 
an overproduction with which the market cannot cope. 

Where such situations prevail, the way of antitrust is not straight 
and narrow. It is an overplus, rather than a want, of competitive zeal 
which lies at the heart of the difficulty. As a governor of industry the 
market has failed of its office. Production obeys no comrnand; the 
price structure is at the mercy of orderless forces; the incidence of 
affairs out of hand — in shock, confusion, displacement, unemployment, 
bankruptcy — is heavy. Often, as in the manufacture of shoes and the 
retailing of cigarettes, the competition which prompts efforts at re- 
straint rests itself upon restraint. A constriction at one point creates 
elsewhere within the economy such hazards to markets as to evoke con- 
scious thought toward a collective defense. Sometimes, as in glass, 
the thinnest sort of an edge stands between a regimented industry, 
with patents as the instrument, and one as wide open as bituminous 
coal. Unless the regulatory office of the market is taken over by some 
other agency, a situation out of hand threatens to engulf all who have 
a stake m it. 

Yet any concerted move against impending disaster may run atoul 
of the law. Even a meeting of minds may be endowed with the sinister 
-taint of conspiracy. In fact, as irony would have it, the more chaotic 
the situation that provokes action the greater the legal exposure. For 
where units are many, heat has marked the struggle for markets, feel- 
ings have grown tense, suspicions have been quickened. As a result 
the getting together has hard going. The meetings must be frequent, 
the talk frank, the understandings clean-cut, explicit, above board. 
The procedure generates evidence as it goes forward; the industry 
virtually invites a suit through the very ease of getting proof. But 
where very few units are involved, where cooperation is a practice of 
long standing, where a large body of understandings is a matter of, 
course, the situation is quite otherwise. The necessity for conference 
is infrequent, minutes of meetings are prepared in advance by skilled 
attorneys, the question direct is never put. Action, is taken without 
fanfare of trumpets ; conduct is clothed in accepted practice ; records 
are barren of evidence to the overt act. Unless the good cause becomes 
blatant, it may escape the attention of the* authorities. Yet in violence 
to the competitive pattern, in departure from lawful norms, in hin- 
drance within the national economy, the less obvious is by all odds 
the greater evil. 



SECTION II 

ADMINISTRATIVE PROCEDURES OF ANTITRUST 



21 



1. BIG ACT LITTLE STICK 



THE SHORTAGE OF FUNDS 



A statute lives by appropriations — and from the first the demands 
of Antitrust have fallen upon the deaf ear of Confess. Not until 
its fiftieth year was as much as $1,000,000 appropriated to the pur- 
poses of the Sherman Act. For more than a decade no separate staff 
was charged with its enforcement ; and when in 1903 Antitrust became 
a division in the Department of Justice, it was given only half a 
million dollars, to be expended at the rate of $100,000 a year over a 
period of 5 years. Between 1908 and 1935 the appropriation varied 
between $100,000 and $300,000. In 1936 the figure was increased to 
$435,000; in 1939, to about $800,000, and for the fiscal years of 1940 
and 1941 to an all-high of $1,300,000 and $1,325,000. 

It is obvious that the staff has been inadequate to police against 
restraint the whole of American business. In the famous trust-bust- 
ing campaign of Theodore Roosevelt, the average number of attorneys 
in active service was 5. In the Wilson administration, when the 
World War had caused prices to skyrocket, the number had risen to 
18. In the twenties, when the corporation was evolved into an intri- 
cate and evasive structure, and merger, amalgamation, integration, 
holding company was the order of the day, the number engaged did 
not exceed 25.^ Not until 1938 were as many as 50 lawyers actually 
employed ; not until 1939 did professional personnel reach 200 attor- 
neys and a half dozen economists. 

JFor almost its whole life Antitrust has been a kind of a corporal's 
guard — a small section tucked away in the intricacies of a Govern- 
ment department. It has taken the great increase in its funds for 
the fiscal year 1940 to lift it to the level of an ordinary bureau. Even 
at that it was only about the size of the Bureau of Labor Statistics, 
with its appropriation of $1,012,500, and a little larger than the Bureau 
of Agricultural Economics with its budget of $928,000. It was still 
smaller than the Bureau of Foreign and Domestic Commerce with 
$2,188,744 to spend during the year.^ The sums allocated to those 
agencies are solely for fact-finding and research. The work of each of 
the three is sharply limited in contrast to the miscellany of functions 
entrusted to the Antitrust Division. The latter has a task of gather- 
ing and analyzing information comparable with that of these other 
agencies. It must, in addition, police the activities of hundreds of 
industries and thousands of companies engaged in commerce among 
the several States. It must enforce the law by apprehending viola- 
tions, presenting lawbreakers to the courts, carrying cases through 

^ It should, however, be pointed out that during this period Antitrust lawyers and 
some 30 agents of the Federal Bureau of Investigation worljed closely together. The 
agents were assigned to Antitrust work, were housed in the Antitrust offices, and for all 
practical purposes were an integral part of the Division. 

'ITie Budget of the United States Government for the fiscal year ending June 30, 
1941. Government Printing Office, 1940 

2.3 



24 OONCENTRATION OF ECONOMIC POWER 

the mazes of protracted litigation. Then, \Yhen the last court has 
spoken, it must follow up judgments and make sure judicial decrees 
become everyday realities. It is obvious that a staff of 20 or 50 or 
even of 100 can give to the affairs of the national economy only the 
most casual oversight. The contrast between the miniature staff on 
duty and the enormity of the job to be done speaks for itself. As well 
attempt to maintain law and order in Boston, Philadelphia, or San 
Francisco with the bold police force of Oshkosh or Annapolis. 

A brief comparison of Antitrust with the metropolitan police is 
suggestive. As $1,325,000 is being used to police industry, break up 
restraints, enforce competition throughout the United States, a sum 
around $60,000,000 is spent to preserve peace and order within New 
York City alone. The Antitrust Division now has 200 attorneys; 
the police force of New York City runs to an aggregate of 20,000 
persons. An analog between unlikes must not be pushed too far; 
but, niceties aside, here is evidence of basic weakness in giving effect 
to tne Sherman Act. To sharpen the contrast, the resources of Anti- 
trust are dissipated; it is charged with legal duties in respect to 
some 30 other acts of Congress. As funds have increased, so like- 
wise in the last 10 years have responsibilities. In 1929, for example, 
Antitrust provided legal services in respect to four other statutes — 
the Grain Futures, the Interstate Commerce, the Produce Agency, 
the Packers and Stockyards Acts. For the fiscal ^ear 1940, the full 
time of about 25 lawyers was diverted from Antitrust to litigation^ 
concerned with 30 other statutes. 

THE PATH OF UNPOLICED POLICY 

This weakness in Antitrust administration has been almost con- 
tinuously remarked; yet the* negligence of Congress in failing to 
implement the statute has persisted. Of the causes for this neglect, 
some stand out plainly, others are lost in the silences of the legislative 
process.^ In part the answer is found in the date of the law. Save 
tor the tariff act — which has been with us always — and the Interstate 
Commerce Act, the statute is the oldest of the Federal laws for the 
regulation of industry. When the Sherman Act was passed, a sepa- 
rate budget for its enforcement was not even suggested. In 1903 
when the Division got off to a start, budgetary allotments for the 
enforcement of Federal laws were traditionally small. In fixing its 
appropriations, year by year, Congress customarily uses as its stand- 
ard the sums allotted in previous years. Legislative custom has it 
that this year's appropriation is alDout right. The sum is a norm, 
with every presumption in its favor ; the burden of proof is upon the 
demand for more money. Thus ancient thought, frozen into a figure, 
stands as an obstacle agaii. t the appropriation which current knowl- 
edge and a later understanding suggest.* 

• Note, for example, the repoi't from the House Committee on Appropriations on the 
J941 Budget: "While the committee recognize that there Is a vast potential field of 
possible activity In the prosecution of antitrust cases and that results to date of in- 
tenalfled antitrust drives indicate savings of several hundred million dollars to the 
consuming pubhe as a result thereof ; none the less, the impelling need for strict economy 

n governmental expenditures must be given serious consideration and weiglied in the 
icales opposite the desire to project the Government's arm at further length into the 

nultlfarlous fields of Federal activities." The committee did approve a $41,000 restora- 

;lon of the |100,000 cut recommended by the Budget Bureau. 
*Thl8 fiscal hurdle has also dogged the steps of the Federal Trade Commission. It 

raB off to a far better start ; Its Initial appropriation was $420,000. By a process of 

iradual gtowth Its budget has since been multiplied five-fold. For the fiscal year 1040 

he sum allotted was $2,324,000. 



CONCENTRATION OF ECONOMIC POWER 25 

As experienca is gained, it is not at once generally available. The 
latter wisdom is- much more likely to be employed in creating the 
new, than in revising the old, venture into control. While an up- 
to-date model has been provided for the Maritime Commission, the 
Kural Electrification Administration, the Federal Reserve Board, 
Antitrust has been left without streamlines. If the newer agencies 
had been established before the turn of the century, their support 
from Congres,s would probably still be rather grudging; their late 
coming enabled them to be supplied with funds somewhat adequate 
to the tasks entrusted to them. 

The impact upon the Federal Budget is startling. As against 
the scant million and a quarter dollars for Antitrust, the Budget 
for the fiscal year 1940 provides some striking contrasts; to the 
Securities and Exchange Commission, $5,470,000; to the Federal 
Power Commission, $2,715,000; to the Rural Electrification Admin- 
istration, $2,790,000; to the National Labor Relations Board. $3,- 
189,600; to the Railroad Retirement Board; $3,254,000; to the Mari- 
time Commission, $3,990,000. The last two sums were for admin- 
istration alone. Yet the regulatory duties of these bodies extend only 
to a single industry, a single strand in industrial organization, or a 
group of ivlated industries, while upon the Antitrust Division rests 
responsibility to hold all concerns engaged in interstate commerce to 
the competitive pattern. 

But the folkways of the Budget cannot fully account for the 
neglect. The trickle of funds is symptom as well as fact and cause. 
In the hurly-burly of industrial movement there has been little 
conscious appreciation of the character and magnitude of the task 
Antitrast has to perform. The public can understand a chivalrous 
adventure in trust-busting in the grand manner. And when a cham- 
pion of the people rides into the wind, seeks out the octopus in his 
lair, and brings home th'3 scalp of a trust, it applauds. But it has 
little appreciation of the detailed, day-by-day drudgery essential to 
the assertion of the public interest in everyday business. With the 
shift from market to management, authority can be met only with 
authority. Thus the safeguarding of the public interest in business 
becomes' a continuous and watchful task. In Antitrust old style, 
heroic victories w^ere now and then to bvi Avon upon the open field. 
In Antitrust new style, a detail of pedestrian work must be done day 
by day and a multitude of decisions 'be made back of the line. 

'The cause of Antitrust lacks that massed support which causes con- 
gressional purse strings to loosen. Its appeal is greatest to the man 
on the outside who wants to barge in on a trade and needs its help in 
making his way. It is least to persons wdio, already established, are 
wary of interference. The support of labor is not easily enlisted. In 
many industries it has a vested int£rest in the maintenance of re- 
straints; the power of its leaders depends upon the maintenance of 
things as they are. It is more prone to view the Sherman Act as a 
weapon to be used against the trade-union than as an instrument of a 
better living. The group of men — ^and women — of good will, who 
busy themselves more than most over public affairs, are well disposed ;■ 
but to them Antitrust is only one among many worthy causes to which 
fitfully thev give their attenti(m. A general opinion may favor all the 
money needed to put teeth i]\to the act; and interested groups may bo 

259564—40— No. 16 3 



26 OONCpNTRATION OF ECONOMIC POWER 

lukewarm or even hostile to appropriations. But, under our Govern- 
ment, the pressure of the many is difficult. It is the few who under- 
stand how to concentrate their pressure at the focal points that count. 

The act, throughout the political community, is held in least favor 
where power and influence are greatest. A rather instinctive suspicion 
of Antitrust prevails in high industrial quarters. As a symbol the 
Sherman Act is grand. It sets down a lofty profession of economic 
faith ; it proclaims industry to be the instrmnent of the common good ; 
it preaches the philosophy which makes the market the rightful agency 
of business control. The statute holds enough of the raw material of 
thought, out of which the creed of laissez-faire was formulated, to 
have high ceremonial value in financial circles. It serves its function 
best, however, as a generality, left in Olympian aloofness, unsullied by 
contact with mundane affairs. As a control which niight do active 
duty in his own industry, the ordinary man of affairs views it. as 
suspect. A^ a scheme of regulation it moves toward diffusion of power 
and runs directly against the trend toward concentration. 

The leanness of the budget has left its lines on the national economy. 
In 1890 free competition as the way of order for industry was not 
seriously questioned. Conformity to this standard was an obvious 
expression of public policy. In the years to come the pattern of indus- 
try was to be beaten upon by a continuous industrial revolution ; turbu- 
lent forces were at large which the law said should be subdued. Yet 
at no time did Congress choose to do more than equip a few knights 
to go forth to romantic combat. The negligent oversight under which 
industry was left to its own devices has confused the problem and 
multiplied the modem task of Antitrust. Industry might once have 
been held to its competitive norms; it is now too late to restore the 
primitive design. The recession of the market, as an instrument of 
industrial control, has obscured the norms of reference provided by the 
common law. The situation was allowed to get out of hand before the 
agency was equipped for its task. Antitrust has never been accorded 
its chance. 



2. THE LAW REFLECTS THE AGENCY 

POLICY AND POLITICS 

Funds are the plastic material of enforcement. Only as they are 
converted into a going organization — all complete with leader, staff, 
program, morale, sense of direction — are they turned to account. It 
is an axiom of govermnent that much may be made of little or little 
of much. But at best it takes vision, drive, experience, years to con- 
vert a recurring item in the budget into a high-toned agency of 
control. Blundering first steps and errors of judgment must be com- 
muted into practical guideposts which indicate where action is feas- 
ible. A workable program must be patiently evolved which combines 
continuity in policy with flexibility in operation. An assortment of 
persDns must be molded into a personnel, independent enough to act 
Avithout awaiting orders, adequately disciplined to move always 
toward the proper objective. Industry has many fronts, and Anti- 
trust a small force ; its lines must be spread thin. Its every attorney 
must be able to plan a strategy; he must be able — against superior 
resources and the best talent that money can buy — to win a campaign. 

For such a venture as trust-busting, the office of the single admm- 
istrator has decided advantages. A commission, it is true, has been 
much favored by Congress as the proper agency of administration. 
It is independent of the Executive ; its personnel, at the head and in 
rank and file, change slowly; personnel lingers on from one admin- 
istration to the next. A traditional viewpoint develops; a fairly 
consistent policy groups up; practice converts statutes into rather 
clear-cut codes of law. A measure of novelty cannot be escaped ; new 
members appear, unfamiliar problems emerge, some accommodation 
must be made to the party in power. But even if certainty is never 
quite attained there is orderly sequence; if policy is I'ut rigid it has 
a discernible trend. Week after week an agency such as Interstate 
Commerce, Federal Trade, Federal Power pursues its steady course. 
The danger is not lack of continuity but too much of so good a thing ; 
as the years pass it does toda}^ wliaf 'it did yesterday and the day 
before. "^ It meets fresh problems with trouble-saving formulas; its 
activities sink into a comfortable groove. Its function is forgotten 
in the meticulous observance of ritual and routine. 

As a division of a Cabinet department, Antitrust knows no such 
stability. The Attorney General, a member of the President's Cab- 
inet, holds an appointive office. His views accord with the policies 
of his Chief, who has reached command of the Executive offices by a 
political process. As one administration replaces another the At- 
torney General and the heads of the various Divisions at Justice give 
way to their successors. For half a century there has been one Sher- 
man Act, but many have been its prophets. From 1903 — when the 

27 



2§ CONCENTRATION OF ECONOMIC POWER 

Antitrust Division was established — down to 1940, 14 Attorneys Gen- 
eral liave served 10 administrations. During this period 17 different 
individuals have had direct charge of the work of the Division. 
Thus a major shift in leadership has biecome effective about once 
every 2 years. 

A change of directors does not of necessity indicate a shift in 
policy. Where the administration remains in power, the successsor 
is likely to be more or less of a mind with the Assistant Attorney 
General whom he replaces. None the less the rapid rotation in^ 
office impresses its shifting incidence upon morale, tradition, policy. 
The head of the Division does not usually come from within the 
ranks; far more often than not he is an outsider. His post, from its 
very function, is a center of controversy. If his is a "strong" ap- 
pointment, he is assured a continuous and highly critical scrutiny 
from business and the press. He is usually a lawyer of distinction; 
but ordinarily his career has not trained him for so unique an office 
in the national economy. The structure of industry is an intricate 
and baffling matter; trade practices are among the most deceptive 
of things. He must go it blind, trust to another, or take time to 
master antitrust practice. Suits once started are not easily dropped ; 
there is always enough in the courts to carry on. But, unfinished 
business aside, his advent is usually followed by a lull. As a new- 
comer he must feel his way; he is unwilling to commit himself too 
far. Six months to a year are likely to pass before he is off to a 
good start. Then, if the law of the average holds, he is likely to 
leave office just as his program is getting under way. The man Avho 
takes his place comes on the scene as a novice; his initial task is his 
own education; another cycle begins its course. 

The administration of Antitrust is by respondent sTiperior. Its 
head directs, not in his own right, but as vicar to the Attorney Gen- 
eral who is himself the agent of the President. The Assistant At- 
torney General has, as such matters go in Washington, a large zone 
of independence. Its traditions give to Justice something of aloof- 
ness; the ranking officials are expected to exalt conscience above 
party; the man in command — thwarted in his efforts— can always 
resign and make public his reasons. Accordingly, within the limits 
of his budget, he may to an extraordinary degree make his bureau > 
an active or a quiescent body. His is a small staff; its personnel is 
largely professional, able to find places outside, susceptible to the 
contagion of leadership. His energy and vision — his skepticism of 
Antitrust — his imperturbable passivity— soon come to set the tone 
for the whole shop. 

But as agent he cannot be unmindful of his principal. Not only 
must a choice be made between vigor and laxness, but the formula- 
tion of any program is a highly selective matter. On questions of 
policy alone there are inevitable differences which the head of the 
Division nuist settle with his superior. Along a vast industrial iroi^ 
only a few salients can be picked out for attack; the actual choice 
of cases can escape considerations neither of policy nor of politics. 
'Persons put under indictment may not take it lying down nor 
limit their response to an answer in court. They see Congressmen, 
put pressure upon the Executive, enlist all who-know-who in their 
cause, move heaVen and earth to have the suit stayed or stopped. 



COXCENTKATIOX OF ECONOMIC POWER 29 

Major antitrust proceedings are things, of great consequence; their 
ramifications run far and wide into the national economy : group, 
class, interest, hot party to the controversy, may be seriously atlectecl 
by its outcome. 

Moreover Antitrust is not an isolated instrument of national con- 
trol. Other agencies under other statutes may be exercising over- 
sight over the same industrial domain. If arms of the Government 
are not to work at cross-purposes, sq)arate efforts must be coordi- 
nated. So clearance with the Attorney General becomes a matter of 
course; and, if a fresh trail is to be follo^^ed, or litigation is likely 
to cut a Avide swath, the issue may be referred to the White House. 
In instapces the will of the Attorney General may clash with the 
wish of the President and his advisers. Thus, in the United Shoe 
Machmei-y cane. President Taft was deeply opposed to a criminal 
suit until the possibilities of equity had been fully explored. Attor- 
ney General Wickersham stubbornly insisted upon using both pro- 
ceeding simultaneously — and did so. But throughout the course of 
the criminal suit, he was through notes, newspaper clippings, memo- 
randa, constantly reminded of the Chief Executive's displeasure.^ 
If opposition is met on its way up, the case-to-be may be involved" 
in protracted delay or unobtrusively dropped. A long succession 
of clearances may be necesssary to get a case of the first magnitude 
under way. 

A change in administrations adds its complicating touch. If the 
departing and the incoming Presidents profess the same political 
faith, there is still a difference. The idiom of Coolidge in public 
affairs is very different from that of Hoover. A shift from party to 
party may lead to an abrupt change in the policy of the Division. 
Although by party platform Democrats and Republicans alike profess 
an almost identical devotion to the cause of Antitrust, differences in 
administration are evident in the record. It is no secret that the 
Republican Party exhibits the greater sympathy with business in the 
perplexing problems which it faces, and that industry feels more 
secure when the weapon of Antitrust is safely " lodged in Republican 
hands. When in power the Democrats have exhibited a little more 
activity and a bit stronger determination to experiment with enforce- 
ment. But the differences must not be too sharply drawn. An ad- 
ministration is of men as w^ell as of a party; a political label defines 
none too sharply what those who wear it will do. 

The course of events may trick Antitrust out of its chance. In a 
period of depression it has always to take the hurdle "this is no time 
to monkey with business'' ; in one of prosperity it is confronted with 
the barrier "better let well enough alone." In Wilson's administration 
Antitrust seemed about to get going. In a burst of high resolve the 
Federal Trade Commission was established. Then came the blow of 
the World War and enforcement passed into eclipse. When the sec- 
ond Roosevelt came into office, hard times seemed to dictate something 
more radical, and Antitrust could not easily move in territory which 
X. R. A. had preempted. 

Within these larger sweeps minor events leave their impress on 
administration. The bullet tliat killed McKinley provided Theodore 

1 Department of Justice flies on V. S. v. United Shoe Machinery Co., File No. 60-137-1. 



30 CONCENTRATION OF ECONOMIC POWER 

Eoosevelt Avith his "big stick." It was Taft's luck to have met Anti- 
trust as a Federal judge, and he had the lawyer's delight in the intri- 
cate problems it raised. An opinion of his from the circuit bench 
still has currency,^ and one of his messages to Congress, all fitted out 
with citations, sounds like the deliverance of a judgment.^ Wilson 
was a trust buster by stern intellectual conviction — but as a great 
humanitarian his heart went more easily into other crusades. The- 
little conference in the Congress Hotel at Chicago which made Hard- 
ing President decreed through Daugherty the low point in the enforce- 
ment of the la-w. When, under Coolidge, Harlan Stone went to the 
Supreme Court and John Sargent became Attorney General, a vig- 
orous Department of Justice became content to leave the world to 
business and to God. It was whispered at the time that Stone's intent 
to proceed against the Aluminum Co. of America was among the 
reasons for his elevation. 

After the weakness of the N. R. A. was revealed by the Supreme 
Court in the Schechter case^ public policy did not at once take the 
old road. Minds were still full of "another way." Harold Stevens, 
staunch in the old faith, departed for the Federal bench ; and John 
Dickinson, the new head, trained in economics as well as law, thought 
of the Sherman Act as only one of a number of instruments for the. 
public control of industry. When in 1937 Robert Jackson became 
the Assistant Attorney General in charge, a vigorous drive was 
launched; and, under his successor, Thurman Arnold, witli more 
ample funds and a larger personnel, this start was converted into a 
vigorous campaign along a number of fronts. As antitrust ap- 
proached its semicentennial it attained an all-high in the number of 
cases under way and the vigor with which they were pushed. 

THE CHANGE IN MODELS 

A contrast between the twenties and the turn into the forties throws 
the subject into relief. It illustrates the play of event and force, pres- 
sure and person, upon the Sherman Act to make it of small or great 
account. The words of the statute can in action utter very different 
commands. In the 5 fiscal years 1925-29, the weapon of litigation 
fell virtually into disuse. Of a count of 75 cases gtarted during this 
period, 37 were settled by consent decrees, 13 ended wdth the plea of 
guilty or nolo contendere, 12 were dropped before they came to judg- 
ment. The attack direct was superseded by a process of informal ne- 
gotiation.^ The policy ripened and in 1929 Attorney General Mitchell, 
in an address before the American Bar Association, was ready to give 
a rather complete explanation of current practice at Justice. The 
Department had made it an established practice to "consider" business 
plans and to "indicate in a limited way its views as to the legality of 
proposals." ^ Where activities did not appear to violate the Sherman 

^Addyaton Pipe and Steel Co. v. U. 8. (85 Fed. 271 (1898)). 

' Si^ecial message to Congress, December 5, 1911. 

* Schechter Poultry Corp. v. U. S. (295 U. S. 495 (1935) ). 

5 It was for the first time publicly stated in the Annual Report of the Attorney General 
for 192G (p. o3) : "The Department has encouraged tl»e submission to it of jwlicies and 
plans adopted by the various trade associations. To the associations which have sub- 
mitted such statements the Department has made clear that it cannot and will not give a 
statement of approval or opinion as to legality. But in the case of associations which in 
the opinion of the Department have endeavored to comply witli the law, but whose methods 
appear to be of doubtful legality, the Department has brought this fact to their attention." 

' 16 American Bar Association Journal 9 (1930). 



CONCENTRATION OF ECONOMIC POWER 31 

Act, the reply took the form of a carefully worded formula/ The 
Attorney General, however, cautioned businessmen that he had no 
power "to license anyone to violate any statute." A determination of 
legality, he emphasized, could be reversed by his successor or even by 
himself. Businessmen could extract such comfort and guidance as 
th^y could from the announcement that there was to be no immediate 
prosecution. 

With respect to future policy the Attorney General made overtures 
toward cooperation. The Department would listen to, and take coun- 
sel with, businessmen who wished to submit to it their proposals. If 
the plan seemed to violate the law, Justice would so state. If it came 
so close to the line that "we feel it would be necessary to invoke the 
judgment of the courts in case the proposal is executed," the parties 
would be so advised. If the program did not appear on its face to 
violate the law, but assurance could come only from inquiry into an 
intricate array of data "for which we have no facilities," the Depart- 
ment would say nothing. Where a cursory reading suggested a pre- 
sumption of illegality, the proposal would be met with a Uke silence. 
Only "in the clearest case" would the industry be advised that no legal 
process was likely to issue. 

As the late thirties ran their course. Justice seemed to move into 
another universe. When N. R. A. went out and Antitrust returned, 
the policy of negotiation, so popular in the mid-twenties, passed into 
eclipse. In the years 1935-39 the Government instituted 45 cases but 
became a party to only 6 consent decrees. Only 2 cases were concluded 
by pleas of guilt or of nolo contendere — and 5 were dropped. The 
official preview of plans to detect signs of coming restraint came to 
an abrupt end. A number of statements released during 1938 ex- 
plained the change in attitude. Bluntly Justice took the position 
that the Sherman Act contemplated enforcement by the courts; it 
could not bind itself through any extra-judicial proceeding. An 
"approval voiced by individual representatives of the Department 
in private conference cannot be binding on the Department or create 
immunity from prosecution." ^ The criminal action had again passed 
into the primacy originally held by the consent decree. The Depart- 
ment met the business group as parties to a potential adversary 
proceeding. The validity of trade practices was to be determined in 
open court instead of private conference. 

Thus no continuity has dogged the steps of Antitrust. The law in 
actioli has worn the livery of many mastei-s. The temper of the times, 
the fervor ' of ttj«|)arty, the preferences of officials have all become 
terms in the formula of enforcement. The Antitrust Division has 
been exposed to all the winds that blow. In a Cabinet department it 
has no immunity from the forces of policy, politics, and pressures 
which play upon, the administration. The frequent shifts in attitude 
and policy have done much to confuse lines. What is frowned at 
under one regime is tolerated or even looked upon with favor by an- 
other. Nor have the courts, the final arbiter of the law, been given 
anything like an orderly docket of cases upon which to work. ' They 

' "As the facts in this matter are understood by the Department, they present no occasion 
for institution of proceedings under the Federal antitrust laws at the present time. Inas- 
much, however, as the transaction may at some future time become the subject of court 
proceedings under the Federal antitrust laws, the Department expresses no opinion as to its 
legality." 

* Department of Justice release, July 20, 1938. 



32 CONCENTRATION OF ECONOMIC POWER 

can act only on the motion of the Antitrust Division ^vliicli initiates 
the suits and presents the issues. The Avant of even an approximation 
to continuity has been a serious defect in the clarification of the law. 
. It is probable that the Sherman Act cannot escape becoming a noble 
experiment with each passing decade. As industry goes its dynamic 
Avay, it exhibits unfamiliar trouble spots, exposes the public to unex- 
pected dangers, demands fresh accommodation to its national habitat. 
Government regulation. of industry has from the first been a matter 
bristling with controversy. The fact of the national economy, only 
dimly sensed a -feAv years ago. can no longer be overlooked ; the public 
has consciously come to think of industry as an instrmnent to serve 
I he general welfare. The courts have haltingly made their adjust- 
jnents to the new current of thin.king. The Supreme Court of today 
could hardly go along Avith all its interi)retations of 10 or even 5 years 
ago. The great value of the ]:)olitical process is that it stimulates, 
freshens, creates. It makes articulate the emerging necessities of the 
people ; it prevents controls from rusting into disuse or into enervating 
routine. It emancipates the law in action from the shackles of the 
past and allows it to live with the breath of its own age. 

THE lawyer's approach TO ANTITRUST 

A political control over the administration of a statute cannot en- 
tirely escape the hand of custom. In the larger bureaus, which like 
Antitrust are under executive direction, heads may go and come with- 
out upsetting the established order or causing disturbance within the 
ranks. This is especially true where the task is of a continuous char- 
acter, where the agency has found its way of operation, and where 
discretion has been subdued into orderly procedure. 

In a smaller division like Antitrust, personnel and function impose 
stubborn obstacles to regimented administration. The Division is of 
a size to which its head can give personal oversight. The staff runs 
heavily to the professional ; it is made up of lawyers of various com- 
petences and sprinkled with economists. To such men independent 
assignments are given ; they rely rather upon their own judgments than 
upon commands.; they cannot escape personal res]Donsibility. The 
day-by-day administration goes forward very largely by conference. 
The larger enterprise is, in fact, a series of independent, changing, 
unlike ventures. Each case concerns a different industry, confronts a 
novel cluster of market usages, presents a new set of legal problems, 
opens the way to a fresh experiment. There must, within limits 
marked out by policy, be novelty in strategy, variety in tactics, patient 
boldness in attack. Save for clerical work and case hounding, there 
is little chance for quantity production or routine. A number of 
separate campaigns are under the same general command. But a high- 
powered executive, who runs his works by pushing buttons, would be 
shocked at the mininnnn to which the formal giving of orders has been 
driven. 

Yet, even in an enterprise in which old-fashioned individualism 
flourishes, tradition comes into play. Among skilled men, who can 
usually get jobs elsewhere, the turn-over in staff is relatively high. 
But a- small nucleus persists through changing administrations; their 
hearts are in the cause and they have enlisted for^the duration. 
Officials in the hisrh command haA^e seen service on all fronts — before 



CONCENTRATION OF ECONOMIC POWER 33 

grand juries, in trial courts, in appeal against error to the highest 
courts. From their experience the rudiments of a general attack 
have been shaped. Their understanding of how to stage the unex- 
pected attack, how to avoid pits dug by opposing counsel, how to 
build up a record, how to make argument persuasive, has accumu- 
lated into ways of thought and action. The newcomer, unless he has 
served his apprenticeship in defending Antitrust suits, is always 
something of a novice. As an apprentice — whatever his rank — he 
i-eads the files, looks into confidential papers, examines the detail of 
earlier cases, lunches with old-timers, absorbs the atmosphere, falls 
into the folkways of the shop. 

As a Division of Justice, the way of the law pervades the work of 
Antitrust. Its task is to hold industry to a legal pattern. It could 
probably be best served by an amphibian who could use with equal 
ease the idiom of law ancl of economics. Yet from the first it was 
the need for lawyers which was manifest. In the Sherman Act the 
Congress decreed resort to legal ]')roce'S to give effect to public pol- 
icy. The tiist and imperative need was for men who couH garner 
testimony, prepare cases, make them stick in court. It was only as 
litigation revealed the intricacies of industrial structures as treach- 
erous realities, that the need for economists was recognized. An 
awareness that one industry is not like another, that the unscram- 
bling of combinations into competitive units is a highly technical, 
yet extra legal, matter came as a very belated afterthought. Al- 
though a small staff of industrial analysts has been added, the deficit 
has been supplied rather by grafting some capacity at economic 
analysis upon a legal competence than in an open door to members 
of another discipline. Although tasks of the most assorted kind are 
involved, a lawyer is expected to carry his suit all the way from 
complaint to final decision. 

This usage finds expression in a balance of advantage and disad- 
vantage. The character of the investigation is determined by the 
Division's obligation to prosecute. Data are collected, files are ex- 
amined, witnesses are interviewed, trade practices are reviewed, in- 
dustrial structure is torn apart — all to the good end of building up a 
case. In its very nature such a process is highly selective. As any 
advocate preparing for a legal bout, the Antitrust attorney seizes 
whatever is helpful, discards whatever might tell against him", draws 
items together into a purposive picture. He gathers evidence instead 
of finding facts; pieces together a conspiracy rather than dissects 
trade practice. The grand total at which he arrives is far more a 
recitation of wrongdoing than a picture of an industry at work. He 
must select his place of trial with an eye out against a iiostile judge; 
he must be prepared to ]:>rove interstate commerce and to meet juris- 
dictional requirements; he must fortify his cause against demurrer 
and a plague of dilatory motions. In a word he brings to an intri- 
cate technical process the skills ■^vhich make up the lawyer's art. 

But such proficiencies are attended by serious costs. The reduction 
of the case to a sequence of legal moves obscures the very purpose of 
the suit. The attorneys develop zeal in their work, are i^ersuaded of 
the giiilt of the accused, bend every effort that the breach of the law 
shall be atoned. The one-sided character of investigation fortifies an 
initial presumption that there is something sinister in the transactions 
under review. As the novel and engaging action goes forward, move 



34 CO^'CENTRATION OF ECONOMIC PQWER 

must be- matched with move; andj like his colleague on the defense, 
lie becomes absorbed in the fine pomts of the case. The instrumental 
character of the statute, the objective the suit was intended to gain, 
the effect of the decision upon the mdustty fade into the background. 
The case comes to be as little concerned with consequences as a war 
with war aims. As the suit proceeds, it is wrong that is to be 
hounded down rather than an industrv that is to be put in order. As 
a result. Antitrust is freq^uently caugnt unprepared by legal victory. 
When a decree is to be written, or the fruits of success secured, it does 
not have at hand resources for the follow-up. The rounded picture of 
industrial practice i,s absent, an adequate analysis is wanting, the 
what-to-do-about-it has not been thought through. 

In its focus upon litigation Antitrust is not unique. In every or- 
ganization, instrument tends to usurp the place of end. It is true that 
the need for bringing objectives into play has not been entirely over- 
looked. An Economics Section has been organized. It has, how- 
ever, not been easy to discover economists who have the lawyer's skep- 
ticism of dialectic, are content to put general theories away in moth 
balls, and can roll up their sleeves for the exciting drudgery of the 
case-by-case approach. A Consent Decree Section has recently been 
added. It, too, is rather a gesture toward a necessary activity than a 
practical reality ; a good part of the time it has been a mere division 
on paper inanimate through lack of staff. Moreover, such units tend 
to be excrescences upon a structure which has made little place for 
them. They are not easily woven into litigation which is the prin- 
cipal activity of the Division. 

The attorney, who must pilot his suit through the court, has his 
eye upon the ball. The less he concerns himself with larger issues, the 
less he bothers over how in the national economy it will all come out, 
the moi-e he can concentrate his attention upon the issues of the case 
in controversy. The more he is persuaded of the iniquity of the de- 
fendants, the less troubled is his conviction that the rascals ought to 
be in jail and the more sincerely his voice rings through the court 
room. The balance of on-the-one-hand against on-the-other-hand, the 
realization of all that is at issue in its far-flung influence, does not rank 
high in the art of advocacy. In fact, an attorney's effectiveness may 
be spoiled by a detached attitude. Once he Avavers in single-minded 
purpose, once he concerns himself with remaking the structure of the 
industry, his energies are dissipated, his powers of advocacy gone. 
He becomes sensitive to the intricate economic forces which compel 
human behavior; he entertains doubts about the sinister character of 
the activities being brought to judgment. Before his very eyes evil 
intent degenerates into a natural response to an inviting or ticklish 
situation. He may even, if once he deserts prosecution for under- 
standing, put himself 4n the other fellow's place — and then he is sunk. 
An element in his case — an indispensable element — is industrial analy- 
sis ; yet in its attainment he cannot compromise his office of prosecutor. 
For years lip service has been given to the need for the economist, yet 
the economist is still the stranger. Reason assigns him a task — yet he 
is a threat to victory in court and the folkways of the law say "no." 

So it continues as the case takes its tortuous course. In large measure 
the attorney in charge determines the relief to be asked of the court. 
If criminal procei-; is employed, the judgment of guilt ends the 



COXCE^'TRATIO^' OF ECONOMIC POWER 35 

action. It is, however, presumed that penalty is a deterrent; that 
the erring brethren "will sin lio more 4\nd in the absence of further 
evil, all will be well. Thus, by the grace of presumption, the industry- 
is restored to health. If, hoAvever, other offenses than those of which 
the defendants have been found guilty exist, another action must be 
begun or the devil left with his due. If the plea is in equity, the relief 
asked is limited to the offense alleged and proved. However intricate 
and devious the ways of the industry, it cannot extend beyond the 
wrongdoing which has been demonstrated. If the basic remedy which 
the situation demands is extraneous to the matters litigated, it cannot 
be directed by the court to issue. In either case* the strategy of the 
attack fixes the limits within which constructive moves are possible. 
If the case is settled by consent decree, there is fuller opportunity for 
reform and the larger office for the industrial analyst. The terms of 
such an agreement are not pent in by what can be proved in courts. 
Yet even here the attorney who prosecutes the action is usually in 
charge of the settlement ; and the counts he stands ready to prove mark 
the way for the decree. 

Thus the act in action becomes the product of its own environment. 
A group, whose craft is litigation rather than industrial control, has 
made it the instrument that it is. Another agency than Justice, an- 
other craft tlian lawyers, an institution of enforcement other than 
litigation, would have made of it something else. The ways of its shop 
have stamped their peculiar identity upon the antitrust law. 



3. THE ORIGIN OF THE SUIT 



TROUBLE SPOTS AND COMPLAINTS 



A case has its beginnings in a complaint. Although it proceeds on 
its own motion, Antitrust is largely dependent upon private informa- 
tion for its knowledge of violations of the law. Its first intimation 
of the need for action comes from outside. 

The complaint responds to its welcome. If met with silence or in- 
difference, it comes in intermittently; if the hope flares that some- 
thing will come of it, the stream flows full and fast. Thus figures pre- 
sent a rought index of the vitality of the enforcement agency. For the 
fiscal year 1932, when the computation was first started, there were "356 
complaints; for 1933, the number had increased to 499. In 1934 and 
1935, the years of the N. R. A., the numbers had jumped to 1,020 and 
1.451; but almost all of these were concerned with violations of provi- 
sions of the codes. The spurt of 'interest in the regulation of industry 
carried over in 1936. when there were 730 complaints : but for 1937 the 
number had fallen to 581. The reA'ival of activity in Antitrust shot the 
number up to 923 for 1938; for 1939, it had risen to 1,375; and 1940 
established an all high of 1,993. 

The great bulk of these complaints come from businessmen. The 
run-of-mine complainant is a small enterpriser who recalls with feel- 
ing and in detail some painful experience he has had with a sup- 
plier, a competitor, a party to whom he has attempted to sell. He 
is certain that the incident reveals a fracture of the law or at least 
conduct so shady as to warrant investigation. In the exceptional 
case he knows his industry, presents events against their industrial 
background, endows the questionable conduct with its legal signifi- 
cance. In most instances he recites only what happened to him, with 
little regard to industrial habitat^ and with no more than a suspicion 
as to the source of the mischief. An oil refiner writes that he has 
been denied a license from the Ethyl Gasoline Corporation ; as a 
consequence he cannot market high-test gasoline containing tetraethyl 
lead. A dealer in farm implements complains that the International 
Harvester Co. is taking from him the lines on which he makes money 
and, as the price of his franchise, is forcing him to handle machines 
that put him in the red. A small baker insists that the big bread 
companies are in conspiracy to put him out of business and to that 
end have cut prices in his sales area below^the cost of production. A 
small dealer in fertilizer insists that the big companies maintain a 
solid front on price. A would-be maker of glass containers states that 
to the best of his knowledge a single concern holds patents to all 
the machinery and that, although he is willing to pay the fair price, 
he cannot obtain a license. 

Such complaints trickle into Justice in a variety of forms. The great 
bulk takes the form of letters to the head of the Division, the Attor- 
36 



CONCENTRATION OF ECONOMIC POWER 37 

ney General, the President. A sizable volume is still referred to the 
Division by the various district attorneys. If there is personal ac- 
quaintance — and often where there is not — ^the victim of restraint 
}>roceed,s through liis Congressman; in seme cases considerable pres- 
sure is exerted "from the hill'" to invoke the law against the wrong- 
doer. If the complainant has means, he may send a lawyer to Wash- 
ington to make his plea orally. In the rare instance, counsel have 
been able to work up a substantial amount of evidence. The miracle 
is the presentation of a fully developed case which, with little to 
add, the Division can at once take into court. 

Almost without exception the complainants are little fellows — the 
small manufacturer crowded toAvard the wall, the dealer fretful at 
his peonage, the retailer up against sources of supply in solid phalanx. 
A large chain, a mail-order house, a great metropolitan store may' 
find a united front among manufacturers but the volume in which 
they purchase gives power with which to force concessions. Seldom 
do they complain to Justice or directly resort to the courts. Few 
tales of woe come from concerns whose names are nationally familiar ; 
almost none represent big business. It is easier and safer for major 
companies to patch up their differences than to invoke the aid of co 
dangerous an outsider as the Federal Government. Where a mul- 
titude of small concerns operate side by side, every man's hand is 
against his neighbor's. In the bedlam that ensues, guilt cannot stand 
out as sharply personal and a general dissatisfaction touches off few 
concrete complaints. • The general run of complaints spring from a 
trend in an industry towards concentration, a situation in which the 
little fellow is up against the giant corporation, a point in an indus- 
trial sequence at which large units pass a good along to smaller ones. 

All through the national economy vision is blurred, wrongdoing ob- 
scure, complaint half articulate. If violations of the law are blatant 
and obvious to the eye. the victim may be expected to cry out. If 
they are discreet and lie well back of the lines, they are likely to escape 
public notice. A swift and spectacular change in the habits of an 
industry will bring them out. An all but imperceptible pressure 
towards a different order will usually leave them mute. If a restric- 
tive practice is well established, it belongs to the scheme of things 
and provokes no complaint. An old firm, even if hurt, may never 
have knoA\ n anything different ; a new one accepts the mores of the 
industry into which it enter.s. The restraint is hardly to be distin- 
guished from other habits and hazards that must be accepted. It 
calls for adjustment rather than for outside help. The businessman 
does his thinking in terms of output, markets,, profits and loss, not 
in the categories of public law. It is the threat to his security rather 
than violence to a command of Congress which prompts his initiative. 
He is not a research economist ; he cannot trace the obvious difficulties 
he is up against to their hidden and unholy lairs. More often than not 
it does not occur to him to translate things which impinge from afar 
into violations of the Sherman Act and to appeal to the authorities. 

Even when the matter is clear, very practical reasons may deter. 
The small independent is often afraid to complain. His name may 
become known; his act may be noised abroad; he may be disciplined 
by the larger concerns in the industry. Although such matters are 



38 concp:ntratiox of economic power 

kept confidential, this fear is manifest in a sizable number of anony- 
mous complaints. Appeal to Antitrust is a habit common to some 
industries and little known in others. In steel the usage is conspicu- 
ous by its absence. In a celebrated case, the Government was seri- 
ously embarrassed by inability to discover indej)endents who in public 
were conscious of their wrongs.^ In oil a continuous stream of com- 
plaints alleges restraint along the industrial line from well to filling 
station. Here the habit goes back to the eighties arid nineties ; it was 
dramatized in the victory of the Government over "the octopus" of 
Standard Oil. A sharp enmity marks the struggle between the major 
companies and the independents ; the cry of monopoly is in the nature 
of a tradition. Antitrust has had the industry under almost con- 
stant observation ; the person who recites incidents to show restrictive 
practices in oil is sure of his audience. 

In fact, as often as not official interest touches off complahit. Com- 
plaints against the American Medical Association began to pour in 
after the Government had started its action. Milk became a topic for 
public correspondence after tlie suit against the Chicago distributors 
was gotten under way. The initial moves against parties to the 
building industry opened the gates to a multiple recitation of acts of 
omission and commission. In 1939 the bulk of complaints centered 
about oil, motion pictures, milk, medicine, and building — all indus- 
tries into whose affairs the Division had begun to probe. An exam- 
ination indicates that complaints are rather the result of actions than 
actions a result of complaints. This means that the number and 
source of complaints are rather an index of the interest of Antitrust 
in an industry than a barometer of actual violations. Invade a fresh 
industry with a suit and complainants will at once get busy. Double 
the number of cases and the incoming mail will show an immediate 
response. 

The stream of correspondence goes to the Complaints Section. If a 
case is under way or an investigation in process, the letter is re- 
ferred to the attorney in charge. If it invites an excursion into 
inactive territory, a lawyer in the section handles it. He calls for 
the file on the industry, examines previous complaints and corre- 
spondence, looks at reports from the Federal Bureau of Investigation, 
studies memoranda prepared on earlier occasions. If the complaint 
appears to justify action, a preliminary investigation may be ordered. 
Beyond this point it has to take its chance against others of its kind. 
It all, depends upon its being able to support an action, finding a place 
in the program of the Division, proving worth while as against other 
uses to which staff and resources might be put. 

