The Bottlenecks of Business. By Thurman W. Arnold. New York: Reynal and Hitchcock. $2.50.
The theme of Thurman Arnold’s “The Bottlenecks of Business” is not indicated by its title, even when the latter has been translated for the benefit of the uninitiated. “Bottleneck,” which is a cliche of our time, was used by military writers to describe the result of the maneuver by which General Beauregard so cleverly sealed up the forces of Butler at Bermuda Hundred in 1864. In later years, “bottleneck” was used to describe a railway terminal which tapered down to an inadequate entrance. As worn to a frazzle during the last two years, by New Dealers and even by Washington writers of a less fervid caste, “bottleneck” I meant a certain type of embolism in the current of production—thus, the case of a manufacturer who would not, or could not, meet the government’s terms for large-scale production. But Mr. Arnold discusses the various obstructions to a free and competitive market that can be caused by the misconduct of capital, and also of labor.
Mr. Arnold, Assistant Attorney General of the United States, is in charge of the Antitrust Division of the Department of Justice. Many of his predecessors have tried the Sherman Act as a cure for industrial ills, but because their methods were coarse, the problem still remains. Mr. Arnold suggests a new method, but whether he is right is for the reader to decide.
Now, here is the difficulty of the present book, and of all others that try to simplify law for the layman. In order to reach a just decision—that is, one which will satisfy his own conscience—the reader must know a great deal of law, must be acquainted with certain phases of legal history, and must know something about the mechanics of production and distribution. And so when the author undertakes to place before a lay public, in less than three hundred pages, problems that belong to the expert alone, it is no wonder that even this small volume contains two appendices, notes, and a copious index; and yet with all these aids, the writer has to take for granted things that many a reader cannot understand. For one thing, the Act itself, passed so long ago as 1890, is encysted with decisions of the Supreme Court which not even lawyers can reconcile, to say nothing of the professional literature that has resulted from two generations of close discussion. The average reader will balk at the graphs, nor will he be mollified by a limerick or a description of the township of Nun, in the West. The book, in other words, is not like “The Folklore of Capitalism,” which, as a real work of art, delighted even those who did not agree with a single word of it.
There is, however, at least one touch of the Arnold genius in the present book. Mr. Arnold loves the paradox; and so the reader of “The Bottlenecks of Business” should read the last chapter first. As independent enterprises disappear, we are told, opportunity lessens for the average man to build up an independent income; and, perhaps subconsciously, his interest passes from the earnings of an enterprise to the prices it is charging for its output. Then the citizen becomes aggrieved when it appears that the business institution on which he relies is incapable either of distributing goods or giving more jobs at higher pay; and that is the situation today. Turning to the first chapter, we find that the purpose of this book is “to explain to the consumer what can be done for him to increase the distribution of goods under our existing laws and by pursuing our traditional ideals of an economy of free and independent enterprise.” Since we are committed to private enterprise as a means of distribution, consumers must “use the instruments of government which they have at hand” if they wish to secure “the maximum distribution of goods in a free market.”
This introduction, highly conservative and therefore a pleasant surprise to the reviewer, leads to a discussion of the different obstructions that used to be called restraints of trade. New terms are here used, I suppose, because a novel idea underlies this book; but to appreciate the new thought we must go back to the old notion of “trust busting.” The theory of the first Roosevelt, put into effect by means of prosecution or injunction under the Sherman Act, was based on the conception that a trade combination was bad if it was big, and so the remedy was to break it up. This lost sight of the fact that the dissolution of a “trust” often meant a dead loss of efficiency in the production of goods. And so, when times became really bad, the remedy, as exemplified by the N. R. A., was to discard all idea of trust busting.
Mr. Arnold proposes that an enterprise be judged in the light of what it does for the consumer, which means that the prices it sets be reasonable. The enterprise should be allowed to effect savings by means of greater efficiency, but as the price of this freedom something must be given in return. Hence the producer must share his increased earnings with the consumer public, which means that price levels must be maintained that are most consonant with the ability of the public to take the goods that are offered. The result, he thinks, will keep consumer demand up to the capacity of the producer, and thus save the latter from such performances as “sales” in dictator countries, from whose bourne no cash or credit can ever return. If this sounds reasonable, the next question is, how may the idea be given effect? One might think of a new type of N. R. A.—purged, however, of certain types and extravagances that helped destroy the prototype. But the administrative board as a cure for national ills has not as yet been fully weighed, and Mr. Arnold is bold enough to propose a remedy under existing law. Let the Department of Justice, he argues, secure proper prices by the use of the Sherman law—an indictment here, an injunction there, followed by agreement.
Years ago, a chief objection to Federal activities under the Sherman law was that it entailed “government by injunction.” Well, what of it? We have seen much since the time when that phrase was coined. As we have a national law against restraints of trade—and that has been our situation since 1890—the producer cannot avoid contact with the government at Washington. Any citizen who is forced to converse with government should have learned, by now, that he is lucky to have a choice between bureaus. For my part, if I had to elect between an arrangement with the Department of Justice, and the bedevilment that so often results from the action of certain types of administrative boards, I would prefer the Department of Justice. Sanity resides there, and a certain tradition; in which respect the Department might be compared with the National Labor Relations Board.
And, as representative of this spirit of sanity and fairness, let me commend Mr. Arnold’s book.