In november, 1937, Mr. Robert H. Jackson, at the time Assistant Attorney General in charge of the anti-trust division, departed with the President for a fishing trip off the Florida coast, and the reporters were left to infer that the campaign for revision of the anti-trust laws and the suppression of “monopoly” was at last about to be perfected. It was one of the more conspicuous items of unfinished business on the New Deal calendar. The Democratic platform of 1936 had carried the sweeping pledge to “restore” the anti-trust acts’ efficacy to stamp out, not only “monopolistic practices,” but the “concentration of economic power” as well; that pledge in turn had grown directly out of the lamentable experiences with the N. R. A. in 1935 and 1934. Those who could still carry their minds back to the furious and forgotten days of the Blue Eagle could remember how the “monopoly issue” had first raised its serpent head in the N. R. A. Eden of “self-government in industry”; and how it had survived (not without assistance from the ambiguous hand of Senator Borah) as an obvious approach to the problem of filling the great gap left by the demise of that noble experiment.
When the campaign pledges were written into both the party platforms, it was reasonably apparent that anti-trust act revision was simply a method of taking in reverse, so to speak, those large and general problems of industrial regulation which N. R. A. had so rashly set out to solve in a more positive manner. The problems themselves were anything but new in 1933; they were anything but abolished by the destruction of N. R. A. in 1935, and after the election of 1936 the possibility of attacking them through the anti-trust acts and thus repairing the N. R. A. disaster remained as a plainly inviting challenge to the inexhaustible energies of the New Deal.
The challenge had not, however, been accepted directly. Instead, the first move was a flanking maneuver by way of the wage-and-hour bill. This diversion was by no means so great as it may have appeared. The problem of wage-and-hour regulation was rooted in the same N. R. A. experiment from which the issue of monopoly and the anti-trust laws had sprung; the relationship which Federal wage-and-hour legislation must bear to any policy for the promotion or control of competition is obviously a very close one, while the original bill (of which Mr. Jackson was one of the chief authors) was constructed upon the legal concept of unfair trade practices—the foundation stone upon which generations of business and anti-trust law rested. The bill was, moreover, careful to explore every conceivable prior decision and Constitutional device which might subsequently prove useful in getting a more generalized structure of business regulation past the suspicious eyes of the Supreme Court. If it was a flank attack, it was a logical one. But the wage-and-hour bill, at all events, was swallowed up like everything else in the titanic struggle over the judiciary bill; and when the exhausted echoes of that conflict finally died away, still nothing had been done about monopoly and the anti-trust laws.
But then Mr. Jackson returned from the fishing trip; early in December the Washington correspondents were reporting that the question of Federal regulation of business was likely to provide the major issue for the coming Congressional session, and when in the Christmas season Mr. Jackson and Mr. Ickes opened up their celebrated oratorical barrage, it seemed that a great program of anti-trust law revision, comparable to the Clayton and Federal Trade Commission acts of 1914, was about to be laid before the country.
Mr. Jackson was anything but diplomatic in his attack. “We are engaged,” he exclaimed, “in a struggle to keep from being a nation controlled by a couple of dozen corporations.” The “monopolists” had “priced themselves” along with the rest of the country into the new depression. Business had implored the government to return to the ways of orthodoxy, and in response “in the last fiscal year the governmental net contribution to purchasing power was reduced about $275,000,000 a month—on the assurance and expectation that business activity would make up for the reduction. . . . But monopoly, by trying to skim all the cream of the recovery for itself, belied the plain meaning of its promise.” Monopoly presented a picture of “aristocratic anarchy”; there was a “strike” of capital against its government, and the “private regimentation of industry and commerce” had become a “dangerous menace to political and economic freedom.”
At once cries of rage and pain went up from the opposition trenches, along with the answering hot shot denouncing this assault on business at a critical moment. The President, in his message on January 3, chose to be’soothing in tone; but at the same time he broadened the scope of Mr. Jackson’s foray in a manner which should have been suggestive. It was not merely “monopoly” which should be ended; it was “tax avoidance . . . , excessive capitalization, investment write-ups and security manipulations, price rigging and collusive bidding, . . . high pressure salesmanship, . . . the use of the patent laws to enable larger corporations to maintain high prices, . . . unfair competition which drives the smaller producer out of business, . . . intimidation of local or state governments . . . by threatening to move elsewhere,” as well as actual migrations “in pursuit of the cheapest wage scale.” In addition to all of which, something should be done, at least, about the “concentration of economic power” in general.