As a forerunner of litigation, such a procedure is at a disadvantage. 
Complaint does serve an important office. The right to petition for a 
redress of grievances is highly cherished; and these letters allow vic- 
tims of collusive practices to call the attention of the authorities to 
points within the economy where legal rights may be abridged or 
denied. In instances they come from responsible businessmen who 
have taken pains to inform themselves on the matters whereof they 
speak and are at least pointers in the direction of action. But the 
mass fall far short of the plane upon which a suit at law should l>egin. 
Some of them are "quack" letters, the work of "crackpots," who in 

' United States v. U. 8. Steel Corporation (251 U. S. 417 (1920)). 



CONCENTRATION 6F ECONOMIC POWER 39 

scribbling attain the Ticarious importance of the officials to whom 
they go. Others come from parties who keenly feel real or imaginary 
wrongs, yet cannot rise to an articulate statement of the breaches of 
the law of which they complain. Still others are voiced by business- 
men who wish to use the Government to get even with, or to put to 
a disadvantage a competitor in the industry. As a whole the stream 
of complaints is too personal in character, too scattering in origin, too 
skimpy in description to reveal the current picture of restraint. 
Place the intelligence it yields against the topography of the national 
economy and its inadequacy becomes obvious. Current procedure 
yields numerous tips, frequent clues, an occasional lead of significance. 

All of which is not enough. Complaint yields far too small and 
rickety a foundation for a program of enforcement. A violation of 
great importance to the public may go unreported and escape the 
vigilance of the Division. An insignificant offense may be empha- 
sized by a flood of complaints. An attorney, or a member of Con- 
gress, by reiterated calls, may press constantly for action. This type 
of activity sometimes brings results irrespective of the validity of the 
complaint and the imj)ortance of the practice in question. Nor is the 
Government always certain of cooperation from those who ha^ve 
invoked its aid. The case once started becomes a counter in a private 
game. Tlie complainant, having set the law on his adversary, may 
cash in his advantage and compromise. He then becomes forgetful 
of what he has said; if put on the stand, he becomes an unsvm- 
pathetic witness. He may even urge Justice to abandon a proceeding 
for which he is responsible. 

Thus reliance upon complaints makes enforcement sporadic and 
liaphazard. A violation substantially the same e^^erywhere may occur 
in a number of industries — yet the several wrongdoers expei'ience a 
variable justice. In one industry loud complaints touch off a case ; in 
a second, a lesser hue and cry get the matter listed for action at a 
later time; in a third it escapes official notice. In respect to open- 
price filing, delivered price, identical bids, many schemes are in vogue ; 
the process of litigation has touched only isolated instances. The real 
function of complaint is to do scouting service for the Division. Yet 
it does not bring in the information requisite to the formulation of a 
program, the planning of a campaign, the shaping of strategy and 
tactics. A raid into oil, a foray against patents, a thrust at an over- 
sized corporation, an attack upon a racket in poultry or fur, an 
offense against a petty conspiracy in a pettier trade — this is an 
orderless miscellany. 

CHECK AND FOLLOAV-UP 

A stream of complaints pours in. The great mass can be disposed 
of by polite answ^er, reference to another agency, relegation to the files. 
One is incoherent and implausible; a second involves 'a local matter 
and is outside the coverage of the Sherman Act ; a third concerns 
unfair competition and goes to the Federal Trade Commission; a 
fourth reiterates a charge it has already been decided not to press;' a 
fifth supplies a corroborative detail for an action under way. It is 
only the 7?th letter which presents a lead of promise that demands a 
follow-up. It may await action until growing doubts cause its dis- 
card; be held o^^er for the time when available persoiinel allow it tn 
be taken up ; be scheduled at once for further inves^gation. 



40 CONCENTEATION OF EOOXOMIC POWER 

For the follow-up the Division is not well equipped. The older 
notion that all wrongdoing is of a kind has persisted and justice has 
been fitted out with a single agency of inquiry. For a lack of a staff 
of its own, the Division has to rely upon the Federal Bureau of Investi- 
gation. Accordingly, an attorney prepares a. memorandum. This 
does not sketch a tentative outline of trade practices against the back- 
ground of the industry wdth the request that lines be corrected and 
blanks be filled in. Instead, conforming to a pattern worked out for 
the apprehension of run-of-the-mine crime, it lists the complaint, 
makes much of the concretions of name-time-place, recites particular 
questions to which specific answers are wanted. The Bureau assigns 
a special agent, who operates in the locale to make the investigation. 
The agent calls upon the complainant, rounds out his statement, se- 
cures the names of others Avho may have similar grievances, puts his 
catechism to each of them, writes his report. If requested to do so, 
he interview's the parties against whom the charges are made. His 
report goes to his headquarters in the field, to the central office of the 
F. B. I. in Washington, and eventually to the Antitrust Division. 

It is hardly fair to F. B. I. to impose upon it such a responsibility. 
Its dominant task is to track down ordinary crime. It is organized 
to follow the trail that leads to the extortionist, the white slaver, the 
kidnaper, the racketeer, the bank robber, the automobile thief, the 
professional spy, the person natural or corporate who makes wrong- 
ful use of the mails. Its techniques and traditions are geared 
toward detecting personal guilt, uncovering the fraudulent scheme, 
getting the goods on the gang. Its process of investigation has devel- 
oped in response to the persistent demands upon F. B. I. — and are 
largely irrelevant to the highly specialized needs of Antitrust. They 
are put to their hardest — possibly to an impossible — test when used 
to re-create a crime which is largely impersonal, lurks in the network 
of industrial practice, is inseparable from the ordinary conduct of a 
legitimate business. The craft of Sherlock Holmes was never con- 
trived for the folkways of the national economy. 

The F. B. I. has no special group assigned to Antitrust work and ex- 
perienced in its ways. Men are detailed as they are needed, are avail- 
able, are near at hand. A fitness for the task or previous work in the 
field is wholly a matter of chance. If there is personal choice, Anti- 
trust is likely to be avoided ; the better men in the Bureau do not like 
to be sidetracked from ventures for which they are specially fitted, 
where their footing is sure, and in which definite results are fairly 
certain. Actually, the complaint presents merely one lead—possibly 
a very inadequate one — into the restrictive practices of industry. The 
task of the operator is to gather as much information as he can in 
the time available about the way in which the industry operates. To 
be successful, the process of inquiry should be flexible and cumulative. 
Lead should touch off lead. A practice, against which complaint is 
made, must be iollowed into the network of impinging trade usages. 
The questions asked in interviews should evoke further questions. 
The investigator, competent in industrial matters, experienced. in its 
ways, with an intuitive smell for his stuff, must feel his way. The 
known must be used as the key to the unknown ; an analytical picture 
must be compounded out of items which at the beginning may not even 
.have been suspected. If the operator is blessed with such attainments, 



CONCENTRATION OF ECONOMIC POWER 41 

it is from other experience or by the grace of the gods. It does not 
inhere in the current discipline of F. B. I. 

At best F. B. I. is an instrument to be employed by Antitrust. Yet 
its independence prevents the oversight essential to such a work of 
agency. The present separation of Bureau from Division leaves its 
impress upon the investigation. All communications move along 
ordained channels and are set in a rubric of formalism. Antitrust 
.submits its request; the task may be undertaken immediately, await 
its turn on a crowded calendar, linger for weeks before men are free 
for the job. An inquiry may be started, and the operators presently 
diverted to some new case of its own which F. B. I. deems more im- 
portant. Investigation may be delayed, deferred, sidetracked, when 
the urge at Antitrust is for full steam ahead. The Bureau lacks 
norms by which to judge immediacy and importance. The brief mem- 
orandum which comes in lists only the facts of the complaint and 
asks a few categorical questions. It is a shot where there is little light ; 
yet the man assigned to the case — without previous acquaintance with 
the trade and untutored in economic analysis — is expected to penetrate 
to the intricate arrangements of an industry and to bring back the 
materials by which to judge the complaint. Occasionally, a brilliant 
report is received. A single concern furnishes tomato crates to a 
Mississippi territory; it skyrockets its price just as the crop is ripe 
and must be shipped; the nearest alternative source of supply is 4 
days away. But this is a simple situation and the operator a person 
'of unusual competence. It is inevitable that a large number of reports 
are quite inadequate to a decision in respect to further action. Nor 
is it surprising that the ordinary operator finds Antitrust work an un- 
pleasant chore in contrast to the man hunt which is his usual employ- 
ment. A dualism runs through the whole procedure. Antitrust has 
no direction over its essential instrument of investigation ; the Bureau 
performs detailed tasks isolated from the o])jective.s they are to serve. 

The saving feature is the flexibility of the arrangement. The role 
of F. B. I. is not exclusive. Although its means are limited, the Divi- 
sion cannot completely escape field work. In instances the facts are 
obviously so intricate and the issues predominantly so legal that Anti- 
trust attorneys take to the road. In "the big case" members of Divi- 
sion and Bureau take the trail together. The work may be divided 
between them, or an organized team representing the two agencies 
may descend upon persons suspected of wrongdoing. But as yet 
action in concert rather adorns than gives character to the process of 
investigation. 

PROMOTION TO A CASE 

A decision to make a comprehensive investigation really amounts to 
the selection of a case for trial. It rarely happens, after a matter has 
been thoroughly probed, that the is.sue is dropped. In virtually every 
instance departures in the pattern of the industry from the standards 
of antitrust are discovered and enougli evidence is gathered to support 
a legal process. In older days, when a single restraint was an object 
of legal attack, the complaint was .something of a guide. It limited the 
investigation and suggested the remedy to be asked. Today it is in 
the nature of a motion to open up the whole industry, its structure and 
corporate controls, to official scouting. In its course the investigation 

2.59564— 40— No. 16 4 



42 CONCENTKATION OF ECONOMIC POWER 

may stray far from the practices toward which the complaint was 
pointed. The original grievance may gink to a minor trouble spot in 
a larger pattern of restraint to which the attention of the court is to 
be directed. 

In a particular case a decision to proceed or not to proceed rests 
upon a number of factors. By far the most significant of these is 
cost. A major antitrust suit is almost of necessity a Hollywood pro- 
duction; it is a venture into litigation on a grand scale. A singlo 
action constitutes a heavy drain upon the resources of the Division. 
A venture such as the Madison Oil case could go forward only at the 
expense of other important suits that needed to be pushed. At its 
inception in 1935, 3 lawyers were assigned to it; once it was really 
under way the number was increased to 7. Of the 42 lawyers then in 
the Division one-sixth were concentrated upon the affairs of the major 
oil companies. The cost of the preliminary investigation — analysis 
of complaints, trips into the field to verify hunches, scrutiny of the 
practices of the mdustry — ran io $30,000. In addition, there was 
the expense incurred by F. B. I. for the 15 or 20 agents whom they put 
on the case. The expense of the grand jury — used to gather testimony 
as well as to return an indictment — was another $40,000. Expenses 
incident to the trial — interlocutory motions, removal hearings, de- 
fense of the indictment's validity, preparation, and photostating of 
exhibits, the combat at law itself — ran to a figure of $60,000. Another 
$25,000 was spent upon the various appeals which ensued to the circuit 
court of appeals and to the United States Supreme Court. In the 
years 1936 to 1939, over $150,000 was expended upon a single casa.^ 
K saving might be effected by resort to equity in lieu of criminal 
action. The expense of grand jury proceeding might thus be avoided. 
Yet the saving is not net; investigation, often quite protracted, must 
be used as a substitute in gathering evidence.^ And in equity, where 
uU the issues to be faced in a decree must be anticipated, proceedings 
are likely to be long drawn out. The suit against the Sugar Institute 
was before the lower court for several months.* The cause against 
the Aluminum Corporation of America, after 26 months, had not 
passed beyond formal trial. ^ 

This means, of course, that only a very limited nr.mber of major 
suits can go forward at any one time. An average expense can 
roughly be set down at $50,000 a year; yet the figure means little. 
It is quite impossible to work out in advance a budget estimate for 
a prospective case. The evidence of wrongdoing may be easy or 
difficult to get; it may be assembled in a few weeks or over many 
months; it may be testimony to overt fact or inferences to be wrung 
from intricate circumstance. Between indictment or complaint and 
the proceeding in open court stretches a period of legal skirmish. 
Venue, jurisdiction, party, are to be fought over in interlocutory 
motions. A demurrer may be filed to the indictment; if it is sus- 

^ In a criminal case, fines imposed upon defendants found guilty may recoup the Govern- 
ment for the costs. They might even be made — under a shrewd selection of ihuses of 
action — to make Antitrust a profitable business enterprise. But such consideraMou? are 
alien to the conduct of the Division ; all fines go into the General Treasury ; its expenses 
must lie met out of its own budget. 

• In a criminal case, the expense of the grand jury can be avoided by the use of an 
"information" instead of an indictment. This has been done in TJ. S. v. American Tobacco 
Co. (li)40). In this case the .Vntitrust Division spent large sums in mailing the investiga- 
tion of the cigarette companies. 

» n. N. V. iiiioar Institute (15 F. Supp. 817 (1934) : 297 U. S. 553 (_1936)). 

» V. S. V. AUiminum Co. of America (S. D. N. Y., Eq. No. 85-73, filed April 28. l637). 



CONCENTRATION OF ECONOMIC POWER 43 

tained bj' the district judge, it may have to g-o up to the highest court 
in the land before a day is set for trial. In the Chicago milk case 
an inordinate time passed before the substantive issue could be raised 
in open court." It was a year and a half after action was begun 
against the American Medical Association before the court of last 
resort removed the ultimate legal difficulty and the case could go to 
trial.^ 

The attitude of the defense is an unknown quantity in the formula 
of expense. It may be friendly or hostile, inclined to speed the mat- 
ter along or to obstruct witli every delay. It may seek to escape 
controversy, enter a plea of nolo contendere, accept a small fine, get 
quickly out of court. It may cooperate in simplifying the trial, ex- 
pediting the appeal, securing a definitive legal judgment upon the 
practices in question. Or it may marshal every technique of obstruc- 
tion known to the resourceful lawyer and for month after month 
stage battle after battle over relevancy and irrelevancy. Always a 
settlement between the parties is an alternative to formal decision; 
always the consent decree hovers around the fringes of the legal pro- 
ceeding. A feeling-out begins long before the case comes to trial. 
Informal negotiation blows hot and cold, sometimes many times over, 
during the course of the litigation. At any moment cost stretches 
uncertainly ahead; at any moment expense may abruptly cease. 

All of this has its incidence in the decision to drop, to defer, to 
proceed. It is no simple matter of violation, i)resentment, judgment. 
If Congress or some kindly source would make adequate funds avail- 
able, suits would go to trial upon their merits. As it is the Division 
does its work within a fixed budget; a substantial part of this is 
laid out on legal staff. Cases cannot go to trial except as attorneys 
are available to guide them through the mazes of the process of litiga- 
tion. Yet plausible causes, in which the Division is anxious to pro- 
ceed, are piled high. Preliminary investigation follows close upon 
the heels of complaint; as it yields a strong presumption, a fresh 
entrj' is added to those awaiting action. Then, as lawyers become 
available, tliey are assigned to ventures which for months or even 
years have been awaiting their turn. Thus the budgeting of cases is 
primarily a matter of persomiel. 

Within the zone of discretion fixed by budget and personnel a num- 
ber of considerations shape the selection of cases. An element of 
chance cannot be eliminated. A number of invitations to action may 
be equally plausible in volume of complaints, persistence of pressure, 
importance within the economy. There may be little to choose be- 
tween them. A full investigation is necessary to resolve the compet- 
ing claims. Yet in each instance investigation is a costly process ; the 
Division feels called upon to get results from funds laid out ; and re- 
sults are forthcoming only by pressing the matter to suit. Causes 
should go to action in terms of their importance; yet only through 

• The indictment against the Borden Co. was returned November 1, 1938. The district 
court sustained the demurrers of the defendants (28 F. Supp. 177 (1939)) but was reversed 
by the United States Supreme Court (308 U. S. 188 (1939)). The case was settled by 
consent decree on September 16, 1940. 

'' The indictment was returned December 20, 1938. On July 29, 1939, defendants' demur- 
rers" were sustained (28 F. Supp. 752). The Government appealed the case to the court of 
appeals and also petitioned for writ of certiorari. Certiorari was denied (308 U. S. 188 
(1939) ). Th« court of appeals reversed the lower court (110 F. (2d) 703 (1940) ), and the 
Supreme Court again denied certiorari, this time on request of the defendants (60 S. Ct. 
1096 (1940) ) . The case is set for trial in October 1940. 



44 



OOXCENTRATION OF ECONOMIC POWER 



action is importance determined. Rough criteria must, therefore, do 
duty for detail of fact, clean-cut analysis, careful comparison. The 
criteria of choice, far too beset with intangibles to be reduced to a for- 
mula, include the volume of complaints, the pressure of tlieir reiter- 
ated beat, the strategic position of dominant firms within the indus- 
try, the power of the mighty to impose discipline upon their breth- 
ren, the significance of the injury to the general public, the ease or 
difficulty of securing evidence, the anticipated hazards of the judicial 
battle ahead. 

Ae there are many terms in the call to decision, so are there many 
attorneys pressing for action on many fronts. Almost every member 
of the staff gets persuaded by his own case. The lawyer who is ag- 
gressive in digging up "the stuff," and in getting his points in con- 
vincing array, is likely to get quicker action than one who is detached, 
retiring, inclined to nurture his own doubts. The attitude of the head 
of the Complaint Section, the experience and predilection of its staff, 
the interest and zeal aroused by the initial inquiry among other officials 
of the Division, all impinge upon the judgment. In addition, there 
the activities of their attorneys, the persistent calls at Justice, the 
are the pressures of interested outsiders — the voices of the petitioners, 
receipt day after day of telling bits of evidence, the inspired requests 
for "information" by Members of Congress. 

The formal decision rests with the Assistant Attorney General in 
charge of the Division. His scheme of values determines the kinds of 
cases which are to be brought. As the directive head ^ives way to a 
man of another mind, the active front may shift from gigantic monop- 
olies to trade associations, to basing points and price leadership, to 
privilege asserted in the name of patents, to conspiracies of con- 
tractors with trade-union officials. His reluctance to employ the sanc- 
tions at hand against concerns whose dominant position had been 
attained by "natural growth," against gentlemen whose concert of 
action may be sheer coincidence, against laborers in league with con- 
tractors to improve their condition of work, defines the orbit of his 
program. Within such limits, marked out by a personal conception 
of public policy, cases are selected upon their showings. 



4. BUILDING THE CASE 

THE STAFF AXD ITS TASK 

The matter somehow has crossed the line which separates com- 
plaint from cause of action. In recognition of the fact, rather than 
as an act of judgment, it is transferred to the Trial Section. The 
lawyer who has conducted the initial investigation, may move across 
with it, or it may be assigned to new hands. In either case th^ 
attorney in charge puts in his request for assistants — and accepts a 
far smaller staff than he deems adequate. If the suit is of the first 
magnitude, he may, for a time at least, command as many as a dozen 
or more men. In planning a major attack he may count upon six 
to eight lawyers ; probably a couple of technical consultants, possibly 
an economist and an accountant. His. technical staff numbers one or 
two men of senior and three or four of junior rank, often quite 
recently fresh from law school. It will be supplemented- by five to a 
dozen agents from F. B. I. But for ventures so variable, no formula 
will do. In number and .competence the staff must be as flexible as 
the work to which it is put. 

The small forc'3 is sent into the field to gather evidence. If the 
preliminary inquiry has been kept secret, the appearance of a deputa- . 
tion from Justice is a signal to the industry. The underground 
grapevine swings into action ; within a few hours the jDrospective de- 
fendants — and even persons only remotely concerned — will get wind 
of their arrival. Usually the industry has become aware of the 
Division's interest long before F. B. I. agents first were in evidence. 
Since time must always lapse between the inquiry prompted by the 
complaint aild the decision for a thorough investigation, the de- 
fendants-to-be have already been accorded opportunity to construct 
bulwarks of defense. Files may have been gone over with a fine- 
tooth comb; intercompany conferences may have been held to de- 
t'ormine a unified strategy of defense. Even independents — sus- 
pected to be the original complainants — may have been sounded out 
to determine how much they know and where they stand. The small 
group from xA^ntitrust finds itself in an atmosphere fraught with 
anxiety and suspicion. Even in a petty industry the resources for 
defense vastly exceed those of the prosecution. 

The task of the staff is to build the case. Facts, information, in- 
telligence about the conduct of the industry must be sought and 
transmuted into acts of personal conduct. In marshaling its proof 
the Government must make use of the moves of litigation devised for 
the private suit. In a personal controversy the parties are equally 
involved and are presumed to have a like familiarity with the facts. 
For the same reason they are assumed to have equal access to such 
documentary evidence as exists. In any event plaintiff and defendant 
are antagonists, each with his eyes open to the salient matters in 

45 



46 CONCENTRATION OF ECONOMIC POWER 

controversy. The office of judge and jury is to liear both sides, to 
listen to proof and rebuttal from parties equally interested and in- 
formed, to scrutinize circumstance for evidence, to allow color to 
be canceled by color, to come to a fair judgment. The situation is 
quite different in an antitrust case. Here the enforcement agency 
enters the domain of controvers)^ as an outsider. The facts, the 
records of activity, the documentary evidence, are all in the possession 
of the adverse party. Unless the persons injured are able and willing 
to supply the material, the testimony with which to convict must 
come from the-lips and records of the accused. 

THE AVITNESS EAGER OR OBSTINATE 

Rarely can Justice buil.d its case upon the evidence of victims of 
restraint. They may have taken its full impact ; they may be glib 
with suspicions, rumors, clues, theories. But as persons sinned against 
rather than sinning, they did not sit in on the conspiracy. Through 
eye and ear they can give little overt testimony to the eventful de- 
cisions. A threat clumsily phrased, an indiscreet letter gone astray, 
a note of instructions sent out to an agent, a suspicious memorandum 
fallen into the wrong hands, a conversation overheard from a nearby 
table, a remark of an indiscreet salesman — such are the shreds of 
proof which the injured party can offer. They offer presumptions 
of guilt feeble indeed against the skills which make up the art of 
restraint. For less is spoken than is to be done: the face of the under- 
standing is given an appearance of innocence.; the secret is hedged 
against discovery. Unless the conspirators blunder or blurt, unless 
their victim is a skilled industrial sleuth, a harvest of surmises yields 
a small grist of proof. 

But suppose that the little fellow does have important bits of in- 
formation. He may have been an insider now kicked out for "chisel- 
ing on the trade." He may have been a member of a trade associa- 
tion, where the cooperation of all the firms is essential to make a 
restrictive practice effective. He may for long have participated in 
the negotiations for maintaining a united front. He knows; yet he 
hesitates to speak. A pledge of a sort has been given to his fellows 
in his going into such an arrangement. Even if the result is to his 
own hurt, morally he is not quite free to tell on the other fellow. 
Nor does conscience alone deter. The harm he suffers nuist be bal- 
anced against the still greater harm he may have to endure if he 
becomes an informer. Every group, from schoolboys to parsons, has 
its distinctive way of making life uncomfortable for the noncon- 
former. Even when sharp differences arise, the act of breaking over 
the traces is a last resort. The dissenter cannot guess just what the 
consequences of his tattling will be — to him as well as to the trade. 
His own enterprise may go down in the general demoralization of the 
price structure. Moreover, his brethren hold over him an effective 
club; he himself is involved in the violation. If he turns State's 
evidence, ordinarily he is rewarded with immunity from prosecu- 
tion — buf is exposed to the private police of the industry. If he merely 
"squeals," he bares everyone — including himself — to rlie vengeance of 
the la-w. 

The ties that bind the victim of restraint to his trade make him 
an unwilling witness. If he operates as an independent witliin the 



COXCENTKATION OF ECONOMIC POWER 47 

crevices of the industry, his chance to carry on is by the grace of the 
big fellows. His business does return a living; his investment and 
personal competence is built about it ; he has no manifest alternative 
where he would be better off. Better a vassal, to whom a trickle of 
"gravy" is doled out, than utter freedom and nowhere to go. More- 
over the practice that irks and constrains him cannot be viewed in 
isolation ; it is an aspect of a network of impinging usage which keeps 
the industry going. He may want to rid himself of a baneful prac- 
tice; yet he cannot aiford the role of a modern Sampson who pulls 
the structure down upon all its occupants. He may quarrel and seek 
amendment; he may use the threat of prosecution to better his posi- 
tion; but he will hesitate long before giving full vent to his com- 
plaints. Even as a vassal, he has given hostages and cannot escape 
their pledge. 

In the decision to be a friendly or hostile witness the fear of re- 
prisals is an important factor. His alliance with the Government 
is for the duration of the case; his contact with brethren of the 
trade — as associate and competitor — is for his business life. He must 
live in peace with a group aware of the need for a collective security. 
He cannot afford to be a "sorehead"; there are too many ways of 
"getting" him which are alike effective and legal. Aspects of a 
business are many; its connections run far; points are numerous at 
which the heat may be put on. Great possibilities lie in the field 
of finance ; loans may be called in at an embarrassing moment ; long- 
time arrangements, maintained as a matter of course, may suddenly 
be revised; the demand for short-term credits abruptly may be re- 
fused. The return of imperfect goods, once taken for granted, may 
become a subject of prolonged negotiation. The services of repair 
men, formerly quite prompt, may take weeks to secure ; the delay may 
spell the difference between profit and loss. Goods may be dis- 
patched to the w^rong destination; through some clerical error they 
may not be shipped at all. When eventually they arrive, the wares 
may be defective in workmanship, of sizes different from those 
ordered, of colors for which there is little sale. All of these de- 
vices are of proven "educational value"; all of them can be made re- 
minders of the consideration which the rugged individual should show 
to his fellows. And, as instruments of discipline, one may succeed 
another faster than the industrial sleuth can turn such activities into 
the kind of evidence that a court "vvill respect. 

It is, accordingly, not surprising that a witness in an antitrust 
case is unreliable and unpredictable. Time and again he appeal's in 
excellent health in private conference and develops a mysterious 
malady as the case goes to trial. Time and again he talks one way 
in a confidential interview and with quite another accent on the wit- 
ness stand. Time and again the difference in testimony betw^een 
the story to the grand jury and the evidence in open court indicates 
lapses in memory of a most alarming character. Time and again a 
witness, quite certain beforehand about the chain of events, jumps the 
traces, discovers another reservoir of fact, and becomes a belligerent 
witness for the defense. A threat of prosecution for perjury is a neces- 
sary defense of the Government's case; but even its imminence does 
not always deter. It is frequently suggested that witnesses for the 
Government have been "tampered with" by the other side; in in- 
stances, no doubt they have. But the discrepancy is usually due to the 



48 CONCENTRATION OP ECONOMIC POWER 

more . i-efined methods by which witnesses for the prosecution are 
reached. 

All the chicanery which attends ordinary litigation is imported into 
the antitrust case. It is possible for defendants rather shrewdly to 
guess who the principal witnesses for the prosecution are to be and 
ingeniously to appeal to all thiB motives which prompt action. In- 
centives to greed, prestige, position, fear, getting ahead, are skillfully 
played upon. A dealer gets a better contract, an agent is shifted to 
a more promising territory, a distributor is unexj^ectedly blessed with 
a large customer, a small competitor learns quite out of the blue some- 
thing to his advantage. No threats are employed, but stories get 
around of what happened under similar circumstances to kindred per- 
sons who had persisted in stubborn ways. "Where the defending com- 
panies are large, well financed, adequately staffed at law, the possi- 
bilities are almost unlimited. The game is the ordinary game of 
litigation, but it is played on the level and with the refinements of 
power politics. A brotherly boost is, however, far more common than 
the open bribe and the veiled threat has almost replaced downright 
intimidation. If the witness hostile to the defense has left, or intends 
to lea\^, the industry, a number of pressures may adroitly be put into 
play. If he is to stay, a few reminders may be enough to make hinx 
walk Warily; he has much to lose and little to gain from wearing the 
Government's livery in the witness box. 

In fact, the witness for the prosecution faces an agonizing ordeal. 
As a man of integrity he may want to tell "the truth, the whole truth, 
and nothing but the truth." As a law-abiding citizen he may be 
concerned that business conduct shall measure up to the standards 
which the state sets for it. But his anomalous situation closes upon 
his capacity for independent action. As a businessman an indulgence 
in testimony which may take away his livelihood is a luxury which 
even the law has no right to impose upon him. As a servant called 
upon to serve two masters, he puts on a front, tries to smother be- 
neath outward poise the conflict within, and endures as best he can 
his. tortuous hours in the witness chair. And as law and its language 
go, his conscience has its zone of tolerance. The limits of a trans- 
action are not sharply fixed; no two persons will recite the event 
with just the same details. Actions are more than overt behavior; 
their legal quality proceeds from the motives which prompted them, 
and no one can with certainty probe the human heart and find intent. 
Evidence is not an instrmnent of precision which can capture human 
conduct with strict accuracy; words are symbols, each of which has 
its synonym; the chosen phrase not only recites the fact but elicits 
fin emotional response. 

The friendly witness would — if lie could — tell his story simply, 
directly, with corroborative detail. He is constrained by personal 
interest to tell no more than that which against every doubt stands 
out as the truth. He responds to the stimulus which for the occasion 
the Government puts on. But an antitrust suit is a passing episode. 
When the case is won or lost the attorneys for the prosecution will 
turn off the heat and move on. But the witness is left within his 
industry; he must face the hostile scrutiny of his associates in the 
trade*. It is the pressure of what lies ahead Avhich is tlie real "intimi- 
dation" of persons called to the stand for the Government. The 



CO>XENTRATIOX OF ECONOMIC POWER 49 

creation of a parade of horribles in the mind of the informer is 
usually enough. A resort to the overt threat is to be reserved for the 
literal-minded. 

EVIDENCE BY CONSCRIPTION 

As a result, the Government must look elsewhere to round out its 
case. The testimony of witnesses — friendly or hostile — is invaluable. 
It maintains the ceremonial of a trial; kindles the fire of personal 
combat; provides illustration, concretion, human interest to the 
drama at law. But it rarely sustains a complaint by the weight of 
the evidence. The requisite data, in massive formation, must be 
secured from the persons, natural and corporate, who have violated 
the act. Of necessity, this evidence is largely confined to docu- 
mentary materials. Save in the rarest case, the companies in defense 
present a united front in categorical denial of violation. If out of 
their own mouths no word of guilt is to be had, resort must be to 
their files. 

The evidence may be pointed and abundant — yet hard t^ reach. 
The Division has no formal power to subpena incriminating docu- 
ments from the files of the accused. Short of calling a grand jury, 
its only available device is polite request. But where persons may 
presently become adversaries in a legal action the amertities are at 
a discount. Businessmen are not likely to cooperate with enthusiasm 
in an enterprise designed to prove that they are criminals. They 
can hardly be expected, with unerring eyes, to draw from a multi- 
farious record just those exciting items which are most likely to send 
them to jail. A ritual which will quiet suspicion and open files has 
not yet been devised. An attorney for Antitrust may state that "The 
investigation is a mere matter of routine"; he may recite that the 
intent is no more than "to clear up a misunderstanding" or "to silence 
a complaint." He may plead that "the law-abiding firm has nothing 
to hide." It is of little use; the very word "Antitrust" suggests an 
adversary proceeding. The inspection of records is regarded as a 
skirmish before battle; and the accused are ready to throw up a 
defense. 

The polite request is met with a variety of tactics. A small con- 
cern, lacking experience, may be ignorant of the lack of formal 
power by the investigators. It may be abashed before 4ie might of 
the United States, especially if agents of F. B. I. aye present. 
Authority or access to a subpena may be assumed; the documents 
asked for may be forthcoming; the inquisitors may even be taken 
directly to the files to make what examination they will. A tar^ 
concern does not yield so easily. To it the matter is not novel; it 
possesses an informed legaUstaff; its aittorneys are present at the 
conference ; they are under no illusion as to the Government's power. 
The usual technique is to play alpng and to defer hostile engagement. 
The initial call at the offices of the corporation frequently defers 
decision ; a discreet interval must be given for a consideration of the 
request. The company's attorney is occupied with court work, i& 
out of town on business, has just departed for the first vacation in 
years. In a matter that may have legal consequences, the officials 
do not feel free to act without consulting him. 

Sometimes certain general data — often accessible to the public in 



50 CONCENTRATION OF ECONOMIC Pt)WER 

some foini or other — is proffered with a show of gallant cooperation. 
Promptly and without reserve are offered articles of incorporation, 
the names of major holders of securities, published reports of the 
company, statements of profit and loss. It is often not difficult for 
the Government to secure the minutes of the meeting of the board 
of directors, particularly if they have been skillfully "recorded" by 
attoriieys for the company. And, as a show of good faith, an assort- 
ment of records — marked alike by engaging variety -and generous 
quantity — attends the ceremonial response to the request for infor- 
mation. / 

The crux of (he matter is access to the. files. A request usually 
induces the response of willingness to comply "if we can know 
exactly what you want," The argument is that there are hundreds 
of filing cabinets; that it is physically impossible to subject all to 
examination; that it is only reasonable for the Government to state 
exactly what it wants. All of which is quite plausible ; yet Antitrust 
is not able — nor can it afford — to be specific. It is at the beginning, 
not the end, of the trail; it has a handful of clues and hunches, not 
a catalog of incriminating writings; the very purpose of its inquiry 
is to discover exactly what documentary evidence there is. So a 
list of documents is asked for with enough of detail to make certain 
the identity of each. The procedure is to be specific, yet to make 
the words of the request broad enough to comprehend any item which 
later proves to be valuable. The request is set down in the manner- 
of a subpena ; files are asked for by subject and period of time ; specific 
documents, if actually known, are played up. 

In practice, access to files becomes a matter of many moves. Like 
the action at law which it heralds, it is freighted with circum- 
stances, request and answer, limitation and definition of the issue, 
delay. It is an extralegal and overtly friendly procedure; yet its 
process is strangely reminiscent of a case in controversy. Investiga- 
tors are I'egret fully informed that files which are "now no more than 
ancient history" are miles away in an old warehouse. Or that, as 
"no longer useful," they have been destroyed. If they are in exist- 
ence, it may be some weeks before subordinates of the companj' 
can be freed for the necessary search. It sometimes happens, through 
-the inadvertence inseparable from such a matter, that a file under 
critical scrutiny reveals obvious gaps — apparently as surprising to 
the officials of the corporation as to the investigator. Officials vary 
enormously in their outward attitude, although in the large corpora- 
tions, particularly, the tendency is in the direction of politeness and 
friendly cooperation. Nevertheless procrastination, a deficit in mate- 
rials, the wild-goose chase are omnipresent to deflect or discourage 
official aim. 

But etiquette has little to do with the result. Amity or hostility, the 
open^-ecord or the file stubbornly closed, usually l^ds to the same thing 
in the end. Always some time elapses between the first appearance of 
Antitrust investigators and the granting or withholding of material. 
The initial call is an event which officials may turn to the advantage of 
their corporation. It is, in effect, an announcement of an impending 
antitrust suit and a warning to the cofiipany to regiment its activities 
for defense. In the interval marked by "deliberation," files may be 
rifled, entombed in sonvginilikely spot, mysteriously disappear for all 



CONCENTRATION OF ECONOMIC POWER 51 

time. Difficulties are discovered which must be resolved; simple re- 
quests are made complex and require clarification ; an attempt is made 
to wear the question out before it ever comes to a decision. A series 
of ingeniously timed delays may protract the issue for months or 
even years. 

KESEARCH BY GRAND JURY 

As an alternative Antitrust is led to employ the grand jury to build 
its case. A staff of attorneys, w'ith a corpus from F. B. I., is sent into 
the field. It seeks clues to specific acts, fixes dates, names names. In a 
short time-^usually 2 months will suffice — it has quite enough in the 
way of leads to prompt an agency equipped with power to issue sub- 
penas and inquire further. 

Usually the first ca^ll of an Antitrust attorney or an F. B. I. agent is 
speedily noised through the whole industry. Occasionally officials are 
taken unawares Avith summons, under threat of lawful punishment, to 
come, to tell, to bring all the documents. If the scouting party does 
its work witii neatness and dispatch, the subpenas can usually go out 
before the officials of important companies can formulate a concerted 
line of defense. The resulting variations in the stories which the sev- 
eral parties tell make the grand jury suspicious. It is also possible to 
check personal statements against tl>e testimony which the documents 
yield and to note discrepancies. In any event, the files have been 
brought under the jurisdiction of the court and can be subjected to 
careful examination. In the Madison Oil case^ 18 tons of records were 
shipped by the major oil companies to Wisconsin.^ In the current 
Drug Case 10 tons of documentary data were sent to the District of 
Columbia for antitrust examination. Thus a judicial inquisition 
is employed to replace or to supplement the Division's voluntary 
inquiry and the Government is supplied with plenteous materials out 
of which to fashion its case. 

The grand jury is a rather blunt device. It is employed by the 
Division only for lack of an instrument that is better. It was never 
shaped for industrial research and, like every agency upon which the 
laAv imposes an alien function, it responds clumsily, expensively, un- 
certainly to the demands upon it. Its mechanics are not geared to 
antitrust work. In many places it meets only at occasional intervals ; 
it is confronted with a run-of-the-mine assortment of crime ; its period 
of life is severely limited ; it lacks opportunity for the painstaking work 
Avhich an infraction of the Sherriian Act involves. Only in cities like 
New York and Chicago, where grand juries are sitting continuously, 
can immediate action be expected. A special grand jury may be called ; 
but only the exceptional case .will justify the bother and cost. 

It presents an extravagant way to carry on an investigation* A 
group of 23 must be kept continuously in session to discard rumor, to 
separate fact from surmise, to ^determine the probability of guilt. A 
judge must be at hand, a group of attorneys busy, the retinue of a 
court in the offing. Witnesses must be brought from far and near to 
testify in person ; their per diem runs to a sizable sum. 

Nor is the personnel of the grand jury ideally adapted to its work. 
The task is to probe into intricate matters, to get on top of the heap of 

^U. 8. V. Socony-Vacumn Oil Co. (23 F. Supp. 937 (1938) ; 105 F. (2d) 809 (1939) ; 310 
U. S. 150 (1940)). 



52 CONCENTRATION OF ECONOMIC POWER 

collected fact, to cut through industrial structure to the trade practices 
beneath, to assess as legal or illegal the conduct of individuals. Skilled 
analysts, much exj^erienced in the \vays of the national economy, would 
have great difficulty at such a job. It is hardly fair to expect superla- 
tive performance from such citizens of the Avorld as make up the ordi- 
nary grand jury. The group may be a miscellany of middle-class men 
and women who take sucli a public service very seriously. They find 
the work exciting, become deeply interested in the evidence presented, 
are shocked at the character of the practices paraded before them. 
After a few^ Avitnesses have testified, their attitude has been deter- 
mined-; they are usually quite read}" to return indictments against all 
suspicious characters. Often it is hard to keep them from definite 
action until the work of inquiry has been completed. The attorney 
-wants to hold them until he has built up a case ; they want to set the 
wheels of justice moving and go home. A "run away" grand jury is a 
threat to the success of his suit. 

But gtand juries are not of a kind. Their several types behave in 
quite different ways. In recent years the "silk stocking" jury has been 
a powerful agent in law enforcemeiit. It is composed of respectable 
men aiid women — recipients of funded income, salaried persons in the 
higher brackets, business executives of high standing in their com- 
munities. If the case concerns the racketeer, fraudulent use of the 
mails, kidnapping, narcotic drugs, the traffic in white slaves, the ordi- 
nary run of Federal crime, their presence is a joy to the pr(»secutor. 
But if it ic an antitrust suit, there are hazards. In the domain of 
public control the members of such a jury have views of their own, and 
the attorneys must walk warily. On occasion jurors have displayed a 
knowledge of the fine points of the law and have even insisted upon 
distinguishing cases — a competence a little unseemly for persons who 
are supposed to belong to the laity. Frequently, too, they find it not 
impossible to put themselves in the other fellow's place. As often as 
itot they are reluctant to indict persons who belong to their own class 
and are respectable pillars of society. 

Nor is the grand jury proof agamst the hazards which attend its 
type of investigation. The individual summoned before it must bring 
all the documents listed or "described" In the order. But to the words 
"subpena duces, tecum" the words "cum box-car" can hardly be added, 
and reason must appoint limits to the demand. Again, there is not 
enough knowledge of the operation of the industry to draw up a 
catalog; the order has to appear specific in the face of a want of 
concretions. If materials are spirited away before the subpena is 
served, there is usually nothing that can be done about it. The witness, 
when questioned, asserts that a periodic clearance of the files is to the 
corporation a matter of routine. If records are destroyed after the 
summons has been served, the witness exposes himself to the charge 
of conltempt. The barrier that protects him from imprisonment is the 
difficuHty of securing proof of his act. There is no certain norm by 
which the completeness of files can be determined. Even when it is 
established that materials have been withheld, a number of plausible 
explanations must be overcome. The witness misunderstood the char- 
acter .of the documents wanted ; the materials were garnered by a 
subordinate; specific records could not be discovei-ed in the wilder- 
ness of miscellany called storage. The positive proof that documents 



CONCENTRATION OF EJCONOMIC POWER 53 

have wilfully, wantonly, contumaciously been withheld from the court 
is a heroic endeavor. 

Yet the sanctions of juristic process are compelling. From days of 
old, as a body which probes into grave matters, the grand jury has 
enjoyed great prestige. The mere summons to appear before it evokes 
considerable alarm. The threat of being in contempt of court tends 
to restrict evasive behavior to subtle and indirect forms. A witness 
can, of course, "stand upon his constitutional rights" and refuse to 
testify. But that is an expensive indulgence which under the circum- 
stances he can ill afford. His act creates a bad impression upon 
the grand jury and induces an easy presumption of guilt. Ordinarily 
he is asked to sign a waiver before he begins ; if he does, -his evidence 
stands even against himself; if he refuses, he is dismissed. The tech- 
nique often employed is to use minor officials as witnesses. They can 
tell all that their principals can tell ; their failure to waive is of little 
consequence; for, as agents, they have followed instructions and are 
not responsible for policies. Tlieir function is the elucidation of the 
matters before the grand jury; they may not even be listed as 
defendants. 

Nor is the inquisitorial power of the grand jury to be treated 
lightl3\ Its duty is to inquire diligently into breaches of the law, 
and its discretion is almost limitless. Its procedure is of an ex parte 
character, its task to do no more than to present suspicious indi- 
viduals. It is the function of the court, when the case comes to trial, 
to listen to the counts, to hear the answer, to render judgment. At 
that time the witness enjoys benefit of counsel ; his attorney is at hand 
to keep straiglit the path of his testimony, to guard him against pits 
dug by the enemy. At tho trial every adverse move, act, question, is 
subject to challenge. But in the grand-jury room the witness has no 
such friendly help. His lawyer is not in attendance to select, arrange, 
direct, color, interpret his recitation of facts. Since he has only the 
vaguest notions of the direction the inquiry may take, any real prepa- 
ration by his attorneys is out of the question. During the ordeal he 
must rely largely upon his own ingenuity. A business official who is 
accustomed to lean upon counsel approaches with something like 
terror a legal situation in which he is compelled to go it alone. And 
anything like a united front by the several concerns is out of the 
question. Moreover, the hazard of conflicting narratives serves to 
discourage fabrication. There may be silence, reticence, lapses of 
memory; but the testimony of record is a nearer approximation to 
truth than any later proceeding is likely to yield. 

Thus the grand jury has a peculiar role in antitrust. Its traditional 
task is to present infractions of the law; the function of industrial 
analysis has been grafted upon it. In the development its initial office 
has passed into eclipse. Nominally, the grand jury has the power to 
indict or refuse to indict; in reality it usually does the will of the 
prosecuting attorney into whose hands the real discretion has passed. 
Yet it has not been reshaped to perform the inquisitorial duties thrust 
upon it. The inquiry partakes of the nature of discovery; yet re- 
quests for documents must be reduced to bills of particulars. The 
files should remain intact until needed ; yet an interval between rumor 
and subpena allows many a slip. The procedure puts a premium upon 
guile and penalizes the virtuous businessman who refuses to tamper., 



54 CONCENTRATION OF ECONOMIC POWER 

It may even tempt the corporate executive to an orgy of destruction. - 
Often the documents upon which the Government Avould like to rely 
are gone for good. 

THE THKUST AT WEAKNESS 

This reliance upon documentary evide)ice hafe its repercussions. A 
half century of experience with the Sherman Act has taught industry 
a great deal. An art of defense has been refined which makes the 
spelling out of the restraint a tedious affair. An overt agreement to 
limit production, to allocate output, to fix price — unless a validating 
sanction is at hand — is noAv passe. It thrives currently only in the 
q^uieter back country of the national economy — in the medical profes- 
sion, among trade unions, in a highly competitive industry whose 
members must in explicit terms bind themselves not to kick over the 
traces. But the up-to-date industry is streamlined against testimen- 
tary exposure. The informal understanding, the telephone accord, the 
accepted gesture which all are to follow is enough. In segments of 
the industrial system even such forms of collusion are fading into 
disuse. A general acceptance of the same notion of a fair mark-up, of 
the same terms for a cost-into-price formula, of an established system 
of delivered price turns the trick. A "moral front" may restrain the 
chiseler whose practices are a menace to the industry; yet the ties 
that bind may be so ethereal as to be invisible to the law. The courts- 
ask for documents; evidence of collusion must be distilled out of thirt 
air. . 

