After experiments and false starts which have continued since the inception of the New Deal the Administration began this summer to mould the business and industry of the country with the aid of instruments which have existed from the beginning, name-1y the anti-trust division of the Department of Justice and the Federal Trade Commission, helped by the New Deal Social Securities Commission. Meanwhile a joint Congressional and Departmental Committee has beer established to study the problem of concentrated wealth, or as it is usually phrased "monopoly:
The chief characteristic of this renewed effort to supervise business activities for the benefit and' safety of the public is that the old crusading spirit has vanished. The Administration have evidently decided that you cannot accomplish constructive work with a sledge hammer. There was a period of cooperation between business and Government under the N.R.A—in fact many criticized the Government for turning over the country lock stock and barrel to the Chamber of Commerce, but with the fall of the N.R.A. began the series of terrorist and punitive attacks upon business held responsible for all the ills to which the country was heir.
The question of government and business relations can be approached from the point of view of whether they shall be antagonistic or ce-operative. It can also be approached from the more tangible side of whether business shall be forced to compete (on the theory that competition between units to attract the favour of the public will best secure for the public what it wants) or whether it shall be consolidated and controlled.
The theory behind the N.R.A. was a combination of the ce-operative approach combined with the "consolidated and control" principle. The rival doctrine, which some people like to call "enforced atomization" has in the past been associated with the hostile approach. Businessmen were malefactors who were forming mergers and combines to fleece the people. The trust-busting carpülgn was a punitive campaign. But there was actually no intrinsic reason why it should A considerable' part of the credit for this new spirit of approach must go to two men, Mr. William Douglas the head of the S. E. C. and Mr. Thurman Arnold, appointed in March this year to be Assistant Attorney-General in charge of the anti-trust division. Both ai them adopted the conciliatory approach They: were no James and John of tie New Deal Evangel, "Boanarges, sons of thunder. but on the contrary set out fo make friends with the Mammon of unrighteousness. Perhaps it would be giving a fairer picture of the approach to say that neither man was a politician seeking to make a campaign issue out of denouncing the enemy of the people. They approached the problem in a scientific and not'an emotional manner.
ME
The monopoly enquiry being conducted this autumn and coming winter should also take much of the witch hunting atmosphere from the monopoly problem. The political value of such brimstone braving drives will vanish. Closer study will show that the problem cannot be resolved into some simple syllogism such as "bigness is badness, badness bigness, that is all we know on earth and all we need to know." One useful study on these lines was made by the Brookings Economic Institute entitled "Industrial Price Polities and Economic Progress," a book incidentally highly praised by Mr. Thurman Arnold.
The big businesses of 25 years ago which the Sherman Act sought to control were in the main created chiefly for the purpose of controlling markets, suppressing competition and raising prices. Today's big business concerns have become big mainly to effect economies and produce masses of standardized products more efficiently. "Most of them actively seek to broaden their market giving the consumer more for his money" the authors of the Brookings volume declare.
They also puncture much of the superstition surrounding the value of "pure" com petition. The theory formerly held is, that a man wanting some particular object will be better served if a number of units attempt to supply him with what he wants. Each will strive to produce as cheap and as reliable an object as possible to win his choice.
Thus the buyer benefits. If it were not for this competition there would be no incentive for the manufacturing firms to make an effort to produce the best possible article and he would suffer.
The first thing wrong with this picture is that it starts with a man wanting something and looking for the best article to satisfy his needs. The frequent beginning today is that a man who doesn't want anything is made' to desire something by having its attractions flaunted beneath his eyes, in the press, over the radio, in shop windows, in his neighbours' homes.
He may want it so much after this that he will economize on something he thought he really wanted before in arge? to buy it. Competition is not a race between half a dozen dishpan makers, but between the dishpan makers and the shirtmakers, or the shirtmakers and the Atlantic City Hotel proprietors. Competition these days is a spirited rivalry of many kinds of people for a larger share in the total' budget of the man in the street.
Therefore' though there may be only one company supplying a particular article, such a situation does not necessarily involve all the classic evils of monopoly. The company will still have to supply a good article, resonably priced, or the consumer will spend his money instead on a trip to Europe.
There is also the possibility that if an attempt is made to keep some product at an artificially high price, some substitute product will take its place. If lead piping is too expensive people will use iron piping, if aluminum prices are too high people will use stainless steel. The price-fixing power of so-called' monopolies has therefore clearly diminished.
This does not mean that intro-trade competition is undesirable. The existence of three very big automobile concerns has provided a car for every second adult American. But the existence of a handful of big competing concerns with happy results does not prove the case for a dozen or a score of competing units. Standardization and mass production require size. "The persistent dissolution' of large corporations would bring us to the point where we had not the power to make the industrial advances which would progressively lower prices," the report states.
The Brookings study shatters the' atceptéd belief that the field of competition has been constantly growing narroWer and the field of monopoly wider. It also shows that bigness and monopoly do not necessarily go together.
A new criterion must be adopted which Mr. Thurman Arnold expressed in a speech as being whether or nó the concentration of economic control gave the particular business power to impose what was in effect a tax upon the people, instead of through efficiency to benefit them by plating a cheaper and more effective product before them; and also whether or no competitors were kept out of the ring by illegal means rather than through despair at being able to rival so excellent a a product as that produced by the big concern.
The two big anti-trust cases brought this summer was first the case against eight motion picture companies and secondly the case against the Medical Association. Neither case was brought forward in a crack-down spirit. As he promised when he took office in March, Assistant Attorney-General Arnold carefully explained his aims. In the cinema case it was to enable independent picture producers to find theatres in which they could exhibit their films and independent theatre owners to find films to exhibit. Owing to the close connection between the big moving picture companies most of whom own chains of theatres, they favour each other and keep out the little man. The public cannot exercise its free choice but must take the film offered it. "There is no opportunity for new forms of artistic expression which are not approved by those in control of the major companies."
Therefore Mr. Arnold proposed that the exhibition end of the industry should' be separated from the producing and distributing end. He also proposed other remedies ior existing conditions, such as the end of lending of actors to other studios unless similar arrangements could be secured by independent producers, and the end of block-booking which makes a theatre owner order films in grotips instead of being able to' select them singly, Independent theatre owners have been agitating for relief since 1932 and the suit wus undertaken because it became evident that their grievances would not be met by volüntary action by the big companies. Nevertheless Mr. Arnold expressed the hope that the lawsuit would be regarded as "the beginning of ce-operation."
The action against the Medical Associdtioti also followed broad principles which throw light on future Government policy and also sion the future economic structure of the country. The Association were charged with preventing the formation of "group health associations" which supplied cheaper medical care to the salaried worker than he could get from his own individual doctor. It was really a species of voluntary health insurance. The Medical Association, however, objected to the principle and refused to permit their members to work with the group doctors on operations and special cases and also exe pelled group doctors from their ranks.
Text read from the printed page and cleaned; old type leaves the occasional error.