This should have been enough to give anyone pause; but because Mr. Jackson’s language was so much more picturesque and because, perhaps, of the always lingering doubt as to whether Mr. Roosevelt really quite means what he says, what ought to have been seen as an issue of business regulation of the broadest sort was actually joined in narrower, more traditional, and more theoretical terms. Mr. Jackson talked about “monopoly” in the time-honored way; and when his anti-trust division happened, just at this juncture, to secure the conviction of many of the most eminent figures in the oil industry on charges of criminal conspiracy under the Sherman act, it was easy to regard him as a simple “trust-buster” of the time-honored type. And it was a time-honored argument which thereupon revived.
Was trust-busting, after all, the correct solution? Was it possible to return into our simpler national past and enforce the laissez-faire ideal of free and unlimited small-enterprise competition? Or must the effective cartellization of great areas of modern industry be recognized as an irreparable fact? Should the huge modern aggregations of monopolistic organization and economic power be shattered into small, competitive fragments? Or should their great gifts of economical operation and mass-produced abundance be accepted and enjoyed, with only a mild form of regulation to eliminate their attendant “abuses”? How many corporations could dance upon the head of the competitive needle? It was the old, scholastic conundrum of 1912; and soon it was being debated with as much solemnity as if nothing at all had happened in the quarter of a century since the Wilsonian Democrats had been demanding the extirpation of monopoly and the Theodore Roosevelt Progressives had been proclaiming, in reply, the inevitability of business concentration and the necessity for its legal recognition and regulation.
It was an argument which appeared to rage within the Administration ranks no less furiously than without them. Mr. Raymond Moley was early dividing the New Deal into two hostile economic parties—the party, as he named it, of “enforced atomization” of industry, and the party of “concentration and control.” It made a neat, perhaps a too neat, division. On the left wing were the atomizers, including, besides Mr. Jackson, such well-known enemies of business and radical planners as Messrs. Corcoran and Cohen, Leon Henderson, and others who were supposed to stem in one way or another from the Brandeis tradition, and who were here apparently voicing that belief in “the curse of bigness” which had so long been a leading element of Mr. Justice Brandeis’s philosophy. Moving from the red toward the blue end of the New Deal spectrum, the controllers became more prominent; among those taking issue with Mr. Jackson one found the more conservative Mr. Richberg and others associated in one way or another with the Baruch influence in New Deal history. Finally one arrived at Mr. Baruch himself (now apparently occupying a place somewhere in the ultra-violet, which is to say invisible, band), who appeared before the Senate unemployment committee to speak of Mr. Jackson with a gentle acidity: “To reach a few malefactors or a few chisellers . . . let us not throw away the benefits of our economy or burn down our house to kill a few bats in the attic.”
Here, surely, was the old battle between the “Brandeis men” and the “Baruch men” which had raged from the first days of the New Deal and, through all the New Deal’s storms and stresses, had done so much to promote the confusions and inconsistencies of its course. Mr. Jackson, while never clearly specifying just what he had in mind, was calling apparently for all sorts of drastic extensions of the antitrust acts to break up numerous different kinds of co-operative business practices and dissolve all the higher integrations of finance and industry. Mr. Richberg was stressing “voluntary co-operation” between business and government (Mr. Jackson had said that he was tired of co-operation in which the government was always expected to do all the cooperating), and was working out a form of anti-trust act revision in which heavy penalties would be retained for such clearly monopolistic practices as could be exactly defined, but in which there would be provision for governmental sanction of those measures of business combination or agreement that might be necessary to eliminate cut-throat competition and to effect desired stabilizations. And Mr. Baruch, feeling (rather bravely, it would seem, in face of the current behavior of the economic system) that “there is a wonderful balance and protection in the laws that God, in His infinite intelligence, has provided,” took an even simpler view. Some businesses’were monopolies which rigged prices; some were merely big businesses, which by their economies brought reductions of price and promoted distribution. All that was necessary was to distinguish between them and eliminate the “abuses” of the former. “On this whole question of monopoly I cannot agree with a campaign of attacking our existing business system on a broad front for the sole purpose of breaking it into smaller pieces. . . . I prefer precisely to define those practices which we regard as monopolistic and then vigorously to prosecute all those who overstep those bounds.”