Industrial arrangements, however, will not stay put. There is 
usually a firm or two disposed, when the opportunity comes, to play 
lone wolf. If personal interest turns that way, under coyer" of the 
hubbub which attends change, they will look to the main chance. To 
hold these apostates jn line, there must be some formal negotiation. If 
they remain uncooperative, measures of an educational character must 
be taken. As long as business is good, it is easy for the member of the 
trade to remain a gentleman ; if there is a downturn in sales, the usage 
which binds tends to lose its power to govern. Even where "discipline 
is close, situations come from around the corner which fall a little out- 
side the terms of accord. A whisper at least must go the rounds or 
some company will fall out of step. All may remain informal, docu- 
ments may remain at a minimum — yet moments of strain come to every 
industry with an attendant lapse into communication. 

A stream of informal understanding has its accents of conscious 
accord. It is toward these lapses into formal discretion that the in- 
vestigator thrusts. The overt act of conspiracj' is usually by word of 
moutli ; only echoes of the under^-tanding get into writing. The search 
is addressed to incidental references, to discreet conversations, to tell- 
tale terms scattered throughout the c<'.npany's files. These fragments 
of testimony may be aiiy where — in personal letters to officials alone, 
in interoffice memo:^ pking to implement the unexpressed pact, in 
mijuites of the board ol u^ 'ctors recording actions whose rationale 
must derive from a trade accord. Time and again a file lives with the 
adnosphere of an effective restraint, yet discloses nowhere the formal 
.statement. As document follows document there' is everywhere tacit 

* Once in a while — as happened In a recent congressional investigation on civil liberties — 
the ill vesHjrn tins staff Is lucky; tho incriminating docuinPnts niakp their way into refuse 
boxas and thonoe into the hands of the investigators. 



CONCENTRATION OF ECONOMIC POWER 55 

acceptance of some understanding which remains mute. The yield is 
scattered bits of circumstance, each of which in itself falls short of 
testimony ; yet the series of coincidental items can bear no other expla- 
nation than "act of God" or conscious design. A presumption of guilt 
is by grace of theory — no other explanation can account for all the 
facts." 

So delicate is the task that the investigator must be wary of a "hot 
trail." Minor officials of a large company "often seek to impress 
their superiors with their zeal in the cause. In their reports they 
magnify iAcident^ into events, parade their feats in warding off every 
threat to the price structure, brag about exploits in which they kept 
competitors from kicking over the traces. In reports from the field 
they set themselves down as important characters in a drama of col- 
lusion. And, with a vanity that is not alien to sale of self, they write 
as if they were on the inside of a gigantic plot organized for the glory 
and defense of an industrial realm. The boastfulness of the subordi- 
nate who seeks to impress is in striking contrast to the reticence of the 
higher-up Avho seeks to suppress. If the minor impulses which come 
in from the principal need to be amplified, the blatant voices of the 
agents need to be toned down. Where there are many words but fe^v 
deeds, the investigator may be off to a false start. Weeks may be 
wasted upon a broad trail that leads into nothingness. Between faint 
clues to major understandings and bugle calls down blind alleys, the 
investigator must watch his step. 

STRATEGY IN THE CHOICE OF ACTION 

An important factor in the search for evidence is the character of the 
suit which the Government intends to bring. In practically all cases 
the selection of procedure is limited to a choice between a criminal 
action and a plea in equity. As often as not the choice is merely nomi- 
nal. The Government is certain the law is flouted, it has a vast mosaic 
of inference, its cause is deficient in overt testimony. It is driven to 
the use of the grand jury to develop quickly a sound foundation in 
fact. In years of aggressive enforcement, the resort is almost as a 
matter of course to the criminal action. When Antitrust is less active, 
the elaborate and sedate process of negotiation dominates; the pre- 
sumption favors the plea in equity and the criminal action is the 
exception. 

Where there is choice, a number of considerations direct it. If the 
intent is to sting the wrongdoer with punishment, to throw the fear 
of God into the industry, to outlaw a particular practice, the criminal 
action does well enough. A conviction is virtually a ban upon the 
line of conduct passed in review ; the party who repeats it proceeds at 
his peril. It is a warning to would-be violators that they run the risk 
of being branded with the mark of the criminal. But if a combination 
needs to be dissolved or positive measures need to be taken to put 
an industry in order, equity is the only available weapon. If alumi- 
num is the monopoly the Government insists, a number of smaller 
units must occupy its domain ; a resolution of its economic power into 
lesser equities can be effected only through the supervision of a court. 
If the pattern of the motion-picture industry is as unlawful as the 
complaint declares, a mere judgment upon past conduct is not an 
insurance of future behavior. The structure of the industry must be 



56 OONCENTKATION OF ECONOMIC POWER 

redesigned; its trade practices must be grooved the way public in- 
terest lies; equity alone is capable of so constructive a task. 

Often, howeverj the choice is not obvious. It is not as if the cloth 
had freshly come into the shop, and the Division could cut it to what- 
ever litigious pattern it wished. An issue between the United States 
and the private parties may have been running for years ; as the matter 
has gone forward, it has taken assumed form ; attorneys ultimately in 
charge can but shape as best they can a half-done job. The policy of 
clearance of proposed plans, prevalent during the twenties, has been a 
frequent source of later embarrassment. A policy-on-paper is never a, 
policy in action ; a proposal innocent on its face, when caught up into 
a going network of usages may become an instrument of restraint. 

How much importance should be attached to a formal approval, a 
tacit acceptance, a failure to prosecute when there has been knowledge, 
cannot be set down with certainty. Acceptance, inaction, silence has 
probative value rather than compelling weight ; it raises moral rather 
than legal questions. The rights of the public ought not to be waived 
by the act of an oJSicial who is ignorant, negligent, or unable to pierce 
the intricacies of the future and lay bare what lies there. There is 
no case in which a court has set down a pledge given — or silently 
passed — as a bar to prosecution. But in one instance a failure to take 
action after Justice had declined to approve a plan appears to have 
been a factor in the victory of the defendants.^ And in the Madison 
Oil case a plea that a prior act of the Government sanctified the conduct 
later called into question was made much of.* Advance approval 
cannot be denied all legal significance. The very disclosure to justice 
is presented as evidence of a desire to do the right thing. 

But, the law aside, the moral question is not to be escaped. Is it 
quite proper to institute punitive proceedings against persons who 
have acted in reliance upon the approval — or even the silence — of 
earlier officials of Justice ? In such instances a sense of ^ood faith has 
prompted the Division to make the necessary suit as impersonal as 
possible. It aims not to punish the offenders but to rectify the 
offense; so the resort is to equity. In the motion-picture case it was 
publicly announced that in the face of the previous policy of "cooper- 
ation" between the Division and the industry it would be "inequitable" 
to institute criminal proceedings and that as a consequence an injunc- 

' In the dominant case, in which a sanction was found in "agency" for resale price 
maintenance, the district court stated : "Conditions complained of have been in existence 
since at least May 1, 1912. The agency method of selling, as well as license agreements 
In question, were not adopted until after they were submitted to the Attorney General of 
the United States for his information and consideration. They were neither approved nor 
disapproved, but defendants' later operations have been only after a full disclosure and 
during a period of prolonged silence. In 1919 all the matters complained of were brought 
to the attention of the Federal Trade Commission. In 1920 they dismissed the complaint. 
To be sure the Federal Trade Commission does not estop the (Government in this proceeding, 
but its conclusions correctly summarize the facts as disclosed in this record and accurately 
state my view of the law" {U. 8. v. General Electric Co., 15 F. (2d) 715 (1925). Sub- 
sequently the Sunreme Court, speaking through Mr. Chief Justice Taft, mentioned the 
fact that the Attorney Ger.eral had declined to express an opinion of the legality of the 
plan, and also pointed out that it had been in operation since 1912 (U. 8. v. General 
meotrio Co., 272 P. S. 476 (1926). There is an inference here that the public may lose 
Its rlsrhts through silence or negligence on the part of its ofBcials. 

' *Tne major oil companies Insisted that the "buying pool" for the maintenance of which 
they had been indicted was not to bo distinguished from a similar arrangement approved by 
the Secretary of the Interior in the heyday of the N. R. A. The district Judge Informed 
the jury that unless the Government had given specific authorization after the N. R. A. the 
companies would not be exempt from the antitrust laws ; and charged them, as a matter 
of law, that evidence was lacking to support authorization. Tlio court oi' appeals, in 
reversing the convictions, fou ' ^hat the Secretary's approval brouL'ht a similar plan 
within tne test of reasonablenes - T'le Supreme Court supported the district court. 



CONCENTRATION OF ECONOMIC POWER 57 

tion would be sought.^ In like manner ,in the Hartford-Empire case 
it was deemed unfair to put in jeopardy of life and limb corporate 
officials who had given testimony before the Temporary National 
Economic Committee ; and the resort was not to the punitive but to 
the corrective process.^ 

It is, of course, possible to employ the criminal and the equity 
actions concurrently. A smashing offense may be followed up with 
a constructive attack. In certain situations the defense of the public 
interest maj^ require the double action; and on occasion it has been 
used. If evidence is not to be had except through a grand jury, and 
if a remedial program must be imposed, the cooperation of law and 
equity seems essential. The only escape would be to call the grand 
jury, use it to build the case, quash the indictment, institute a plea 
for a decree. It is, however, a little awkward all at once to drop and 
to press moves against the same parties for the same offense; the 
presumption of guilt laid alongside one of innocence would utterly 
confuse the layman and leave the lawyer not without qualms. It is 
more usual, when a criminal action leads off, to allow equity to abide 
its time. In almost every case overtures for a peaceful settlement are 
presently made. They may be abruptly dropped or they may lead to 
prolonged negotiation. If eventually it appears, that no agreement 
can be reached, Justice may then turn to chancery for its correctives. 
If a consent decree emerges in definitive terms, the Division may 
abandon its criminal case, institute its plea for relief, arrd present for 
its imprimatur the settlement agreed upon out of court. 

In the past, as of late, there has been some censure of the Division 
for the concurrent use of the two procedures. In 1912 President Taft 
severely reproved his Attorney General for bringing a criminal action 
before he had exhausted the possibilities of equity. In the automobile 
finance cases a Federal district judge officially became highly incensed 
when he discovered that the parties to a' criminal action before his 
court were moving toward an amicable settlement behind his back."^ 
And often businessmen insist that the punitive proceeding is a club 
wielded with the intent of coercing the accused into consent decrees. 
If the consent dex3ree were an effective instrument of industrial gov- 
ernment, the charge might warrant consideration ; but where it does 
little more than painlessly and quietly close the case, it is quite aca- 
demic. Even were it effective, the presumption must be set down in 
its favor. Actions for crime and in equity are not alternatives in the 
Sherman Act. And the return of an. industry to the competitive 
design is so rare a product of litigation that tolerance should be 
accorded the law for however many instruments it employs to achieve 
the result. 



5 Department of Justice release, July 20. 1938.. A further reason given was that the aim 
of the suit — the divorce of exhibition from production and distribution — could be accom- 
plished only through an equity decree. It would seem probable that, even were the first 
reason unavailable, the second would ha,ve proved compelling. 

"Department of Justice release. December 11, 1939. Hearings on the glass container 
industry were held before the Temporary National Economic Committee In Decemher 1938. 
The equity action was instituted by Antitrust in December 1939. Trial of the case was set 
for October 1940. 

^ U. 8. v. General Motors Corp., hearing of Judge Geiger discharging grand Jury, Mil- 
waukee, December 17, 1937. 



259564— 40— No. 16- 



5. ANTITRUST IN THE COURTROOM 

THE WAT OF BUSINESS — AND OF COrRTS 

In an antitrust action litigation assumes the office of business. Yet 
as it takes over the task it retains its own ways. It attempts to im- 
pose order, pattern, responsibility upon an industry through the deco- 
rous process of law. 

Business moves at a quick tempo. Its activities stretch away in a 
hurried series of transactions. Events occur, questions are presented, 
decisions are made. The emerging judgments concern executives, 
shareholders, workers, consumers — all who have a stake in the en- 
terprise. They reach out to affect competing concerns, the market 
for raw materials, the activities of investment banks, all whose inter- 
ests impinge. The lines of influence radiate to the fringes of the 
national economy; their incidence affects the fortunes of corporations 
and pervades the lives of individuals. Yet such decisions must be 
speedily made. Contingencies, situations, even emergencies must be 
met with as much or as little of knowledge and understanding as is 
immediately at hand. The course of affairs will not wait while the 
claims of every party which has a stake in the outcome are measured 
with meticulous scrutiny. In the 'taking of trade from rivals, in 
producing a new ware, in invading a new market, in paralyzing com- 
petitors through patent litigation, in doing all that constitutes carry- 
ing on a business there is no time for notice to all the persons con-' 
cerned, for elaborate findings of fact, for tentative orders, for full 
hearings before they are made final, for the ceremonial observance of 
the rubric of due process. Business rt^v ^ go on; it is desirable that 
a question be answered right ; it is iiiiperative that it be answered at 
once. Thus in expediency crowded upon expediency a rough sort of 
industrial justice is dispensed. From the exercise of managerial dis- 
cretion there is usually no appeal to a higher court. 

The concern of an antitrust suit is with questions of the same sort. 
The statute invoked is an instrument of policy; the object of the action 
is to subdue the activities of the industry to the general good. The 
Government seeks to keep open the doors of opportunity, to remove 
obstacles from the channels of trade, to tear down private toll gates, 
to deflect trade practices from antisocial use, to curb the pursuit of 
gain run wild. Its purpose is not to stop the contest or even to shift 
the players, but to subdue the rules of the business game to the require- 
ments of fair play. It is, as truly as the ordinary conduct of busi- 
ness, an announcement of industrial policy, a creation of industrial 
government, an exercise of industrial discretion. 

Yet in court an industrial issue must be fitted out with all the ap- 
purtenances of litigation. The symbol must replace the actuality; 
the real question be commuted into a cause at law ; the essential issue 
be resolved through the observance of the ritual decreed for a genuine 
58 



CONCENTRATION OF ECONOMIC POWER 59 

case in controversy. An impersonal is converted into a liiglily per- 
sonal matter. The actual question is whether a particular pricing 
practice, a specific classification of customers, a scheme of open price- 
filing, a cost formula for price, a system of basing points has a proper 
place in the pattern of an industry. The legal issue is vrhether the 
conduct of specific officials of particular corporations falls within or 
without the luw. The matter of concern pertains to industrial or- 
ganization ; the process of decision belongs to the rules of litigation. 
It brings to the settlement of questions of economic order the proc- 
esses, hazards, confusions, evasions, circumlocutions, delays of the 
legal folkways. As if the issues were not in their own right perplex- 
ing enough, the way towards judgment is charted through alien paths, 
Reality waits upon the sidelines to abide the event of a trial by ordeaL 
The' device of a lawsuit envelops a question of policy in an at- 
mosphere of personal controversy. The very terms "prosecution" 
and "defense" disguise the question of choice between alternative in- 
dustrial arrangements. If the suit is in equity, every presumption is 
arrayed on the side of current practice. It is not enough that, by the 
norms of the statute, the suggestions of the Government are the 
better. An irreparable damage must be shown before the court can 
decree "correction," and constructive measures must masquerade as 
"relief." If it is a criminal action, the industrial status quo appears 
as a person accused, whose innocence must be presumed until proof 
of guilt no longer admits of a reasonable doubt. Over the centuries 
the common law, the statutes, and even the Constitution have conspired 
to create an intricate system of defenses about the man whose freedom 
is in jeopardy. He must be fully informed of the charges against 
him; he must be confronted by witnesses to his wrongdoing; he can- 
not be made to bear testimony against himself; evidence that is tainted 
with unlawful search or the third degree cannot be used against him; 
his guilt must stand out sharply above every blinder his skilled at- 
torneys can devise. Such safeguards to personal innocence, private 
character, individual integrity become buttresses about a distinctive 
way of business conduct which may be antisocial. All of them, rea- 
sonable enough when the life or liberty of a human being is in 
jeopardy, become the elements of an obstructing machinery when the 
real issue is the amendment of a trade practice. 

The resort to law involves a shift in pei-sonnel. Persons competent 
in the habits of industry must give way to those skilled in the 
techniques of legal combat. The economic analyst recedes; at best 
he can provide only the raw material which must be reshaped for 
courtroom use. The businessman becomes a spectator while his legal 
representative engages the legal representative of public policy in a 
protracted campaign. The opposing champions are well versed i-i-- 
demurrer, interlocutory motion, the tactics of seeking or avoiding a 
general engagement. They are less at home with overhead cost, Pitts- 
burgh plus, the fiction of the quoted price. Experience, particularly 
for the defense, has been largely with private causes, and both sides 
prefer to fight over terrain upon which their feet feel secure. As a 
result an insistent urge draws controversy away from substantive 
toward procedural issue. The flight from the unfamiliar world of 
actualities into the shadowland- of symbol and rite is almost in- 



QQ 00NCEN1 RATION OF ECONOMIC POWER 

evitable. The atmosphere of litigation invites it ; the lawyer is wary 
of public appearance about matters he does not understand; he im- 
presses his client most in the display of his priestcraft. 

As the case goes forward the champions become more and more 
creatures of the courtroom. The staging of the question as an ad- 
versary proceeding sets lawyer against lawyer. As the opponents 
invoke every technical device to secure the advantageous position in 
the oncoming struggle, personalities clash. Every move, every wit- 
ness, every fact, every document becomes a counter in a legal game. 
"The record" has come to do vicarious duty for an analysis of the 
industry in operation; and every item, favorable to one side, can win 
admission only against the- heavy cross-fire of the other. Every pro- 
cedural device which may arrest or speed action, flank or snipe the 
verbal minions of the enemy, color the conduct on parade with inno- 
cence or guilt, is called into play. The campaign is lost in its events ; 
interest is focused upon an interminable series of petty conflicts. The 
judge becomes engrossed in the detail of his work as imipire. It takes 
the final summing up of the lawyers to bring the jury back to the 
dominant legal issue. And somehow antitrust as an instrument oi 
public policy has gotten lost in the scuffle. 

The ancient spirit of trial by combat broods over the whole affair. 
It is manifest in a series of skirmishes which precede the general 
engagement. An indictment in a criminal case is invariably met with 
demurrer and motion to quash. If the judge resolutely denies, re- 
quest is put in for a full bill of particulars. If the demurrer is 
sustained, appeal will be taken, usually all the way up to the United 
States Supreme Court; and only after an ultimate victory on points 
at law can the case come to trial. A plea in equity is regularly met 
by a long answer, categorical denial, and a prayer to dismiss the com- 
plaint. Along the whole course interlocutory motions — some of them 
subject to appeal — will be made, contested, amended, reargued, de- 
cided while the real issue abides its time in the offing. If one side 
shifts to the procedural front, the other must meet it there ; and the 
techniques possessed by the defense are adequate to a real game of 
obstruction. In an antitrust suit, where large sums may be available 
to beat off attack, the older devices of the law are mere primitive 
elements out of which "the higher procrastination" has been refined. 
No attorney of skill would be content to create two issues where one 
had been before; at least half a dozen would be essential to satisfy 
his professional pride. Procedure becomes a buttress against sub- 
stantive attack ; behind its fortifications the defense digs in for a long 
siege. 

FACT INTO LEGAL PROOF 

An epitome of the whole difficulty is the problem of proof. At 
the trial the court demands evidence ; yet in respect to conversations, 
documents, testimony, oral and written, the insiders enjoy every 
advantage. If incriminating evidence is in the hands of the Govern- 
ment, it is the function of the defense attorneys to fight its admissi- 
bility. For, if it is kept out, it cannot reach the minds in judgment 
to entice reaction. If does not get into the record, presumably the 
higher court which some day must hear an appeal will get no wind 
of it. Time, patience, resource, guile, ingenuity, indirection, are re 



CONCENTRATION OF ECONOMIC POWER gl 

quired of the prosecution to draw it forth, fit it into an articulate 
indictment, refine it into the testimony the court will entertain. For 
every item, before it can take its place within the contemplation of the 
court, must make its peace with "the rules of evidence." 

The code of evidence, with its stubborn precisions, grew up out of 
concern with ordinary cases in tort, contract, and crime. Its exactions 
were pivoted upon a simple, easily identifiable act, clean-cut in intent 
and eflfect, the deed of an individual or a small group of persons. It 
aims to fix a focus, to avoid the irrelevant and untrustworthy, to make 
the line of inquiry converge upon the event in question. It seeks to 
protect the accused against gossip, rumor, surmise, inference by limit- 
ing testimony to direct, straightforward, authenticated statement. In 
response to such a purpose an elaborate testament has been fomiulated. 
It is expedient and practical, rather than articulate and speculative 
in character, for it has emerged out of experience from a multitude of 
suits. But it has been shaped largely by the business of the courts 
with such elementary wrongs as slander, fraud, assault, theft, arson, 
seduction, manslaughter. Its norms of admission, relevancy, com- 
petence, exclusion lie far removed from the arena in which legal 
combats over the patterns of industries are staged. 

Actually these rules of evidence are vague enough to allow con- 
siderable latitude. The discretion they accord the presiding judge 
accounts in part for the care with which — if anj^ choice is possible — 
the Division selects the particular district in which to bring its case-. 
One judge, who regards the rules as a general guide, will set down a 
presumption in favor of what is offered and exclude only when clearly 
he must. Another judge, who regards the rules as severities demand- 
ing strict conformity, imposes upon every bit of testimony the duty 
of proving its way into the record. A third, who frankly admits he 
is feeling his way, is inclined to say, "Let it in at least for the time 
and later we can decide its worth." Thus the judge's conception of 
his office, his temperament, his habits on the bench, his feeling at ease 
or his bother witli the instant case, obtrude into the rules of evidence, 
as he makes stubborn or easy, speedy or protracted, the way of proof. 
He may generously admit irrelevances and blur perspective or he 
may haughtily exclude essentials and create a distortion. 

In so intricate a matter as antitrust only the unusual judge can 
pursue a consistent course. Experience alone enables him to drive 
ahead through the miscellany of unlike items which seek admission 
to the record. At one stage of the proceedings a bit of testimony 
seems clearly apart ; at another, quite in point. If put in one way or 
presented for one purpose, the facts are to be denied admission; if 
stated in other terms and shaped to another issue, they appear mate- 
rial. Thus, if data seem to be very important, an attorney who is 
polite, ingenious, and persistent can usually contrive to get them in. 
It has happened that a potential entry, met at first with shocked 
judicial surprise, has within 3 days been accorded an enthusiastic 
welcome from the bench. As the case goes forward, the pattern of 
rulings may become more sharply defined; the judge has mastered 
the case ; he has learned by trial and error what is helpful and what- 
time consuming ; his feet have become set in the path that leads to 
decision. He can, therefore, at once become generous to the loser and 
guard his rulings against reversal on appeal. Often, as the trial 



E 



Q2 CONCENTRATION OF ECONOMIC POWER 

proceeds, the vigilance with which evidence is guarded is relaxed. 
The judge has discovered that data will get in anyhow; he is bored 
and wants the thing over; his mind is made up. All that lies ahead 
is the fulfillment of procedural requirement;s. 

The range of discretion is indicated in the problem of relevance. 
It is accepted that judge and jury should get "all the facts" — with 
the qualifying clause, by "competent" evidence. Here rule and pro- 
viso, when applied to evasive and intricate evidence, yield a latitude 
of severe appearance. The lawyer presents his testimentary mate- 
rials; a series of offer, objection, ruling, performed by a professional 
caste, must purify entries for admission into the record. Again and 
again the attorney and the witness raise their antiphonal voices; the 
counsel for the adverse party chants the approved formula "incom- 
petent, irrelevant, and immaterial"; the judge from the loft above 
interjects a responsive "sustained" or "overruled"; and the loser, who 
intends to fight another day, comes in dramatically with "exception." 
As the witness proceeds, a series of variations are performed on an 
abiding theme. ^ 

It i^ obvious that the scope of inquiry must be somewhat con- 
fined — else the meandering of counsel would never cease. The chan- 
nel in which the examination must run is fixed by the judicial con-^ 
cepts of "the material" and "the relevant." But the court has no' 
instrument, save its own judgment, to weigh the material against the 
immaterial and to separate the relevant from the irrelevant. In an 
affair so complicated, with the lines of the case only slowly coming 
into place, the umpire possesses only the vaguest standards of refer- 
ence. Any item put in is relevant if it is ''connected up"; but such 
connection may come later and is never quite free from the taint of 
inference. The procedure creates- an outer atmosphere of pomp and 
circumstance v\ithin which His Honor feels at home. Within its 
formal familiarities his detail of rulings must take its strange and 
empirical course over alien territory barren of recognized land- 
marks. But, like any other aspect of legalistics, the exactions to 
which testimony must conform have been written down as verbal 
formulas; and the judge, to whom the law is the letter, finds the 
rules of evidence very compelling. He is bound by them even 
against his common sense and his better ' judgment.- Since in a 
major action involving such an industry as oil, aluminum, or motion 
pictures, relevancy does not come down to earth until the architec- 
ture of the case appears, the literal-minded judge may sacrifice 
pertinent testimony to the law-in-vacuo. 

At best, competence is a matter of many variables. It is sheer 
speculation to decide in advance what may be significant in the light 
of the entire edifice. The logical thing would be to get the whole 
case in before any part of it is presented ; then, since relevancy is 
relative, norms for the acceptance or rejection of testimony would be 

1 As a series of exhibits was being put in at the Aluminum trial in New York, an at- 
torney for the defense solemnly read the following formula more than 20 times : "In behalf 
of our defendants we have examined this eslilbit only to the extent necossarv to determine 
what, if any, cross-examination should lie conducted by us. We believe the exhiliit is erro- 
neous in theory, incorrect, and irrelevant. Howev^er, we make no formal objection to its 
admission, nnd we believe our position in regard to this exhibit can be made clear in our 
evidence for the defense." 

' In tht> course of the Madison Oil case the presiding .iudge Intorniea the defense that 
he saw clearly that certain testimony was irrovelant and if it objected he would be 
compelled by the rules of evidence to refuse admission. Yet he regretted the objection 
because the testimony in question had proved to him to be unusually illuminating. 



CONCENTRATION OF ECONOMIC POWER 63 

at hand. But, since even a court of law cannot rise to such a 
requirement, the process of justice must put up with a compromise. 
Tlie note may be taken for the cash; the item is let in in response 
to the attorney's plea that the connecting tissue will later be supplied. 
Again the judge must be governed by his own standard as to how far 
such an indulgence is to go. Once in, the practical presumption 
is in its favor; it can later be struck out if it continues to stand 
apart. But even the ultimate act of expunging from the clerk's 
record is nominal. It is not so easily erased from the minds of the 
jury and it may even leave an indelible imprint in its passage through 
the judge's mind. Moreover, once in, the bit of testimony has a will 
of its own. At its appearance it may be a stranger, but presently it 
finds itself quite at home. It is the habit of the inquiring mind to 
i-each for connections among the isolated facts which at one time 
it entertains. 

A device improvised in the heat of conflict is "admission for a 
limited purpose." A bit of testimony may be let in as to some, 
but not as to others, among the defendants. Or it may be admitted 
only as tending to prove thus-and-so "and for no other use what- 
ever." The practice is particularly rife in conspiracy cases, where 
the parties are many and the plot is compounded of numerous acts. 
Here the knowledge of each of the accused and the part of each of 
the actors in the enveloping drama, presents a neat problem of impu- 
tation. Picture each member of a jury with a huge sheet of paper 
before him. At the top of the various columns, set down the names 
of the alleged conspirators. At the left list in line after line the 
various acts which are alleged. Then, where horizontal lines cross 
the vertical columns, set down check marks as specific acts are 
proved against particular defendants. It is a task in the intricacies 
of blame to which a concert of 12 good men and tr^je could hardly 
rise. 

If the matter is intricate, justice almost compels a resort to equity. 
Even a judge who in his school days may not have been a paragon 
at simultaneous equations will have his difficulties. His usual pro- 
cedure is to be broad-minded, admit all that promises to be of signifi- 
cance, and "instruct" himself to disregard all that remains irrelevant 
at the close of the case. The picture of a jurist, sitting as a presiding 
officer to determine what he has a right to consider, is not without 
interest. It is a neat exhibit of a situation in which logic and reason 
are beyond the reach of the law. 

The tangled miscellany known as the hearsay rule looms large in 
Antitrust. The defendants seldom admit guilt; their files — complete 
enough upon many topics — are strangely fragmentary in respect to 
restraint; overt testimony can rarely be put together to prove thei 
act. A search will usually reveal numerous bits of evidence of an 
incriminating kind. But as often as not they are not the kind of 
testimony which a court is willing to receive as currency. A series 
of letters by trained market observ^ers may implicate third ]::^ties; 
the foreign head of an international cartel may write an associate 
abroad about the activities of an affiliate in this country; a host 
of office communic_ations, when shrewdly pieced together, may spell 
out a pattern of conspirac}^ Against indictment by such evidence 
the defendants seek asylum at the shrine of hearsay; and such 
, ephemeral evidence gives no warrant for laying profane hands upon 



g4 OONCENTKATION OF ECONOMIC POWER 

them. In more secular walks of life market letters may be held in 
higher regard than the testimony of the eye witness; trade reports 
may be looked to as furnishing a better informed account of what 
was going on, than the word of an amateur Johnny-on-the-spot. Not 
so at law, where the emphasis still lingers on the single dastardly 
deed and the court must have as witness the one who saw it done. 

As with many another legal usage, common sense eats at rigidity. 
The rule must be applied, yet it must be made to work. It is to be 
reverenced, yet it must make its peace with the world of today. As 
hard situations are met, the exactions of the hearsay rule break down 
into exceptions. Concessions are made to custom, convenience, the 
ways of business, the need of getting ahead with the case. As such 
adjustments to reality multiply in number, the statement of the rule 
becomes increasingly intricate. The records of business regularly 
kept, are rather easily admitted. If the man who saw them come 
into being is put upon the stand to vouch for their identity and in- 
tegrity, documents of various sorts may be gotten into the record. 
They currently appear, however, not in their own right but as a 
kind of appendage to human testimony. Interoffice memos and 
eveii market reports are still usually made to fall into the ancient 
category of hearsay. It is all very curious, for such accounts are 
generally accepted and used as a matter of course by the very 
companies against which the Government is proceeding. In fact 
they are among the most accredited materials upon whose founda- 
tion corporate policies are posited. Such is the gulf which sepa- 
rates the process of business from that of litigation. 

There is, of course, no sharp line between overt testimony and 
hearsay. It is easiest to draw in the case of crime or tort, where 
the focus is upon a single overt act of wrongdoing. It is harder 
to maintain in respect to the deed of the abstract person, at law 
called the corporation, where a medley of officials may be involved in 
the offense. The boundary becomes a sheer fiction in an antitrust 
case; there the unlawful act is a series of events stretching across 
the years; a large number of corporations, with ranking officers and 
factotums, are parties; the various persons, natural and artificial, 
are involved in very different capacities. The policy of restraint is 
continuous; each who has a role sees with his own eyes only a seg- 
ment of the larger design; each shapes his conduct upon activities 
which he takes for granted but about which he has no intimate 
personal knowledge. To any particular witness what is overt and 
what is hearsay depends upon how little or how much is crowded into 
the specific event about which he testifies. A shift in the definition 
of act from the minute incident to the policy-in-action converts 
hearsay into direct testimony. The very tissue which gathers the 
parts into a going conspiracy is knowledge that extends far beyond 
personal observation. In antitrust it is utterly impossible for a 
judge to apply the hearsay rule without benefit of a series of fictions. 

ANALYSIS AS A T^AWTER^S ART 

In the trial of the law of agency has a heroic role. The Government 
invokes. respondeat superior, insists that the acts of its agents are the 
acts of the corporation, and calls upon both to answer. The corpora- 
tion retorts that the alleged acts of officials were never authorized 



CONCENTRATION OF ECONOMIC POWER g5 

and clearly lay beyond the scope of their employment. If the plea 
is accepted, the individuals have little to fear; their activities are 
divorced from the conduct of the corporation; in isolation they can 
hardly be thought of as pieces in a conspiracy. As yet the strictures 
of evidence have Hot been loosened enough to accord with the great 
impersonality of the corporation. The dualism of the high com- 
mand, as officials of the company and as individuals in their own ri^ht, 
presents to "responsibility" a game of hide and seek ; and the technical 
rigidities of admission do not permit the easy assembly in court of 
diverse events into a single act of restraint. 

At times even testimony near its best may flatten itself against the 
evasive intricacies of corporate structure. The Government has a 
"perfect case" against "state agents" who put the screws upon the 
dealers in a certain ware. But discretion lies with the "executive" — • 
and the corporate charter is there to show it. The men at the top 
disclaim the acts of the agents and deny all responsibility. It is 
even reported that subordinates have been disciplined for exceeding 
their authority in a matter affected with a public inteitest. The 
Government's proof, plain as day, has difficulty in getting over the 
high hurdles of agency. In instances the rule-in-action produces a 
curious result. In the suit against General Motors, all officials were 
found innocent by a jury which heaped their collective guilt upon 
the company. An impersonal corporation had acted without the 
intervention of human agency,* 

Thus it is not easy to impose a rigid judicial pattern upon the 
ebullient facts of an industry,' The judge may attempt to limit the 
jury's attention to evidence which meets all the canons of acceptability ; 
he may righteously seek to exclude from his own mind all that he re- 
gards as inadmissible. Yet considerations that are taboo will creep 
in by stealth and the minds of men who must decide cannot be kept 
from forbidden trails. The opening statements of attorneys admit 
of great latitude ; knowledge is not yet at hand by which to hold it to 
its proper orbit ; attempts to limit its scope are of doubtful success. In 
the qualification of a witness, counsel may bring out history which 
would prove irrelevant in the examination proper. Upon direct ques- 
tioning, the witness may not be led ; still the skilled inquisitor can plot 
the course that testimony is to follow and in neatly worded questions 
he njay suggest answers. 

On cross-examination tolerance is a little broader. And the at- 
torney on re-direct may capitalize disclosures through the wider lati-' 
tude accorded him, A statement on direct may be explained on cross- 
examination ; an apparently innocent detail may, as the other side takes 
the witness, prove an open door into closed territory. An exhibit 
which would be dramatic, if it were forced in against vigorous objec- 
tion, becomes a dud when the opposition gets to the gun first and puts 
it in, A question quite out of bonds, reiterated by being rephrased — 
even though eventually overruled — may prove as effective as the cate- 
gorical statement which would have been the reply. An answer, bad 
if labeled "guess," becomes competent if presented as "the witness' 
best judgment," If arduous wrangling occurs over a document, whose 
identity and contents are not allowed even to be whispered, the curi- 

s U. 8. Y. General Motors Corp., N. D. Ind., Criminal No. 10039, fllea February 1938 
(unreported). 



gg CONCENTRATION OF ECONOMIC PpWER 

osity of the jury is aroused. Thus if formally — or through the air — 
it ever comes to their attention, its value is enhanced. 

To the resourceful trial lawyer the technology of evidence — which 
he never thinks of as a corpus of rigid rules — is a challenge rather 
than a barrier. His problem is not whether he can get a telling testi- 
mentary bit in, but how he can get it in. His usual shortcoming is 
not in want of strategy in the courtroom, but in such intimacy with 
the practices of industry as to discover the implications which it holds. 
Yet against a procedure never designed for industrial analysis, even 
an adroit practice of his mystery is a feeble instrument. It serves 
to capture a salient, defend an exposed spot, throw a line of legal de- 
fenses about a position. It presents an intricate barricade through 
which a trickle of fact can come to judgment but gives it no insulation 
against overtones of suspicion. It falls far short of providing the 
materials out of which a clash between industrial practice and public 
policy can be resolved. In th^ courtroom not even the rules of evi- 
dence stand still, but the adjustment of an ancient rubric to modem 
actuality can hardly come by way of piecemeal. The fact that both 
sides can play at a legalistic game is no argument against reform. 

A PAWN WITH A WILL OF HIS OWN 

In this battle of lawyers the witness is an indispensable henchman. 
The strategy of selecting persons to give testimony is not wholly 
guided by a pure demand for information. The witness who is flus- 
tered, likely to be led into a trap, or easily broken, is not to be 
chanced, no matter how comprehensive his knowledge. The one who 
can clothe evasiveness with a spirit of sincerity is far more to be de- 
sired, even if more poorly informed. If he is glib enough to get in 
answers to the questions before the opposition can object, so much the 
better. If he is ingenious enough to explain a slip in an unguarded 
moment, he is almost sure of a place on the stand. Two persons may 
be equally able, equally informed, equally committed to the cause; 
yet one will prove a skillful and the other an impossible witness. An 
overconscientious person, who exalts the scruple above the impression, 
is above all others distrusted by counsel. These are the standards, 
be it noted, of professional pleaders, not of industrial analysis. If the 
fact, however obvious and authentic, must be purified by a testimen- 
tary ordeal to become evidence, it is because legal procedure makes a 
luxury out of more realistic process of inquiry. 

It happens that much of the Government's case must be proved by 
hostile witnesses. They are under oath in respect to the truth but are 
in duty bound to do no more than answer questions. The witness alone 
has the information ; he will yield orily what he is compelled to give ; 
th^ game is to extract "the evidence." All along, the thrusts are met 
with evasion, lack of knowledge, qualification, denial. The witness 
who knows in detail a sequence of events about which his questioner 
possesses only hunches, has a large domain in which to maneuver his 
defenses. Against them the prosecutor must tilt adroitly as best he 
may. He may allow the witness enough rope to hang himself, snare 
him into contradictions, pick up fre.=;h leads as the story unravels. He 
may meet forgetfulness with a document, con-front stark oblivion with 
the statement of a.7 other, present an excerpt from testimony else- 



OONCENTKATION OF ECONOMIC POWER 67 

^^•here "to refresh the recollection." He may even, in the extreme in- 
stance, seek to use admissions before the grand jury to "impeach" 
the witness. The line between "refreshment" and "impeachment" is 
precarious ; and blunt going might easily touch off "reversible error." 
He may, in nimble overtones, allow Uie hazard of an indictment for 
perjury to hang heavy over the head of the witness. The whole course 
of the examination is beset with leeway and intangibles. The atti- 
tude of the judge, the indulgence to leading questions, the latitude to 
refreshment, the standing granted to the proceedings before the grand 
jury, are all elements in the result. 

INTENT AND MANY INTENTS 

The greatest obstacle in making a case stick lies in the proof of 
"intent." As yet little attempt has been made under the Sherman 
Act to outlaw "monopoly per se" ; the usual case involves a charge of 
conspiracy.* Section 1 recites the words "contract, combination, oi; 
conspiracy in restraint of trade"; yet the first of the verbal^^trio has 
least and the third most color of a legal offense. When to a particular 
situation all are equally applicable, that one if chosen which carries 
the greatest legal taint. An agreement which seeks private gain in 
the face of an opposing declaration of public policy is at law to be 
called by the ugliest name. And the more tenuous type of informal 
understanding is in form neither contract nor combination; it is 
fashioned of stuff too insubstantial easily to be drawn together into 
either of these categories. 

In a technical way "conspiracy" lends itself rather nimbly to the 
task in hand. Men may stealthily plot about any matter under the 
sun; the essential vagueness of the concept permits the entrance of a 
large and miscellaneous array of facts ; under adroit guidance a some- 
what well-rounded picture of the activities of an industry may be 
approximated. The factor of time and the statute of limitations are 
not serious bothers ; all the acts which make up the conspiracy, what- 
ever their dates, are admissible. The successful consummation of the 
illegal undertaking does not have to be proved'; the meeting of the 
conspirators for a nefarious purpose is enough. Yet there is no bar 
against testimony to the overt act ; instances of restrictive activities are 
introduced as proof that there has been a conspiracy. In fact proof 
is usually at its scantiest in respect to "the plot." Scraps of evidence 
of this fact usually have to be supplemented by data, memos, oral 
testimony revealing the design in operation. Often a thread of in- 
ference — an inference against which no alternative inference is plaus- 
ible — has to set the parts of the conspiracy in their places. As a result, 
elusive as it is, conspiracy is generally the easier way to a verdict of 
guilt. In antitrust it is the instrument of general reliance. 

The task" of showing a concert in activities to be sinister is ex- 
tremely difficult. When the law- undertook to probe into the mind of 
man and to read the motive hidden there it let itself in for a perilous 
venture. Long ago the task proved to be a little too much for its 
resources, and the law had to accept its compromise. In vexing sit- 

*A statute is, of course, as the legal usages which it calls into being make it. It is 
of note that in antitrust section 1 rather than section 2 of the Sherman Act has become 
the dominant sanction. For antitrust we have an articulate law of conspiracy ; as yet 
we have little in the way of a law of monopoly. 



(58 roXCEXTEATIOX OF ECONOMIC POWER 

nations it was held that the deed spoke for itself ; that the wrongdoer 
"intended the probable consequences of his act." Thus the thing 
sought became manifest in the very character of the deed, and a 
"constructive intent" would suffice. Although such notions are now 
•well established in many domains, the "constructive conspiracy" is 
virtually unknown in antitrust law. It is true that judges have"^ said 
that a conspiracy can be inferred from overt acts which could only 
have resulted from conscious design, but the concession here is little 
more than nominal.^ In practice the tolerance in an antitrust action 
is far smaller than if the Government seeks to bring to justice labor 
leaders, draft dodgers, or bootleggers. As yet the courts are not 
content with a showing of uniform rises in price or a demonstration 
that a division of territory in fact exists. 

The word "intent" is hardly indigenous to the matter in dispute. 
Men do not in an abstract way aim at a restraint of trade. Their 
object is to create and to exploit to their own advantage money- 
making opportunities. Nor does the pure state of mind, manifest 
in the legal concept, shape a course of conduct carried out through 
many acts, comprehending a host of detailed judgments extending 
over a period of years. The conduct of a business enterprise is a 
process ; a series of situations are touched off ; as the situation changes 
the motive of the actors is no higher and no lower than the pursuit 
of gain. At one time advantage lies in engaging in collusive under- 
taking; at anotherj in luring away an important customer from a 
competitor; at a third, by joining the group in a raid upon a trouble- 
some fellow; at a fourth, in granting a secret discount, profferring 
a free service, adding a unit not paid for, making the real lower 
than the quoted price. 

As decision follows decision, the course of events exhibits more 
or less of knowledge and ignorance, system and confusion, purpose 
and accident. The various characters in the drama of restraint are 
very differently involved as respects interest, act, participation, ulti- 
mate objective. To invoke intent is, as it were, to make all the par- 
ticipants a single person, to simplify a tangled medley of behavior 
into a single deliberate act, to endow all that has' come to pass with 
a unity of preconceived meaning. The stream of activities springs in 
part from a realization that the security of a stable price structure 
can be had only through cooperative action. But it derives in part, 
too, from the precarious situations in which businessmen find them- 
selves, from a response to a stimulus which — assuming a money-mak- 
ing economy — is not too inaccurately to be set down as tropismatic. 
To isolate from the complex of impulses playing upon a host of per- 
sons a particular motive, or to make one impulse to action dominant 
and the others recessive, is to indulge sheer fiction. Not even the 
individual actors, in the sanctity of a public-rights confessional, could 
^enumerate, appraise, reduce to a hierarchy the promptings to which 
they had responded. 

This taint of ceremonial gives to the defendants a singular advan- 



» It is possible to spell out from the opinions of the United States Supreme Court 
enougji to sliow lltat proof of intent is no longer necessary. See especially U. S. v. 
TrenTon Potteries Co. (ii73 U. S. 302 (1027)) ; Interstate Circuit. Inc. v. U. S. (306 
U. S. 20S (J039)) : /'. .S'. V. Snconn-Vdriium Oil Co. (310 l'. S. I'^O (1010)). Yet. for all 
the Supreme Court has said, it woulil be a ne;;li^'ent attorney who before the trial court 
would omit to prove — and to prove up to the hilt — "intent." 



CONCENTRATION OF ECONOMIC POWER (^9 

tage. In every criminal action the prosecution must establish the 
intent to commit a crime. This makes it very difficult to secure the 
conviction of individuals. To the ordinary jury a corporation is 
not sacrosanct ; it is an impersonal and affluent sort of thing ; in the 
run-of-mine case the jury takes pleasure in making the creature dis- 
gorge to the benefit of the personal litigant. Bigness itself tends to 
connote evil; a jury is not indisposed to see chicanery in the activities 
of the large corporation. But suspicion needs to be underlined and 
fortified if persons of consequence in their communities are to be sent 
to jail or fined. It is hard to connect important officials, who carry on 
far back of the operating front, with overt deeds. Minor employees 
can more easily be connected with acts of legal wrong, but there- 
is general sympathy with tlieir plight. Here the juryman deftly puts; 
himself in the other fellow's place ; the salary of the poor wretch' is 
small, he has no voice in policy, his job may be in jeopardy. 

In the equity suit, sentiment and sympathy do not obtrude so 
baldly. Here the dominant task is not to assess personal guilt but to 
contrive a way of undoing an evil. None the less proof of wrong is. 
the necessary antecedent of relief. Only rarely will the facts tell their 
own story without some strands of inference to hold them together. 
Inference invites counter inference ; and the defense can usually con- 
trive a theory of its own to account for all that has happened. So, to 
bolster the case, to fasten the picture of restraint upon the facts, to 
rebut the couriter explanation, the Government is constrained to argue 
intent. It is compelled to look beneath the acts themselves to the 
stream of personal judgments of which they are no more than out- 
ward expression. In the case against the Sugm^ Institute " the de- 
fendants were permitted to testify that they had submitted their plan 
of operation to the Division before its final adoption. The plea was 
received by the court, not as an estoppel to the action, but as an item of 
evidence tending to establish the good faith and the rightful intent of 
the defendants. 

If the judge tends to indulge business conduct with the latitude 
of ''the rule 5f reason," intent becomes a counter of consequence. If, 
as in the Maple Flooring case,'' the object of common endeavor was 
only to provide, in the form of simple regimented statistics; the in- 
formation about the industry which every member needed for the 
intelligent conduct of his business, the concert of action was of little 
legal significance. If, as in Appalachian Coals,^ the concerns in a lim- 
ited territory did no more than take common action against the dis- 
order of an industry, the court would at least suspend judgment and 
wait for the antisocial result. Here the departure from competition 
was justified by its unruly character. The thought of the barons of 
bituminous had been, not an attack upon the public, but a defense of 
themselves against the shock of industrial anarchy. In the Madison 
Oil case, the district judge cited Trenton Potteries for the rule that 
the power to fix prices, irrespective of purpose or incident, was 
enough.^ The Court of Appeals cited Appalachian Coals^ held that a 

• U. 8. V. Sugar Institute, Inc (297 TJ. S. 553 (1936) >. 

"'Maple Flooring Manufacturing Assn. v. 17. 8. (268 U. S. 563 (1925)). 

» Appalachian Coals, Inc. v. U. 8. (288 U. S. 344 (1933) ). 

•U. 8. V. Socony-Vacuum Oil Co. (23 E. Supp. 937 (1938)). 



70 CONCENTRATION OF ECONOMIC POWER 

"rule of reason" should have been applied, and reversed.^" In turn, 
it was reversed on the identical point by the United States Supreme 
Court.^^ If intent is formally abandoned, it refuses to stay out of the 
case. It has a way of sneaking back as a correlative of other issues. 

THE judge's lot I$ NOT A HAPPT ONE 

The judge throughout is an actor of paramount importance. In 
the criminal action his attitude is an important factor in the verdict 
of the jury. By admitting or excluding evidence he shapes the pat- 
tern of activities upon which they are called to pass judgment. By 
relaxing the rules, he permits animadversions by counsel upon the 
sterling qualities of the men indicted. By indulgence to one-side and 
sternness to the other, he creates in his court an atmosphere within 
which the jury must determine guilt or innocence. He may in 
respect to some — or even all — of the defendants decide that there is 
not enough evidence to warrant submission of the case to the jury. 
In fact his whole manner during the trial is^a force which plays 
intangibly and persistently upon the 12 men who sit in the box. 
If he "is alert or looks bored; if he parades pleasantries or indulges 
tantrums; if he hews to the line or preaches sermons, the reiterate 
beat has its tilling effect in the verdict. 

At equity, where there is no jury to share discretion, the facets of 
his personality have even freer rein. The action, in fact, occurs 
largely in the universe of the judge's mind. No informed person 
dpubts that the sources of personal preference lie deep and that the 
techniques of the law are henchmen in the service of the jurist's 
scheme of values. In matters of public control the dominant urges 
which make for decision come from without the formal law. The 
minds of many — in fact of most — Federal judges reflect the attitudes 
and traditions of the upper middle class from which they spring. 
Some of them have their own mibstantial blocks of securities; many 
belong to clubs where only respectable opinions are voiced; all read 
newspapers whose slant does not escape the "'igilance of their adver- 
tisers. Until "New Deal judges" came in numbers to the bench, the 
presumption ran strongly against any interference by Government 
with the affairs of business ; tlie placing of the burden of proof upon 
regulation wais a widespread article of judicial faith. 

The discipline of the law likewise imposes its overtones of con- 
servatism. The law is hoary with precedent and in its eyes the 
established is largely the rightful. Its practice, too, has made hard 
tlie way of the Government. The able lawyer, in quest of retainers 
and distinction, has found the best market for his services with large 
corporations. It is a mark of the profession that some of its ablest 
members have learned to serve affluent clients for whom they have 
little respect with arguments which to themselves are unconvincing. 
But such an attainment sets a standard of objectivity to which every 
lawyer cannot aspire. It is far more common for tiie heart and the 

w 105 F. (2d) 809 (1939). It is easy enough to reconcile the opinion of the Court in 
Trenton Potteries with that in Anvi'^'iehinn Coats. Any person can concur with the Court 
in both 'rulings without putting strain upon his urge toward consistency. Yet of late, in 
antitrust actions, the two holdings have been polarized. The attorneys for the defense 
habitually try to iinarlogize tlieir case to Appalachian Coals. The attorneys for the prosecu- 
tion mnlte a likeness to Trenton Potteries their trump card. 

"310 U. S. 150 (1940). 



CONCENTRATION OF ECONOMIC-POWEK 71 

cause to travel hand in hand. Yet out of lawyers who have served 
the vested interests most judges are made. 

An action in antitrust involves not only judicial attitude but also 
judicial competence. A major suit occurs in a given district so rarely 
that the ordinary judge is lucky to get one in a lifetime. Yet when 
it comes it falls upon him like a bolt out of the blue. He is unpre- 
pared for its procedural maze, its pattern of disputed industrial prac- 
tice, its unregimented array of issues. Now there appear before him 
for judgment defendants, who are among the leaders of American 
business, whose names are household words, whose salaries run into 
staggering figures. The distinguished members of the American bar 
come into his court, great in repute, learned in the law. They are 
intent upon the game, alert to every move, ready with every trick, far 
more resourceful than the old-fashioned Philadelphia lawyer. The 
judge must be as knowing as they; if possible he must win their re- 
spect and acclaim; above all, amid the. treacherous moves of litiga- 
tion, he nmst save his face. Representatives of the large newspapers 
are present ; for perhaps the first time in his life his honor discovers 
that he is news. The trial is staged in a city of the second magni- 
tude, or perhaps in a small town. Two opposing legal commands, 
with all their retinue, descend and for an interval the place enjoys a 
prosperity unknown to its history. Hotel accommodations are 
grossly inadequate ; the townspeople move out of their homes and rent 
them at exorbitant prices. Old buildings, unoccupied for years, yield 
up their decay for offices. In an action which would test to the limit 
the ablest jurist, in the presence of eminent attorneys before whom he 
dare not display a misstep, in a judicial capital overrun with an un- 
accustomed hurly-burly, the judge must maintain his learning and his 
nimbleness, his temper and his poise! 

In the trial itself his footing falls upon unfamiliar terrain. If 
the case involves a major industry, the arrangements under which it 
operates are singularly complex. At the begimiing the judge is a 
novice; within a few weeks he must make his way through a culture 
of trade practices which the business executives have unconsciously 
mastered' as one masters the English language. He must confront as 
witnesses specialists who have spent years in a single branch of the 
rrade and have the intricacies of its operation at their finger tips. 
He is beaten upon by the smooth advocacy and obstreperous tactics 
of skilled attorneys who seek to impress opposing pictures upon the 
none too certain facts. He is expected to have a critical mastery of 
corporate finance, marketing practice, industrial stnicture; to have a 
sound grasp of physics^ chemistry, electrodynamics, in fact the funda- 
mentals of all the mechanical arts. He must be at once an experienced 
analyst and a man critically skilled in the intricacies of cost account- 
ing. 

He must have the capacity quickly to grasp the detail of industrial 
arrangements stretchilig away from the factory to the consumer. He 
rnust be able to sense the place of small units within the trade, to 
discover the real relation between large companies and independents, 
to appraise the industry-in-action in terms of the legal norms of 
conipetition. In a word, he must be alike omnicompetent in law and 
in industry — an expert in the multiplex of affairs and disciplines 
which converge upon the case. All of these capacities must be kept 



72 CONCENTRATION OF ECONOMIC POWER 

in play as day-by-day the trial moves to its issue. And ^vith eyes 
alert to all that belongs within, and with resolution steeled against 
all that should be put without, the judge must proclaim the stream 
of decisions out of which the record of the case emerges. He must, 
as items come along, rule on their admission, even when relevancy can 
be discovered only as the story is fully revealed. 

It is all a little too much to ask of a judge who cannot escape his 
own humanity. Yet upon his poise and sanity obtrude the knowledge 
that he himself, as well as the cause in action, is upon trial. He 
conducts the case as best he may through all the hazards of litigation 
to a definite result. Then error will be alleged by the losing side 
and appeal taken to the circuit court, and, if it chooses to hear the 
case, to the United States Supreme Court. In the face of his own 
ordeal, his tendency is to retire somewhat from the domain of indus- 
trial reality and to fortify his judicial performance with a meticulous 
observance of the technicalities. With both sides adept at the ancient 
art of splitting legal hairs, the protections of proper process become 
barriers to understanding. Even the judge himself becomes an ob- 
stacle to bringing into sharp relief the pattern of the industry and 
its points of restraint. 

The lines of the picture come tortuously into place. A distorted 
perspective emerges in a logical fashion all its own. Where the case 
is entirely in, the industry may be all trees and no forest. The hub- 
bub of battle is not yet stilled; contradiction runs through the testi- 
mony, huge gaps appear in the structure, material facts are left 
stranded as irrelevant, the significance of the result is not beyond per-, 
adventure. Yet all parties have a stake in an articulate statement and 
a constructive settlement. In essence the matter is not a controversy 
between persons at all. The real issue, which must upon the side- 
lines abide the result of a combat at law, is the pattern of arrange- 
ments upon which an industry should be conducted. 

THE APPIL\L TO OLYMPUS 

A trial court is a court on trial. The judge, as umpire, presides 
over a combat at law, applies tlie rules, drives issues to their conclu- 
sion. At the end he sets down a decision ; and an appeal lies to the 
tribunal above to correct error, to order a new trial, even to reveise 
judgment. The trial court sets down a tentative hypothesis, the 
final appeal court records an ultimate judgment. For, as a creature of 
flesh and blood, the trial judge is presumed to be prone to error while 
the appeal judge — if he is a member of the United States Supreme 
Court and votes with the majority — is beset with no such frailty. 

A sharp contrast marks the tasks of the trial and appeal courts. 
The case in controversy remains in the tribunal below; it is the con- 
duct of the judge which is passed in review above. The proceeding 
below has been an interminabje affair; the review above moves Avith 
bi:evity and dispatch. The rulings of the presiding judge have been 
legion; a very few can be challenged above. The appeal is upon er- 
ror, error concerns "points of law." So thb focus above is upon 
issues in tlieir more abstract statement. An understanding of a rul- 
ing demands its factual setting; so shreds and patches of the indus- 
trial situation are carried along for scrutiny from on high. The testi- 



CONCENTRATION OF ECONOMIC POWER 73 

mony in its entirety, some scores of thousands of pages of it, are 
in reserve to be consulted as will and an insistent docket allow. But, 
in the usual appeal, samples must do duty for the whole; and the 
liumanity, concretion, circumstance of bitter and prolonged combat 
tend to fade toward a fragile cluster of dialectical differences. 

The reality of ordeal by law is replaced by a show of make-believe. 
The parties make no corporeal appearance ; attorneys vicariously de- 
fend their legal rights. The parade of witnesses with, stammering 
tongues, tell-tale face, contradictory statements appear only as a 
transcript of testimony in an interminable and lifeless record. Look, 
accent, gesture are no longer there to help the reviewing bench dis- 
tinguish truth from falsehood. The fabi'ic of the industry, painfully 
discovered through tortuous inquiry, survives only in such fragments 
as stand out from the vantage point of error. The atmosphere of 
the trial, the perspective which protracted consideration yields, the 
saturation essential to valid hunches have all receded. Their ghosts 
emerge as items in oral argument, passages in a brief, entries buried 
in the volumes of transcript. The record can be sampled, but rarely 
studied; its sheer bulk and the press of unfinished business forbid. 
The months that have gone into the trial are condensed into a single 
session and casual reading.12 Xhe jurists who must correct error — 
and are presumed not to err themselves — live in a rarified atmos- 
phere where they never see a litigant, observe a witness, or smell tlie 
sweat and blood of battle. In their forum quarreling persons are 
the abstract "appellant" and "appellee"; industrial problems, legal 
contentions; actuality, verbal currency. 

The appeal court is the custodian of the law. Through its opinions, 
which are alike corrections of error and admonitions to lesser judges, 
it is presumed to make judgments take the right path. Yet one could 
hardly expect even the United States Supreme Court to convert so 
brief and general an act into a certain, articulate, and comprehensive 
corpus adequate to the control of industry. The very conditions 
under which it must hammer out rules of tolerance forbid. The cases 
stretch across almost five decades ; they began when a trust was new and 
strange and terrible ; they extend into the period when the giant cor- 
poration is taken for granted, when bigness can be distinguished 
from iniquity and quantity production mean's efficiency. Not even 
a court which moves in the upper stratosphere is insulated against the 
pervading atmosphere of belief. Ovefi* half a century other branches 
of the law, more secure in foundation and far more specific in lan- 
guage, have yielded before the impact of an emerging industrial 
cultui-e. What then could be expected of the antitrust law? 

Only a few industries out of the whole national economy have been 
hailed into court. Out of a bewildering fabric of trade practices the 
merest sample has been subjected to judicial scrutiny. The larger 
domain of business conduct is still unblessed — or uncursed — with the 
imprimatur of the courts. At any moment the jurists who sit as a 
bench are not of one mind. As judge ^ives way to judge, an idiom 
of mind, of preference, of language gives way to its successor. A 
single jurist may take a stand and maintain a somewhat consistent 

i*In the Madison Oil case there is abundant evidence that Mr. Justice Douglas not only 
read but carefully studied the whole record. But the realistic quality of his opinion by 
comparison underscores the ordinary performaace. 

25&5t3-.l— 40— No. IG 6 



74 CONCENTRATION OF ECONOMIC POWER 

position ; the Court must go as to the will of its changing members take 
it. Public policy in respect to business is a subject upon which men 
differ, opinion changes, feeling runs too deep for formulas. It follows 
that the United States Supreme' Court has said — it could not possibly 
escape saying — very contradictory things about antitrust." 

A review of legal error made in the trial court would appear to be 
somewhat beside the point. Between the cryptic words of the general 
law and the evasive actualities of industry a gulf yawns which the 
process of litigation seems unable to bridge. A vague feeling that the 
matter demands standards more earthly than those of the statute has 
found expression in a search for a "rule of reason." It has been 
invoked, denounced, accepted, and rejected in a dialectical war which 
runs through volumes of the reports. Its meaning has never been 
drawn out of the clouds into articulate statement.^* The Sherman 
Act came out of the common law and the rule may be no more than 
a belated attempt to have its "reasonable man" come along. It may 
be an assertion that norms of conduct must be flexible in their reach 
and sensible in their application. It may be a device for separating 
good trusts from bad. It may be technique by which the will of Con- 
gress is accommodated to the circumstances of milike industries. It 
may be an invitation to the creation of a code industrial. Yet it does 
little to define, clarify, qualify the competition to which the Sherman 
Act is by inference committed. In spite of all the opinion it has 
called forth, it remains an evasive idiom whose words remain to be 
filled with specific values. 

The plain truth is that the "rule c'f reason" is symptom rather than 
device. It records the discomfort which the appeal court feels in 
having to concern itself with a task which fits neatly neither its dis- 
tinctive competence nor its conditions of work. The retreat from the 
rule, manifest in recent holdings, is prompted by an awareness that 
an antitrust suit demands a realistic attack that a body appointed to 
correct legal error cannot give. It is a self-denying ordinance by which 
the Supreme Court attempts to lodge discretion hard by the facts. 

" It is no part of this account to draw Into place the opinions of the Court in respect to 
the Sherman Act. Its lines of decision have again and again been subjected to critical 
scrutiny in the law reviews. 

" For the changing fortunes of the "rule of reason" note in succession, TJ. 8. v. Trans- 
Missouri Freight Assn. (166 U. S. 290 (1897)) ; U. S. v. Joint Trafpo Assn. (171 U. S. 505 
(1898) ) ; Northern Securities Co. v. U. 8. (193 U. S. 197 (1904) ) ; Standard Oil Co. of N. J. 
V. U. 8. (221 U. S. 1 (1911)) ; U. 8. v. Trenton Potteries Co. (273 U. S. 392 (1927) ) ; Inter- 
state Circuit, Inc., v. U. 8. (306 U. S. 208 (1939) ) ; U. 8. v. Socony -Vacuum Oil Co. (310 U. S. 
150 (1940)). 



6. THE EFFICACY OF SANCTIONS 

EQUITY AS INDUSTRIAL ARBITER 

The suit in equity is designed as a constructive device. Under its 
machinery attempts to constrict the channels of trade or to freeze the 
structure of industries can be enjoined. Agreements in restraint of 
trade can be declared null and void. Or, if more extreme measures 
are deemed necessary, combinations may be broken up and dissolved. 

The remedy of dissolution has limited application ; its occasional use 
has rarely been successful. It can be invoked only where the almost 
complete concentration of the business has made absence of competi- 
tion conspicuous. A major difficulty is that in most industries a trickle 
of rivalry is preserved to becloud the issue for the courts. And the 
blatant monopoly is often safeguarded by rights of patent which can 
be pleaded in extenuation. Not one line in the Sherman Act pro- 
claims the exact norm to which competitive practice must conform or 
lists the requisites which make up proof of violation. The confused 
industrial picture and the lack of definite criteria make the courts 
hesitant ; they are loath to sanction extreme remedies, and ret -eat 
into requirements of proof which spell ultimate defeat for the 
Government.^ 

The usual plea in equity is for an injunction. Yet even here, where 
the aim is merely to prevent a future recurrence of illegal activities, 
the process has its hazards. The absence of subpena power means that 
the Government must — ^unless it has held unusual cooperation or used 
the grand jury — go into court half prepared. It knows in little 
more than general terms the wrongs at which it will thrust; a large 
part of the facts out of which it must construct its edifice of proof are 
still missing ; it is still vague about the remedies which are required. 
Unless the judge who sits is willing to entertain questions and to speed 
the investigation by the exercise of his powers to compel answers, the 
suit may break down even before it is under way. 

Even, if it should issue, an injunte*tion cannot operate as a real 
deterrent. Under the administration of antitrust, a single action must 
do police duty for many. An injunction, however, does little to punish, 
to warn, to deter the wrongdoer himself. It leaves the past as it is; 
all gains that have accrued through activities now pronounced illegal 
are left undisturbed ; the defendants pass through the confessional and 
are told to go and sin no more. The result is to bless with legality that 
which was done without the law ; and the incidence of wrongdoing is 
borne by the victims of the conspiracy. As for the future the defend- 

lAll through antitrust gropes a leading question. It is whether the Sherman Act is a 
legal reference or an instrument of policy — whether it supplies a strict norm to which, 
business conduct must conform or is a sanction to be invoked in directing industry to the 
gt'neral good. If a norm, "what are its obvious contours? What the criteria by which 

departures from its standards are to be detected? If an instrument, what are the ends it 
serves? When are its sanctions to be invoked? And who is to be the judge? This has 
been, is, and will continue to be the dilemma of the courts. 

75 



yg CONCENTRATION OF ECONOAIIC POWEB 

ants are still free to seek the same objectives — so long as the means 
employed are clearly to be distinguished from those which the court 
forbids. Only the parties are bound who were named in the suit. As 
for others, w4iose activities may be similar to, or even identical with, 
those condemned, there is little more than an admonition by hearsay. 
They are free to pursue a like course until their activities are called 
before a court and are enjoined. Thus the injunction is not a general 
prohibition of the type of conduct which in the instance has been out- 
lawed. Beyond its concrete terms it presents no real hazard to 
unlawful conduct. 

Nor can a series of injunctions furnish detailed guidance to busi- 
nessmen. In antitrust there can be no simple formula of "one trade 
practice, one suit, one clean-cut rule of law." It is impossible to 
discover a single usage of industry which in the abstract appears to 
be a violation of the Sherman Act. The legal test is its actual 
operation. But in practice its identity becomes merged in the com- 
plement of usages which impinge. It takes a number of interrelated 
practices to constitute a restraint of trade. The court may clearly 
condemn the entity ; it is outside of its office — and i^robably beyond 
its competence in imputation — to pronounce separately upon the ele- 
ments out of which the fabric is compounded. As a result, the "case 
by case" attack is a necessary — if vexatious— route to an industrial 
code. A book of freight rates, a formula for ascertaining cost, a 
system for classifying customers may be a. sheer convenience to the 
i^rms — or an instrument toward their accord with respect to produc- 
tion and quotation. The bid depositary, the filing of "past prices," the 
exchange of industrial information, the stereotyped contract between 
manufacturer and dealer — all such devices have dual possibilities. 
A trade practice in its industrial setting may be adjudged a breach 
of the law. But it is not easy to discover a second industry whose 
modus operandi is so closely in accord that the judgment clearly 
applies. 

The injunction has little function in inducing general compliance 
with the law. A victory for the Government has its effect, not as a 
command to be obeyed, but as an incitement to "the fear of God." 
Its impact is emotional rather than legislative; its urge is toward 
inducing businessmen to scrutinize their operations and to abandon 
practices exposed to legal attack. But where restraint means en- 
hanced profits or greater industrial security, a mere sei-mon from 
the bench is not enough. The very procedure of chancery covers 
with immunity all that happens before it puts in its decree. Even 
after a suit has been staited, the dilatory tactics of defense counsel 
and the long time consumed in trial may defer for years the ultimate 
ban upon the questionable practices. 

Despite its innocuous character, the courts have not looked upon 
the equity process with great favor. Over a period of 50 years, 272 
equity cases have been instituted and 93 have come to trial. Of these 
64 have been 'won and 29 lost by the GoA^ernment. In 32 instances 
the defendants have looked to the courts above to correct error, and 
Justice has taken 18 appeals. . 'The prosecution has fared rather the 
better in the review of the findings. As the appellee, decisions in 
its favor have been affirmed in 21 cases, affirmed in part in 2, reversed 



CONCENTRATION OF ECONOMIC POWER 77 

in 7, and dismissed as moot in 2. As the appellant, it has secured 
reversals in 12 cases,^ failed in 5, and had 1 case dismissed as moot. 
A mere count cannot, of course, allow for the relative importance of 
the suits involved. A glorious triumph over a petty lot of cleaners 
and dyers ^ is small compensation for defeat in an attempt to bring 
coal barons * and processors of maple flooring ^ to account. Nor 
can a tally in the column marked "won" tell how much or what sort 
of a victory has been achieved until the detail of the decision is 
laid bare. In sustaining some of the contentions of Antitrust, the 
trial court may so emasculate others as to turn technical success into 
actual failure. Or, in affirming a judgment, the appeal court may 
so severely circumscribe its language as to strip from the decree its 
general warning. At bit of dicta, inadvertently let in or consciously 
planted, may open to collusive action a far wider territory than is 
closed by the decision. 

Moreover, a legal victory is one thing ; its practical realization in 
the reform of the industry something else. The court lays down the 
laAv; but it possesses no facilities for seeing that the terms of its 
decree aP3 carried out. It has plenary power to punish for con- 
tempt, but it lacks means for discovering that its orders are not 
obeyed. If the victory in court is to make a difference in the conduct 
of the industry, the decree must be policed. Thus the problem is 
thrown back upon the .enforcement agency which, save for the oppor- 
tunity to invoke contempt, is exactly where it was before the trial 
began. Actually, the Division, as at pre&»3nt financed and staffed, is 
quite unable to undertake a task of such magnitude in the oversight 
of industrial activity. As matters currently go, the decree of the 
court — whether for or against the Government — is looked upon as 
ending the case. The defendants, as law-abiding citizens, are pre- 
sumed to amend their practices and give no further cause for com- 
plaint. The Division moves its personnel to another trouble spot 
along the industrial front. 

The task of police really falls to the industry itself. Without a 
court to guide and Justice to supervise, the wrongdoer is left to 
amend his own ways. It is the unusual industrialist who, faced by 
the same problems and animated by the same profit motive, does not 
soon forget the court decree. He may live up to the letter of the 
court's order, yet indulge behavior calculated to produce the same 
restraints. Thus persons who found the former practices distast'oful 
are likely to renew their protest. In fact, a victory of the Gov- 
ernment in the courts may accelerate the number of complaints in 
the industry. Yet the Division is unwilling to draw upon its meager 
funds and limited staff to explore again issues just threshed out.^. 



2 This fact raises the interesting question of what might happen if the Government werfe 
permitted to appeal adverse decisions in criminal cases in the trial court. At present, ,of 
course, a defeat automatically ends the case — on the ground that a person cannot I.e put in 
jeopardy of life and limb twice for the same offense. 

3 Atlantic Cleaners rf Dyers, Inc., v. U. 8. (2S6 U. S. 427 (1932) ). 
* Appalachian Coals, Inc., v. U. S. (288 U. S. 344 (1933)). 

8 Maple Flooring Manufacturers' Assn. v. U. S. (268 U. S. .563 (1925) ). 

' In only two instances has contempt been invoked to give effect to an equity decree of 
the court. The first was a labor case in 1894, when Eugene Debs and three others were 
sentenced to imprisonment for disobeying a labor injunction grounded upon the Sherman 
Act. The second involved the famous New York poultry racket case started in 1930. The 
contempt proceeding followed close upon the heels of an injunction granted by the district 
court in 1932 ; Weiner and four others were given jail sentences in 1934. 



78 OONCENTKATION OF ECONOMIC POWER 

So the issue is back where it started, in the complaint stage, with 
little likelihood of there being; any immediate action. The C3^cle has 
run its course. 

What effect the sixty-odd equity decrees now in force have had it is 
impossible to say. The law presumes innocence even after a party 
has been formally accused. It must, therefore, be presumed, for 
want of evidence to the contrary, that the companies named have 
lived up to th-e decrees. But to assume that they have foresworn the 
objectives toward which the forbidden practices moved would be 
either to disparage their zeal in the pursuit of gain or to reflect upon 
the competence of their legal counsel. Many paths have been open — 
to chance it as if there were no decree, to respect its letter and avoid 
its command, to change corporate identity by a juggling of holdings. 
Nor is it certain that the .decrees were adequate to eliminate restric- 
tive practices from the industry. 

At its best the terms of the decree can hardly be broad enough to 
reach the industrial malady. It is limited to the persons who have 
been before the court; yet the matters in question usually compre- 
hend ,the acts of many other parties. It is in nature a new in- 
dustrial charter; yet th-e practices which are enjoined may be no 
more than evidences of a disorder whose roots lie elsewhere. Unless 
the remedy reaches the source of the difficulty, any significant change 
IS out of the question. Nor can a static decree maintain its vitality 
for long in a rapidly changing industry. Many, now decades old, are 
utterly unsuited to current industrial practices. 

CRIMINAL SUIT AS ECONOMIC CONTEOL 

In antitrust the criminal action departs far from its norm. The 
men in the dock are not denizens of the underworld, but gentlemen 
of substance and standing. In financial circles the word of the 
accused is as good as his bond ; in the ordinary affairs of life his in- 
tegrity is beyond question. The defendants are members- of the best 
clubs, pillars of Christian churches, leaders in civic enterprises. They 
are represented, not by shysters, but by leaders of the American 
bar. Their lawyers put on a decorum fitting to the occasion; the 
jury are conscious that rulers of the national economy are before 
them ; even th'e judge recognizes that he confronts men who have at- 
tained eminence in a respectable line of endeavor. . That such per- 
sons have to stand trial for crime becomes a towering fact. It creates 
an atmosphere which pervades the court room and shapes the legal 
procedure. 

The incidence of such intangibles has made futile the provision for 
imprisonment. In 5 decades the number of criminal actions has run 
to 252, yet in only 24 did the trial court impose penal sentences.'^ 
But even so poor a showing on paper exaggerates the 'reality. Eleven 
of tlie cases involved trade unions ; 96 out of 102 defendants involved 
served sentences which ran from a few months to 2 years. Two of 
the suits, strictly speaking, are not antitrust cases, but concern the 
activities of alleged German spies during the World War. The 
Sherman Act served, for want of a better, as the instrument for 



'' In addition, in the 2 cases mentioned above — U. S. v. Dehs and V. 8. v. Weiner- 
npiisonment wuk imposed for contempt. See Appendix 
Under Federal Antitrust Laws, July 1890-July 1940, p. 11 



impi is<^nment wuk imposed for contempt. See Appendix A, Convictions of Imprisonment 



CONCENTRATION OF ECONOMIC POWER 79 

incarcerating 8 suspects in jail. Only the 11 cases which remain are 
really in point; they alone involve violations of the Sherman Act 
by business men. In 10, actual racketeering practices — threats, in- 
timidation, holdups, personal violence — entered as a significant ele- 
ment in insuring conviction. Thus out of the whole number, a single 
suit proclaims that along with the racketeer and the trade union 
official, the respectable man of business goes to jail for restraint of 
trade. In Trenton Potteries, sentences were pronounced upon 8 
individuals, but were suspended by the trial court and- the terms 
were never served. 

If a racket is set within a pattern of business restraint, conviction 
is difficult. In cases involving Ainerican Naval Stores and the Na- 
tional Cash Register Co., the trial court found for the Government, 
but the judgments were reversed upon appeal. In 5 other cases, 
some or all of the defendants won reversals or contrived to receive 
suspended sentences. In fact, racketeering must be quite uncon- 
taminated with ordinary industrial usage to make imprisonment 
imminent. During the life of the Sherman Act, less than 110 indi- 
viduals altogether — an average of 2 a year — have served prison 
sentences. And,, without a single exception, all have been trade- 
union officials or racketeers. 

It is obvious that as a sanction the prison sentence has virtually 
been a dead letter. The enforcement agency must fall back upon 
the penalty of fines to secure compliance with the law. Yet an ex- 
amination of instances indicates that the pecuniary deterrent has 
been sparingly used. Between 1890 and 1940, the criminal action 
has resulted in fines in 97 cases. The total sum assessed — ranging, 
in the instant case from $50 to $370,000— aggregates $3,509,331.« 
Of this amount $47,950 must be deducted for reversals and suspen- 
sions, making the figure $3,461,381. That' is, over the half-century, 
fines have been asssessed at the rate of $70,000 a vear. 

The average fine imposed upon the individual is small. The 97 
cases in which fines were imposed involve some 1,500 individuals and 
corporations. As an average, this runs to. about $2,000 per defend- 
ant. Such a calculation, of course, takes no account of the far 
larger group of persons — natural and corporate — who were originally 
indicted and for one reason or another dropped out of the case. It 
is not known what part of the^ sums assessed were ever paid. Curi- 
ously enough, the smallest amount assessed has been in cases which 
actually went to trial. In 34 instances pleas of nolo contendere led 
to fines of $1,233,502; in 39, pleas of guilt, $1,184,415. In 34 cases 
submitted to trial, the fines amounted to $1,091,414, but reversals and 
suspensions bring the total down to $1,043,464.'* 

It may be just as well that the fine alone punishes violation of the 
Sherman Act. A restraint of trade is a far more nebulous thing 
than a crime like arson or murder. Its incentive is more definitely 
set in circumstance; it is more sharply a response to a situation; 
its continuous character dwarfs individual responsibility. The de- 
vices by which it is sustained are so numerous, varied, innocent in 

8 In addition there were fines, aggregating $11,500, imposed In 3 cases involving contempt 
proceedings in consent decrees. See Appendix B, Fines Imposed Under Federal Antitrust 
Law, July 1890-July 1940, p. . 

» See Appendix C, Analyses of Fines Imposed Under Federal Antitrust Law, July 1890- 
July 1940, p. — . 



gQ CONCENTRATION OF ECONOMIC POWER 

themselves, that inference is necessary to discover that the statute 
outlaws them. In many instances the restrictions are so inseparable 
from the practices by which the industry is carried on that only 
tlirough an intricate process of reasoning can they be isolated. In 
simplest terms the question often is whether the zeal displayed in 
the pursuit of gain — a cardinal virtue in a system of private business 
enterprise — has been carried too far. Or, in an idiom habitually 
employed by the judiciary, it is whether the lure of profit has crossed 
the line marked out by a rule of reason. No great landmarks fix the 
boundary between the commendable and the intolerable ; and as in case 
after case the courts renew their survey, the line refuses to stay put. 
In a society in which business shapes the destinies of the people, 
the norms of what may be reasonably expected of industry refuse 
to become static. So long as policy sets down its sanctions in vague 
terms, it seems unfair to treat as a crime to be punished by imprison- 
ment lapses from lawful standards of business conduct. 

But, if a fine is to deter, it must be large enough for its task. 
In an era of big business a maximum penalty of $5,000 is utterly 
inadequate to secure compliance. The figure is a conventional one 
set down in 1890, when it connoted a far larger sum than today. 
Moreover, it was not meant to stand alone; the fine and the prison 
sentence were to be used alternately or in conjunction as the occa- 
sion might suggest. The recession of the threat of jail into the 
mists has weakened the criminal sanction. To a corporation of even 
modest size, the hazard of a loss of a few thousand dollars has little 
persuasive effect. Even petty decisions of corporate policy are 
pivoted upon far wider margins.^" 

It is, in fact, the criminal indictment, rather than its event in 
pecuniary penalty or prison sentence, which looms largest in the 
minds of executives. No respectable citizen wishes to have his name 
attainted by a formal charge of crime. None relishes the discom- 
fort, the routine, the anxiety of the process of arraignment; none 
wishes to be fingerprinted in the manner accorded the ordinary 
criminal.^^ Thus the stigma of the indictment tends to be the real 
punislunent. The actual penalty comes at the beginning, rather than 
the end, of the trial. The effect is to punish by presumption and not 
by proof. The accused is branded with the hypothesis of guilt, 
which in the office, at the club, on the golf links he must rebut as best 
lie can. The judgment emerges from the verdict of the grand jury; 
it derives from an ex parte process in which he is not heard in his 
own behalf. Thus the reality of the criminal action has strayed far 
from its legal profession — and conviction comes as something of an 
anticlimax. 

How long so informal a sanction can retain its power is uncertain. 
It rests upon the attitude toward a criminal indictment prevalent 

I" The sums expended In defending a suit are vastly in excess of the legal penalties that 
may be imposed. In the Madixon Oil case the court, after trial of the defendants, 
assessed $65,000 in fines. Estimates of the lesal expense of the defendants vary from 
82,000,000 to $2,500,000. No doubt cost of litigation is a factor in a decision to enter 
a plea of guilty or of nolo contendere. It is unlikely, liowever, that the hypothetical cost 
of the hypothetical defense of a hypothetical suit can be a serious deterrent to violation, 
of the antitrust law. The lightning strilves too fitfully to make tlie risk one to be taken 
into account. 

"The usages of the criminal action are already beginning to be relaxed in respect to 
businessmen. As defendants they are no longer required to be present during the whole 
course of the interminable trial. In instances tliey have been excused from being 
arraigned and fingerprinted. The drift Is definitely toward the use of "kid gloves." 



CONCENTRATION OF ECONOMIC POWER gl 

within the business community. It may well be that its efficacy 
derives from the rarity with which it is employed. If frequent use 
makes it commonplace, its moral edge may be blunted. A business-, 
man can hardly feel its sting very keenly if all his fellows have 
been tainted with the same turpitude. As the congregation of the 
guilty is enlarged, the look askance may give way to the jocular 
remark. An executive may even be acclaimed by his more fortunate 
fellows as "slipping" because Justice has not considered his particular 
scheme of enough consequence to indict him. If such an attitude 
should become general, the threat of the indictment would lose its 
magic. It is a fragile — and possibly an ephemeral — sanction upon 
wliich to rest compliance with the antitrust law. 

Yet, as the matter stands today, the criminal action is the law's 
most effective sanction. It insures resort to the grand jury, access to 
the power of subpena, an opportunity for Justice to build its case. 
Take the sanction away and the Government would be hard put to 
it in gathering evidence with which to go into court. For the moment 
at least those who would violate the antitrust act shuddeb- at the 
threat of an indictment; and, while this attitude endures, there is 
something of a deterrent. So long as in resources and stalf Antitrust 
is unable to police all American industry, its task must remain largely 
preventive. And prevention moves by example; it dangles before the 
many the fate of the few. The situation is beset with irony ; the pen- 
alties which Congress decreed as warnings no longer. deter; the fear 
of God, so far as it is effective, comes from a sentiment which 
businessmen themselves have built up in respect to the criminal law. 

SUIT AGAINST THE AVARE 

The libel action has been used only 3 times. In all 3 the issue 
was settled out of court before the cases went to trial. In 1907, 
its first invocation, 175 cases of cigarettes- were seized, later" to be 
released und-er bond to the British American Tobacco Co.^^ In 1913, 
on motion of the United States, the libel was dismissed. The 2 later 
actions were likewise directed at foreign corporations ; the one, in 1928, 
involved imports of quinine; the other, in 1930, of Norwegian sar- 
dines. ^^ Alike they were legal accompaniments to more direct suits 
against the offending companies; alike they were dropped when 
consent d-ecrees were entered in tlie civil cases." The difficulty of 
reaching tlie defendants had dictated the use of the suit in rem 
against the alien corporation. 

It has often been .suggested that the libel should be widely em- 
ployed in antitrust. The real concern of the enforcement agency, 
it is argued, is the c<jrrection of trade practices, and the confiscation 
of goods might lend itself admirably to that end. It is the threat 
which counts, and immediate seizure might prove more effective as a 
deterrent than the prosecution oi personal offenders. However, the 
range of the action in rem is rather limited. In the service trades 
there is no commodity which can be seized. In instances, too, the 

^ U. /?. V. One Hundred and Seventy-Five Cases of Cigarettes. The case was instituted a 
few months after the famous suit of TJ. 8. v. American Tohacco Co. (164 Fed. 1024 (1908), 
221 U. S. lOS (1911)), 

^' V. S. V. SSSjSJ/O Ounces of Quinine Derivatives. U. 8. v. 5^898 Cases of Sardines. 

" U. 8. V. Amsierdamsche Chininefabriek and U. 8. v. A. B. G. Canning Co. 



82 CONCENTRATION OF ECONOMIC PQWER 

harshness of the remedy may fall more heavily upon outsiders than 
upon brethren of the trade. In the good old days, when procedure 
was by piecemeal, a suit would be brought against one branch of an 
industry. Then the seizure of goods would lay its obstructing hand 
upon trade; other groups in the industry, as well as the general public, 
might suffer as much or even more than the defendants. For much 
the same reason the libel appears somewhat unsuited to current 
employment. If its effects were to confiscate the goods of those who 
had broken the law and for the time to surrender the market to their 
more law-abiding competitors, it might do well enough. The offend- 
ing concerns could have their goods and their access to market back 
when they had amended their practices. But where, as at present, a 
whole industry is involved, it is not feasible to engage in a w^holesale 
seizure of the wares of trade. A public antagonism might develop 
which would flare more mightily against the Government than against 
the lawbreaker. 

But even if the libel cannot be generally employed, it is still possible 
to thrust with it at strategic points. If antitrust must operate largely 
by example and prevention, the mere threat of the seizure of goods 
might be enough. For, in terms of delay, confusion, embarrassment 
to the defendant companies, its penalty may be most severe. The 
bother, in the use of so disturbing a remedy, is to make the action 
stick. The libel penetrates far into the internal affairs of a business, 
and the courts will expect the Government to make out its case beyond 
perad venture. Yet, unless the conspirators have left a broad trail, the 
evidence of restraint is as securely locked away as if the action were 
in equity. Unless Justice is forearmed and fortified, the dramatic act 
of seizure may be followed by a dull thud in court and a venture that 
got off bravely may turn into a boomerang. 

Under the health laws, the seizure of deleterious goods and drugs 
has been rather effective. So, too, has the confiscation of diseased 
cattle and of prison-made goods. But in such instances proof pre- 
sents a rela!tively simple problem. In foods, medicines, cattle, evidence 
of illegality lies in the thing itself; in prison-made goods, evidence of 
origin is enough. The illegal taint can be tracked back through no 
such simple trail to an unlawful origin in conspiracy. 

PRIVATE SUIT AND TREBLE DAMAGES 

In provision for private suit Congress intended to make the Sherman 
Act self-operative. An industry generally law-abiding was to be its 
own policeman. The businessman engaged in restraint at his peril ; if 
his act caused harm to his competitor or his customer, he might be 
stung for three times the damage and costs. The stake to' be won by 
an appeal to the majesty of the law made it abundantly worth the vic- 
tim's while. There were, of course, the hazards of litigation;. but the 
rewards were far larger than those which ordinarily lure individuals 
into the uncertainties of business eiiterprise. In the gamble the in- 
centives of' the money economy were put behind an ancient sanction 
of the cotnmon law. 

Yet, for all its promise, from the start the action was doomed to 
futility. The injured person is free to take his complaint into court; 
but, once there, he has to make out his case. The very fact that he 
complains means that he is not a party to the restraint. He may have 



OONCENTRATION OF ECONOMIC POWER §3 

quite a bit of circumstantial evidence; perhaps something in writing 
may attest indiscretion in closing in upon him too overtly. But cir- 
cumstance is easily to be explained away, and some theory other than 
restraint may be made to account for all the facts which the court will 
entertain. In respect to proving his case, his plight is far worse than 
that of the Government. Before the legal bout begins, he has no power 
to requisition documents by subpena, no grand jury to garner the evi- 
dence and help bring the case together. And if the case survives the 
preliminary heat, the plaintiff is in for a prolonged and costly trial. 
The private suit is just as susceptible to delay, interlocutory motion, the 
tactics of procrastination as one of a public character. In formal com- 
bat the small businessman meets a protagonist possessed of vastly 
greater resources; his opponent can lose and appeal, but he can alford 
no such financial indulgence. The accumulating costs become a heavy 
drag on the plaintiff — if he is already "broke," on his lawyer; they 
may be driven into a settlement out of court or the suit may break down 
for want of funds. And while the law takes its due course, the up- 
start — if he remains afloat — can expect to undergo the discipline of the 
industry. 

An attempt was made, through the Clayton Act, to alleviate these 
difficulties. The statute provides that a finding for the Government, 
at law or in equity, shall be accepted as prima facie evidence of re- 
straint in the action for personal damages. The intent was to make 
it easy for the private litigant to follow where the Government had 
blazed the trail. The provision has been of little avail. The law 
specifically exempts judgments; such as consent decrees, in which 
there has been no taking of testimony. Likewise it excepts when 
the recitation of testimony has been commenced but not concluded. 
This narrowly restricts its use since only a fraction of all the cases 
are carried through trial to a definitive judgment. In practice the, 
courts also exclude cases in which the . verdicts rendered are still 
undergoing appeal. 

Moreover, such judgments in public actions constitute only a pre- 
sumption of restraint. They are subject to attack and rebuttal by 
The defense. The edge given to the private plaintiff is thus a tenta- 
tive hypothesis to be explored, checked, rewritten. la general the 
courts have looked upon suits for triple damages with such dis- 
favor that the statutory presumption in favor of the plaintiff is rather 
lightl}^ entertained and the rebuttal rather generally indulged. The 
provision is quickly swallowed up in the rules of evidence and pres- 
ently there is little to distinguish the trial from others of its kind. 

In addition the plaintiff in the private action must show his dam- 
ages. He must, in effect, isolate one from the numerous factors which 
impinge upon his business and demonstrate its pecuniary consequence 
upon his- profits. A discovery of cause within a complex is at best a 
perilous undertaking, and a legal review of the affairs of an industry 
is not an ideal occasion for its exercise. A corporation is a going con- 
cern; it operates amid changing conditions; its fortunes are played 
■upon by a myriad of forces. The terms of the equation which spells— 
or refuses to spell— solvency are so intertangled that an attempt to 
separate and evaluate is sheer imputation. A business loses money 
for a variety of reasons — an industrial recession, obsolete machinery, 
want of credits, labor trouble, inaccessibility to patents, poor man- 
agement, shifts in the location of industry, restrictive practices of 



34 CONCENTRATION OF ECONOMIC POWER 

competitors, changes in the public taste. It requires courage, imagi- 
nation, and indulgence to shaky assumptions, to isolate a factor, mark 
out its causal domain, and commute the result into dollars and cents. 
If, moreover, a company is a victim of conspiracy, it does not sit 
passive. It fights back for its life ; it seeks to escape as much of the 
restraint as may be. It may change its prices, eliminate a free serv- 
ice, even cheapen its product. Into a tangle which converges upon the 
balance sheet this introduces further complicating factors. 

Nor is the private action immune to legal aouse. A concern 
starts a nuisance suit against a rival, makes the cause at law a counter 
in a nonlegal game, and secures advantage through private settle- 
ment. A firm, quite willing to ^o along with others, yet insistent 
upon its own terms, starts a "strike suit." A fly-by-night, barging 
into an industry, attempts to pick up a little cash by being bought 
off. Of greater consequence has been the ease with which the suit 
has lent itself to use along the labor front. One of the largest sums 
ever assessed under any provision of the Sherman Act has been 
against a trade union.^^ For a time employers had access to' the 
labor injunction, preferred preventative to corrective measures, and 
with a court order sought to paralyze the strategy of a militant 
union. When the Norris-LaGuardia Act put such a device almost 
beyond reach, the tendency was to fall back upon the suit for damages. 
For this action the available precedents went back beyond the turn 
of the century to a code hardly touched by the modern humanitarian 
impulse. The movement was halted by the United States Supreme 
Court in the Apex Hosiery case; ^® once again the triple damage pro- 
vision was set back upon its original track. 

In controversies between businessmen, the private suit has not 
justified the trust reposed in it.^'' Few genuine cases have been 
brought ; fewer have gone to trial ; in fewer still has the action taken 
all the bumps to an award of damages. In the rarest instance has it 
performed the office for which it was intended. The little fellow, to 
whom it was to have been sword and shield, has been almost barred 
from its use. The trade-unionist, whose affairs can better be handled 
in another arena, has taken the brunt of its attack. It invites a clash 
of values between private purpose and national policy. Suits aimed 
at personal advantage usually fall far short of the public mark at 
which they are aimed. In cases which have only nuisance value, the 
objectives of the Sherman Act never put in an appearance. Even the 
man with the righteous cause drives primarily at a better bargain for 
himself and the general interest tags behind. All but a fraction of 
the cases are settled out of court, where relative bargaining power 
dominates and the Government is not present to assert the law. 