So the tide of battle flowed back and forth, with the President appearing to incline now to the one side, now to the other. The first echoes of the Jackson-Ickes explosion had barely died before Mr. Richberg and a delegation of business men were appearing at the White House in the interests of “voluntary co-operation”; and there was a press conference which appeared to deny everything that Mr. Jackson appeared to stand for. But the press conference had scarcely sunk in before the oil decision arrived to undo its effect, and it was reported that Mr. Jackson and Mr. Cohen were at the White House to put the finishing details on the forthcoming anti-monopoly campaign. Down to the moment of the President’s monopoly message on April 29, the struggle between the atomizers and the controllers seemed hanging in the balance. And then the message arrived. It was not without its suggestive passages; but as to the issue between control and atomization it said nothing, while it rolled up the whole anti-trust and anti-monopoly campaign and put it away in a Congressional investigation. The customers were left with the sudden feeling that the battle they had been witnessing was only a sham battle after all.
No doubt it was; for it had been largely a sham battle when it was first joined, with the passage of the Sherman act half a century ago; it was a sham battle in 1912; it had involved a large amount of sham fighting in 1933 and 1934, and, revived in 1938, it could hardly have been other than a sham battle still. The essential unreality of that issue between the atomizers and the controllers, between competition and cartellization, should have been apparent from one glance back to its history in 1912, when the atomizing Democrats, having conquered the controller Progressives, proceeded to translate their mandate into law, only to emerge with a solution, in the Clayton and Federal Trade Commission acts, almost indistinguishable from what the Progressives had advocated. The insubstantial character of the controversy should have been suggested by the curious alignments that it produced, putting Senator Borah, for example, in the Cohen-Corcoran camp, or leading so conservative a commentator as Mr. Walter Lippmann to salute Mr. Jackson for having reversed the entire centralizing course of the New Deal, although Mr. Jackson and his associates were themselves largely responsible for the centralization.
The truth is that the whole subject of competition, integration, and the public regulation of business in general, has become so involved in large, meaningless, and emotional words that it is all but impossible to see its essentials through the forests of irrelevant controversy which overgrow them. The whole vocabulary has become unserviceable. “Monopoly,” “concentration of economic power,” “unfair competition,” “restraint of trade,” monopolistic “abuses” have become empty resonators, implying anything that the controversialist of the moment wishes to put into them. And when Mr. Jackson chose to employ them as the weapons of his assault, he was gaining political effectiveness at the cost of all but completely concealing the real point that he was making.
It is greatly to be doubted whether Mr. Jackson was ever really an atomizer at all. He utilized the moralistic phraseology of the old war between the sins of monopolists and the virtues of the small business man; but he used it in order to set forth what was in fact a perfectly practical economic thesis, to which that war bears small relation. When he declared that the “monopolists” had “priced themselves into a slump,” it had the effect of accusing the large business men of a conspiracy of greed and wickedness against the commonweal, but it actually stated a criticism of the existing economic machine which would be equally effective and significant had he assumed that the hearts of all big business men were as pure as that of Owen D. Young. He was saying, in effect, that the economic machine is now so highly integrated that it trips itself over its own efforts to make money.
The argument is clearer in the statistical support that Mr. Leon Henderson brought to Mr. Jackson’s position. Unlike others, Mr. Henderson began by recognizing that “monopoly” is a “loose term” and by defining what he meant by monopoly prices as “controlled prices, rigid prices, administered prices, or manipulated prices”—which is a definition large enough to take in a large part of the actual price-making in the contemporary industrial field. In September of 1937, he said, commodities representing forty per cent of the value of all goods exchanged were being priced higher than in 1929, although the total production was less than in 1929. Not all of these prices were controlled, and not all commodities produced under the more obvious forms of control were in this high group, but the fact pointed to an imbalance of prices as a primary cause of the disaster that overtook the nation in the latter half of 1937. It would follow that “so long as a part of the economy can side-step competition, there can never be, under present assumptions, any substantial duration of prosperity on a high level of activity.”“
If there is anything in this conclusion, it would seem clear that government regulation must intervene to improve the workings of the mechanism; and this would follow equally whether one described the condition as one of “monopoly,” or of the “elimination of cut-throat competition,” or of the “short-sightedness of business men,” or of the “wonderful balance and protection” provided by the infinite intelligence of God. It would also follow whether one believed that the intervention should be in the direction of breaking up all large corporations or of fostering some and breaking up others, of promoting more trade agreements under greater restriction or of preventing any trade agreements and removing all other restriction. It would follow likewise, whatever one conceived as the ultimate scope of the intervention; whether some measure of regulating business management alone would suffice, or whether the regulation must include labor organization, labor standards, financial practices, holding-company organization, and so on.