Moreover, the cases are somewhat off the beaten track. Their con- 
cern is with matters too much of their own kind to serve as reminders 



" For $232,240 in Lawlor v. Loewe (209 F. 721 (1913), 23B U. S. 522 (1915) ). 

^^Apex Hosiery Co. v. Leader (60 S. Ct. 982 (1940)). 

" In February 1939 the Government sought for the first time to make Use of the treble- 
damage provision. Suit was instituted to recover approximately $1,000,000 from 18 tire 
manufacturers charged with collusive bidding on Government contracts. A major question 
raised by the defendants is whether the Government may make use of this provision. The 
act provides that 'any person' injured may sue and recover threefold the damages sustained. 
The Government claims that as a buyer it is a person within the purview of the act. The 
district court upheld the contention of the defendants and granted their motion to dismiss 
the complaint (31 F. Supp. 848 (1940)). The order of dismissal was affirmed by the 
Circuit Court of Appeals for the Second Circuit. Writ of certiorari has been filed with the 
U. S. Supreme Court. 



OONCENTRATIOX OF ECONOMIC POWER §5 

and to deter those who would violate the law. At best such such 
actions are hardly more than complaints; and complaints to courts 
tell as little about the real trouble spots as do complaints to Justice. 
In industries wliich are highly centralized, all firms are insiders. 
Here it is against the united front that legal attack should be hurled — 
yet there is no one to complain. In industries threatened with chaos 
and struggling for discipline, informers are easily to be found — yet 
the restraint threatens to fall of its own weight. It is only when the 
insider has been turned out into the cold that the private action prom- 
ises to perform its public office. Suits recede when most needed and 
become dominant when there is no larger interest to serve. The time 
i^ past when each man, in quest of his personal advantage, is led 
along a process of law to a general good which is no part of his 
intention. 



7. THE RPACH AFTER NEW WEAPONS 

THE ADVISORY OPINION 

All of the sanctions in the Sherman Act^ — the plea in equity, the 
criminal action, the libol on the goods, the private suit for dam- 
ages — rely directly upon litigation and the courts. In the procedure 
all that government or private party can do is to make complaint; 
it is for the judiciary to straighten out the tangled lines of the in- 
dustrial pattern. The result is a dual system or control ; the accus- 
ing party does no more than raise the question ; its settlement is up 
to the courts. Such an antiphonal process of administrative initiative 
and litigious response makes the technology of regulation a very in- 
volved process. It is slow, clumsy, inefficient; and it is usually a 
moral victory, rather than an industrial corrective, which a resor,t to 
law will yield. 

The reach after new weapons began early in the administration 
of the antitrust law. The advisory opinion got its toe-hold almost 
by accident. In 1913, when James Clark McReynolds became At- 
torney General,^ an amicable settlement Avas brewing with the Amer- 
ican Telegraph & Telephone Co. As a gentleman dealing with gen- 
tlemen, the head of Justice did not insist upon a formal decree and a 
court sanction. The word of the company was enough. The De- 
partment, he stated, would not abate "the insistence that the statutes 
must be obeyed"; it desired "to promote all business conducted in 
harmony with the law"; it welcomed opportunity to effect adjust- 
ments necessary to the "reeslablishment of lawful conditions without 
litigation," ^ In response to such a stimulus, numbers of businessmen 
descended upon Justice with their problems. The Attorney General 
was firm in a refusal to confer except in instances in which the De- 
partment had taken action. An initial drive to forestall litigatidn 
through negotiation failed. 

An opening wedge, however, was not easily withdrawn. A going 
concern is a cosmos of activities and the business executive wants to 
discover his shortcomings, amend illegal ways, avoid exposure to 
litigation. Against a pressure so persistent and praiseworthy, re- 
sistance gradually gave way. At first the conferences were so in- 
formal and occasional that no rex;ord is left; by the mid-twenties it 
was publicly acknowledged by the Attorney General as established 
practice. It was made clear that a favorable ruling merely promised 
immunity from immediate prosecution ; it had no binding effect upon 
a later administration. In recent yeai*s the trend has been away from 
"cooperation." The Department's position has been that the Gov- 
ernment cannot barter away its power to sue in an extrajudicial pro- 
ceeding. 

^ At present, of course, Mr. Justice McReynolds. 

'Quoted in Cummlngs and 'McFarland, Federal Justice, p. 344 (Macmillan, 1937). 



CONCENTRATION OF ECONOMIC POWER §7 

In spite of such professions, businessmen habitually call at Justice. 
They seek to secure some inkling of an official attitude toward their 
practices. If they represent an industi-y of importance, custom dic- 
tates a ceremonial call upon the Attorney General. To raise issues 
they must go to the head of the Division and are usually referred to 
officials of lower rank. It is, at the very beginning, pointed out with 
scrupulous care that nothing said can bind Justice. Yet as interview- 
follows interview, upon the facts disclosed, the official does render 
a legal opinion. The informal conference has too confirmed a place 
within the folkways of the law to be excluded from antitrust. And 
so insistent is the demand that the Division has been forced to recog- 
Jiize a procedure which — welcomed, sanctioned, or frowned upon — 
goes on as a matter of course.^ 

The current procedure falls short of the demands of business ex- 
ecutives. It marks out a rough limit of tolerance; it reveals, at least 
for the time, the temper of the personnel charged with enforcement. 
But it subjects industrial practice to no definitive scrutiny; it gives 
no assurance that the conferee of today may not become the prosecutor 
of tomorrow. Assurance, such as it is, comes from an underofficial. 
It carries no sanction that binds ; the opinion given is personal rather 
than official. The conference may in fact create a hazard. It raises 
an issue, opens or reopens a file, leads to a preview of complaints, 
revives the industry's past, invites an independent investigation.. 

As currently organized, the Division is in no position to give ad- 
visory opinions. Unless t:he industry is under investigation, there is 
no one on the staJff informed on its practices; no personnel is available 
for a comprehensive check upon the industrial pattern outlined by 
business officials. If the request is for advance approval upon a 
new and untried plan, the difficulties are even greater. Its operation 
cannot be anticipated; the public interest requires careful observation 
of its consequences as it swings into action. But with Antitrust con- 
centrated upon cases elsewhere in litigation, staff cannot be spared 
for this administrative work. 

In lending its sanction. Antitrust in fact surrenders its freedom of 
action. In name it may be at liberty to take such action as later 
circumstance demands. But good faith has its compulsions ; and the 
presumption runs strongly against prosecution — certainly, the crimi- 
nal action — whatever the unforeseen events. If a number of industrial 
fronts equally invite legal attack, choice is likely to fall upon that 
which is a stranger to Justice. In litigation, a prior approval by the 
Government is a card of consequence to the defense ; at the very least, 
it must be explained away. It is, of course, easy to argue that the 
State cannot sacrifice its indefeasible rights through the negligence 
of its officials. But in Antitrust, where intent of the parties looms so 
large in the result, prior clearance of some or all of the acts in question 
creates serious hazards for the Government's case. 



8 In an address before the Trade and Commerce Bar Association of New York on March 
21, 1940, Wendell Berge, ofllcial of Antitrust, suggested a "procedure whereby parties may 
make full disclosure to the Department about the facts of any activity which they have 
undertaken or desire to undertake. If the Department finds that such activity violates the 
law, it will so inform the parties, who must thereafter act at their perU in the event they 
disagree with the Department's position. If. however, the Department is not in a position 
to "state positively that the practices are Illegal ~at the time they are submitted, either 
because of lack of personnel to investigate or for any other reason, and the parties decide 
to go ahead with the proposed activity, any future action on the part of the Department 
would be through civil proceedings." 



gg OONCENTRATION OF ECONOMIC POWER 

THE CONSENT DECREE 

A V- velty which has found a firmer foothold is tlie consent decree. 
Tlie r icrman Act provides for no such procedure; there is no refer- 
ence > it in the congressional debates. It emerges t)ut of the very 
pro -s of litigation; settlement out of court is one of the oldest of 
V.^.,! usages. Its first use dates from 1906; * since that time 143 con- 
sent dexirees have been written. Of approximately 270 proceedings 
instituted in equity, over half have resulted in settlements by 
negotiation.® 

As a device to escape litigation, the consent decree cannot wholly 
circumvent the courts. Its origin stems from the broad power of 
equity. The decree, shaped by the immediate parties to the contro- 
versy, must receive a judicial blessing. Its legal status is that of a 
decree written by the court ; the violation of its command invites the 
action for contempt. In theory the part of the judge is that of a 
mast'^r in chancery ;~ he is supposed to lay bare the questions in con- 
troversy, and in informed judgment satisfy himself that the agree- 
ment does justice betiveen the industry and the public. In fact, his 
role is ceremonial; he brings to the accord a passive spirit and his 
imprimatur. The adverse parties have been in protracted conference ; 
they have arrived at the terms of settlement; they confront the judge 
with a fait accompli. The jurist. has only casual knowfedge of the 
issues; he lacks facilities for informing himself; he has no ready 
norms for testing the fairness of the provisions. He asks a few 
perfup.ctory questions; he may make a minor change or two. The 
lawyers for the Government appear satisfied. He accepts the instru- 
ment on faith. 

The consent decree permits a direct attack upon problem.s in in- 
dustrial government. Questions do not have to be transmuted into 
the alien language of the law ; the procedures ordained for ordinary 
courtroom use do not obtrude-with their distractions. The parties 
meet in informal conference; no weight of intent and harm hangs 
heavy overhead; fact and value do not have to trickle into the dig- 
cussion through the conventional rules of evidence. An opportunity 
is presented to a group of men, sitting around a table, to reach a 
settlement grounded in industrial reality and the demands of public 
policy. 

In addition, the instrument has a sweep which no process of law 
coul4 ever impart. It can go beyond sheer prohibition; it can at- 
tempt to shape remedies to the requirements of industrial order. If 
the demand is for adjustment within an intricate scheme of trade 
practices, at least it supplies the instrument. It can reach beyond 
the persons in legal combat to comprehend all the parties to the 
industry. It can accord some protection to weaker groups and safe- 
guard to some extent the rights of the public. It can, unlike a decree 
emerging from litigation, take into account the potential conse- 
quences of its terms. It can make its attack upon the sources, rather 
tlian the manifestations, of restraint; give consideration to activities 
which-would never be aired in open court ; probe into matters which 
the prosecution could never prove; explore conduct just outside of 

* U. S. V. Otia Elevatw Co. (1 Decrees and Judcments in Federal Antl-Trnst Cases. 197). 
» See Appendix D, Consent Decrees Entered Undei Federal Antftrust Law, July 1890-July 
1940, p. — . - 



CONCENTRATION OF ECONOMIC POWER gQ 

lestraint; follow wherever the trail leads. It can amend usage, 
create new trade practices, provide safeguards against unintended 
harm. 

As yet such possibilities have been little realized. The consent 
decree still clings rather closely to the injunction whence it sprang. 
Its dominant use has been to free dockets from cases against minor 
industries; and within this narrow domain its concern has too often 
been with trivial matters. It has been invoked to establish industrial 
order among makers of candy stick, peanut cleaners, and shellers, 
dealers in perforated music rolls, producers of shirting cloth, the 
poultry trade in New York City, wholesale jewelers, candy jobbers 
in four cities, manufacturers of rubber heels, dealers in barber sup- 
plies, the hat-frame industry, a thread company. Some 40 cases 
involve trade associations; in about a dozen of these the members 
agree to a dissolution of the organization. In all such instances the 
parties in defense neither deny nor admit the Government's allega- 
tions. They simply agree, now and forevermore, to refrain from an 
enumerated list of forbidden activities.^ 

In no more than 30 cases have large corporations been involved. 
In each instance power was great, issues tangled, a mere list of prohi- 
bitions hardly adequate. In 1912 a consent decree struck at the 
monopoly position of the Aluminum Corporation by voiding several 
of its contracts. In 1916 the National Cash Register Co. was for- 
bidden, directly or indirectly, in whole or in part, to acquire "an 
essential part of the business, patents, or plant of any comj^etitor 
without the consent of the court." In 1926, the National Food Prod- 
ucts Corporation was ordered to divest itself of ownership in the 
stock of certain other corporations. In 1920 a procedure against the 
meat packers produced a formidable instrument of industrial gov- 
ernment. Threatened with Federal regulation, the Big Five sought 
refuge in a consent decree prepared })y Justice. It provided, 
among other things, that the defendants with reasonable dispatch 
should divest themselves of their interests in public stockyards, stor- 
age plants, stockyard terminal railroads, and other productive facili- 
ties. They were ordered to cease to do business in some one hundred 
and forty commodities unrelated to their principal activity and were 
forbidden to own and operate retail stores or to sell fresh butter and 
cream. A separation of meat packing from the irrelevant enter- 
prises in which it had become embedded was to be effected within 2 
years of the date of the decree. 

In 1932 a similar pattern of divestment was with its consent im- 
posed upon the Radio Corporation of America; and in 1936 upon 
Columbia Gas & Electric, where a trustee was appointed to hold 
the securities of the affiliates until their disposal. The Ford and 
Chrj^sler decrees in 1938 contain a complicated — perhaps an unen- 
forceable — plan for placing independent finance companies on a 

' Two decrees written in 1940 contain interesting variations. In U. .V. v. National Con- 
tainer Association an attempt is made to draw a line between price fixing and activities 
sanctioned by the courts. The trade association is specifically permitted to gather and 
disseminate information of the cost of manufacture, to compile and circulate recommended 
procedures for the computation of selling prices, to promote the application of uniform 
cost accounting, to discuss such statistics at meeting.s, to exchange credit information, and 
to publish data on specific current contracts of sale "for the sole purpose of avoiding 
interference with such contracts." Since such activities all tend to produce a united front 
in the industry, the line between the legal and illegal gets pretty thin. In U. 8. v. Tile 
Contractors' Association of America an elaborate scheme is established for policing the 
lecree by the labor union. 

259564 — 40— No. 16 7 



90 CONCENTRATION OF ECONOMIC POWER 

plane of competitive equality with their own subsidiaries.^ In 1940 
the large typewriter companies were enjoined from securing control 
of competitors — through stock ownership, purchase of assets, or 
otherwise — without prior consent from the court.* The recent con- 
sent decree in the optical-goods case declared void a number of con- 
tracts between the Bausch & Lomb Co, and a German concern and 
forbade the payment of royalties until further order by the court. 
The decree involving the Southern Pine Association splits up the 
activities of the trade association and establishes a separate organ^ 
ization — open to all manufacturers of southern-pine lumber without 
discrimination — for grading and standardization services. 

The decrees appear more formidable upon paper than in operation. 
More than half were written during the 1920's, when government 
and business were in close accord. The device lends itself to a lax 
enforcement of the law. The parties meet informally behind closed 
doors ; the negotiations leave no public record ; groups who do not 
participate are left in the dark. The only information available 
to inquiring parties is the decree itself ; and, although it is filed with 
the court, its terms can be understood only by the person who inti- 
mately knows the industry. As a result, the instrument is useful to 
a sympathetic administration in building up a paper record of accom- 
plishment. Further, the suit in equity carries little opprobrium; 
the settlement out of court is convenient, involves little expense, and 
offers little embarrassment to the activities of the defendants. 

But weakness does not inhere in the process. If the Government 
is bent upon enforcement it offers an instrument of vigorous attack. 
Its use must be preceded by resolute court action elsewhere; execu- 
tives do not willingly shackle their own discretion; they yield only 
as pressure is put upon them. A vigorous campaign, a large number 
of suits, a fanfare of litigation sets the sta^e for its constructive 
use. The great difficulty lies not in the capacity of justice to impose 
measures but in its want of technical skill to turn concessions to 
account. The resort to law necessitates a staff whose training and 
experience has been in trial work. Their interests are focused by the 
task of proving charges in open court. It is customary, when nego- 
tiations are begun, to assign the shaping of the consent decree to the 
attorneys already busy upon the case; there are no others at hand 
conversant with the practices of the industry. The trouble is that 
materials of a case are not the stuff for creating an instrument of 
industrial order. The distinctive competence of the resourceful law- 
yer does not find its easiest outlet in prescribing for the maladjusted 
industry. 

In its procedure the formal position of the Government is that the 
matter is voluntary. It cannot dictate terms; the initiative must 
come from the industry; its task is no more than to accept a pre- 
ferred arrangement which accords with the law. In fact, it plays no 
such passive role. Its representatives start v ith ideas about what 
they would like to demand; as the conversations go forward their 
notions become articulate. Yet the absence of a reliable picture of 
the industry, a superficial knowledge of its structure and folkways, 

' Ab latt 18 September 1940 a system of registration the real Implementation of tlie 
decree — ha not been brought Into use. The tardiness has been due in part to a waiting 
for the outcome In the General Motors case. The consent decrees were made contingent 
upon the success of the Government In Its suit against General Motors. 

« U. B. V. Underwood Elliott Fisher Co. 



CONCENTRATION OF ECONOMIC POWER 91 

and ignorance in regard to the real sources of trouble hang heavy 
about the conference table. They make for a process of bargaining 
that is uncertain, speculative, confused. The representatives of the 
Government suggest leads; but across an unfamiliar industrial ter- 
rain their footing is insecure, their sense of direction none too certain. 
They must, for want of detail and perspective, seek guidance from 
the gentlemen of the industry. 

Such a search for an industrial order is rather like the blind lead- 
ing the blind. At operating a corporation within an industry execu- 
tives are adept. It is their business, and their minds have been con- 
ditioned to its tasks. But their viewpoint is that of the single 
concern, and they are little accustomed to think in terms of an entire 
industry. They lack an over-all view ; they are little given to detach- 
ment, critical analysis, the consideration of alternative arguments.* 
So the defendants propose, the Government counters, the parties 
mutually thrust at plans; the ordeal yields an aggregate of isolated 
prohibitions. At best, tlie agreement which emerges is a makeshift 
answer to the problem of industrial order. 

Nor does Justice really view the consent decree as an instrument of 
industrial government. The dangers which attend its creation have 
invoked timidity in exploring it-s possibilities. The want of an inde- 
pendent source of information, of a clear grasp of industrial prac- 
tice, of an arsenal of constructive reforms from which to choose, 
have made officials cautious in committing themselves. The proposed 
arrangements might be misused; a contingency might render them 
obsolete; a scheme designed to restore competition might in practice 
prohibit its return. Accident is as powerful as design; the pattern 
of the industry might change overnight. Practices, which defy its 
spirit, might be shaped to the very letter of the writ; a sanction 
accorded to an innocent practice might later be found wrapped 
around a vicious one. So long as good intent can be affected, a lot 
of provisions can be made to do the things they ought not to do. 
And, after all, provisions are commitments and the Division is afraid 
of what might later be discovered within their none-too-certain terms. 
So the positive gives way to taboo and negation comes into control 
of the proceedings. 

A consent decree anticipates the outcome of the suit ; the threat of 
recourse to law has been a factor in its growth. As attorneys shift 
to conference, the carryover of a scheme of values from litigation is 
inevitable. At any moment the defendants may withdraw and throw 
the Government back upon its chances in open court. The handicaps 
of legal procedure are powerful cards which the defense can play in 
dilutmg the decree. Wlien more cases are on hand than can be 
handled and the prosecution must play for time, it is often con- 
strained to accept terms which will fall short of clearing up the 
situation. Where sympathy with the plight of the industry prevails 
in official circles, the concessions secured are usually far less. But, 
friendly or hostile, the division confronts a formidable docket, and 
the best settlement possible frequently becomes a sheer necessity. 

♦„'-T*'^/''^?'°^. ^'L* cftnsent decree presents to the parties In Interest an unusual oppor- 
i^o *^^*^ educate themselves in the problems they face. But a lesson that has not been 
^^li^u^^u^**?"*?* J^^ passed on, and without the greater knowledge and the larger vision 
which the task demands the opportunity Is usually allowed to slip. 



^2 CONCENTRATION OF ECONOMIC POWER 

Thus the consent decree is largely a device of economy. It spares 
the defense the expense of a protracted legal campaign; it allows the 
division, in some sort of way, to cover an extended front. It is a 
resort to an informal process of bargaining, an attempt to capture — 
without incurring the cost — the answer which the legal ordeal would 
yield. It shifts the focus from the need of industrial reform to the 
strength of the Government's case. A situation may stink to high 
heaven ; yet, if testimony cannot be regimented into proof or if infer- 
ence must come along to fit pieces into a pattern of restraint, the 
exaction must be mild. If the companies are small and litigation an 
extravagance they can ill afford, more can be demanded. If the 
conduct has been flagrant, a series of solemn commandments can be 
written. In consequence, litigation and negotiation become alter- 
native means to much the same result. 

OVERSIGHT WITHOUT AN OVERSEER 

A matter of concern in the current use of the consent decree is its 
industrial reach. The only parties bound are those named in the 
instrument. If a company loses its identity through reorganization, 
the decree may or may not be the kind of a chattel which passes on. 
Corporations which freshly enter the industry lie beyond its jurisdic- 
tion. . Save for the vague threat of prosecution — blunted by knowl- 
edge that the industry has already been the subject of legal scrutiny — 
they are at liberty to ignore its terms. Where an industry is half- 
bound, half free, those who must obey the decree are put at a com- 
petitive disadvantage. 

A shift in trade practices, decreed in the settlement, may have con- 
sequences far outside the orbit of the original decree. In destroying 
established usages it may hurry the demise of the small units pre- 
cariously perched in the industry. Unless these companies are parties 
to the decree, they have little voice in the formulation of its tenns. 
Ordinarily the original complainants are informallv con>;ulted during 
negotiations, but no over-all coverage of parties affected by its terms 
is possible. If repercussions extend beyond the lines of the industry 
to allied trades, no machinery is available for the expression of their 
views. In an}^ event the formal document can tell little of how its 
terms will work in practice. The policy of secrecy accentuates the 
problem. Conference often goes on when the matter is in the courts, 
and any publicity might prejudice the Government's case. Yet the 
real issue is affected with a public interest, for it concerns the ar- 
rangements under which an imUistry is to carry on. It ought to be 
open to all who have a stake in the outcome.^'' 

A kindred difficulty is police. The instrument with which to make 
the commands effective has not yet been forged. So long as the dom- 
inant objective of Antitrust is legal victory, the consent decree must 
remain a way of "closing a case." A result has been reached, the zeal 
in the cause has been spent, interest moves on. If a decree provides 
for immediate changes, such as the sale of a property, a divestment 

'"In somo of the roceiit consent decrpes tlio Govoniintnt has sought to secure the view- 
point of intoiosted outsidois. First, an effort was made to secure represeritation of opinion 
in court at the time of the filing of the decree, but in two or three Instances Judges were 
reluctant to open their forums to possibly prolonged debate in ot>en hearing. Then the 
Qovernmont experimented with giving publicity to decrees before they wpnt into effect and 
Issuing a general invitation for comment. There was no response. 



CONCENTRATION OF ECONOMIC POWER 95 

of shares of stock, the dissohition of a trade association, the file is 
held open until such steps are taken. After that is done, the matter 
is adjudicated, the issues are removed from controversy. In the 
records of Justice the episode is closed ; the case has gone to the hall 
of records: a fresh initiative is necessary to call it once more into 
action. Nor is an effort made to follow up the decree, observe success 
and shortcomings in operation, check practical result against intent, 
determine ujjon necessary revisions. 

The occasional modifications throw into sharp relief its inflexi- 
bility. A large number of decrees are decades old, the industry has 
been made over beyond recognition, the consent decree endures un- 
touched. About 25 decrees have been hailed into court. In general 
the revision has risen to no higher plane than formal change. A com- 
mand to sell, divert, dissolve has been staj^ed until a more propitious 
moment; a concern has been permitted to acquire a negligible com- 
petitor, a trade association has been indulged the collection of harm- 
less information, a prohibition has been recast in the light of a later 
decision of the Supreme Court. Such modifications are made at the 
behest of private parties, in every instance the purpose has been to 
liberalize the requirements imposed upon the industry. In but a 
single case has Justice sought reconsideration because the decree had 
become unsuited to later conditions in the industry. In the spring of 
1939 it moved to vacate a decree entered 3 years earlier against the 
Columbia Gas & Electric Co. 

In only fi^-e instances have proceedings been brought for contempt. 
In one case fines aggregating $5,500,^^ and in another $4,000 ^- were 
imposed. A couple of proceedings, involving the motion-picture in- 
dustry, are still in court." It is only the fifth, concerned with the 
manufacture and sale of cash registers, which has left an engaging 
chapter in judicial history. The case, in fact, presents in graphic 
illustration the assortment of difficulties experienced by Justice in 
attempting to give effect to an order of the court. It reveals 'the 
weakness of the instrument Avith which a consent decree must be 
policed. 

The story began in 1911, when civil and criminal suits were con- 
currently brought against the National Cash Register Co. and some 
29 of its officials. The criminal action resulted in a verdict of guilty 
and jail sentences ranging from 9 months to a year were imposed 
upon 27 of the defendants. The president of the company, one John 
H. Patterson, was given a 1-year sentence and fined $5,000.^* The 
circuit court of ajppeals reversed the judgment of the District Court 
for Southern Ohio ^° and the Supreme Court refused certiorari." 
The opinion of the circuit court was so far-reaching that Justice felt 
it hopeless to go forward. So in 1916, in opposition to the district 
judge who sat on the case, the Government asked for a dismissal, 
On the same dav a consent decree was entered in the civil suit.^^ 



" C7. 8. V. Southern Wholei^ale Grocers Association (207 Fed. 434 (1913)). The decree- 
dates from 1911, 2 years earlier. 

" C7. 8. V. National Retail Credit Asaooiation (plea of guilty, 1935). The consent decree 
was entered in 1933. 

"{7. S. V. Barney Baldhan (1938), involving consent decree \n V. S. v. Balaban & Katr 
Corp., entered in 1932; and V. 8. v. Fox West Co<ist Theatres Corp. (1939), involving: 
decree in V. S. v. West Coast Theatres, Inc., entered in 1930. 

^* L. 8. T. Patterson, 1 Decrees and Judgments in Federal Anti-Tiust Cases 795. 

"222 Fed. 499 (1915). 

"238 U. S. 635 (1915). 

" V. 8. V. National Cash Register Co., 1 D. and J. 315. 



94 OONCENTEATION OF ECONOMIC POWER 

The consent decree was rather sweeping. Among other things, it 
enjoined the parties from intimidating competitors and their cus- 
tomers, from wrongfully obtaining the names of their competitors' 
prospective purchasers, from the theft of business secrets, from 
wrongful trade practices, from espionage. Hardly was the ink dry 
upon the decree before complaints began to pour in; the company 
likewise began to busy itself with the limits of its legal bonds. First, 
it asked the court for a number of interpretations of the text of the 
decree. Then it went to Justice to ask for modifications. Justice 
in turn called -upon the Federal Trade Commission for an analysis 
of the operation of the decree. Within 2 months the company with- 
drew its request. Meanwhile complaints continued to accumulate 
and a major competitor, the Remington Cash Register Co., employed 
a prominent New York law firm to press for action. The evidence 
accumulated; an Attorney General went and another took his place; 
in 1925 Antitrust determined to institute proceedings. A major ques- 
tion Avas who in particular was to be cited for criminal contempt. 
Salesmen were engaging in practices which the decree forbade; cir- 
cumstance pointed to knowledge and complicity by the officials of 
the company ; there was no overt testimony to supply the connecting 
tissue. Some attorneys in the Division were loath to strike high, 
without the necessary proof. Others believed that proof of actual 
knowledge, while helpful, was not essential ; that it was the business 
of the company to see to it that their petty officials were law abiding ; 
that the mere fact of violation was enough to constitute contempt 
of court. In the end — as so frequently happens — the less hazardous 
view prevailed, and the action was confined to the 92 sales agents 
who had been direct participants in disobeying the court's order.^^ 

The company was not at a loss for weapons of defense. As soon 
as the action for contempt was brought, the corporation was reor- 
ganized; it was plead that the new legal person was immune to the 
court order. A like immunity was claimed for persons who were not 
in the company's employ at the time of the decree. It was also con- 
tended that the powers of the court of equity were limited to its dis- 
trict ; that the judge could punish for contempt only those salesmen 
Avho had operated in the southern district of Ohio. It was insisted 
that, unless action was begun within 1 }^ear of the time the acts 
occurred, it was barred by the statute of limitations. In the course 
of the trial, the charges against 70 of the defendants were dismissed 
because of insufficient evidence. Later, on the ground that the Gov- 
ernment had not acted in time, the judge dismissed 18 of the 22 who 
were left.^® The later ruling was appealed to the Supreme Court 
which reversed.^" 

Back the case went to the district court. Meanwhile the energies of 
the Government had flagged; it now moved to dismiss 20 of the de- 
fendants. Thus of the original 92, 2 survived the ordeal of inter- 
locutory motions to be tried. In 1928 the district court found 1 of 
them guilty .on 2 counts and imposed a fine of $1,000 on each count. 
It dismissed the information against the remaining person. In 
1929 a motion by Justice for a new trial was denied. As a final blow, 

" Department of Justice files on U. 8. v. National Gash Register Co., file No. 60-51 -0. 
" U. 8. V. National Cash Register Co. (23 F. (2d) 352 (1927)). 
«'277 U. S. 229 (1928). 



OONCENTEATION OF ECONOMIC POWER 95 

in 1931, the decree was modified to permit National Cash Kegister to 
acquire Kemington Cash Register, the very company which through- 
out the twenties worked aggressively for the enforcemei^t of the 
decree. Since 1916 violation of the decree had been flagrant, yet the 
net result of all efforts was a fine of $2,000 against a single salesman. 

The ordinary antitrust suit has problems enough. The follow-up 
in contempt, in addition, presents difficulties all its own, many of them 
new to the courts. What is the precise meaning of the language of the 
decree ? How are set terms to be accommodated to a changing pat- 
tern of trade practices? In the hierarchy of an industry whom, does 
it bind? How far does its jurisdiction extend beyond the persons, 
natural and artificial, who are named in the instrument? Along the 
various planes of corporate officialdom, how much of knowledge and 
of participation must be proved? If violation is virtually compelled 
by the necessity of meeting competition from companies not named in 
the decree, what then ? If new practices are devised as a way around 
the prohibitions, has there been contempt ? How long must the Gov- 
ernment wait after a decree has been entered before bringing an action? 
And how long can it pause after the overt act before losing its right 
to strike? What if, in the interval, the industry has been, quite 
transformed in technology, structure, trade practices, markets, and 
wares? What if only a few among many former units are now 
bound?" 

In five cases involving divestment proceedings, trustees have been 
appointed pending the disposal of the stocfe.^^ A major difficulty 
here has been the spasmodic interest of Justice. The decree usually 
antedates the current administration; the attorneys who handled it 
are gone or to them it has grown cold. Their knowledge has been 
submerged beneath the materials of more recent cases; the intan- 
gibles have left little trace behind in the records. All that remains 
alive of the industry, its trade practices, ancient pattern of restraint, 
is a bulking and silent file over which — as a ghost of a case closed — 
hovers the decree. In isolation, and without the Division's lawyers 
to prod, the trustee takes his course. He i§ more responsive to pres- 
sures which are current than to those that are gone; to the flesh and 
blood that bears down upon him than to volitionless files. He is 
driven forward — or stopped in his tracks — by a personal interest. 
His task is to speed the sale of securities in his hands; his stake in a 
job which expires when his duty is done bids him await a favorable 
market. As a result, a company may maintain its equity for years 
after it has been ordered by the court to divest itself of tlie holdings. 
In any event the immediate counts for more than the remote, and the 
trustee tends more and more to take- the industry's view of the mat- 
ters he handles. 

All the difficulties appear in the classic of tonsent decrees, that 
against the meat packers.^^ The agreement of 1920 provided, among 

" A move has lately been made toward easier administration of consent decrees. A pro- 
vision embodied in all recent decrees grants to Justice access to all books and records. 
Reports upon the operation of the decree may also be required. The provision holds real 
possibilities. For the first time the files of the offending company are open without round- 
about of grand jury and subpena. The great weakness is that the Division lacks the 
facilities for the follow-up essential to keep the decree alive. 

^ TJ. 8. V. New York, New Haven & Hartford R. R. (1914) : U. 8. v. 8'uHft & Go. (1920) ; 
V. 8. V. Po(B Theatres Corp. (1921) ; V. 8. v. Rand Kardex Bureau (1926) ; V. 8. v. 
Columbia Gas d Electric Corp. (1936). 

» 17. 8. V. 8wift d Co. 



96 OONCENTRATION OF ECONOMIC POWER 

Other things, for an immediate disposal by the "Big Five" of their 
interests in public stockyards. They were likewise required to sep- 
arate themselves from concerns dealing in various canned products. 
At the outside the process of divestment was to be completed within 
a period of 2 years. Almost at once the packers began an attack 
upon the decree to which they had voluntarily consented. The first 
move came from off stage; the California Cooperative Canneries 
appealed to the Attorney General for modification.^* Then, as a 
third party, they asked to intervene, went into court, and moved that 
the decree be vacated on the ground that it disturbed their contrac- 
tual relations with a party to it. The canneries had a 10-year con- 
tract for the sale to Armour of all their products it might require. 
A clause provided that, in case of Government interference. Armour 
was free to abrogate the contract on 60 days' notice. At the time the 
canneries were heavily in debt to Armour. Whether the canneries 
acted on their own motion, or whether they were prompted by the 
packers, is a moot question. The trial court decided for the Govern- 
ment and was revei-sed on appeal. The court of appeals declared 
that tjie canneries had lost valuable assets without a right to be 
heard; that there had been a taking of property without due process 
of law." 

In 1924, while this matter was still pending, Swift and Armour 
filed their own motions to vacate the decree. They argued that the 
packers had denied violations of the antitrust acts; that there was no 
genuine case in controversy; that the court lacked jurisdiction to 
enter the decree ; that the Attorney General had no power to exclude 
persons from a legitimate business. A number of ancillary attacks 
were made on the decree — its vagueness and generality, its compre- 
hensive character, its want of factual support. The trial court, feel- 
ing itself bound by the appellate ruling in the Cwnn&ries case^ sus- 
pended the decree. In such a matter, a definitive ruling could come 
only from the highest court, and in 1928 and 1929 the Supreme Court 
found no merit either in the direct attack by the packers ^" or in the 
collateral attack upon the decree by the canneries.^^ 

The packers, however, were prepared for this legal pitfall. In 1930 
they again embarked upon litigation — this time to secure modification 
of the decree. Their complaint was a woeful series of corporate 
wrongs; their prayer for relief — finite in the instance — asked in the 
aggregate for a virtual scrapping of the instrument. Their argument 
postulated a revolutionary change in economic conditions, the rise of 
the grocery chains, their need for diversifying their business, the 
necessity for retail outlets, the economies in distribution direct from 
process to consumer, the utility of all of this to the consumer, its 
compatibility with the ideal of competition. In the trial court the 
packers Avon a partial victory, which again was lost in the Supreme 
Court.2^ In 1932 a period was written to 12 years of litigation ; the 
letter of the decree and the position of the parties had not been 
changed one bit. 

2* Department of Justice in U. 8. v. Swift d Oo., llle No. 60-50-0. 
'^Oalif. Cooperative Canneries v. f/. S. (290 Fed. 908 (1924)). 
"Sm>i7( .e Co. V. U. 8. (27G U S. .^ll (1928)). 
^^ U. H. V. Calif. Cooprratir. Canntrics (279 V. S 553 ()929)). 
■'' U. 8. V. Sivift <t Co. (28« U. S. 106 (19:i2>^ 



CONCENTRATION OF ECONOMIC POWER 97 

So long- as cases were in the courts, the packers made no effort to 
divest themselves of equities in forbidden companies. Then in 1931, 
11 years after the command had been given, A.rmour hastened to obey 
the order of the court. Its interest in the General Stockyards Corpora- 
tion was disposed of to three companies owned by members of the Ar- 
mour family. When corporate gears are disengaged, persojial ties may 
still abide and it seems probable that so fictitious a divestment still 
leaves the order of the court unfulfilled. The Swift Co. showed no such 
precipitate haste. In 1932, in accordance with the mandate of the 
Supreme Court, the trial coui*t appointed a -trustee, and directed that 
gentleman to dispose of the prescribed holdings in Libby, MeNeil & 
Libby within 1 year. In 1933 the defendants asked for a further 
period in which to rid themselves of their interest in the canning 
company. The court refused and directed the trustee to see that the 
block of stock found its way into hands legally competent to hold it. 
In 1936 Swift divested itself of a part of its investment in stockyards. 

The months dragged on. In the spring of 1939 Justice, its patience 
exhausted, sought to force disposal of Sw^ift's interest in the large 
canning concern. It attempted to secure from the court an order to 
the trustee calling for bids. This action -was vigorously contested on 
the ground that market conditions did not warrant sale of the stock. 
During the summer the judge called the parties to his chambers and 
announced that he had decided to grant the motion. He would, how- 
ever, refrain from taking public action until the defendants had been 
accorded a reasonable time to dispose of the holdings. Shortly there- 
after the sale was made and in" November of that year the court ap- 
proved a plan for the disposal of the Swift stock. Thus, after 19 
years of litigation, an important provision in the packers' consent 
decree was at last given real effect. 

The innovation of the consent decree has made its modest adden- 
dum to the Sherman Act. If experience has ripened into so little 
of novelty, at least strands have appeared upon which a fabric of 
administrative control may be woven. 



SECTION III 

A PROGRAM OF ACTION 



1. STREAMLINING THE ACT 

A revision of the Sherman Act is long overdue. The attitude of the 
Fifty-first Congress was experimental ; yet its Mid-Victorian machin- 
ery has endured. In 50 years American business has undergone a 
revolution, yet antitrust has made a faltering response. A belated 
recognition of the national economy led to the creation of the Anti- 
trust Division in Justice. The consent decree grew up to escape the 
severities of an ordeal at law and to impose some positive corrective 
upon the processes of industry. The courts have made now domina,nt, 
now recessive, a rule of reason which they seem to regard as existing 
primarily for purposes of dialectic. The Division within Justice has 
expanded, yielded to a division of labor, started a body of tradition of 
its own. And that is all. It is difficult to think of another institu- 
tion, played upon by dynamic forces over so eventful a period, which 
has exhibited fewer responses to the urges of growth. 

A constructive attack may be made upon any one of several planes. 
It may aim to vitalize the current act or it may seek another way of 
industrial order. It may aim to hurry along the suit at law or it 
may abandon litigation for an administrative venture into control- 
It may remain true to the ancient creed of competition or it may 
choose to ground regulation upon another philosophy. But anti- 
trust is a rather intricate affair; one question easily touches off 
another; and, as it goes forward, inquiry is likely to take its way 
to anotlier level. It is, therefore, essential to sp]:)arate ])roposals for 
revision into groups and to keep ahvays clear the current plane of 
discussion. 

It is well to begin by taking, antitrust as it is and to ask what can 
be done within the four corners of the Sherman Act. A number of 
moves are obvious. First of all, Antitrust should be provided with 
adequate funds. The idea of its authors that, through the right of 
private action, the act was self-enforcing can no longer be enter- 
tained. A modern economy has come into being and in kindred 
domains experience has revealed the magnitude and intricacy 
of supervision. The current task belongs to a contemporary 
Avorld; the appropriation should no longer be set down at a figure 
shaped by the ideas and circumstances of the nineties. This is not 
a demand that ijrocedure by sample give way, to a prosecution of 
Jill offenders. To make an "example" of a violation before his erring 
brethi-en is right enough. It is the method of traffic control, of the 
abatement of nuisance, of the law generally. Tlie idea is to deter,, 
ratlier than to punish, to bring the number of offenses within hailing 
distance of the capacity of the state to handle them. For antitrust 
it is the only possible way : but there ought to be sample cases enoughi 
to sliow that the Division means business. There should be suits 
enough to persuade judges and juries tliat in convicting the persons 

101 



102 CONCENTRATION OF ECONOMIC POVvER 

before them, they are not hounding the unfortunate few where a 
multitude are guilty. 

Adequate funds would provide samples enough to allow a strategy. 
If examples are to deter, the points of attack must be shrewdly 
chosen. At the moment the law of antitrust stands out in sparse 
and indistinct lines. A few score of suits have been brought; a 
handful of them have reached the only court which can speak with 
authority. In a field so controversial, where public opinion takes 
its uncharted course and jurists come and go, the decisions of even 
a dozen years ago do not circulate at par. The law can never be 
fully -certain. Restraints go in and out of fashion; no list of pro- 
hibitions is proof against the novelties which ingenuity contrives. 
As a result, the legislative mandate is most effective if its terms 
transcend the particular. A catalog of acts which lie beyond legal 
tolerance can easily be met by others of innocent appearance which 
attain the same result of restraint. A lawsuit may be a nuisance, still 
there is need of a surge of cases along the industrial front. It is 
needed as much by business executives as by the Government. The 
idea of landmarks may be a legal myth ; but it will take quite an as- 
sortment of beacons to light the twilight zone which separates the 
legal from the illegal. The law may never become certain ; but a little 
less of uncertainty is desirable if the Sherman Act is to become an 
effective instrument of control. 

An increase in funds should improve the quality of performance. 
A larger staff would allow a continuous analysis of the more im- 
portant industries, an essential to a strategy of attack. So long as 
complaints from without are the guide, enforcement \^dll be of a 
hit-or-miss character. Minor restraints may usurp the legal stage 
while far-flung conspiracies may go their way obscured by thei 
shadows. At present the accent falls too heavily upon the well- 
beatwi trail, the loud-mouthed industry, the lucky accident that un- 
covers lawless conduct. Only in an informed knowledge of the 
operation of the industries Avhich make up the national economy can 
antitrust rise to it^ task. Policy and strategy converge in the selec- 
tion of cases. 

It is likewise high time for the modernization of antitrust machinery. 
For the task of investigation. Justice should be fitted out with the 
power of subpena. The national economy is the instrument of general 
welfare; its hierachy of industries performs a public office and is af- 
fected with a public interest. It is scoffing at reality to make access 
to thfe records of a company a "private" right of its management and 
to exclude other parties who have a stake in its operation. As mat- 
ters currently go, consumers, laborers, even stockholders may be scat- 
tered, unorganized, powerless; unless protected by the Goverimient 
their real interests may be obscured or even ignored. A corporation, 
a creation of the state, is a convenience through which a miscellany 
of individuals combine their contributions of divers kinds in a collec- 
tive enterprise. Yet it has come to be the practice to invest its files 
with the sanctity of personal right. And under the legal cloak the 
officials of a corporate body have usurped a monopoly of knowledge of 
its affairs. A practice which turns to the account of a strategic group 
an exclusive privilege which is not theirs is an anachronism. Anti- 
trust represents parties of interest in the industry. A management 
occupies a position of trust and an action at law is a way of holding it 



OONCENTEATION OF ECONOMIC' POWER JQS 

to its fiduciary office. The individual defendants are hostile witnesses ; 
outsiders have little to relate. Evidences that acts lie beyond the toler- 
ance of the law repose in the company's own files. The record of its 
activities is necessary to hold officials to their assumed obligations. 
As the representative of unvocal interests and of the public, Justice 
should have free access to all records whenever occasion demands. 

The grant of subpena would not be to the disadvantage of business. 
Equity is the legal process best suited to restraint of trade ; if a con- 
structive remedy ig demanded, it can be secured in no other way. The 
resort to the criminal action has been compelled, not because it is ap- 
propriate, but because the use of the grand jury was necessary to 
secure evidence. A power of subpena by Justice would put the two 
actions upon an equality and allow merit to shape the choice between 
them. It would obviate the urge to prosecute where the acts in ques- 
tion correspond so crudely with the norm of crime. 

The grant to Justice of subpena power would simplify enforcement. 
In all save the extraordinary case its direct use would supersede the 
costly, clumsy,- complicated procedure by grand jury. Even more, 
a knowledge that the Government held in reserve an easy access to 
all books and files would tend to insure a readier and more universal 
conformity with the law. At present the lawbreaker may capitalize 
the interval between initial demand and eventual subpena to put its 
records in order. Even the sudden summons from the grand jury 
permits a hurried survey before the fateful arrival ; and, since human 
nature is j^rone to error, it is always possible to get confused, mis- 
understand the order, become muddled as to the relevant and the 
irrelevant. With the subpena ready for use, the interval disappears 
and inquiry can be conducted in the company's office before files have 
been destroyed. No doubt the disadvantage of having to enumerate 
in advance incriminating documents Avhose existence Justice only sus- 
pects will for a time continue. But, with a sanction within easy 
reach for a search upon the spot, it will become less embarrassing. 
Eventually the very logic of the situation should establish complete 
access to all files as occasion warrants. 

The Government would not pay too high a price for its easier access 
to evidence. The criminal process results in a verdict of guilt; its 
satisfaction is a fine. The penalties are always pecuniary, respectable 
men of business do not go to jail. But the equity decree, for all its 
limitations, does permit an appraisal of usage, the revision of trade 
practice, the remaking of the pattern of the industry. The criminal 
action, of course, is not at once to be tucked away in mothballs. It is 
not to be relinquished until teeth have been put in civil process and 
it has become adequate to its larger job. Even then it is well to have 
the more drastic weapon in reserve ; for an exhortation to good works 
and an injunction against bad ones means little unless there is some- 
thing at hand with which to make words good. But, more important, 
equity and its decree allowed correctives to be applied in advance 
rather than assess penalties against conduct which has run its course. 
If industrial activity is to measure up to the requifements of law, the 
revision of arrangements is rather more important than winning 
criminal suits. 

A kindred suggestion concerns the form of action. It is recognized 
that the criminal process is not well adapted to antitrust, and it is 



104 OONCENTKATION OF ECONOMIC POWER 

proposed to shift the punitive sanction to a civil base.^ The offense 
}& to be treated, not as a crime against the majesty of the state, but as 
a wi'fing to the general v/elfare. A restraint of trade is an infraction 
cf the national economy, an affront to the Commonwealth ; hence a 
public action in tort appears to be the more appropriate remedy. 
There is nothing novel in the use of a civil procedure to impose penal- 
ties for the violation of Federal law. As a remedy it is to be found 
in statutes concerning matters as diverse as patents, customs duties, 
Indian laiids, alien immigrants, interstate carriers, sugar quotas, the 
securities of corporations and Federal revenue. The shift removes 
the taint of crime, focuses the issue sharply upor? the departure from 
legal norms, strips the suit of much of its ceremonial irrelevance. The 
jeopardy of life and limb is gone ; the pecuniary penalty remains. 

The shift from crime to tort speeds the action ; so the stage is set for 
a revision of penalties. A fine of a dime will hardly stop the filching 
(i>i a dollar ; the risk of a $5,000 penalty is not guaranteed to kill off 
a conspiracy that promises to net five millions. If a legal threat is to 
deter, the impact of the punishment must be worthy of the crime. In 
like manner it does little good to limit the fine to the offending com- 
ipany when the acts of restraint are decreed by its officials. If dam- 
ages are to become a preventive, they must be assessed against the 
parties who made decisions as well as against those who harvest the 
benefits. So it is proposed that a corporation violating the act for- 
feits to the United States a sum equal to twice the total of the net 
income accruing during the period of wrongdoing. An offending of- 
ficer is likewise to forfeit to the Government double the compensation 
he has received during the period of violation. In addition, an execu- 
tive may for an appropriate period be separated from his corporate 
office for such malfeasance in the discharge of his duties. The burden 
of the penalties is automatically adjusted to the gain derived from 
the illegal activities. Offense and penalty are written in the language 
of the national economy. 

The shift to a civil action improves the weapon. It creates a 
responsibility alike corporate and personal, makes substantial daili- 
ages a term in the businessman's equation, renders it far more certain 
that the penalty will follow the illegal act, places a deterrent before 
the breach of the law. In a word, it attempts to make restraint of 
trade a bad business risk. 

One further provision eases the course of litigation. In the usual 
antitrust suit the doctrine of agency presents an endless bother. It 
is extremely difficult to connect overt acts with the willful decision 
of corporate officials, A presumption can be made easily to bridge 
the gap; respondeat superior is to mean what it plainly says. The 
knowledge on the part of any officer or director of any of the acts 
making up the conspiracy is to be presumed to constitute authoriza- 
tion of the restraint. Such a presumption must, of course, be subject 
to rebuttal. But its fiction — if fiction it be — runs in accord with 
common sense; and it places the burden of proof where it ought to 
lie, upon the party which enjoys access to all the facts. 

As a forward move it is also proposed to endow the consumer with 
a cause of action. Although its text gives no express warrant, the 

1 See bill to provide additional civil remedies against violations of the antitrust laws, and 
•for other purposes (the O'Mahoney bill), S. 2719, 76th Cong., let sess. (1939). 



COXCENTRATION OF ECONOMIC POWER 105 

Sherman Act does not forbid such a suit. In early drafts, in defining 
the offense as a denial or abridgement of "full and free competition," 
it seemed to invite it. But an early judicial ruling, discovering the 
consumer to be without an interest of real substance, closed the door.^ 
Yet, as one of the two parties to a sale, he has his common law rights ; 
and, so long as the norm of contract remains the picture of two parties, 
each with equal power to shape the terms of the bargain, it is hard 
to follow the logic by which access to the courts was denied. The 
act grants him the right to such a price as the open market effects, 
and if through collusion his pocket is picked for more, the deprivation 
of property appears obvious. 

At the moment the Government, as a purchaser of automobile tires, 
alleges that identical bids from a number of companies attest collu- 
sion, and sues for tiiple damages. If as a buyer the United States 
is permitted access to the courts, the door can hardly be closed to the 
suit of the individual consumer or of the consumers' cooperative. 
The real argument against such an action is of a more practical char- 
acter. The consumer meets the ware in the market place, not back 
of the line. He neither has access to the information nor possesses 
the funds with which to sustain his suit. The consumer's interest in 
the aggregate is the public interest; and it was that very interest 
which the public prosecution was intended to protect. Still there is 
a unit intermediate between the solitary buyer and the general pub- 
lic. However it may have been in the nineties, organizations of 
consumers are today realities. A consumers' cooperative, an associ- 
ation of purchasing agents, a trade union of housewives, ought legally 
to be free to maintain its access to a free market against collusion and 
conspiracy. 

The clumsy instrument of Antitrust needs to be fashioned to its 
gigantic task. The hope in these interlocked proposals is to create 
an up-to-date model for a suit at law. If litigation must continue 
to be the instrument of public policy, it will enjoy an easier, speedier, 
more certain process, less freighted with procedures, less confused 
by the irrelevancies of legalism. It needs to %orrow a bit of direct- 
ness and dispatch from the world of business within which it must 
operate. 

= Citation. 



259564— 40— No. 1( 



2. TOWARD AN ADMINISTRATIVE BASE 

TO BORROW AND ADAPT 

In spite of its advantages, such a program of reform does not 
reach the heart of the difficulty. Antitrust is still gi'ooved to the 
ordinary process of litigation. A movement toward an adminis- 
trative base appears inevitable. Justice has, against its will, been 
forced to grant a skeptical indulgence to the advisory opinion. It 
has, to speed its work along, been compelled to make a cautious 
use of the consent decree. Each is still a blunt tool in the early 
stage of development; each needs to be shaped into a nimble instru- 
ment of control. 

In other domains the advisory opinion has been converted into 
the administrative ruling. It. is argued that rule-making ought to 
be domesticated to use in antitrust. Its informal process is sim- 
plicity itself. The representatives of a trade come to Justice with 
their program. Negotiations are entered into. The resulting agree- 
ment is virtually a contract between the industry and the Govern- 
ment. The companies pledge behavior in accordance with the terms 
of the document. Justice promises' immunity in respect to the enu- 
merated practices. 

A few pencil strokes will create the ideal process. An industry 
seeks advance clearance for its program. Justice understands the 
operation of the national economy and is fully informed in respect to 
the proposal. It gives adequate notice, seeks out all parties Avho may 
be in interest, gives to all concerned an opportunity to be heard. The 
procedure is informal; all available knowledge is distilled into a 
common understanding, an agreement is reached as durable as the 
occasion and circumstances allow. The result represents a rneeting 
of minds steeped in the realities of the industry. It is only fair that 
a legal immunity should be thrown about a course of conduct which 
scrupulously adheres to the lines of such an understanding. The 
Division could then safely say to those who had sought its advice, 
"Upon the basis of the facts as you have set them forth, you may 
proceed lawfully." But, "if you deviate from this particular pattern 
of conduct, you do so at your own peril." 

The picture is persuasive. The single standard of the Sherman 
Act does well enough as a norm ; but reason dictates its accommoda- 
tion to the circumstances of particular industries. Litigation is too 
ponderous for the case-by-case approach; the administrative ruling 
seems to meet the need for a more flexible and expeditious remedy- 
It promises alike to free business enterprise from unnecessarily legal 
hazards and to bring its activities into closer accord with the law. 
It opens the door to executives honestly in quest of advice. It lifts the 
cloud of uncertainty beneath which businessmen must now launch their 
ventures. If ignorance of the law excuses no man, the reason is not 
106 



OONCENTRATION OP BCONOMIG POWER 107 

that the source of ignorance is presumed to lie within the law itself. 
Surely it is within the realm of reason that persons vitally concerned 
be informed in advance about the meaning of the statute ; and if they 
act in reliance upon such advice, the consequent fault is not theirs. 

Advance clearance also promises to raise the level of enforcement. 
The appearance of businessmen is voluntary. They come on their 
own business rather than as defendants. No stigma of potential 
crime attaches to their presence ; no presumption of guilt has become 
an article of faith; the industrial landscape is not read in terms 
of a hypothesis of monopoly. In a spirit of amity the parties can 
address themselves to the practical problems in the industry. 

Such a process can the better accommodate itself to the volume of 
traffic. A matter at issue can go forward at a fraction of the former 
cost; a substitute of the preview for the clean-up is the greatest of 
economies. The cost of investigation is the single item in the bill of 
expense that carries over to the new procedure; and inquiry, neces- 
sary in any event, would serve a more objective master. It would be 
addressed, not to fastening guilt upon the defendants, but to correct- 
ing industrial practice. In such research the industry would have a 
stake, and the costs might be materially reduced by the cooperation of 
business.^ With the funds at its disposal, Antitrust could supervise 
a far larger segment of the national economy. 

Tlie very shift in emphasis is fraught with significance. As it is 
now the law is not invoked until after the fact. Justice steps in to 
run the clock back, undo what has been done, resolve a fused mass into 
its elements. A return to the status quo — or to some hypothetical 
status quo — is often impossible, the earlier pattern has been obliter- 
ated. It is far more sensible to invoke the law when it can get in its 
real licks, before forbidden usages have been woven into the very 
design of the industry. It is true that many practices come by 
growth, that folkways come into the law by stealth, that their arrival 
cannot be dated, that they do not fit the concept of a plan. But, how^- 
ever slowly and surreptitiously they emerge, they are constantly in 
process of change. Hence, with the administrative ruling, a public 
authority can give direction to their development. 

If the matter were as easy as all this, little could be said to the 
contrary. But an issue in antitrust is a coniplicated matter, and a 
variety of hazards attends its conversion into a declaratory ruling. 
The plan brought forward is a code b'f behavior for the industry ; it 
is — modified perhaps beyond recognition by event, expediency, adjust- 
ment — to continue over the years. The commitment of the Division 
concerns a concert of corporations, projects far into the future, 
involves consideration for the moment obscure. In nature it is rather 
a law for the conduct of an industry than an assessment of activities 
Avithin it. Even assuming the utmost in good faith, the proposal 
cannot work out as formulated. The industrial system is highly 
dynamic, business practice is a stream of accommodations; in cor- 
porate structure, technology, marketing, consumer acceptance, the 

^ It can be plausibly argued that the outlay incurred keeping an Industry orderly and 
within the law is a necessary cost of production. If so, the expenses essential to such a 
•control might be borne by the trades concerned or by industry generally. The resulting 
betterment in the mores of business might well pay its own way. A precedent is offered 
in the office of the Coordinator of Transportation, 1934-36. The expenses of Commissioner 
Eastman's establishment were logically assessed against the railroads. 



JQg CONCENTRATION OF ECONOMIC POWER 

unexpected forever appears. No conference, however fully it is 
informed, can predict the future.^ 

The administrative process, which Justice is asked to borrow, is not 
us yet full grown. It exists as an aggregate of devices and procedures 
not yet articulated into an effective scheme of control. The agency of 
regulation is not easily held to its function. As establishment comes 
upon it, it will tend to lose initiative, bury itself in detail, create a 
stifling body of tradition, become a humdrum organization. All 
through human society the instrument tends to obscure the office; 
function tends to survive in the sheer daily grind of carrying on. 
Difficulties, too, attend the very process of administration. Its 
authority is pent in by legislative grant ; and it falls back upon its 
delegated powers as a defense against anything it does not want to 
do. As "the words of the law*' are invoked as a check upon the novel 
and the unusual, the agency retreats further and further within the 
verbalisms of the statute. The imaginative administrator still has 
room enough to accomplish what he d.eems essential ; but the ingenu- 
ity of the ordinary official does not rise to so severe an ordeal. As a 
consequence there is an insistent demand for an enlargement of 
administrative powers in order that the agency may be lifted above 
the literal and restored to its office. 

Thus pressure, retreat behind the act, a demand for increased 
power runs a merry chase. It is obvious that those whose style is 
cramped by its rulings constantly cry out against "the arbitrary acts 
of bureaucracy"; yet almost the unanimous judgment disinterested 
observers have is that leniency rather' than severity is accorded vested 
interest. The serious complaint is that tolerance for business has 
involved injustice to the public. Antitrust would be subject to con- 
tinuous pressure from the managerial group, and against such indul- 
gence its process would have to be carefully guarded. 

Yet, for all of this, a place may be found in Antitrust for the admin- 
istrative ruling. Its effective use, however, requires a scheme of reg- 
ulation shaped to its distinctive task. For the issue is not limited to a 
single transaction; the agreement becomes a statement of policy for 
the future conduct of an industry. It must be grounded in actuality, 
invite full deliberation, do justice among all the parties it concerns. 
It cannot emerge from a plan on paper ; it must be shaped to the very 
life of the trade. In a word, it should be a code for the government 
of an industry. Sucli a process cannot come into practice full blown. 
It must begin as "a cautiously experimental power." The borrowed 
device must be accommodated to its habitat. As understanding grows, 
its lines should be reshaped until it becomes an effective agency of 
control. 



= A technical way out is, of course, always open to. the Government. A plan on paper 
is one thing; the scheme in oper;itlon something quite different. It is in the abstract quite 
obvious that where business executives go beyond the terms of the agreement, justice Is 
not bound. The solemn covenant has been overstepped by one party ; the other, released 
from all promises, is free to take whatever steps circumstances demand. Immunity cannot 
be stretched to comprehend more than lies within the bond. Yet a limit of tolerance is 
implicit in the good faith which the Government has pledged. Words have very elusive 
meanings ; tlielr content varies enormously from application to application. An agreement 
is little more than a skeleton ; to give it reality, a great deal must be spelled out from 
between the lines. The usages In vogue may run quite contrary to those in contemplation ; 
yet their validity may be juggled out from the terms of the agreement. Or actuality 
may accord with the nominal understanding, yet present a situation which would never 
have been sanctioned. Its pledge once given, a technique of escape is not easily available 
to the Government. 



CONCENTRATION OF ECONOMIC POWER 109 

HAZARDS AND QUESTIONS 

A beginning could be made with cases already in controversy. The 
Government brings suit at law or in equity. The parties understand 
the cost, delay, confusion, irrelevance of litigation ; they agree to take 
the-administrative short cut. The task is to explore the line where 
public interest and private advantage clash and to resolve the conflict. 
Justice must see to it that the frontier of legal tolerance, as marked 
out by the Supreme Court, is not crossed. It must impose a ban 
against a closed trade, collusion to restrict output, agreement to main- 
tain price. It must forbid to firms the use of a common formula for 
finding costs ; it must not allow the consumer to be deprived of access 
to a free and open market. In such matters a series of prohibitions 
comes easily enough ; an injunctive section of the decree could be made 
to shape their terms. 

The positive provisions are no such simple matter. An information 
service, a system of open price filing, a classification of customers, a 
uniform scheme of discounts, a barrage of trade usages, are device^s of 
business enterprise. In themselves they are neither good nor bad; 
their moral quality derives from the ways in which they are. used. 
And no usage stands alone ; each takes it quality from the group of 
trade practices of which it is a single aspect. An issue, then, no matter 
how narrow its initial statement, invites scrutiny of the whole pattern 
of the industry. 

At the very threshold stand a series of questions. Exactly what 
is an industry ? "Wliat are the limits of its coverage ? Are producers 
of special products to be crowded off into an association of their 
own? Suppose that the byproduct of one industry competes witli 
the main product of another? What of a case like rayon against 
silk, where the products of separate industries compete? How is 
representation to be secured for all who have a stake in the result? 
How is the group to be kept constant, when parties in interest vary 
from question to question? How are the rights of minority groups 
to be protected ? Of firms that live along the fringes ? Of outsiders 
to whom a connection is necessary to carry on? As interest becomes 
more and more remote, where is the line to be drawn ? If lawful ends 
are to be served, all the interests involved should be represented at the 
conference. "Hearings open to all who are concerned" is easy to 
profess but almost impossible to realize. An industry is not a regi- 
mented array of firms, like one to another in all that gives identity. 
Its separate units are a miscellany whose interests harmonize and 
clash in various ways. Among them representation is a delicate prob- 
lem, and the rule of the majority puts in jeopardy every minority 
interest. It would be highly difficult to adjust control to the com- 
plexities of industrial formation. Nor is it easy to tell how large the 
number of conferees must be to keep any legitimate party from being 
left out in the cold. 

A change at one point has repercussions far and wide. If an issue 
arises in respect to automobiles, chemicals, or steel, the producers of 
raw materials and the distributors of the commodity are vitally 
affected. The larger units in an industry might seek an accord with 
Justice, and the independents — many in number but small in indus- 
trial power — might fir-^ ^h^'^v very existence at stake. The agree- 



110 OONCENTRATION OF ECONOMIC POWER 

mentj in a direct or roundabout way, is a threat to the distinctive 
equities they have built up in the industry.^ And if all who are con- 
cerned with the outcome are to be invited to the conference, amid 
the resulting babel of tongues what chance is there for a real accord? 
Would the decree bind only those who signed on the dotted line? 
What of the recalcitrant 10 percent whose activities might frustrate 
the result?* 

How, too, in shaping the decree, could questions of policy be 
avoided? Would Justice encourage the advance of technology and 
the elimination of the unfit? Would it promote a highly dynamic 
economy in which every concern had forever newly to make good? 
Or would it, in recognizing demands for economic security, keep the 
little fellow in business? Could it, in the face of pressure from 
organized petty trade, escape "the politics of industry"? How could 
it avoid freezing the existing industrial structure with all its waste 
and extravagance? Could it keep industries open to all who wished 
to take their chances? Or would it, by sanction and injunction, 
create vested interests within an enduring framework of business? 
As the years passed, would the impact of its decisions tend toward 
a more efficient, articulate, purposeful economy? Would it in time 
be compelled to abandon competition for a more "realistic" philos-. 
ophy? It is easy enough to extend such questions, immediate and 
remote, into a real catechism. But their import is clear enough. 
They indicate how uncharted is the way of formal control, how great 
the obstacles to be faced, how many the distractions to be avoided, 
how easily the end may be lost in concern with the instance. 

The process of negotiation also demands its safeguards. The busi- 
nessman wants advice before the fact; the Government demands 
security for its plighted word. If both are to be satisfied the judg- 
ment must be based upon a knowledge that anticipates the future. 
An open file on an industrj^ should precede by many months the 
formal raising of any question. It should be kept up-to-date, be 
available at any moment. All information relative to trade usage 
should be gathered, arranged, indexed. But, if facts are to shape 
judgment, analysis must convert them intO' undjerstanding. The 
administrative agency must become familiar with the industry; it 
must know intimately its structure, products, markets, technology, 
folkways, balance of large and small units, affiliations with other 
trades, and place in the national economy. It should possess norms 
with which to test the good faith in proposals submitted, envisage 
their practical operation, evaluate them as remedies for current mal- 
adjustment. It should not have to seek its data from the corpora- 
tions before it. Its access to independent sources of information 
would eliminate the fear of entering into an agreement blindfold. 

The character of the ruling which results must accord with its 
function. In a world of good and bad, an eternal ban can be laid 
against a practice that is evil; in a court of equity it may be per- 
petually enjoined. But the affairs of an economy are doomed to 
change and the perspective shifts with the increase m understanding. 

• During the N. R. A. the charge was persistent that In the codes the control of one'8 
business had been "delivered Into the hands of his competitors." 

* In quite a different set-up, N. R. A. had to face many such problems. Had the experi- 
ment continued for some time, its experience might throw much light upon the path ahead. 
As it was, the great mass of these questions did not get answered ; they were not even 
adequately raised. 



OONCENTRATION OF ECONOMIC POWER JH 

In the current state of knowledge, a definitive code for an industry is 
out of the question. The agreement can at its first writing be little 
more than a tentative hypothesis for the conduct of an industry. 
Every measure which it contains is subject to correction ; either party 
should at any time for good cause have the right to move for 
amendment. 

Its use demands a constant oversight of the operation of the trade. 
In the past the serious bother has not been in the winning of cases, 
but in the follow-up of decrees. If their terms had been adequately 
policed, the story of antitrust enforcement would be far less a series 
of sporadic episodes. Justice cannot afford to win hard-fought battles 
only to allow victories to be eaten away by inaction. It hardly suflBces 
to cure the patient if he is to be j>ermitted to relapse into disease. It 
does little good to outlaw a practice if a substitute is permitted to 
achieve the same objective. The void in making the law work can be 
overcome only by a regular check-up. 

Thus the administrative process becomes an instrument of indus- 
trial government. The initial provisions of the instrument would rest 
upon the best of current knowledge and belief. But they should be 
subject to amendment as practice, circumstance, and expanding 
knowledge might suggest. A breach of the terms should be a civil 
offense, reached by a simple administrative action, and remedied by 
mandate or punished by fine. To such an instrument a tentative oflfi- 
cial assent would be accorded. Justice could not protest activities 
which conform to its terms, but it could at any time move for their 
revision. Save for conduct that lay clearly without the law, firms 
would not have to carry on under permanent injunctions which they 
are powerless to lift. As the operation of the industry might demand 
and so far as the public interest would allow, any provision could be 
modified. 

It is useless to minimize such a task of public oversight. The 
concern of most other supervisory bodies is with a narrow domain 
or a single aspect of an industry at work. In comparison to agencies 
concerned with the railroads, the merchant. marine, corporate securi- 
ties, the task would be gigantic. Antitrust would have to operate 
over almost the total area of the national economy. Certain prov- 
inces would be excluded or rarely demand attention. The trades 
local in character are beyond its scope; for many parts of the econ- 
omy — motor transport, railroads, the staples of agriculture — Congress 
has made other provision; where competition is operative there is 
no need of supervision ; aspects of industrial practice fall more prop- 
erly within the' orbit of the Federal Trade Commission. But, with 
due regard to every limit set by local charter, legislatiA^e exception, 
adequacy of regulation by the market — the domain is broad and still 
largely unexplored. It is idle to attempt to bring it under the author- 
ity of the Sherman Act all at once. There can be no inmiediate 
escape from the hit-or-miss approach of the individual case. A 
rough formula should determine the industries "selected for immediate 
attention. Its terms should be departure from the competitive stand- 
ard, the harm to competitors and consumers, the place of the trade in 
the national economy. 

Once off to a good start, the superiority of the administrative 
process would become nianifest. Its merits are so outstanding that 



U2 concp:ntkation of economic powp:r 

industries may be expected voluntarily to seek its sanctions. The 
demand might well exceed the capacity of the agency to furnish 
guidance. Justice should act only on its own motion until experience 
enables it to respond to such requests with assurance and understand- 
ing. It will be difficult to gear traffic to the requirement of competence ; 
for, where a trade is well organized, there is constant apprehension 
lest some part of its intricate pattern lie without the law. The pros- 
pect of a conference with Justice, of amicable amendment, of freedom 
from legal vexation, is very alluring. If the industry is sprawling, 
disorganized, highly competitive, the search for security becomes 
frantic. The demand for an instrument flexible enougli to allow an 
industry to take the course of events will be insistent. Eventually the 
initiative should be open both to justice and to the industry. 

It is a hard road ahead-^but it seems to be better than any other. 
On the lofty plane of purpose and principle the law has always been 
alert to the instrumental character of industry. If, in the realization 
of public policy, the avowed ends have been blurred or lost, a dominant 
reason is not far to seek. Antitrust has lacked suitable tools with 
which, to do its work; its want has been in devices and procedures 
fitted to the task which needs to be done. It is upon this level that 
the urge toward invention must find outlet in techniques of regulation.. 
The public control of business awaits the creative work of adminis- 
tration. 

THE TASK OF RETOOLING 

In the shift the work of Antitrust would be transformed. As a divi- 
sion of Justice, its pristine task has been that of a prosecutor ; as an 
arbiter of arrangements under which an industry is to carry on, it 
has driven far into administration. It has become charged with the 
appraisal, the observation, the revision, of the pattern of trade prac- 
tice. It has, in a word, come to perform an economic office. As a 
day-by-day supervision of the affairs of industry, its task is admin- 
istrative. As a filling in of detail in the blanks of a statute, it is 
legislative. As a doing of justice between the parties who have 
interests in the industry, it is judicial. In all its aspects its concern 
is with industrial government. Its reorientation to its revised office 
will comei slowly, fumblingly, step by step; but it is possible to 
anticipate, at least in general terms, the changes which impend. 

To the. newer process the Antitrust Division would have to be 
regeared. Administration would be pivoted upon sections charged 
with industrial analysis and the formulation of rulings and decrees. 
The task of the former should be to capture a picture, in clean-cut 
perspective and comprehensive detail, of the industry in operation. 
Against the background of structure and pattern of usage, the sources 
of maladjustment should be laid bare. If every case leads to an 
adequate diagnosis, the results should prove cumulative. Even under 
an ad hoc approach, little by little the topography of the national 
economy will emerge. Industries may range themselves into types; 
a trouble spot may be matched against others of its kind ; fault lines 
will be discovered in the economy along which disorder may be ex- 
pected. A growing body of experience will be at hand upon whicli 
to draw as occasion demands. 



CONCENTRATION OF ECONOMIC POWER 113 

A distinct section should be concerned with remedies. Its task 
is constructive; its work begins where that of the other division 
leaves off. Its proposals must be grounded in adequate analysis; but 
they involve choices between alternative schemes of arrangement 
which imagination must help knowledge to predicate. Its concern 
is in a sense the technology of industrial order. As inventors fur- 
ther the economic arts, its office is to create and improve the devices 
and procedures through which an industry maintains order, carries 
on, does justice between the several parties concerned. To turn its 
work to account it must engage in a constant oversight of the decrees 
which it has to administer. 

Such tasks are exacting in respect to personnel. It is obvious that 
the work is not in strict accord with the usual capacities of the law- 
yer. While in a sense the demand is for the practice of economics, 
its formal discipline — with severities which far too often reflect 
more of the remote world of mind than of the real industrial proc- 
ess — may prove as much a hindrance as a help. Academic economics, 
as well as legal law, may obtrude with alien stereotypes, irrelevant 
procedure, a scheme of rigid categories in which to pour seething 
actuality. The need is a round of skills shaped to the task. It is 
at present impossible to discover proficiency in so novel an art ready- 
made; it will have to be developed. For that reason innate qualities 
are more important in prospective officials than any formal schooling. 
Given a keen, retentive, and resourceful intellect, an ability to see 
the forest without losing the trees, an open mind that remains skep- 
tically alert, a capacity to project a plan on paper into a scheme in 
operation, a devotion to the public interest — and the exposure of 
experience will do the rest. The general run of the craft may be 
inmiune — but there are lawyers and economists upon whose disci- 
plines such a competence can be grafted. A staff for such a task 
cannot be assembled; it must, through trial, exposure, and discard, 
be painfully built up. 

An institution can hardly drift so far without creating an an- 
tithesis between its inherited form and its assumed office. A number 
of serious questions press for more durable answers than an undi- 
rected process of growth can give. It is only through the tenuous 
link of equity that Antitrust has become a positive agency of business 
control. It has no legal warrant for such a function of oversight; 
it can command only as an industry is loath to risk a battle in court. 
Its exercise of authority is still set within the adverse formula of a 
cause of action; the office of arbiter has been grafted upon that of 
prosecutor; the rules to be decreed for th£ game masquerade as a 
legal judgment; the parties in quest of usages under which they are 
to carry on are still technically the defendants. Most anomalous 
of all, justice is dispensed by an agency whose task it is to police. 

A clash between original and derived function cannot forever con- 
tinue. As a division of Justice the task of Antitrust has been that of 
prosecutor. As an arbiter of arrangements under which an industry is 
to carry on, it has stumbled into an administrative office. The tasks 
should not be confused. Justice should be left free to inquire, to com- 
plain, to move for a remedy; such activities are in accord with its 
distinctive competence. The remedial section should be freed from 



]^24 CONCENTRATION OF ECONOMIC PQWER 

its ancient bondage to litigation, given its independence, fitted out with 
all the requisites of its office. Functions which are distinct should 
be separated; the prices of negotiation should be placed — where in 
character it has already drifted — outside the Antitrust Division in 
an independent administrative body. 

Judicial review should be by way of a specially constructed indus- 
trial court of five or seven members.- They should be as competent 
in the ways of industry as they are learned in its law. All protests 
against administrative rulings whether by Justice or by a private 
party, would go to this bench. From it appeal would lie directly 
to the United States Supreme Court. The court, like any Federal 
tribunal, would sit at law and in equity. In the exceptional case, it 
would sit en bloc; the run-of mine business would be dispatched by 
the single judge. As occasion demanded, it would hear criminal ac- 
tions, refer issues to the jury, impose penalties. It would more often 
sit in tort and assess against corporations and their officials the ap- 
propriate fines. In the policing of decrees, a host of minor or major 
violations would be brought before it. It would issue injunctions, 
order divestment and dissolution, decree codes of fair conduct. 

But if effective results are to be had, a vigorous agency of enforce- 
ment must be maintained. Its place must remain in Justice. It is 
one thing to decree, quite another to police; and again the functions 
must not be confused. The detachment essential to analysis, the 
studied poise required by judgment, are hardly assets in detecting 
malfeasance and calling to judgment suspicious conduct. Yet, since it 
is a trade practice rather than personal guilt which is to be presented, 
a zeal for righteousness needs to be tempered somewhat with the prac- 
tice of an industrial art. The Division must likewise police the decrees 
of the Court ; and, as these increase in number, its oversight will extend 
over larger areas of the industrial system. It must with diligence 
hunt out violations; but since the industry operates under a flexible 
instrument, it must constantly be alert to amendment. It must, as 
occasion demands, seek penalties for public tort; but it must also, 
through chancery, move to plug loopholes, prevent evasions, amend 
rents in the mesh of the decree. 

Little change in structure would be necessary to accommodate the 
Division to its enlarged task. Its head, an Assistant Attorney Gen- 
eral, would continue to be a Presidential appointee. His position 
would become one of strategy within the national economy ; he would 
determine the types of trade practice which would be subject to revi- 
sion, choose the industries to be brought into court, direct the tech- 
niqiies of investigation. His personal competence should accord with 
the task he is called upon to perform. As a political appointee his 
office would take color from the administration in power ; and, within 
the limits of policy marked out in the law, it would reflect the party 
progVam. There would remain the chance of a lapse under a weak 
President into letting things take their own course. But the institu- 
tion once established, its far-reaching tentacles should support its 
activities and the inertia of old would be difficult to achieve. Once 
its usefulness had been demonstrated, business could hardly get along 
without it. A fresher and more invigorating atmosphere would come 
to pervade the enforcement agency. 



OONCENTRATION OF ECONOMIC POWER II5 

The whole scheme would sharpen structure along functional lines. 
A sharp separation of powers would divide the administrative from 
the judicial process. In a sense, the head of the Division would be an 
officer of court. He would control the docket; in his selection of 
cases he could not escape the role of accessory before the fact in the 
making of the law. .But judgment none the less would lie with a body 
whose members were in no sense parties to the action. The new tri- 
bunal would not merely condemn and enjoin ; it would correct and 
commend. Within its lesser orbit it would be as free as the Congress 
to make a constructive attack upon the disorder in an industry. It 
would substitute a regular for a casual, a competent for adventitious, 
determination of issues. 

At present it is a matter of chance in what district an antitrust 
suit is brought. The case stands apart from the run-of-mine grist 
of the judicial mill; the judge's ability to keep his footing over an 
unfamiliar terrain is a matter of accident. Under the new arrange- 
ments cases would go to a court experienced in industrial matters. 
A host of scattered suits would be garnered into a singlfe docket. 
In time there would emerge a "code industrial" possessed of such 
focus, breadth, and consistency as human nature and the changing 
circumstances allow. It would constitute a flexible law of industry 
for an economy which is on the march. 



3. ANTITRUST FACES THE FUTURE 

THE RESIDUAL ESTATE 

At its beginning the Sherman Act Avas public policy in respect to 
business. Today it is one of a number of acts in which public policy 
is recorded. Then it was the legal weapon for the control of busi- 
ness; now it is a single instrument in the arsenal of regulation. It 
is still the dominant expression of public purpose, and other measures 
are still written as qualifications or special cases. But legislation 
already upon the statute books is grounded upon other assumptions; 
and economic creeds, other than competition, have arisen to dispute 
its foundation. Nor is the area in which industrial fact accords 
with its presumption as large as once it was. Almost everywhere 
(he free and open market has lost its primitive simplicity; nowhere 
does it operate in the complete and automatic way once glibly as- 
sumed. In a word, the world has grown up, industry has compro- 
mised competition with its folkways, the sovereignty of antitrust in 
public policy is no longer absolute. 

The Sherman Act was laid down as a defensive wall about laissez 
faire; today a Federal oversight of the national economy is a matter 
of course. So long as the market supplied a system of checks and 
balances which was assumed to keep industry in order, a passive Gov- 
ernment did well enough. As the efficiency of market control was 
lost — or its shortcomings became manifest — the need of positive con- 
trols became apparent. Necessity decrees a search for techniques to 
keep industry going; opinion lingers lovingly upon "the free' and 
open market." Pressures drive public policy forward; our beliefs 
command that novelties come by way of exception. As a result, the 
development of public control is pragmatic. The older pattern is 
beset by, and threatens to be smothered beneath, expediencies. 

The current problem in public control gets stated as a sharp alterna- 
tive. Choose you this day between the regimentation of industry and 
the rule of the free and open market. Either competition is to be 
imposed where there has been departux'e from its pristine pattern, or 
every trade is to be regimented under a bureaucratic control. The 
easy dichotomy is dramatic, speculative, and unreal. The landscape 
of the national economy is not a dull, monotonous gray. A number of 
industries, for one reason or another, could operate as competitive 
units only with a serious loss of efficiency. Others have strayed so 
far from the competitive norm that a return is a parlous adventure 
which would have to be shrewdly contrived and brilliantly executed. 
Hostages have been given to prevailing arrangements and the rank 
growth of years would have to be trimmed away to make a fresh be- 
ginning. Even the brG'akfng up of so loose a union as a trade associa- 
tion presents its difficulties. The dissolution of a giant corporation 
calls for the exercise of an art which as yet is little perfected. There 
116 



CONCENTRATION OF ECONOMIC POWER 117 

are industries^ whose activities fall short of strict legal requirements, 
yet whose performance seems rather better than an enforced com- 
petition would be likely to induce. At the other extreme is the trade 
in which an excess of zeal has hammered the precise competitive design 
into a miniature of chaos. And in between, along the fringe, weaving 
in and out, are an assortment of industries, in which elements of re- 
straint and competition have been colorfully woven into the same 
pattern. 

It is hardly possible to reduce industrial actuality to trim cate- 
gories. A threefold classification of the competitive, the under- 
competitive, and the overcompetitive confuses analysis by parading 
simplicity. In the economy as with organic life and human culture, 
there is no straight line of evolution; nor is there a general trend 
toward concentration of control. Industries forever react to the 
circumstances they face. They may blunder into a struggle for 
markets as well as conspire to escape it; changes occur constantly 
and there is no single trend in development. 

To large areas of the national economy the Sherman Act is for 
one reason or another inapplicable. Long ago the public utility was 
recognized and it is now established beyond recall. There we accept 
unity in operation as in the public interest. We no longer permit 
the entrance of newcomers except upon a showing of convenience 
and necessity ; save for the right of the state to enter with its yard- 
stick, the industry is virtually closed. An authority, therefore, is 
set up as a substitute for a free and open market which is no longer 
able to accord protection. The commi&sion, and its scheme of regu- 
lation, still presents a series of unsolved problems, which break very 
differentlj^ for railroads, street railways, light and power, water. 

An evolving agricultural policy has seriously compromised the 
rule of competition. The interest of the group has been exalted 
above that of the individual ; the acquisitive urge has been forced to 
bow before regulation directed at a collective security; a quota has 
been assigned to the farmer — in excess of which he can soav and 
reap, but may not market. To the same end legislation seeks to 
redress a disadvantage in bargaining position by making lawful a 
concert of action by agricultural cooperatives. 

Even when the departure from the competitive norm is marked, 
the Sherman Act may prove inert. Restrictive practices are often 
absorbed into the conduct of the industry. They arise, are accepted, 
lose their identities, in the general body of industrial usage. They 
come into being as restraints; yet they may linger after an avid 
struggle for markets is resumed. Once linked to the established 
order they are not easy to uproot. They may be no more than symp- 
toms of an industrial disorder not yet discovered. If so, a ban upon 
them merely invites an encore appearance in novel form. 

And a large domain, clearly competitive, lies beyond the remedial 
reach of antitrust. What of the overcompetitive industry, with 
its disorderly market, chaotic price structure, overdone capacity ? An 
excess as well as a dearth of rivalry carries its detriment to the 
general welfare. The use of twice the human and material re- 
sources necessary to turn out our budget of bituminous coal ought 
to shock a sense of efficiency as much as cotton plowed under or 



JJg CONCENTRATION OF ECONOMIC POWER 

oranges kept away from the market. A constriction in the stream of 
commerce near the oil refinery yields a toll rightly called "unearned 
increment"; the colossal waste in the system of filling stations, 
through its inflated retail margin, impose a far heavier burden upon 
the consumer. A breaking of a bottle neck manifest in making 
illegal a concerted action to get "distress gasoline" off the markets, 
contributes nothing to freeing the economy of the heavy toll which 
the militant methods of marketing entail. At one point in an indus- 
try an antitrust action may break barriers and allow traffic freely to 
move; but at another point, where traffic needs to be checked rather 
than released, another sort of attack is needed.^ 

Nor does the pattern always stay put. Industries are moving at 
various tempos in various directions. If some move toward increased 
concentration, others are moving toward a bigger and better competi- 
tion; still others shuttle back and forth in response to the stimuli 
which constantly beat upon them. A shift in technology, a deal in 
high finance, the appearance of a substitute, the loss of a foreign mar- 
ket, the development of a byproduct — and the fabric of trade prac- 
tice reveals new lines. An overcompetition, with its induced demand 
for security, may breed conspiracy. A restraint itself, through some 
weakness in its armament, often invites a return to competition. 

A vast realm, however, still lies within the orbit of the Sherman Act. 
Tlie kind of restraints envisaged by the Fifty-first Congress still exist. 
The channel of trade is constricted at the strategic pomt; the correc- 
tive is the smashing of the bottle neck. A concern, which has devel- 
oped bodies for automobiles, stands ready to supply the railroads with 
up-to-date, lightweight parlor and sleeping cars; the Pullman Co. has 
converted, its monopoly into a series of exclusive contracts ; an anti- 
trust action should provide an escape from obsolete equipment. A 
f^erious check is imposed upon group health by a boycott of "organized 
medicine"; the physicians serving "the consumers' cooperative" are ex- 
cluded from hospitals and expelled frorh the brotherhood; a breaking 
of the barrier clears the way for experimentation in the provision of 
medical services. It is impossible to establish a daily paper without 
a news service. Yet access to any one of the Big Three news-gathering 
organizations is as severely guarded as entrance into an exclusive club. 
If their facilities were open to all upon the same terms, the trend 
toward fewer newspapers would pass into reverse and journals might 
come to reflect the diverse currents of opinion in the community. In 
a multitude of such cases the invocation of the Sherman Act offers a 
direct attack. 

But over a large industrial domain a single legal blow is not enough. 
The smash may be needed — or it may not — but unless a corrective goes 
along, the end of the matter is likely to prove as bad as the beginning. 
A scheme of restraint, to which an industry has grown accustomed, is 
not at once sloughed off; it must little by little be eradicated from the 
organism of trade practices. A sporadic attack, not even a series of 
staccato blows, can be made to clear up the malady. It is, of course, 
quite possible easily to achieve immediate results ; recent drives in milk, 

' T ., .• liency. too, Is a factor in the definition of limits. In the personal service trades — 
ilie laundry, the barber sliop. hairdressinp. cleaning, and dyeing — a multiplicity of cor- 
porals of Industry are eng.iKt'd in deadly rivalry ; for their regulation a snooping force 
out of all proportion to the r.siilt.s would be demanded. If there must be oversight tlie 
'.i*k would seem to l^ for tli(> lot;il police. 



CONCENTRATION OF E'CON O:\IIC' POWER 119 

fertilizer, potash, the building trades, have demonstrated as much. 
While the case is in process, restraints take to cover, prices fall, a flick- 
ering competition flares into vitality. But such phenomena represent 
a temporary response ; the real test comes when the legions have been 
shifted elsewhere and the stimulus is removed. In victory or in defeat, 
for a time the behavior of the industry will appear circumspect; but 
the rectitude may provide a protective coloring, rather than obliterate 
the indelible lines of the older design. A corrective that pierces to the 
heart <-i the difficulty — and endures — defies the ordinary probe at 
law. The habits of industry are too com]:yelling to be delicately read- 
justed by so blunt a weapon. 

In actuality industries are a miscellaneous lot. The requisite, there- 
fore, is a procedure rather than a recipe, and thus a more flexible proc- 
ess seems to offer. Broad ways of public control may be distinguished.; « 
but each needs to be readjusted to unlike instances. To become a ma- 
ture instrument of regulation, the casual attack of Antitrust must 
be transformed into a habitual procedure. It can endure only by tak- 
ing on the durable character of the activities it is used to direci:. In a 
word, it must shift its base from litigation to administration. 

A FINAL CAVEAT 

Antitrust is a symbol of democracy. It is an assertion that every 
industry is affected with a public interest. Quite apart from ifs 
operation, it keeps alive within law and public policy a value which 
must not be sacrificed or abridged. It asserts the firm, the trade, the 
economy to be the instrument of the general welfare. If the fact 
falls short of the ideal, the call is to amend -the fact rather than 
abandon the ideal. It may be that in many industrial areas, the 
free and open market has been compromised or is forever gone. 
Still its norms of order and justice endure to serve as standards for 
performance under another arrangement. In matters where the mar- 
ket can be restored to its economic office, there should be caution 
in substituting administration. A hazard to the common good at- 
tends the enlargement of personal discretion. 

No matter how competent the agency, informed persons shudder 
at the replacement of the open market by personal discretion. Only 
the impotence of competition to do what is expected of it invites the 
change. A case for the shift is wanting unless safeg-aards can be 
contrived to replace those which the minority group, the consumers, 
the interests interlocked with the industry, are forced to surrender. 
The administrative agency invites the very invasion of economic 
power which the competitive market is supposed to be proof against. 
It is played upon by all the pressures which powerful groups can 
muster into service. 

Other ventures have not pointed an alluring way. The commis- 
sions have been very effective in closing public utilities to outsiders; 
they have been far less successful in assuring fair charges to the 
users of their services. Their rigidities have discouraged experimen- 
tation with price which might have brought power and light within 
the reach of lower and lower income groups. The Interstate Com- 
merce Commission has been swamped beneath a deluge of detail. 
Save for the brief life of the Coordinator's office, it has spent little . 



120 CONCENTRATION OF ECONOMIC POWER 

energy upon a forward plan for the railroads. The various agricul- 
tural controls — corn, milk, wheat, sugar, cotton, tobacco — have been 
very sensitive to the plight of the farmers, rather negligent of farm 
labor, and far too indifferent to the general public who must pay 
the bill. 

The N. R. A., brief as was its life, staged a full-dress performance 
of the hazards of the administrative process. Wide powers were 
granted — to become sanctions under which the strategic group could 
lord it over the industry. The strong were served under the affecta- 
tion of protecting the weak; managerial privilege was entrenched 
under a pretense of fairness to the little fellow and to labor. Rules 
were written, presently to be smothered beneath a flood of exceptions ; 
the vague clauses in codes were made to mean what interested parties 
wanted them to mean: "emergencies" were invoked to justify orders 
which otherwise would have been intolerable. 

Such dangers, always imminent, may be forestalled. But vigilance 
must not relapse for even a moment. The question of privilege is 
seldom directly put; it emerges in a score of disguised issues. A 
scheme to restrict output is presented as a limitation upon the hours 
of labor. A cost formula for price is invoked to allow the little 
fellow to recover his expenses. A reduction of capacity is intended to 
do no more than bring it within hailing distance of what the market 
will take. A provision, fair upon its face, operates to the detriment 
of a firm whose progressive ways have been an embarrassment to the 
industry. The barrage of pressures is so persistent — the writing of a 
special rule, the invocation of an emergency, the declaration of an 
exception— that the stanchest official has difficulty in withstanding it. 
It emerges in forms so innocent that he must be forever alert lest his 
resolution be outflanked. The impulses from the privileged are omni- 
present and strong ; the voice of the unorganized, weak, and faltering. 
To catch the perspective the administrative agency must supply its 
own amplifier. 

Such moves are no more than next steps. As change obeys its 
dynamic urge, their contribution may be a restatement of the problem 
of public control. Trends are already manifest of which these pro- 
posals take little account. But their lines must be more sharply de- 
fined before they can become the concern of an articulate public policy. 
The stress and strain in industrial structure proceeds from a clash 
which runs deep. At the moment a triple demand is being laid upon 
the national economy — it must take the turbulent course of events ; it 
must ' assimilate a medley of public controls long overdue; it must 
provide an adequate national defense. It may well be that here is 
more traffic than the system of free enterprise can carry. But if com- 
petition belongs to aii interlude in history — a lull between ages of 
unlike authority — only its events can reveal the next stage. 

The task of keeping industry the instrument of the Commonwealth 
is as arduous as it is everlasting. 