Now it is evident that in any advance into business regulation, it is all these latter and complicated questions which raise the real issues, and that no advance which can accomplish anything can be achieved except in the light of pretty definite and practical answers to them. And surveying the disputation of the past few months, it seems evident, likewise, that almost none of it has trenched upon the only ground which is really significant. Mr. Jackson has in effect declared that we must for economic reasons have a far more extensive regulation of business than now exists; and all parties have in one measure or another echoed him. If Mr. Jackson regards the present anti-trust laws, as interpreted by the courts, as mere “theological tracts on corporate morality,” Mr. Baruch finds them “a sinister jest”; and even the Republicans announced in their platform their belief that “additional legislation” may be necessary. But virtually the only concrete suggestions so far advanced have confined themselves to possible methods of regulation, not to the vital matter of its content.
Until Mr. Baruch gives a clearer idea of just what he regards as “abuses”; until Mr. Richberg has succeeded in writing his definitions of the “monopolistic practices” to be prohibited and relating them plainly to the trade agreements “to protect and promote business” which he would authorize; until Mr. Jackson has lent precision to his concept of “monopoly,” we are dealing only with the tactics of a campaign for which no strategy has yet been worked out. The tactics are important. Whether to proceed by criminal prosecution or civil suit, whether to define and punish or more generally to indicate and administer, whether to mingle sanctions for some kinds of combination (the “good trusts”) in with the prohibitions upon other (the “bad trust”) kinds, are all serious issues, but secondary ones. The machinery cannot properly be set up until the designs for the product which it is to turn out are in hand; and the very fact that all these issues have been fought over continuously for forty years with so little agreement and so little result is its own indication of the lack of any adequate primary design.
One turns again to the Presidential message of April 20 to read over the matters which it recommended for study: technical changes in anti-trust procedure; powers to prevent mergers, to control investment trusts, and to oversee the uses to which the great accumulations of the life insurance companies are put; supervision of trade associations; amendment of the patent laws; and the development of “tax correctives.” All, once more, are matters of method. They speak of the kind of controls that any system of business regulation might use; they say nothing as to the utilization to be made of them. Acquiring the power to prevent mergers, for instance, implies nothing as to the sort of mergers that ought to be prevented. The vital matter of the design for the new industrial scheme of living which is to eliminate the apparent defects in the present one, the President has entrusted to further investigation. But just to read over this catalogue of proposed controls, together with the hints in the January 3 message, is enough, I think, to show the appalling complexity and far-reaching scope of the true problem which any real effort at anti-trust revision must pose.
For the old and seemingly simple question of competition against combination has long since been swallowed up in the torrential advance of the times. It has become nothing less than the whole problem of price policy, wage policy, production policy, and investment policy throughout the economy as a whole, and the proper interrelation of these policies in order to keep that economy generally operating at a high level of activity. To discuss the regulation of such matters in the old terms of “monopoly,” “restraint of trade,” “unfair competition,” and so on, is about as easy as to tune up a V-8 automobile with nothing but the tools and the terminology appropriate to maintaining a mule-powered covered wagon in running order. The task, if it is to be attempted at all, is a task for a corps of highly expert mechanics working with a pretty clear idea of the functions which the economy is to perform, and free to use a wide variety of adjusting and controlling devices as each may be appropriate to some different part of the system.
Because it is such a task, it may be doubted, without excessive cynicism, that it will really be attempted even by Mr. Roosevelt’s rash administration; if it is attempted, it seems highly probable that any results that may finally be achieved through the inevitable storms of opposition will be just about as confused, contradictory, and unworkable as the N. R. A. experiment turned out to be. But as the whole issue is now turned over to the mercies of Congressional investigatorial wisdom, it is no use blinking our eyes to the true enormity of its scope and intricacy.