APPENDIX A 

CONVICTIONS OF IMPRISONMENT UNDER FEDERAL 
ANTITRUST LAW, JULY 1890-JULY 1940 



Number of 
defendants 



Year sen- 
tences im- 
posed 



U.S.Y.Dehsi 

U. iS. V. Amer. Naval Stores Co. 

U. S. V. Haines. .- 

17. S. V. Patterson 



Labor union 

Business racketeering 

Labor union 

Business racketeering 



U. S. V. Rintelen 

U. S. V. Bopp 

U. S. V. Alexander & Reid Co. 



War spies. 
....do 



U. S. V. O'Brien. 



U. S.v. Powell 

U. S. V. Trenton Potteries Co. 



V. S. V. Williams 

U. S. V. Reilly. 

U. S. V. Krewoski 

U. S. V. Baumgartner _. 

U. S. V. Greater N. Y. Live 
Poultry Cham, of Comm. 

U. ,*?. V. Mercer.. 

U.S.v. WeinerO 

U. S. V. Fish Credit Assn., Inc.. 
U. S. V. Union Pacific Produce 
Co. 

U. S. V. Protective Fur Dressers 
Corp. 



Business racketeering. 

Labor union 

...-do 



Labor union 

....do 

....do 

Business racketeering. 
do 



U. S. V. Oramlich 

U. S. V. Fur Dressers Factor 
Corp. 



U. S. V. United Sea Woricers 
Union. 



U. S. V. Needle Trades Workers 
Industrial Unions" 



U. S. V. Local 807, International 
Brotherhood of Teamsters.^" 



Labor union 

Business racketeering. 



3 to 6 months 

3 moi ths' 

4 hours 

24 defendants, 1 year; 

3 defendants, 9 

months.' 
1 year' 



1 year 

__..do 

1 defendant. 2 months; 

3 defendants, 4 

months.^ 

4 defendants, 8 months; 

1 defendani, 30 days. 

10 days 

7 defendants, 6 
months; 1 defend- 
ant, 10 months.' 

10 months 

1 year 

6 months 

3 to 9 months 

10 days to 4 months... 



3 montlis 

3 months to 3 years... 

6 months to 2 years '. . 

2 defendants, 6 
months; 1 defend- 
ant, 1 year.3 

2 defendants, 2 years;' 
13 defendants, sus- 
pended sentences. 

2 years 

10 defendants, 2 to 15 

months; 68 defend- 
ants, suspended sen- 
tences. 

3 defendants, 3 to 6 
months; 2 defend- 
ants, suspended sen- 
tences. 

5 defendants, 1 year; 
4 defendants, 6 
months; 2 defend- 
ants, 3 months; 1 de- 
fendant, suspended 
sentences. 

23 defendants, 1 to 18 
months; 3 defend- 
ants, suspended sen- 
tences. 



1909 
1912 
1913 



1917 
1917 
1921 



1922 
1923 



1923 
1924 



1931 
1934 
1935 
1936 



' Contempt proceeding. 

> Reversed. 

' Sentence of 1 defendant commuted to 4 months. 

• Sentence of 1 defendant commuted. 

• Sentence suspended. 

• Contempt proceeding for violation of decree in U. S. 
' Sentences of 8 defendants suspended. 

• Sentences of all suspended. 

• Reversed as to 1 defendant. 
«o On appeal. 

25©6e4 — 40— No. 16 8 



V. Oreater N. Y. Live Poultry Chamber of Cormnerce. 



121 



APPENDIX B 

FINES IMPOSED UNDER FEDERAL ANTITRUST LAW, 
JULY 1890-JULY 1940 



Title 


Industry 


Num- 
ber of 
defend- 
ants 
fined 


Fines 
imposed 


Year 
fine im- 
posed 


U S v Moore 


Coal 


1 
1 
6 
2 
1 
6 

18 
2 

27 
5 
3 

12 

33 

■s 

3 

1 

5 
2 

27 
6 
3 

18 
1 

15 
4 
5 
4 

29 

34 

32 

12 
5 

16 
4 

■9 
5 
5 

17 
5 

'""12' 
10 

5 
20 
15 
52 
'7 
8 
1 
8 
16 
41 
6 
35 


i$200 

1,000 

2.000 

18,000 

1,000 

30,000 

47,500 

■2,000 

54, 000 

113,000 

3,000 

265 

63,000 

3,500 

10,000 

110 

132, 200 

5,500 

4,000 

18,000 

8,000 

51,007 

16,000 

2,000 

81,500 

15,000 

8,450 

8,500 

19,500 

6,000 

650 

8,500 

5,265 

7,250 

3,500 

20,000 

20,000 

25,000 

11,000 

1,250 

6,255 

13,000 

4,500 

7,500 

>9,000 

7.500 

25.000 

18.325 

40.000 

122,000 

51.000 

10,000 

500 

6,000 

20,000 

58.300 

l.S.OOO 

169.000 


1896 


U S V Federal Salt Co 


Salt 


1903 








U S V MacAndrews & Forbes Co 


Licorice paste 


1907 




Meat 


1907 






1907 


U S V American Seating Co 


Church furniture 

Company store 

Paper . . . 


1907 


U. S. V. Santa Rita Store Co. & SaniaRita Mining Co. 
U S V Parks , 


1907 
1908 


17 S V Union Pacific Coal Co 


Coal 


1909 




Umbrella frames 

Plumbers' supplies 

Paperboard 


1910 




1910 


U S V Albia Box & Paper Co 


1910 






1910 






1910 


U S V Ray 


Labor union 


1911 






1911 






1913 


U S V Patten 


Cotton 


1913 




do 


1913 






1913 






1913 


U S V Oeer 


Paperboard 


1913 


U S v Hunter Milling Co 


Flour 


1913 


U S v! New Departure Mfg. Co 


Coastfer brakes 

Cash registers 


1913 


U S v Patterson 


1913 




Fruits and vegetables. 
Wharf facilities _.. 


1913 


17 S V North Pacific Wharves & Trading Co 


1914 


U S Y Pacific & Arctic Ry & Navigation Co 


1914 




Clothes wringers- 

Farm produce 


1914 


U'S y Collins 


1915 




Plumbers' suppUes.... 


1916 




1916 




do 


1916 


U S V King 


Potatoes 


1917 






1917 


U S v Bopp 


War spies 


1917 


U S y.Cowell 




1917 


U S -v Mead 


Newsprint . 


1917 


U S v M Piowaty & Sons 


Onions 


1917 






1917 




Fish 


1918 


U S v Artery 


Labor union 

Tile 


1918 


U S \. Chicago Mosaic <fe Tiling Co 


1918 


17 S V Belfi . . . - 


do 


1918 


U S v Jensen Creamery Co 


Dairy products 


1919 




1920 


U. S. V. Alphons Custodis Chimney Construction Co^.. 

U. S. V. Ooodwin-Gallagher Sand & Gravel Corp 

U S V Alexander & Reid Co 


Brick chimneys 

Sand and gravel. 

Tile 


1920 
1921 
1921 






1921 






1922 


U S V Whiting 


Milk 


1923 






1923 


U S V Clow & Sons 


Plumbers' materials. _ 

Building materials 

Terra Cotta 


1923 


U.S. V.Andrews Lumber & Mill Co 

U S V American Terra Cotta & Ceramic Co 


1923 
1923 


U. S. V. Trenton Potteries... 


Pottery 


1923 



' Reversed. 

' Fines imposed for contempt of consent decree. 

» $1,950 reversed; balance remitted by President. 

122 



CONCENTRATION OF ECONOMIC POWER 



123 



U. S.Y. Williams 

U. S. V. Harvel 

U. S. V. Reilley. i 

JJ. S. V. Lindsley Bros. Co 

V.S.v. Cope 

U. S. V. Baker .- 

17. S. V. Brown 

U. S. V. Natl. Malleable & Steel Castings Co.. .-. 

U. S. V. Lay Fish Co 

U. S. V. Amer. Agricultural Chemical Co 

U. S. V. Shreve, Treat <fe Eacret 

U. S. V. Berger Mfg. Co. 

U. S. V. Nat'l Cash Register Co.''.... _... 

U. S. V. Berkey & Gay Furniture Co 

U. S. V. Aulshrook & Jones Furniture Co 

U. S. V. Allied Cleaners & Dyers of Seattle 

U..S. V. Baumgartner 

U. S. V. Meyers _ 

U. S. V. Greater New York Live Poultry Chamber of 
Commerce. 

U. S. V. Ludowici-Celadon Co 

U. S. V. Mercer - 

U. S. V. Nevada Northern Ry. Co 

U. S. V. Fish Credit Assn., Inc _ _. 

U. S. V. Protective Fur Dressers Corp. 

U. S. V. Lockwood & Winant 

U. S. V, Hulse ' 

U. S. V. Union Pacific Produce Co 

U. S. V. Fur Dressers Factor Corp... 

U. S. V. Gramlich 

U. S. V. Dairymen's Assn., Ltd 

U. S. V. United Sea Food Workers Union 

U. S. V. Standard Oil Co 

U. S. V. Socony-Vacuum Oil Co., Inc 

17. S. V. Local S0?4i, Wine, Liquor & Distillery Workers 
Union. 

U. S.v. General Motors Corp.^ 

U. S. V. Engineering Survey and Audit Co. 

U. S. V. Sheet Metal Assn 

U. S. V. Southern Pine Assn. _.. 

U. S. V. Long Island Sand & Gravel Producers Assn... 

U. S. V. Bausch & Lomb Optical Co 

U. S.\. Needle Trades Workers Industrial Union » 

U. S. V. Local &07, International Brotherhood of Team- 
sters ». 



Industry 



Labor union. 

-...do 

-...do 



Red cedar poles. 

Refrigerators 

Furniture. 

-..-do 



Iron castings... 

Fish 

Fertilizer 

Jewelry 

Metallath .... 

Cash registers 

Furniture 

----do 

Pressing machinery. 

Confectionaries 

Labor union 

Poultry dealers 



Roofing tile. 

Trucking 

Railroads... 



Fur skins 

Fish 

Credit information . 

Artichokes 

Fur skins.. 

Labor union 

Milk 

Labor union 

Gasoline 

---.do 

Labor union 



Auto financing. 

Building . 

...-do 

....do 



-.-.do 

Optical goods - 
Labor union.. 
....do 



Num- 
ber of 
defend 
ants 
fined 



Fines 
imposed 



$12, 500 

50 

13,000 

37,300 

70,000 

176, 000 

209 000 

227, 000 

31,000 

90,500 

26, 850 

10, 850 

2,000 

58, 950 

46, 950 

750 

* 20, 010 

10.000 

' 40, 650 

5,000 

250 

557 

48, 387 

6 38,000 

12,000 

4,000 

1,000 

8 63, 250 

360,000 

4,500 

9,000 

70,000 

375, 000 

1.000 



4 


20,000 


^6 


6,000 


1 


1,000 


3 


12,000 


9 


50,000 


4 


40.000 


4 


7,000 


^ 


10,000 



Year 
fine im- 



1923 
1924 
192.5. 
1925- 
1925 
1925- 
1926. 
1926 
1926 
1927 
1927 
1928 
192S 
1928 
1928 
1929 
1929 
1929 

1929 
1931 
1934 
1935 



1937 
1937 
1937 
1937 
1938 



1940 
1940 
1940 
1940 
1940 
1940 
1940 



• $500 Reversed. 
'$5,250 suspended. 
« $10,000 reversed. 

' Fines imposed for contempt of decree in U. S. v. National Retail Credit Assn. 

• $3,000 reversed. 

• On appeal. 

Fines imposed for contempt $11, 500 

Total fines imposed under criminal action , , 3,509,331 

Reversals, suspensions-.. 47,9.50 

Total net fines imposed 3,461,381 



APPENDIX C 

ANALYSES OF FINES IMPOSED UNDER FEDERAL ANTI- 
TRUST LAW, JULY 1890-JULY 1940 



Title 


Trial 


Guilty plea 


Nolo con- 
tendere 
plea 




i$200 






U S r Federal Salt Co 


$1,666 
2,ooa 












18,000 
1,000 




U S T Phoenix Wholesale Meat <t Prodvxe Co 






U S V Atlantic Investme iit Co 


30,000 
47, 500 










U S V Santa Pita Store Co. & Santa Rita Mining Co 


! 2,000 




U S V N^at'l UmbrHla Fram>' Co 


3,000 






1 13.000 




U S y Simmons 


265 




U.S. V.Ray 


110 






54,000 
63,900 




U S V Albia Box & Paper Co 






U.S.v. Steers 


3,500 








$10,000 


U S V So Wholesale Grocers' iss'n.^ 


5,500 








4,000 




U S V Thompson . . - 




18,000 


U S v John Reardon & Sons Co 






8,000 




51,007 






U S V Geer 




16,000 


U S V Whiting 




500 






132,200 


U. S. V. Hunter Milling Co - 

U S V Nat'i Cash Register Co ^ 


2,000 
2,000 












76,000 
8,500 
19,500 


5,500 








U S V Pacific & Arctic Rv & Navigation Co 








'5,000 






8,450 






8.500 








6.000 


U S \ Booth Fisheries .... 






13,000 


U. S. V. Col'ins 






650 








5,265 




7,250 
3,500 
2, 500 
20,000 






U S V King 






U S V Artery 


2,000 








U S V Feeney 


6,000 




U S v Bopp 


20.000 
7,500 




U S X Coweil - .. 


17,566 
7,500 




U S V Jensen Creamery Co 








11,000 






7,500 




U S v M Pionaty <& Son 




1,250 


U S v Nnt't Retail Monument Dealers Iss'n 






6,255 




19,000 






U S V Sumatra Purchasing Corp . ... 




25,000 


U S v Alphons Custodis Chimney Crnistrvction Co 






18, 325 






40,000 
20,000 
122,000 










U S V ■Hennidcr <fc Reid Co 








58, 300 






61.000 
13,500 




U S V American Terra Cotia & Ceramic Co . .. 




1,500 


U S V Trenton Potteries 


169,000 
10,000 
12,500 










U S V Williams 






U S v.FIarrel 


50 




U. S. V. Reilley 


1 13,666 





Reversed. 

Contempt proceeding. 

124 



OONCENTRATION OF ECONOMIC POWER 



125 



Title 


Trial 


Guilty plea 


Nolo con- 
tendere 
plea 


U. S. V. Nat' I Malleable & Steel Castings Co 




$5, 500 
37, 300 
68, 000 
176,000 
209,000 
1,000 
2,000 
31,000 


$221, 500 








U S V Coye 




2,000 


U S y Baker 












U S v Berkey & Oay Furniture Co ... 




57,950 


U S v Aulsbrook & Jones Furniture Co 




44 950 


U.S.v. Lav Fish Co 






U S V. Shreve, Treat and Eacret 




26, 850 


U S V Amer Agr'l Chemical Co 






90,500 


U. S. V. Allied Cleaners & Dyers of Seattle - 






750 




* $20,010 






U S.v Berger Mfg. Co 


10,850 
10,000 




U S Y Meyers 








5 40,650 




U S. V. Ludowici- Celadon Co 




5,000 


U S V Mercer 


250 








1,000 








557 


U S Y Fish Credit Ass'n, Inc 


48, 387 
6 20, 000 
' G3, 250 






U S V Protective Fur Dressers Corp 


18,000 








U S. V. United Sea Food Workers Union 


9,000 




U S V Lockwnod & Winant 




12,000 


U. S. V. Hulsei 




4,000 






360,000 
65,000 




U S -v Standard Oil Co * 




5,000 






375,000 








4,500 


U. S. V. Local gom. Wine, Liquor & Distiller Workers Union 


"26,"o6o" 


1,000 










6,000 


U S. V. Sheet Metal Assn 






1,000 


U S w Southern Pine Assn 






12,000 








50,000 


U S V Bausch & Lomb Optical Co 






40,000 


U S V Needle Trades Workers Industrial Union s 


7,000 
10,000 






U.S.v. Local 8(n, Internal Brotherhood of Teamsters 












Total 


1,098,914 1 1.188.415 


1, 233, 502 






1 





» $1,950 reversed; balance remitted by President. 

• $500 reversed. 

• $5,250 suspended. 

• $10,000 reversed. 
' $3,000 reversed. 

• On appeal. 



APPENDIX D 

CONSENT DECREES ENTERED UNDER FEDERAL ANTI- 
TRUST LAW, JULY 1890-JULY 1940 



Name of case 


Date 
instituted 


Decree 
entered 


Further action 


U. S. V. Otis Elevator Co 


Mar. 7,1906 


June 1. 1906 




U. 8. V. Southern Wholesale Gro- 


June 9,1910 


Oct. 17,1911 


Contempt proceedings, found guilty 


cers' Assn. 






and fined $5,500, 1913. 


U. S. V. American Sugar Refining 


Nov. 28, 1910 


May 9, 1922 


Modified to permit acquisition of 


Co. 






another company, 1927. 


U. S. V. General Electric Co 


Mar. 3,1911 


Oct. 12,1911 




U. S. V. Harwich 


Aug. 31,1911 


Dec. 4, 1917 




U. S. V. Colorado & Wyoming 


Sept. 25, 1911 


Dec. 29,1917 




Lumber Dealers' Assn. 








V. S. V. National Cash Register Co. 


Dec. 4, 1911 


Feb. 1, 1916 


Contempt proceedings, 1925; 1 defend- 
ant found guilty and fined $2,000. 
1928; modified to permit acquisition 
of 2 companies. 1929 and 1931. 


U. S. V. Pacific Coast Plumbing 

■ Supply Assn. 

U. S. V. Aluminum Co. of America. 


Dec. 18.1911 


Jan. 6. 1912 




May 16.1912 


June 7,1912 


Modified to permit acquisition of com- 








pany, 1922. 


U. S. V. Central- West Publishing 


Aug. 3,1912 


Aug. 3.1912 


Modified to permit sale of company'? 


Co. 






assets, 1917. 


V. S. V. MaHer Horseshoers' Nat'l. 


Dec, 12,1912 


1914; 1916 




Protective Assn. 








U. S. V. Philadelphia Jobbing Con- 


Dec. 13,1912 


Feb. 17, 1913 




jictioners' Assn. 








U. S. V. Elain Board o] Trade 


Dec. 14,1912 


Apr. 27.1914 




IT. S. V. Krentler-Arno'd Hinge 


Feb. 7, 1913 


Feb. 7. 1913 




Last Co. 








V. S. y. Cleveland Stone Co 


Feb. 12.1913 


Feb. 11,1916 




U. S. V. Jnlcrnat'l Brotherhood of 


Feb. 24,1913 


Feb. 27,1914 




Electncal Worhrs. 








U. S. V. American Thread Co 


Mar. 3.1913 


June 2,1914 


Modified to permit compliance with 

N. R. A. Code, 1933. 
Modified to permit acquisition of 


U. S. V. Burroughs Adding Ma- 


do. 


Mar. 3.1913 


chine Co. 






German- concern, 1922. 


U. S. V. American Coal Products 

Co: 

V. S. V. New Departure Mjg. Co.. 


do 


Mar. 4.1913 




May 27, 1913 


May 27, 1913 




V. S. V. American Ttliphone & 


July 24,1913 


Mar. 26, 1914 


Modified to permit consolidation of 2 


Telegiaph Co. 






telephone exchanges. 1914. 


V. S. V. National Wholesale 


Nov. 18, 1913 


Jan. 30,1914 




Jewelers' Assn. 








V. S. V. New York, New Haven & 


July 23,1914 


Oct. 17.1914 


Modified several times. 


nartford R. P. Co 








U. S. V. Bowser & Co 


June 10.1915 
May 19.1917 


June 10,1915 
May 19,1917 




U. S. V. National Assn. oj Master 




Plumbers. 








V. S. V. Kluge 


Oct. 8.1917 


Oct. 8, 1917 




U. S. V. Paris Medicine Co 


Nov. 12. 1917 


Nov. 13, 1917 




U.S.v.Mead 


Nov. 26, 1917 
Dec. 4, 1917 


Nov. 26, 1917 
Dec. 4,1917 




v. S. V. Discher 


Defendants' motion for modification 




denied. 1919. 


U. S. V. Booth Fisheries Co 


Mar. 13. 1918 


Mar. n, 1918 




U. S. V. Inttrlaken Mills 


Apr. 15.1918 


Apr. 15,1918 


Modified. 1919; also, 1934, to permit 
compliance with N. R. A. code. 








U. S. V. Victor Talking Machine 

Co. 
U.S.v. Button Export & Trading 


May 3.1918 


May 3,1918 




June 28.1918 


June' 28, 1918 




Corp. 








V. S. V. American Cone & Wafer 
Co. 

V. S. V. Western Cantaloupe Ex- 


July 31.1918 


Aug. 3.1918 




Nov. 9,1918 


Nov. 9,1918 




change. 








U. S. V. Kla.Tov Horn Co. 


Dec. 8, 1918 


Dec. 8,1918 




U. S. V. American Assn. o] Wholt- 


Dec. 12.1919 


Dec. 12.1919 


Modified to permit compliance with 


satt 0]}ticians. 






N. R. A. code, 1934. 


V. S. V. Ironite Co 


Dec. 17.1919 


Mar. -. 1920 





126 



CONCENTRATION OF ECONOMIC POWER 



127 



17. S. V. Swijt & Compavy. 



U. S.v. Sumatra Purchasinq Corp. 
U. S. V. Barbers' Supply Dealers 

Assn. 
U. S. V. California Associated 

Raisin Co. 

U. S. V. Albany Chemical Co. 

17. S. V. Ooodtv in- Gallagher Sand 

& Gravel Corp. 

U. S. V. Miller... 

17. S. V. Corrugated Paper Mfrs. 

Assn. 

U. S. V. Kern 

U. S. V. American Coated Paper 

Co. 
17. S. V. American Lithographic Co. 

U. S.Y. Tile Mfrs.' Credit Assn.,. 

U. S. V. National Enameling & 

Stamping Co. 
U. S. V. Bricklayers', Masons' & 

Plasterers' Irdernat'l Union. 
U. S. V. Wickwire Spencer Steel 

Corp. 
U. S. V. Gypsum Industries Assn.. . 

U. S. V. Live Poultry Dealers' Pro- 
tective Assn. 

U. S. V. California Wholesale Gro- 
cers' Assn. 

U.S.v. Utah-Idaho miolesale Gro- 
cers' Assn. 

17. S. V. Wheeler-Osgood Co 

17. S. V. Seattle Produce Assn 

17. S. V. Oregon Wholesale Grocers' 
Assn. 

U. S. V. Nat'l Peanut Cleaners & 
Shellers Assn. 

U. S. V. Tanners Products Co 

U. S.Y. Porcelain Appliance Corp. 

U. S. V. Flower Producers Coopera- 
tive A.ssn. 

U. S. V. Ward Food Products Corp. 

U. S. V. Nat'l Food Products Corp. 

U. S. V. Noland Company, Inc 

U. S. V. Leibner & Company 

U. S. V. Lay Fish Company 

17. S. V. Southern Hardware Job- 
bers' Assn. 

U. S. V. Rand Kardex Bureau 

17. S. V. Eighteen Karat Club 

U. S. V. American Amusement 

Ticket Mfrs. Assn. 
U.S.v. California Retail Hardware 

& Implement Assn. ■ 
U.S.v. National Gum & Mica Co. 
U. S. V. National Hat Frame 

Assn., Inc. 
U. S. V. Northwest Shoe Finders 

Credit Bureau. 
U. S. V. Deutsches Kalisyndikat 

Gesellschaft. 
U. S. V. Richmond Distributing 

Corp. 
U. S. V. Gillette Safety Razor Co... 
U. S. V. Maine Co-Operative Sar- 
dine Co. 
U. S..,v. Columbus Confectioners' 

Assn. 
U. S. V. The Fernald Co. & Souie 

Steele Company. 
U. S. V. Amsterdamsche Chinine- 

fabriek. 



Date 
instituted 



Apr. 13,1920 
May 7, 1920 

Sept. 8,1920 

Jan. 10,1921 
Jan. 18,1921 

Jan. 28,1921 
Feb. 2, 1921 

Mar. 8,1921 
Mar. 14, 1921 

Mar. 26, 1921 

Jan. 10,1922 

Feb. 14,1922 

Feb. 28,1922 

Mar. 20, 1922 

Dec, 27,1922 

Jan. 18,1924 

Apr. 2, 1924 

Apr*. 9, 1924 

May 5, 1924 
July 18,1924 
Sept. 29, 1924 



June 11,1925 

Oct. 16,1925 
Dec. 15,1925 

Feb. 8, 1926 
Feb. 13,1926 
Apr. 13,1926 
July 2, 1926 
May 12,1926 
Aug. 9,1926 



Oct. 21,1926 
Nov. 24,1926 
Dec. 16,1926 



Feb. 18,1927 
Feb. 23,1927 

Mar. 29, 1927 

Apr. 7, 1927 

Apr. 13,1927 

Aug. 4,1927 
Oct. 4, 1927 

Nov. 4,1927 

Dec. 6, 1927 

Mar. 29, 1928 



Decree 
entered 



Apr. 13,1920 
May 7,1920 



Jan. 10,1921 
Jan. 18,1921 

Jan. 28,1921 
Feb. 2, 1921 

Mar. 8,1921 
Mar. 14, 1921 

Mar. 26, 1921 

Nov. 26, 1923 

Feb. 14,1922 

Feb. 28,1922 

Mar. 20, 1922 

Dec. 27,1922 

Dec. 16,1925 

May 5,1926 

Sept. 27, 1926 

June 18,1925 
Mar. 21, 1925 
June 4, 1926 



Oct. 3, 1927 

Feb. 25,1930 

Jan. 15,1926 

Apr. 3, 1926 

Mar. 4,1926 

June 2, 1926 

July 2, 1926 

May 12,1926 

Aug. 12,1926 



Dec. 9, 1926 
May 4,1927 
Dec. 30,1926 

May 12, 1927 

May 27,1927 
Mar. 22, 1927 

Jan. 11,1928 

Feb. 27,1929 

Apr. 13,1927 

Aug. 4, 1927 
Oct. 4, 1927 

Nov. 4,1927 

Dec. 6, 1927 

/Sept. 20, 1928 
\Mar. 2,1929 



Further action 



Liitigation from 1920-32. Defendants' 
efforts to have decree vacated or 
modified unsuccessful. Government 
forced disposal of Libby McNeill 
stock, 1939. 

Modified to permit compliance with 
N. R. A. code, 1934. 



Modified to permit exchange of certain 

information, 1926. 
Modified to permit exchange of certain 

information, 1928. 
Minor modifications, 1924 and 1927. 



Modified to permit exchange of certain 
information, 1928. 



Modified in view of changed condi- 
tions, 1933; also in 1934 to permit 
compliance with N. R. A. Code. 
Decree dissolved, 1939. 

Petition for suspension of decree in 
light of N. R. A. dismissed. 



Order construing decree, 1927. 

Modified to permit compliance with 
N. R. A. Code, 1933; also to permit 
defendants to take advantage of 
Miller-Tydings amendment, 1937. 



Modified to permit compliance with 
N. R. A. Code, 1934. 



128 



CONCENTRATION OF ECONOMIC POWER 



Date 
instituted 



Decree 
entered 



Further action 



V. S. V. Great Lakes Steamship 
Co. 

V. S. V. Candy Supply Co 

V. S. V. General Outdoor Adver- 
tising Co. 

U. S. V. Barnard & Co 

XJ. S. V. Confectioners' Club of 
Baltimore. 

U. S. V. Alden Paper Co 

U. S. V. Balaban & Katz Corp 

T7. S. V. Motion Picture Theatre 
Owners of Oklahoma. 

V. 8. V. Bates Valve Bag Corp 

U. S. V. Evansville Confectioners' 
Assn. 

U. 8. V. Ludowici-Celadon Co 

V. S. V. Fox Theatres Corporation. 

XJ. 8. V. Pittsburg-Erie Saw Co 

17. S. V. Greater N. Y. Live Poultry 
Cham, of Comm. 

U. 8.V. Standard Oil Co. of Cali- 
fornia. 

U. S. V. Foster & Kleiser Co 

U. S. V. Radio Corporation of 
America. 

U. 8. V. Painters' District Council 
No. B, etc. 

XJ. 8. V. A. B. C. Canning Co...^. 

XI. 8. V. Wool Institute, Inc 

tJ. 8. V. West Coast Theatres, Inc.. 

U. 8. V. BoU, Nut & Rivet Mfrs. 
Assn. 

XJ. 8. V. International Business 
Machines Corp. 

(Court decree entered by con- 
sent against Remington Rand, 
Inc.) 

XJ. 8. V. Corn Derivatives Institute. 

XJ. S. V. Fox West Coast Theatres.. 

XJ. 8. V. Millinery Quality Guild, 
Inc. 

XJ. 8. V. National Retail Credit 
Assn. 

XJ. 8. V. Kansas City Ice Co 

XJ. 8. V. Columbia Gas & Electric 
Corp. 

XJ. 8. V. Warner Bros. Pictures, 
Inc. 

XJ. 8. V. Textile Refinishers Assn. 
Inc. 

XJ. 8. -v. Ox Fibre Brush Co 

XJ. 8. V. Chrysler Corporation et 
al. 

XJ. 8. V. Ford Motor Company et 
al. 

XJ. 8. V. Wine. Liquor & Distillery 
Workers Union, Local gOSU, et 
al. 

XJ. 8. V. Imperial Wood Stick Co., 
Inc., et al. 

XJ. 8. V. Local 807 of Internat'l 
Brotherhood of Teamsters, Chauf- 
feurs, Stablemen <fc Helpers of 
America. 

XJ. 8. V. Voluntary Code of Heat- 
ing Piping & Air Conditioning 
Industry for Allegheny County, 
Pa. 

XJ. 8. V. Excavaters Administrative 
Assn., Inc. 

XJ. 8. V. Plumbing & Heating In- 
dustries Administrative Assn., 
Inc. 

XJ. 8. V. Union Painters Adminis- 
trative Assn. 



Apr. 7, ] 



June 8, 1928 
July 23,1928 



Aug. 8, 1928 
Sept. 14, 1928 



Oct. 1, 1928 
Dec. 15,1928 



Jan. 4, 1929 
Feb. 21,1929 

Mar. 12, 1929 
Nov. 27, 1629 
Dec. 23,1929 
Feb. 7, 1930 

Feb. 15,1930 

Apr. 20,1930 
May 13,1930 

June 10,1930 

June 12,1930 
June 27,1930 

Aug. 21,1930 

Mar. 17, 1931 

Mar. 26, 1932 



Apr. 6, 1932 
Nov. 16, 1932 
Mar. 23, 1933 

June 12,1933 

June 5, 1934 

Mar. 6,1934 

Feb. 25,1936 

May 1,1936 

1, 1937 



May 9, 1928 



July 

Nov. 7,1938 

do 

Nov. 9,1939 

June 5, 1939 
July 17,1939 

Dec. 8, 1939 

Dec. 22,1939 
do 



8,1928 
7, 1929 



8,1928 
3, 1930 



June 
May 



Feb. 
Apr. 



Jan. 30,1931 
Feb. 21.1929 

Mar. 18, 1929 
Apr. 15,1931 
Dec. 23,1929 
Nov. — , 1931 

Sept. 15, 1930 

Mar. 13, 1931 
Nov. 21, 1932 



Jan. 16,1931 
June 27,1930 

Aug. 21,1930 

Mar. 17, 1931 

Jan. 29,1936 



Apr. 6, 1932 
Nov. 16, 1932 
June 9,1934 

Oct. 6, 1933 

June 5, 1934 

Jan. 29,1936 

Apr. 30,1936 

May 1,1936 

July 30,1937 
Nov. 15,1938 

do 

Nov. 11, 1939 

June 7, 1939 
July 17,1939 

Dec. 8, 1939 

Dec. 22,1939 
do 



Modified to exclude Columbia Pictures 
Corporation, 1932. Contempt pro- 
ceedings, 1938. Awaiting trial. 



Supplemental decree, 1931. 



Modified to permit compliance with 
N. R. A. Code, 1933. 



Modified, 1935, 



Modified to permit compliance wltU 

N. R. A. Code, 1933. 
Contempt proceedings, 1939. Awaiting 

trial. 



Contempt proceedings; plea of guilty 
and fines totaling $4,000, 1936. 

Supplemental decree canceling certain 
contracts, 1934. 

Government motion to vacate decree 
May 1939. Awaiting trial. 



CONCENTRATION OF ECONOMIC POWER 



129 



Date 
instituted 



Decree 
entered 



Further action 



U. S. V. New Orleans Chapter, As- 
sociated General Contractors of 
America. 

U. S. V. Half-Size Dress Guild, Inc. 

U. S. V. Party Dress Guild, Inc.... 

U. S. V. Sheet Metal Assn. 

U. S. V. Southern Pine Assn 

U. S. V. National Assn. of Com- 
mission Lumber Salesmen. 

U. S. V. Engineering Survey & 
Audit Co. 

U. S. V. Western Penn. Sand <fc 
Gravel Assn. 

U. S. v. Marble Contractors Assn.. 

U. S. V. Mason Contractors Assn. 
of District of Columbia. 

U.S. V. Pittsburgh Tile & Mantel 
Contractors Assn. 

U. S. V. Employing Plasterers 
Assn. of Allegheny County, 
Penna. 

U. S. V. National Container Assn.. 

U. S. V. Underwood Elliott Fisher 
Co. 

U. S. V. .American Potash Alchem- 
ical Corp. 

U. S. V. Long Island Sand & 
Gravel Producers Assn. 

U. S. V. Tile Contractors Assn. of 
America. 

U. S. V. Mosaic Tile Co 



Aug. 13,1940 
Aug. 13,1934 
Feb. 5, 1940 
Feb. 21,1940 
...^do 

— -do 

....do 

Feb. 29,1940 
Mar. 12, 1940 

Feb. 29,1940 

Mar. IS, 1940 



Aue. 9,1939 
July 28.1939 

May 15, 1940 

May 22, 1940 

June 10,1940 

June 15,1940 



Jan. 27,1940 

----do. 

Feb. 5. 1940 
Feb. 21, 1940 
....do 

...do 

.-..do 

Feb. 29,1940 
Mar. 12, 1940 

Feb. 29, 1940 

Mar. 18, 1940 



May 21, 1940 
M!»v 22, 1940 
June 10,1940 
June 17,1940 



APPENDIX E 

DISPOSAL OF CRIMINAL CASES UNDER FEDERAL ANTI- 
TRUST LAW WHERE FINES OR IMPRISONMENT WERE 
NOT IMPOSED, JULY 1890-JULY 1940 

CASES NOLLE PROSSED 



Name j 


Date in- 
stituted 


Date 
closed 




1892 

1905 

1906 

1906 

1906 

1906 

1907 

1908 

1910 

1911 

1911 

1912 

1912 

1913 

1913 

1913 

]9U 

1917 

1917 

1917 

1917 

1918 

1918 

1921 

1921 

1921 

1921 

1921 

1921 

1921 

1921 

1921 

1922 

1922 

1922 

1923 • 

1924 

19'?6 

1928 

1928 

1928 

1928 

1929 

1936 

1936 

1938 

1938 

1938 

1939 

1940 


1894 


U S V Armour & Co .. .... .... 


1913 




1912 




1909 


U S V Oloyd 


1909 


U S Y Hogg 


1909 


U. S. V. Stafford Mfg. Co 


1912 


U. S Y Stiefvater 


1910 




1913 


U. S.Y. Holmes . 


1913 


U. S Y Cotton 


1912 




1913 


U.S.Y.Metlen 


1920 


U S Y. White 


1916 


Do 


1914 


U.S.v. Hayes 


1916 


U S Y Western Cantalovpe Exchange 


1918 




1917 


U. S.Y. Simpson 


1923 




1921 


U. S.Y.St. Clair . 


1918 


U. S. Y. Ironite Co 


1 1920 


U. S.Y. Schrader's Son 


1923 


U. S. Y. Andrews Lumber & MHl Co . 


M921 


U. S. Y. Poster Advertiser's Ass'n 


1925 




1923 


U: S. V. Alpha Portland Cement Co 


1923 




1926 




1926 


U. S. V. American Terra Cotta & Ceramic Co 


2 1923 




1925 


XJ, S. Y. Johnston Brokerage Co 


1927 


U.S.Y. United Oas Improvement Co 


1922 


17. S. V. Lehigh Portland Cement Co 


1926 




1926 


U. S.Y.Bastin _ 


1925 


U. S. V. Mitchell Brothers' Company 


1926 


U.S.Y. Mitchell 


1930 




1932 


U. S. V. Amsterdamsche Chininefabriek 


11928 


XJ. S. V. Greater N. Y Live Poultry Chamber of Commerce 


U931 




11930 


Do.. ... 


11930 


v. S. V. Standard Oil Co (Indiana) 


'1936 




n938 


U. S. Y. Hawaii Brewing Corp., Ltd . 


1938 


U. S. Y. Chrysler Corporation 


11938 




11938 


U. S. V. Underwood Elliott Fisher Co 


11940 


U. S. V. American Potash & Chemical Corp 


11940 







> Consent decree entered in civil case. 
' Superseded by new indictment. 

-130 



OONCENTRATION OF ECONOMIC POWER 

INDICTMENTS QUASHED, DEMURRERS SUSTAINED 



131 



Name - 


Date in- 
stituted 


Date 
closed 


U.S.v.Nelsmi . 


1892 
1892 
1906 
1910 
1910 
1911 
1912 
1912 
1913 
1915 
1917 
1917 
1917 
1920 
1921 
1921 
1922 
1923 
1929 
1929 
1937 
1938 


1892 


U S V Greenhut 


1892 


U S ^ Virginia-Carolina Chemical Co 


1908 




1910 




1915 




1918 




1912 


U. S. V. Milter 


1912 


U S V Hippen 


1913 




1915 


U. S. V. Baker-Whiteley Coal Co . 


1917 


TJ S V. Nash Bros 


1918 


U. S. V. Colgate & Co.. . 


1919 


U. S.Y.Moore . . . .... 


1920 


V S V. Smith 


1924 




1927 


U. S.Y.Peters ... . 


1923 


17. S. V. Hency 


1923 


TJ S V Oreat Western Sugar Co 


1929 




1930 


U. S. V. Dairymen's Assn., Ltd 


2 1937 . 


U S. V. National Dairy Products Co 


1939 ■ 






DIRECTED VERDICT FOR DEFENDANTS 


U. S. V. People's Ice & Fuel Co.... 


1906 
1917 
1920 
1934 
1937 
1940 


1907 




1917 


U. S V. Colgate & Co ' . . 


1924 


U S V McGlone 


U934 


U. S.Y.McGlone 


1937 


U. S.v. Local 659, International Brotherhood of Teamsters 


1940 






JURY DISAGREED 


17. S. V Cassidy 


1894 
1909 
1914 
1921 
1928 


1$95 




, 1912 


U. S. Y. Rockefeller > . 


1916 


U. S. Y. Atlas Portland Cement Co . . 


1925 


17 iS V Wallace 


1932 






VERDICT NOT GUILTY 


U.S.Y.DeMund Lumber Co. 


1906 

1907 

1908 

1908 

1910 

1911 

1914 . 

1917 

1917 

1925 

1935 


1907 




1908 


U. S. Y. Ray 






1914 


U. S. Y. Swift J - ■ 


1912 


U. S. Y. Pearce 


1912 


U. S. Y. Rockefeller a : 


1916 




1917 


U.S.Y. Webster 


1919 


17. S V Fitzgerald 


1926 




1936 






VERDICT OF lUILTY REVERSED 


17. S.V.Moore . ..... 


1895 
1907 
1907 
1912 


1893 


17. S. V. Santa Rita Store Co. and Santa Rita Mining Co 


1911 




1910 




1915 







> Superseded by new indictment. 
' Some defendants. 
• Second trial. 



APPENDIX F 

DISPOSITION OF EQUITY CASES UNDER FEDERAL ANTI- 
TRUST LAW, JULY 1890-JULY 1940 

(Consent decrees excludea] 
CASES WON BY GOVERNMENT IN TRIAL COURT 



17. S. V. 

U. S. V. 

U. S. V. 

V. S. V. 

17. S. V. 

U. S. V. 

U. S. V. 

U. S. V. 

U. S. V. 

U. S. V. 

V. S. V. 

U. S. V. 

17. S. V. 

17. S. V. 

t7. S. V. 

U. S. V. 

17. S. V. 

V. S. V. 

17. S. V. 

U. S. V. 

U. S. V. 

17. S. V. 

17. S. V. 

17. S. V. 

U. S. V. 

U. S. V. 

17. S. V. 

17. 5. V. 

17. S. V. 

U. S. V. 

17. S. V. 

U. S. V. 

U. S. V. 

U. S. V. 

U. S. V. 

17. S. V. 

17. S. V. 
17. S. V. 
17. S. V. 
U. S. V. 
17. S. V. 
17. S. V. 
17. S. V. 
U. S. V. 
17. S. V. 
17. S. V. 
17. S. V, 
17. S. V, 
U. S. V, 
U. S. V 
C7. S. V 
17. S. V, 
17. S. V 
17. S. V 
17. S. V 
LT. S. V 
17. S.v 
U. 

U.S.v 
U.S. 
U.S. 
U.S.V 
U.S.y 
U.S. 



Jell ico Mountain Coal (fe Coke Co 

Workingmen'a Amalgamated Council. 
Debs .. 



Debs . ; 

miiott -..- 

Hopkins 

Anderson - '. 

Coal Dealers' Ass'n. - 

Chesapeake & Ohio Fuel Co 

Northern Securities Co - .■.. 

Swift & Company 

Federal Salt Co 

General Paper Co -.. 

Nome Retail Orocerymen's Assn 

Nat' I Ass'n of Retail Druggists 

Standard Oil Co. of N. J 

American Seating Co 

Reading Company ' -. - 

DuPont de Nemours & Co -.. 

AlUn Bros. Co 

Missouri Pacific Ry. Co.. 

Qfeat Lakes Toiving Company 

Chicago Butter & Egg Board 

Standard Sanitary Mfg. Co. 

Hamburg-American Co 

Eastern States Retail Lumber Assn 

Lake Shore Ry. Co --.. 

Standard Wood Co 

Hollis -... 

Keystone Watch Case Co 

International Harvester Co 

Associated Bill Posters 

Motion Picture Patents Co 

Kellogg Corn Flake Co 

Chicago Board of Trade 

Corn Products Co - --- 

Eastman Kodak Co 

Reading Company^.. 

■ United Shoe Machinery Corp .• 

New England Fi.th Exchange 

American Column & Lumber Co 

Consolidated Music Corp. 

Cement Mfrs' Protective Assn - 

Norcross. - 

, Cement Securities Co 

, Schrader's Son 

. Railway Employees' Department of A. F. of L 

, Nat'lAssn. of Window Olaat Mfrs 

. Maple Flooring Mfrs' Assn , 

. Industrial Assn. of San Francisco 

. Live Poultry Dealers' Protective Assn 

. Southern Calif. Orocers' Assn 

. Standard Oil Co. (Indiana).. 

. Journeymen Stone Cutlers Assn 

. Paramount Famous Lasky Corp 

. Painters' Dist. Council No. H of Chicago, etc 

. Atlantic Cleaners & Dyers Inc — 

. Glaziers Local No. S7 of Chicago, etc.. 

. Greater N. Y. Live Poultry Chamber of Commerce. 

. Sugar Institute 

. International Business Machine Corp 

. Appalachian Coals, Inc 

. Interstate Circuit, Inc 

. Ethyl Gasoline Corp 



Date 


Date of 


insti- 


trial 


tuted 


court 




decree 


1890 


1891 


1893 


1893 


1804 


1899 


1894 


1898 


1894 


1894 


1896 


1897 


1897 


1897 


1897 


1899 


1899 


1900 


1902 


1903 


1902 


1903 


1902 


1902 


1904 


1906 


1905 


1S06 


1906 


1907 


1906 


1909 


1907 


1907 


1907 


1910 


1907 


1912 


1909 


1909 


1910 


1910 


1910 


1915 


1910 


1914 


1910 


1911 


1911 


1914 


1911 


1913 


1911 


1914 


1911 


1912 


1911 


1917 


1911 


1915 


1912 


1914 


1912 


1916 


1912 


1916 


1912 


1915 


1913 


1915 


1913 


1916 


1913 


1916 


1913 


1915 


1915 


1920 


1917 


1919 


1920 


1920 


1920 


1922 


1921 


1923 


1921 


1924 


1922 


1924 


1922 


1923 


1922 


1923 


1923 


1923 


1923 


1924 


1923 


1923 


1924 


1925 


1924 


1925 


1924 


1929 


1927 


1927 


1928 


1930 


1928 


1931 


1929 


1931 


1929 


1930 


1930 


1932 


1931 


1934 


1932 


1935 


1932 


1932 


1936 


1937 


1937 


1939 



I 



Government upheld in part. 
I Government's contention upheld In part. 

132 



CONCENTRATION OF ECONOMIC POWER 133 

CASES WON IN TRIAL COURT AND APPEALED BY DEFENDANTS 



17. S.v. Workingmen's Amalgamated Council 

U. S. V. Hopkins - 

U. S. V. Coal Dealers' Assn 

U. S. V. Chesapeake & Ohio Fuel Co.. 

U. S. V. Northern Securities Co 

17. S. V. Swift <fc Company 

L'. S. V. Standard Oil Co. of N. J. 

U. S. V. Reading Company. 

U. S.x. American Tobacco Co 

U. S.v. Standard Sanitary Mfg. Co 

L''. S. V. Hamburg-American Co 

17. S. V. Eastern States Retail Lumber Assn 

U. S. V. Prince Line, Ltd 

U. S. V. Corn Products Co 

U. S. V. Reading Company 

U. S. V. United Shoe Machinery Corp 

U. S. V. American Column & Lumber Co — 

17. S. V. Cement Mfrs'. Protective Assn 

U. S. V. Maple Flooring Mfrs'. Assn 

17. S. V. Industrial Assn. of San Francisco.- 

U. S. V. Live Poultry Dealers' Protective Assn 

U. S. V. Standard Oil Co ^ 

U. S. V. Journeymen Stone Cutters Assn — 

U. S. V. Paramount Famous Lasky Corp.. 

U. S. V. Painters' Dist. Council No. U of Chicago, etc 

17. S. V. Atlantic Cleaners & Dyers, Inc 

U. S. V. Greater N. Y. Live Poultry C. of Comm 

U. S. V. Sugar Institute 

U. S. V. International Business Machines Corp 

U. S. V. Appalachian Coals, Inc _ 

17. S. V. Interstate Circuit, Inc 

17. S. V. Ethyl Gasoline Corp 1. 



Date in- 
stituted 



Trial 
court 
decree 



1902 

1902 

1906 

1907 

1907 \ 

1910 I 

1911 

1911 

1912 

1913 

1913 

1915 

1920 

1921 

1923 

1923 

1924 

1924 

1927 

1928 

1928 

1929 

1930 

1931 

1932 

1932 



1900 4 

1903 

1903 

1909 

1010 

1908 

1911 

1911 

1913 

1915 

1916 

1915 

1920 

1920 

1923 

1923 

1923 

1924 7 

1929 

1927 

1929 

1930 

1029 

1932 

1934 

1935 

1932 

1937 



United States Su- 
preme Court 



Affirmed Reversed 
trial court trial court 



1904 

1905 

1911 

1912 5 

1911 

1912 



1914 



1919 
1920! 
1922 
1921 



1930 
1931 
1932 
1934 
1936 
1936 



1916 < 
'i9i7'« 



1925 
1925 
1925 



CASES LOST BY GOVERNMENT IN TRIAL COURT 





Date 
insti- 
tuted 


Date of 
trial 
court 
decree 




1892 
1892 
1896 
1903 
1905 
1907 
1908 
1911 
1911 
1911 
1912 
1923 
1912 
1913 
1913 
1913 
1913 
1914 
1914 
1920 
1920 
1922 
1922 
1923 
1924 
1924 
1928 
1935 
1905 


1892 




1894 


L' S V Joint Traffic As-^ocialion 


1896 








1915 




1911 


US V Union Pacific R R Co 


1911 




1913 


U. S. V. U. S. Steel Corp 


1915 


U S V. United Shoe Machinery Co .... 


1915 


t7 S V American-Asiatic S S Co 


1915 




1926 




1915 




1919 


17 S V Lackawanna R R Co 


1914 




1916 




1916 


U S V. Southern Pacific Co . » 


1917 


U S V Lehiijh Valley R R Co 


1914 


U S V American Linseed Oil Co 


1921 




1920 


U. S. V. Fur Dressers' and Fur Dyers' Assn 


1925 


17 S V Iludnut 


1925 


U S Y New York Coffee ie Sugar Exchange 


1923 


U. S.\. Gen'ral Electric Co 


1925 




1925 


U. S. V. First National Pictures, Inc. 

U S v Republic Steel Corp 


1929 
1935 


U S V Terminal R R Assn 


1910 







' -Affirmed by Circuit Court of Appeals, 1893. 

* Affirmed by Circuit Court of Appeals, 1902. 

« In part. Supreme Court decree more favorable to Government. 
' Dismissal ordered on ground questions had become moot. 
' Affirmed by Circuit Court of Appeals, 1924. 

• Supplemental petition. 



134 CONCENTRATION OF ECONOMIC POWER 

OASES LOST IN TRIAL COURT AND APPEALED BY GOVERNMENT 



Date in- 
stituted 


Trial 
court 
decree. 


1892 


1892 3 


1896 . 


1896 » 


1896 


1897 10 


1905 


1910 


1908 


1911 


1911 


1915 


1911 


1915 


1912 


1915 


1912 


1926 


1913 


1915 


1913 


1914 


1914 


1917 


1914 


1914 


1920 


1921 


1923 


1923 


1924 


1925 


1924 
1928 


1925 
1929 



United States Su- 
preme Court 



Affirmed Reversed 
trial court trial court 



V. S. V. Trang-Miaaouri Freight Association 

V. S. V. Joint Traffic AsSn 

U.S.Y.Addystm Pipe & Steel Co... 

U. S. V. Terminal R. R. Assn _ 

V. S. V. Union Pacific R. R. Co 

U.S.v. V. S. Steel Corp. 

U. S. V. United Shoe Machinery. 

V. S. V.American-Asiatic S. S. Co 

U. S. V. International Harvester Company « 

17. 8. V. Chicago Board of Trade 

17. <S. V. Lackawanna R. R. Co 

U. S. V. Southern Pacific Co 

U. S. V. Lehigh Valley R. R. Co 

U. S. V. American Linseed Oil Co 

U. S. V. New York Coffee & Sugar Exchange, Inc. 

U. S. V. General Electric Cb 

U. S. V. Sisal Sales Corp 

U. S. V. First Natl. Pictufes, Inc 



1912 
1912 



1924 
1926 



1918 
1915 



1920 
1923 



CASES DISCONTINUED 



Date in- 


Date dis- 


stituted 


continued 


1905 


1917 


1908 


1909 


1910 


1910 


1912 


1914 


1912 


1913 


1913 


1915 


1913 


1915 


1917 


1918 


1919 


1921 


1921 


1927 


1921 


1926 


1922 


1923 


1923 


1925 


1923 


1925 


1923 


1927 


1924 


1934 


1924 


1925 


1925 


1927 


1925 


1929 


1928 


1932 


1928 


1931 


1929 


1934 


1930 




1932 


1937 


1935 


1936 


1935 


1936 



U. S. V. Metropolitan Meat Co 

U. 8. V. New York, New Haven & Hartford R. R. Co. 

U. 8. Y. National Packing Co 

U. S. V. American Naval Store's Co -.- 

U.S.v.Sielcken : . 

U. S. V. McCaskey Register Co.. 

U. 8. V. Terminal R. R. Assn 

U. S. V. Pan-American Commission Corp 

17. /S. V. Atlas Portland Cement Co 

U. 8. V. Southern Pine Asiociation -.- 

U. 8. V. Mid-West Cement Credit & Statistical Bureau 

U, 8. V. United Oas Improvement Co 

17. S. V. Kryptok Co 

U.S.v. Western Pine Mfrs.' Assn ., 

17. S. V. American Chain Co ....i.... 

U. 8. V. Jeffrey Manufacturing Co...^ 

U. 8. V. Colgate & Co 

17. S. V. One-Piece Bifocal Lens Co 

U.S.v. Carson Brewing Company... 

17. S. V. Chicago Assn. of Candy Jobbers 

17. S. V. Asbestos Corporation, Ltd.. ^ 

U. S. V. Warner Bros. Pictures, Inc 

17. S. V. Asphalt Shingle i Roofing Institute 

U. 8. V. United Theatres, Inc 

U. 8. V. Mather. 

V. 8. V. Warner Bros. Pictures, Inc 



« Affirmed by Circuit Court of Appeals, 1897. 
W Reversed t>y Circuit Court of Appeals, 1898. 



APPENDIX G 

CASES INSTITUTED UNDER FEDERAL ANTITRUST 
LAW, JULY 1890-JULY 1940, BY FISCAL YEARS 
ENDING JUNE 30 



Title of case 


Industry 


Proceeding 


1891 








Coal 




1892 






U S Y Trans-Missouri Freight Assn 


Railroads 


Do 


U S V. Nelfon 






U S V E C Knight Co 


Sugar refineries 


Equity 


U. S. V. Greenhut - 


Distilled spirits 


Criminal. 


U S V Patterson 


Cash registers » 


Do 








U. S. V. Debs 


do.- - 


Do. 


Do 


do 


Do. 


U S Y Elliott 


do 


Do. 


U. S. V. Cassidy — 


do 


Criminal. 


1896 
U S V Moore 


Coal retailers 


Do 






Equity. 


1897 








Do. 


U S V Hopkins 


Livestock 


Do 




do 


Do. 


1898 










Do. 






Do. 


190S 






U. S. V. Northern Securities Co 


Railroads 


Do. 


U. S V Swift & Company 


Meat packers 


Do. 


1903 






U. S. V. Federal Salt Co 


Salt 


Do. 


Do - 


do 


Criminal. 


1904 






V. S. V. Baksr & Holmes Co 


^"holesale grocers 


Equity. 


1905 






U. S. V. General Paper Co... 


Paper.-. — 


Do. 



135 



136 



CONCENTRATION OF ECONOMIC POWER 



Title of case 



Industry 



Proceeding 



U.S. 
U.S. 

u. s. 

U.S. 
U.S. 
U.S. 
U.S. 
U.S. 

U. s. 

U.S. 



1906 

V. Armour & Co 

V. Metropolitan Meat Co 

V. Nome Retail Grocenjmen's Assn.. 

V. Terminal R. R. Assn.- 

V. Allen ds Robinson 

V. Otis Elevator Co. 

V. Amsden Lumber Co 

V. Nat'l Ass7i. of Retail Druggists 

V. Virginia-Carolina Chemical Company. 
V. MacAndrews & Forbes Co... 



Meat packers, 
do. 



Retail (rrocers 

Railroads.. 

Wholesale lumber. 

Elevators 

Lumber 

Retail druggists... 

Fertilizer 

Licorice paste 



1907 



U. S. V. American Ice Co 

U. S. V. Chandler Ice & Cold Storage Plant... 

U. S. V. Oloyd 

U. S. V. People's Ice & Fuel Co — 

U. S. V. DeMund Lumber Co 

U. S. V. Phoenix Wholesale Meat & Produce Co 

U. S. V. Standard Oil Co. of N. J 

U. S. V. Hogg 

U. S. V. Atlantic Inrettment Co 

U. S. V. Aw.erican Seating Co 

Do 

U. S. V. Santa Rita Store Co. & Santa Rita Mining Co. 
U. S. V. Reading Company- 



Ice 

....do... 

Lumber... 

Ice.. --- 

Lumber... 

W holesale meat 

Oil 

Lumber 

Naval stores 

Church furniture 

....do 

Mine company store. 
Coal 



U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
arettes. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
17. S. V. 



National Umbrella Frame Co 

American Tobacco Co 

Stafford Mfg. Co 

Du Pont de Nemours & Co 

One Hundred and Seventy-Five Cases of Cig- 



Corbett Stationery Co 

Union Pacific Coal Co.. 

Simmons 

Union Pacific R. R. Co. 



Ray. 

Ray 

Stiefvater 

American Naval Stores Co 

New York, New Haven & Hartford R. R. Co. 
Parks 



Umbrella frames... 

Tobacco 

Church furniture... 

Munitions 

Tobacco 

Office supplies 

Coal 

Plumbers' supplies. 

Railroads 

Labor union 

...do 

Plumbers' supplies. 

Naval stores 

Railroads 

Paper 



U. S. V. Allen Bros. Co. 



U.S. 

U.S. 

u. s. 

U.S. 
U. s. 
u. s. 

U.S. 

u. s. 

U.S. 
U.S. 
U.S. 



V. American Sugar Refining Co . 
V. Albia Box & Paper Co 



V. Imperial Window Glass Co 

V. National Packing Co 

V. National Packing Co 

V. Cudahy Packing Co 

V. Missouri Pacific Ry. Co 

V. Souihern Wholesale Grocers' Association . 

V. Great Lakes Towing Company 

V. Chicago Butter & Egg Board 



Paperboard 

Tobacco producers. 

Window glass 

Meat packers 

....do 



....do- 

Railroads... 

Wholesale grocers. 

Towing 

Trade board 



1911 

U. S. V. Patten... 

U. S.v. Standard Sanitary Mfg. Co 

U. S.v. Sivift 

U. S. V. John Reardon & Sons Co 

U. S. V. Standard Sanitary Mfg. Co 

U. S. V. American Sugar Refining Co 

U. S. V. Purinqton ... 

U. S. V. General Electric Co.... 

U. S. V. Hamburg-American Co 

17. S. V. Geer...: 

U. S. V. Eastern States Retail Lumber Assn. 

U. S. V. Whiting 

U. S. V. Holmes... 

U. S. V. Palmer 

U. S. V. Periodical Clearing House 



Cotton 

Enameled ware. . 

Meat packers 

Fertilizer 

Enameled ware.. 

Sugar 

Paving products. 
Electric lamps... 

Steamships 

Paper board 

Retail lumber 

Milk . 

Retail lumber 

Copper wire 

Magazines 



Criminal. 
Equity. 

Do. 

Do. 

Do. 

Do. 
Criminal. 
Equity. 
Criminal. 

Do. 



Do. 

Do. 

Do. 

Do. 

Do. 

Do. 
Equity. 
Criminal. 

Do. 

Do. 
Equity. 
Criminal. 
Equity. 



Criminal. 

Equity. 

Criminal. 

Equity. 

Libel. 

Criminal. 

Do. 

Do. 
Equity. 
Criminal. 

Do. 

Do. 

Do. 
Equity. 
Criminal. 



Equity. 



Criminal. 

Do. 

Do. 

Do. 

Do. 
Equity. 
Criminal. 
Equity. 

Do. 

Do. 

Do. 



Criminal. 

Equity. 

Criminal. 

Do. 

Do. 
Equity. 
Criminal. 
Equity. 

Do. 
Criminal. 
Equity. 
Criminal. 

Do. 

Do. 
Equity. 



CONCENTRATIQJS' OF PICONOMIC POWER 



137 



Title of case 


Industry 


Proceeding 


1912 








Coal 


Equity. 
Do. 




Retail lumber 


U S v Hunter AliUivg Co 


Flour 


Criminal. 




Kindling wood 

Shoe machinery ... 






Criminal. 


U. S. V. Cnlorado & Wyoming Lumber Dealers' Assn. 
U S V Hollis 


Wholesale lumber 


Equity. 
Do. 


do : 




Steel 


Do. 


U S Y Cotton 


Labor union 


Criminal. 




Cash re'^isters 


Equity. 
ITcfi 








L-abor union 

do 




U S y Haines 


Do 


U. S. V. Pacific Coast Plumbing Supply Assn... 

U S V Keystone ^^'atc^i Case Co 


Plumbing supplies 

Watch cases - 


Equity. 
Do. 




Do. 








U. S. V. North Pacific Wharves & Trading Co 

U. S. V. N'orlh Pacific Wharves & Trading Co 


Wharves (Alaska) 


Do. 


dO_.-.. 


Do. 
Do. 


V. S. V. Pacific & Arctic Ry. Co 


do 


Do. 
Do. 








U S Y Miller 


Charcoal 


Criminal. 




A.gricultural machinery 


Equity. 
Do. 






U S V Sielcken 


Coflee 

Steamships 


Do. 


U S Y Prince Line Ltd 


Do. 


191S 
U S Y Central-West Publishing Co 


Publishing 


Do. 






Do. 


XJ S Y Motion Picture Patents Company 


Motion-picture patents 


Do. 












Equity. 
Do. 


U. S. V. Philadelphia Jobbing Confectioners' Assn 

U S Y Elgin Board of Trade 


Candy jobbers 


Butter 


Do 








U S V Kellogg Corn Flake Co 


Corn flakes 


Equity. 


U.S. Y.Page 


Fruits and; vegetables 






Equity. 
Do. 


U S V United Shoe Machinery Co of N. J 


Shoe machinery 


U. S. Y. Chicago Board of Trade. 


Grain ' 


Do 




Do. 


U S Y Lackawanna R R Co 


Coal 


Do. 






Do. 


U. S. V. luternat'l Brotherhood of Electrical Workers.. 
U S Y Corn Products Co 




Do. 


Corn products 


Do. 


U S Y American Thread Co 


Thread 


Do. 






Do. 


U S Y American Coal Products Co 


Coal tar 


Do. 




Railroads 

Bicycle and motorcycle parts - 

Labor union 


Do. 


U. S. Y. New Departure Mfg. Co 

U S V White 


Do. 
Criminal. 


U. S. Y. Eastman Kodak Co 








Oatmeal 

Fruits and vegetables 


Do. 


17 S V Hippen 


Criminal. 


1914 
U. S V. TTiompson 


Cotton.. 


Do. 








Coal .. ' :::vv:\:.::: 


Do. 


U. S. V. National Wholesale Jewelers' Assn 


Jewelry 


Do. 


U. S. V. American Can Co 

U. S.Y.White -. - 


Tin cans.--. -..- 


Do. 


U. S. V. Hayes 


do 


Do. 


U S Y Southern Pacific Co 


Railroads 


Equity. 


U. S. V. Lehigh Valley R. R. Co 


Coal 


Do. 


U. S. Y. Knauer 


Plumbing supplies 

Clothes wringers 


Criminal. 


U. S. V. American Wringer Co 


Do. 


1915 
U. S. V. Booth Fisheries Co 


Fish 


Do. 


U. S. Y. New York, New Haven & Hartford R. P. Co. 


Railroads 


Equity. 






U. S. V. Collins 


Country produce 


Do. 



259564— 40— No. 16- 



-10 



138 



OONCENTRATION OF ECONOMIC POWER 



Title of case 


Industry 


Proceeding 


1915 
U. S. y. McCoach 












U. S. V. Pockefeller 


Railroads 


Do. 




Wrecking 


Do 


U S V King 


Potatoes... . 


Do 


U S y Artery 


Labor union 


Do 


V S.Y. Boyle :-.. 


do 




U S Y Bowser & Co . 


Gasoline storage tanks. 


Equity. 
Do 


1916 
U S V United Shoe Machinery Corporation 


Shoe machinery 








U S y Bopp ... i. .- 


do 


Do 


1917 
U S y Cowell 


Cement 


Do 


U S y Jensen Creamery Co 


Dairy products 


Do 




Coal.... 


Do 


U. S. y. Algoma Coal & Coke Co 

U. S. y. Baker-Whiteley Coal Co.... 


do 

do 

Milk 


Do: 
Do. 
Do. 


U S y Mead 


Newsprint 


Do 


U S y Chicago Mosaic & Tiling Co 


Tile 


Do 


U. S. V. National Association of Master 'Phmbers 

V S y M Piowaty & Sons 






Onions .... 


Criminal 


U S y Oilman 


Eees 


Do 


U S. V, New England J<ish Exchange 


Fif;:::::::::::::::::::::::::""" 


Equity. 
Do 


1918 
U S y Pan-American Commission Corporation 


Sisal . 


U. S. V. St. Clair .- 


Bread . 


Criminal. 






Do. 


U S y Nash Bros 


Fruit 


Do 


U S y Webster 


Auto accessories 


Do 


U S \- Kluge 


Woven labels 




U S V Paris Medicine Co 


Drugs ... 


Do 


U S y Barton 


Grocery dealers.. 


Criminal 


U S.y.Mead - - 




Equity. 
Do. 


U S y Discher 


Auto bumpers 


U S y Belft 


Tiles 


Criminal 






Do. 




Fish... 


Equity. 
Do. 


U. 'S. V. Interlaken Mills ...•. 








Do. 


U S y Ironite Co 


Powdered iron 


Criminal 






Do. 






Equity. 
Do 


1919 
U S y American Cone & Wafer Co 


Ice cream cones 












Equity. 
Do. 






mo 

TJ S y Atlas Portland Cement Co 


Cement 


Do 


U. S. y. Alphons Custodis Chimney Construction Co.. 
U. S. y. American Assn. of Wholesale Opticians 

U S y Ironite Co 






Wholesale opticians 


Equity. 
Do. 


Powdered iron 


U S y American Column & Lumber Co 


Lumber 


Do. 






Do! 


U S y Colgate & Co 


Toilet articles 


Criminal. 


U S y Sumatra Purchasing Corp 


Tobacco 


Equity. 






Do 






Do. 


mi 

17 S V Consolidated Music Corp 


Copyrighted music .. 


Do. 


U. S. y. Moore ,- - 












U. S. y. California Associated Raisin Company 

U. S. y. Ooodwin-Oallagher Sand & Gravel Corp 

U S y. Albany Chemical Co . 




Do. 


Sand 


Criminfil. 


Drugs.., 


Equity. 


U. S. V. Ooodwin-Oallagher Sand & Gravel Corp: 

U S y Andrew Lumber & Mill Co 




Do. 


Building trades 


Criminal. 


V. a. y. Poster Advertisers Assn 


Outdoor advertising 


Do. 



OONCENTRATION OF ECONOMIC POWER 



139 



Title of case 


Industry 


Proceeding 


U. S.V.Miller 




Equity. 
Do 


U. S. V. Corrugated Paper Mfrs. Assn.. 


Corrugated paper 


U. S. V. Southern Pine Assn. _ _ 




Do. 




Coal 




U. S. V. Alpha Portland Cement C0...I 


Cement 


" Do 


17 S V Smith 


Goal dealers 


Dol 


U S V Kern 




Equity. 
Do 


U. S. V. American Coated Paper Co 


Glazed paper 


TJ S Y. American Lithographic Co 


Lithographed labels 

Plumbing supplies 

Heating apparatus 


Do 


17 S V Clow & Sons 


ririminal 


U. S. V. Chicago Master Steam Fitters' Assn 


Do 


t/ S V Biegler Company 


do 


Do 






Equity. 


im 


do . 


U. S. V. Alexander & Reid Co - 


Tiles 


Do 






Do. 


U. S. V. Atlantic Terra Cotta Co 


Terra cotta 


Do 


U. S. V. American Terra Cotta & Ceramic Co 

U S v Norcross 


-—do . 

Cement 


Do. 
Equity. 

Do. 
Criminal 


U. S. V. Mid-West Cement Credit & Statistical Bureau . 
U. S. V. Johnston Brokerage Co 


do 

Window glass 






Do. 






Equity. 
Do 


U. S V Tile Mfrs.' Credit Assn 


Tile 


U. S. V. Peters—^ ..-- 






U. S. V. National Enameling <fe Siampius 


Galvanized tubs 


Equity. 
Do 


U. S V. Bricklayers', Masons' & \Plastti ^ ' s' mn- 


Labor union 


national Union. 
U. S. V. United Oas Improvement Co. 


Incandescent lamps 


Criminal. 


U S V. Lehigh Portland Cement Co 


Cement 


Do 






Do. 


erage Co. 
USv Wickwire Spencer Steel Corp 


Kitchen utensils 


Equity. 












Do. 






Equity. 
Criminal 


USv Trenton Potteries Co 


Sanitary pottery 


C7 S V Schroder's Son 


Tire valves 


Equity. 
Do 


U. S. V. Railway Employees' Department of A. F. ofL. 


Labor union 


U. S. V. Clemen's .. . 


do 


Criminal. 




do , 


Do. 


U. S.Y.Powell .! 


do 


Do. 


U. S V Fur Dressers' & Fur Dyers' Assn 


Fur dressers and dyers 


Equity. 
Do. 


U.S.v.H,. --d . 




U. S. V. B 


Labor union 


Criminal. 


U. S V. G' m Industries Assn 




Equity. 
Do. 


U. S. V. A,. >'«n. of Window Glass Mfrs 




U. S. V. Bai,ii . 


do 


Criminal. 


U.S.v.Reilly. 




Do. 


U.S.v.Hency 


do 


Do. 


U. S. V. Kryptok Co 


Optical goods 


Equity. 






Do. 


U. V. V. New York Coffee & Sugar Exchange, Inc . 


sugar " " ' 


Do. 


U. S. V. Western Pine Mfrs.' Assn 


Lumber 


Do. 


U. S. V. Industrial ASsn. of San Francisco . . 


Building trades 


Do. 


im 




Do. 






Do. 


U. S. V. Mitchell Brothers' Co 






U. S. V. General Electric Co 


Electric lamps 


Equity. 


U. S. V. Nat' I Malleable & Steel Castings Co 












17. S. V. California Wholesale Grocers' Assn 


do 


Do. 


U. S. V. Utah-Idaho Wholesale Grocers' Assn 


do..., . 


Do. 
Do. 


17. S. V. Wheeler- Osgood Co 


Fir doors 


Do. 


U. S. V. Standard Oil Co. ('Indiana) ,. 




Do. 


loss 

U. S. Y. Seattle Produce Assn : 




Do. 


U. S. V, Sisal Sales Corp 


Sisal 


Do. 






Do. 


U. S. V. Colgate & Co... 


Toilel articles... 


Do. 



140 



CONCENTRATION OF ECONOMIC POWER 



Industry 



Proceeding 



1925 



U. S. V. Lindsley Bros:. Co _ 

C7. S. V. Nat'i Peanut Cleaners & Shelters Assn. 

U. S. V. Fitzgerald 

U. S. V. Coye 

U. S. V. Baker : 

U. S. V. Brown 

U. S. V. iine-Piece Bifocal Lens Co 

U. S. V. banners Products Co j. 

U. S. V. Carson Brewing Company 



Cedar poles 

Peanut cleaners and shellers. 

Trade union 

j Refrigerator manufacturers.. 

Chair manufacturers 

Furniture 

Optical supplies... 

Tanners products 

Ice 



U. S. ■ 
U.S.' 

u. s. 
u. s. ■ 

U.S.- 
U. S.' 
U.S.- 

u. s.- 
u.s. • 

U.S.- 

u. s. • 

U.S.- 



National Cash Register Co 

Berkey & Gay Furniture Co.. 

Aulsbrook & .Jones Furniture Co... 

Lay Fish Company 

Porcelain Appliance Corp 

Krewoski 

Flower Producers Cooperative Assn. 

Ward Food Products Corp _.. 

National Food Products Corp.. 

Noland Company, Inc 

. Lay Fish Company 

Shreve, Treat & Eucret 



Cash registers. 

Furniture 

.....do 



U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
17. S. V 
Assn. 
U. S. V. 
U. S. V. 
17. S. V. 
U. 8. V. 
U. S. V. 
17. S. V. 
U. S. V. 



U. S. V. 
U. S. V. 
U. S. V. 
17. S. V. 
U. S. V. 
U. S. V. 
17. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
Do. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
L^. S. V. 
U. S. V. 
U. S. V. 



Leibner & Company 

Mitchell - 

Southern Hardware Jobbers' Assn 

Rand Kardex Bureau.. 

Eighteen Karat Club 

American Agricultural Chemical Co 

American Amusement- Ticket Mfrs.' Assn _ _ . 
. California Retail Hardware & Implement 



National Oum & Mica Co 

National. Hat Frame Assn. Inc 

Journeyman Stone Cutters Assn 

Northwest Shoe Finders Credit Bureau. 

Deutsches ICalisyndikat Oesetlschaft 

Richmond Distributing Corp 

Allied Cleaners & Dyers of Seattle 



Fish 

Porcelain insulators. 

Labor union 

Florists 

Bakery products 

-do. 



Plumbing supplies. 

Fish 

Jewelry retailers.... 



Fish 

Labor union 

Hardware Jobbers. 

Orflce furniture 

Jewelry retailers 

Fertilizer. 

Amusement ticket manufacturers 
Hardware retailers - 



Adhesive compounds. 

Hat frames 

Labor union 

Shoe findings 

Potash.... 

Candy jobbers 

Pressint; machinery... 



auiette Safety Razor Co 

Maine Co-Operutive Sardine Co 

Columbus Confectioners' Assn 

Ba ungartner - ..- 

Berger Manufacturing Co 

The Fernald Co. & Soule Steel Co 

Chicago Assn. of Candy Jobbers 

Asbestos Corporation, Ltd 

Metro-Goldwyn-Mayer Distributing Corp. 
Amsterdamsche Chininefabriek 



Great Lakes Steamship Co 

Wallace 

S83,340 Ounces of Quinine Derivatives. 

Paramount Famous Lasky Corp 

First National Pictures, Inc 

Candy Supply Company..- 

Myers 



U. S. V. 
U. S. V. 
U. S. V. 

merce. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
U. S. V. 
L". S. V. 
U. S. V. 

merce. 
U. S. V. 



General Outdoor Advertising Co 

Barnard di Co 

Greater N. Y. Live Poultry Chamber of Corn- 



Painters' Dist. Council No. 14 of Chicago, etc 

Confertioner.i' Club of Baltimore 

West Coast Theaters, Inc 

Alden Paper Co 

Balaban & Katz Corp. — 

Motion Picture Theater Owners of Oklahoma. 

Bates Valve Bag Corp 

Greater N. Y. Lire Poultry Chamber of Com- 



Razors and razor blades. 

Sardines _. 

Candy jobbers 

do. 

Metal lath 

do 

Candy jobbers 



Motion pictures 

Quinine derivatives. 

do 

Steamships 

Labor union 

Quinine derivatives. 

Motion pictures 

do 

Candy jobbers 

Labor union 



Outdoor advertising. 

Shirting cloth 

Poultry dealers 



Labor union 

Candy jobbars 

Motion pictures 

Watermarked paper 

Motion-picture exhibitors. 

do 

Bag-filling machines 

Poultry dealers 



Great Western Sugar Co i Beet sugar. 



Criminal. 

Equity. 

Criminal. 

Do. 

Do. 

Do. 
Equity. 

Do. 

Do. 



Criminal. 

Do. 

Do. 

Do. 
Equity. 
Criminal. 
Equity. 

Do. 

Do. 

Do. 

Do. 
Criminal. 



Equity. 

Criminal. 

Equity: 
Do. , 
Do. 

Criminal. 

Equity. 
Do. 

Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Criminal. 



Equity. 

Do. 

Do. 
Criminal. 

Do. 
Equity. 

Do. 

Do. 
Crimiunl. 
Equity. 
Criminal. 
Equity. 
Criminal. 
Libel. 
Equity. 

Do. 

Do. 
Criminal. 



Equity. 
Do. 
Criminal. 

Equity. 

Do. 
Criminal. 
Equity. 

Do. 

Do. 

Do. 
Criminal. 

Do. 



CONCENTRATION OF ECONOMIC POWER 



141 



Title of case 


Industry 


Proceeding 


m9 




Equity. 
Do. 


t/ S V Glazier s T ocal No ?7 of Chicaao 


Labor union 


U S v Evansville Confectioners' Assn 


Candy jobbers 


Do. 










do 


Equity. 


U S Y West Coast Theatres, Inc 


Motion pictures 


Criminal. 


mo 

U S V Great Western Sugar Co 


Beet suear^ 


Do. 


U S \ Fox Theatres Corp 


Motion pictures 


Equity. 






Do. 


U S V Pittsburqh-Erie Saw Co 


Saw frames and blades . 


Do. 


U S V Greater N Y Live Poultry Chamber of Com- 


Poultry dealers 


Do. 


merce. 
U S V. Standard Oil Co. of Calif 




Do. 


U S V Foster & Kleiser Co 


Outdoor advertising 


Do. 


U S y Badio Corporation Of America 


Radio 


Do. 


U S v Painters' District Council No S 


Labor union 


Do 






Libel. 


U S V A B C Canning Co 


do 


Equity. 






Do. 


1931 
U S V West Coast Theatres Inc 


Motion pictures 


Do. 






Do. 






Do. 


U S y Sugr Institute 


Sugar 


Do. 


U. S.V.Mercer , 






19SS 
U. S. V. International Busine.is Machines Corp 


Business machines 


Equity. 




Do. 


U S V Appalachian Coals, Inc 


Coal - - 


Do. 


1933 
17 iS V United Theatres, Inc 


Motion pictures 


Do. 




do 


Do. 




Millinery 


Do. 








U S v Nei'ada Northern Railway Co 


Railroads 


Do. 


U S V Fish Credit Assn Inc 


Fish 


Do. 








1934 
U.S.v. WeincT 






17 S V Market Truckmen's Assn 


Trucking 


tempt. 
Criminal. 






Do. 


of Teamsters. 




Do. 


U S Y Needle Trades Workers Industrial Union 


Labor union 


Do. 






Do. 






Do. 


U S Y I ockwood & Winant 


Fish 


Do. 






Do. 




Ice 




1935 




Do. 


U. S. Y. Party Dress GuUd, Inc 

U. S. Y. Half-Size Dress Guild,, Inc 


do 

.... do 


Do. 
Do. 


U. S. Y. American Society of Composers, Authors & 

Publishers. 
U. S.Y. McOlone 




Do. 


Labor union 


Criminal. 


U. S. Y Warner Bros Pictures Inc 


Motion pictures 


Do. 




Steel 


Equitv. 


U. S. Y. Mather 


do 


Do. 


U. S. Y Columbia Gas & Electric Corp 


Natural gas 


Do. 


U. S. Y. Hulse.... 




Criminal con- 


1936 
U. S. Y. Warner Bros Pictures Inc 


Motion pictures 


tempt. 
Equity. 


U. S. V. Local No. m of the Int'l brotherhood of 

Teamsters. 
U. S. Y. Warner Bros. Pictures. Inc 


I;aborunion :.. 

Motion pictures .. 


Criminal. 
Equity. 


U. S. Y. Teriile Reflnishers Assn., Inc 


Cloth sponging 


Do. 



142 



CONCENTRATION OF ECONOMIC POWER 



Title of case 


Industry 


Proceeding 


1957 
U. S. V. Standard Oil Co. (Indiana) 


Gasoline 


Criminal 




do 


Do. 






Do. 


U. S. V Interstate Circuit, Inc 


Motion pictures 


Equity. 


U. S. V. Standard Oil Co. (Indiana) 




U. S. V. Socony-Vacuum Oil Co., Inc 


do 


Do 


U. S V McGlone 


Labor union 


Do 








U. S. V. Aluminum Co. oj America 


Aluminum 


Do 


19S8 




Do. 


U. S. V. Dairymen's Assn., Ltd 


MUk (Honolulu) . . 


Criminal. 


U. S. V. Dairymen's Assn., Ltd 


do 


Do. • 


U. S. V. Postal Telegraph & Cable Corp 


Telegraph.. 


Equ^y. 


U. S. V. Western Union Telegraph Co . : 


- do . . .... : .. 


U. S. V. Hawaii Brewing Corp., Ltd 


Beer (Honolulu) 


Criminal. 






Do. 


U. S. V. Ford Motor Co 

U. S.v. General Motors Corp 


do 

do 


Do. 

Do. 


U. S. V. Local 807 of International Brotherhood of 




Do. 


Teamsters, Chauffeurs, Stablemen & Helpers of 
America. 

1939 

U. S. V. Paramount Pictures, Inc 


Motion pictures 


Equity. 


U.S.v. The Borden Co 


Fluid milk. 


Criminal. 






Do. 


U. S. V. Columbia Oas <fe Electric Corp 


Natural gas 


Equity. 






Do. 


U. S. V. ford Motor Co 




Do. 


U. S. V. Barney Balaban 


Motion pictures 


Criminal con- 






tempt. 


U. S. V. The Cooper Corp 


Auto tires .. . .. .. 


Triple damage. 


U. S. V. Griffith Amusement Co 


Motion pictures 


Equity 








Local mu. 
U. S. V. Imperial Wood Stick Co., Inc 


Candy stick 


Equity. 


mo 




Criminal. 








Iters, Chauffeurs, Stablemen & Helpers of America. 
U. S. V. Kraft Paper Assn 


Kraft paper 


Criminal. 


U. S. V. Underwood Elliott Fisher Co . 




Do. 








U. S. V. National Container Assn ' 


Paperboard - v 


Criminal. 








17. S. V. Fox West Coast Theatres Corp 


do - 


Criminal con- 


U. S. V. Local 639, International Brotherhood of Team- 
sters. 


T/ahnr nTiinn 


tempt. 
Criminal. 






U. S. V. William L. Hutcheson 


Labor union, building trades 


Criminal. 


U. S. V. Local IS02U, Wine, Liquor & Distillery Work- 




ers Union. 
U. S. V. Glaze-Rite ... . . 


Building trades 


Criminal. 


U. S. V. General Petroleum Corp. of Calif 


Gasoline 


Do. 


U. S V. Long Island Sand & Gravel Producers Assn 


Building trades 


Do. 


U. S.v. Wheeling Tile Co 




Do. 


U. S. V. Voluntary Code of Heating, Piping & Air 

Conditioning Industry for Allegheny County, Penna. 

U. S. V. Hartford-Empire Co 


do.... 


Equity. 
Do. 








U. S. V. Sheet Metal .4ssn 


do 


Do. 


U. S. V. San Francisco Electrical Contractors Assn 

U. S.v. E. L. Bruce Co 


do. 

do 


Do. 
Do. 


U. S. V. Cadillac Electric Supply Co 

U. S. V. Plumbing and Heating Industries Adminis- 
trative Assn. 


..,..do..... 

do 

do 


Do. 
Equity. 

Do. 


U. S. V. Excavators Administrative Assn 

U. S. V. Master Plasterers Assn of San Francisco 


do 


Do. 
Criminal. 




do 


Do. 


U. S. V. New Orleans Chapter, Associated General 

Contractors of America. 
U. S. V. Building & Construction Trades Council of 

New Orleans, La. 

U. S. V. Mosaic Tile Co j. 

U. S. V.Arthur Morgan Trucking Co 


do .— 

do - .... 

......do 


Equity. 

Criminal. 

Do. 
Do. 



CONCENTRATION OF ECONOMIC POWER 



143 



Title of case 


Industry 


Proceeding 


mo 

U S V International Longshoremen's Assn 


T,ahnr nnjoTi 


Criminal. 


U. S. V. Heating, Piping and Air Conditioning Con- 
tractors Assn. of So. Calif . 
U S V United Brotherhood of Carpenters & Joiners 


Building trades 


Do 


T.ahor nninn 


Do. 


of America. 




Do. 


Calif. 
U. S. V. Chicago Cook County Building <5t Construc- 
tion Trades Council. 


do... 

.. . do 


Do. 


U.S.v. Beardslee Chandelier Mfg. Co 

U. S. V. Harbor District Chapter, Nafl Electrical Con- 
tractors' Assn. 
U. S. V. So. Calif. Marble Dealers' Assn 

if S Y Southern Pine Assn 


do 

do 


Criminal. 
Do. 

Do. 
Do 




do 




17. S. V. Western Penna. Sand & Oravel Assn 

17. S. V. Engineering Surrey & Audit Co 

V. S. V. Lumber Institute of Allegheny County, Penna.- 
U. 8. V. Santa Barbara County Chapter, Nat'l Elec- 
trical Contractors Assn. 

U. S.v. Marble Contractors Assn. 

17. S. V. Pittsburgh Tile & Mantel Contractors' Assn.. 
U. S. V. Son Francisco Electrical Contractors' Assn... 

U. S. V. Masonite Corp 

17.. S. V. Mason Contractors' Assn. of District of Co- 
lumbia. 
U. S. V. W. P. Fuller Co.. 


"""do'~:^l^III^l'"III'I"-"I'I 

--.-do 

do 

do 

do 

..—do. 

do 

do 

do 

. do . . 


Do. 

Do. 

Criminal. 

Do. 

Equity. 

Do. 
Criminal. 
Equity. 

Do. 

Criminal. 
Do. 


U. S. V. Employing Plasterers' Assn. of AlUgheny 

County, Penna. 


do 

do . ... 


Equity. 


U S V Bausch & Lomb Optical Co 


Optical goods 


Do. 






1 Do. 






U. S.Y.New York Electrical Contractors' Assn. 


do 

do 


Do. 
Do. 






} Do. 




1 Building trades 








Equity. 


U. S V. Nationat Container Assn 


Paper board 


Do. 


U. S. V. Associated Plumbing & Heating Merchants.. 
U. S. V. Kelly-Goodwin Hardwood Co 


Building trades 


Criminal. 




Do. 






} Do. 




\Building trades 






Do. 






} Do. 


Wire & Metal Lathers 


1 Building trades 








U. S. V. .-imerican Potash & Chemical Corp 

U S Y St Louis Tile Contractors Assn 


do 

Building trades 


Criminal. 
Do. 


U. S. V. Long Island Sand & Gravel Producers Assn.. 


do 

do 


Equity. 


U S V American Optical Co 


Optical goods 


Do. 




_-■... do 


Do. 


U. S. V. John P. Nick 




Do. 


U. S V Tile Contractors' Assn. of America, Inc 


Building trades 


Equity. 
Criminal. 


U. S. V. Chattanooga News-Free Press Company 

U. S. V. Mosaic Tile Co 


Newspapers 






U. S. V. Associated Marble Companies 


i""do' " ." " ".'."r.r.'.'i.- ----.'.'-!.'..— 


Criminal. 
Equity. 






} Criminal. 
Do. 






U S Y Lumber Products -issn 


do . 


U S Y United States Gypsum Co 


Gypsum 


Do. 






Do. 









INDEX 



Fag« 

ADMINISTRATIVE RULING : Operation of in Antitrust Division 106-112 

ANTITRUST DIVISION, DEPARTMENT OF JUSTICE : 

Administration, 1903-40 27-32 

Administrative ruling, adoption and operation of 106-112 

Advisory opinion 86-87 

Appropriations for 23-24 

Modernization of antitrust machinery proposed 102 

Practice and personnel . 32-35 

Realignment of functions of 112-115 

Relation of to proposed Industrial Court 114 

ANTITRUST LITIGATION : 

Analysis of fines imposed under Federal antitrust law, July 1890- 

July 1940 124-125 

Cases instituted under Federal antitrust law, July 1890-July 1940. by 

fiscal years ending June 30 135-143 

Consent decrees entered under Federal antitrust law, July 1890-July 

1940; list of 126-129 

Convictions of imprisonment under Federal antitrust law, July 1890- 
July 1940 ; list of cases 121 

Course of litigation : 

Action on complaints, first preliminaries — .36-44 

Case in court; third step 58-74 

Cause of action,, procedure of staff of Trial Section ; grand jury 

researches; second preliminaries -. 45-57 

Criminal action ^'78-81 

Disposal of criminal cases under Federal antitrust law where fines 

or imprisonment were not imposed, July 1890-July 1940 130-131 

Disposition of equity cases under Federal antitrust law, July 1890- 
July 1940 . 132-134 

Equity action 75-78 

Fines imposed under Federal antitrust law, July 1890-July 1940; list 

of cases . 122-123 

Libel action — : 81-82 

Private suit and treble damages 82^5 

BASING POINT PRICE SYSTEM : 

Cast-iron soil pipe industry practice ; _ 14 

Cement industry practice 14 

Influence of as an aspect of the whole economy . 15 

Steel industry practice 14, 15 

BUILDING INDUSTRY : Restrictive practices 14-15 

CAST-IRON SOIL PIPE INDUSTRY : Basing point price system—, 14 

CEMENT INDUSTRY : Basing point price system — 14 

COMPETITION : Restraints of trade mothered by, instances 10-20 

CONSENT DECREE__ , 88-97 

Decrees entered under Federal antitrust law, July i890-July 1940; 

list of - 126-129 

DELIVERED PRICE SYSTEM. See Basing Point Price System. 

GLASS CONTAINER INDUSTRY : Restrictive practices 16 

GOVERNMENT REGULATION : Current problem of 116-119 

Emergence of regulatory commissions 5-6 

HAMILTON, WALTON, and TILL, IRENE : Antitrust in action. T. N. E. C 
Monograph No. 16. 

HOAR, SENATOR GEORGE F. : Relation to Sherman Act 9-11 

INDUSTRIAL COURT -. Establishment of proposed 114 

INJUNCTION : Function of 75-76 

145 



146 INDEX 

Page 
MILK INDUSTRY: Restrictive practices 17 

MONOPOLY: Proceedings of Fifty-first Congress summarized 5-11 

NATIONAL ECONOMY: Changing pattern of 11&-119 

Public consciousness of 32 

OPTICAL LENS INDUSTRY : Restrictive practices 16 

PAPER INDUSTRY : Restrictive price practices 14 

PATENT LICENSING RESTRAINTS : Glass container industry 16 

Shoe machinery manufacture 16 

POLITICAL PROCESS : Value of 32 

PRICE LEADERSHIP 13-14 

PRICE LINING : Milk industry ^ 17 

PRICE STRUCTURE RESTRAINTS: Basing point system. See Basing 
Point Price System. 

Paper industry , 14 

PUBLIC UTILITY COMMISSIONS : 

Characterization of 119 

RESTRAINTS OF TRADE 12-20 

Basing point system. See Basing Point Price System. 

Building industry, practices 14-15 

Competition the mother of restraint, instances of , 19-20 

Glass container industry practices 16 

Milk industry practices . ± 17 

Optical lens industry practices 16 

Origins and absorption by fabric of industrial organization 12-20 

Paper industry pricing system 14 

Patent licensing restraints 16 

Price lining. See Price Lining. 

Price structure restraints. See Price Structure Restraints. 
SANCTIONS : Legal sanctions employed as defense in maintaining trade 

practices 16-20 

SHERMAN ACT (July 2, 1890, 26 Stat. 209) : 

"Charter of freedom" 4 

Enforcement, lack of financial support 24 

History of legislative action prior to passage 3-10 

Legal reference or instrument of policy? 75 

Name a misnomer 11 

Revision, program of action 101-105 

Status of act at its beginning and today 116 

SHOE MACHINERY MANUFACTURE : Patent license agreements 16 

STEEL INDUSTRY : Basing point price system 14, 15 

SUBPENA POWER : Grant of to Department of Justice proposed 102-103 

TAFT, WILLIAM HOWARD : Antitrust opinion and message cited 30 

TECHNOLOGICAL CHANGE: Absence of developing technology in the 

building industry 15 

TILL, IRENE, joint author. See HAMILTON, WALTON. 

TOBACCO INDUSTRY: Restrictive practices 15 

TRADE UNIONS : Immunity from restraint of trade legislation claimed by_ 17 
TRIPLE DAMAGE SUITS 82-85 



o 



iililfi 

3 9999 06351 917 5