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The Commoner
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Department of Justice Under the
Democratic Administration
Robert T. Burry, in Loulsvlllo
Courier-Journal.
In tho summing up of tho achiovo
inonts of tho Wilson administration
too much attontlon can not bo cen
tered upon tho record of tho depart
ment of justice.
In lmportanco to tho business of
tho nation, despito tho legislative
accomplishments of tho democratic
congress, too much omphasls can not
bo placed upon tho reduction by the
department of justlco of tho area of
doubt In the no-man's land between
that known to bo Illegal and that
which Is certainly lawful in busi
ness. But, you ask, Is thefo no longor
twilight in the "Twilight Zono?"
Yos, tho authorities of tho depart
ment of justlco say, but this mys
terious area of half-light in the law
of trado restraint now Is no greater
than that' accoptod as a matter of
course In tho application of many
other laws.
What are theso advances?
What aro -tho differences between
tho "sham dissolutions" of monopo
lies under Itoosovolt and Taft and
tho "gonulno dissolutions" under
Prosldont Wilson?
What aro tho "consent decrees"
tho short cuts to squaro the affairs of
great corporations with the law of
which so much has been heard of
late?
Anti-Trust Laws
In tho domostic Hold, no more im
portant and interesting questions
havo confronted tho federal author
ities. It Is tho purposo of this ar
ticle to state tho essential features
of tho situation with roforonco to the
enforcement of tho anti-trust laws.
, You find at tho outset that tho
guiding rule has been:. To protoct
tho public against monopoly and
"unduo restraints" of trade; but to
' do so in ways that do not hinder but
help, do not obstruct but facilitate
tho developments of legitimate busl
nesa enterprise.
As matters now stand, in tho vast
majority Of caseB it is not dlfflcult for
those qualified by training and ex
perionco to determine whethor a
proposed transaction is or is not in
violation of tho statute forbidding
restraints of interstate, commorco.
Tho fundamentals aro well estab-
lisnea.
"Tho .Standard Oil and Tobacco
cases," tho government's lawyers
say "docidod not only that those
particular combinations were within
tho prohibition of tho Sherman law,
but made it certain that any combin
ation in any form that unduly re
strained interstate trado in any of its
various manifestations was forbid
don by the act. They removed any
doubt which previously could have
existed as to whethor a combination
which unduly restrained that com
merco could escape tho condemna
tion of tho law because of the garb
in which tho ingenuity of lawyers
had clothed it. They established
tho application of the law to manu
facturing and trading combinations
ns well as to those affecting other
phases of interstate commerce.
"On tho other hand, theso de
cisions put an end to a bugaboo
which had boon rather sedulously
circulated by thoso whoso idea of
tho proper way to deal with the
Sherman law is not to interpret and
apply it, but to repeal it. As a result
of much competition, rather consid
erable acceptance was gained for the
assertion that tho Sherman law, if
honestly enforced, would cripple, all
business however legitimate; that
no man miclit make anv sort of am
icable business arrangement with a
commercial rival for their mutual
advantage without facing tho open
doors of tho penitentiary.
Apprehension Unfounded
"In tho great cases named, the
supremo court mado it clear that
such an apprehension was wholly
unfounded. In exnross terms it de
clared that a normal and usual con
tract of tho kind essential to indi
vidual freedom, tho right to make
which is necessary in order that
trado may bo free, was in no wpy
condemned by tho act. In holding
that any combination that unduly
restrained trado wan forbidden, it
was pointed out that undue restraint
of trado was not a new form of ex
pression but ono that had long been
known and dealt with in the law.
That to determine what acts consti
tute that undue restraint .of trade
all that is necessary is tho application
of that legal reasoning in which law
yers aro presumed to be trained and
competent. The anti-trust acts were
intended by congress to prevent cer
tain well recognized social and econ
omic evils. Acts which do not threat
en to bring about these evils aro not
forbidden. Thoso which tend to pro
duco them are condemned."
Such is tho now famous "rulo of
reason."
What of matters yet to bo decided?
Some of tho pending questions, it is
pointed out, aro involved in cases
now pending before tho supreme
court which aro rapidly being pushed
to a final disposition. Is tho fact
a combination has behaved itself to
ward tho competitors left outsido its
embrace a defense to aw charge of
illegality in forming tho combina
tion and eliminating the previously
existing competition of tho units
combined? Is a monopoly which is
completo as to tho invaded part of a
given field of industry beyond the
condemnation of tho law if it has re
frained from invading tho whole
field? Is an attempt at monopoly
absolved by the fact that it turns out
that in that particular field of in
dustry it in not possiblo for such an
attempt wholly to succeed? Is a
combination which was illegal in,
purposo and inception and, through
the use of illegal methods has in
trenched itself in a position of dom
inance, now outside the application
of tho law because a few years ago
it saw the light and has ceased to
follow tho Illegal practices for which
it no longer has need?
Absoluto Accuracy Desired
Tho officials v of tho department
recognize tho desirability of tho most
accurato possiblo definition of tho il
legal transactions forbidden by the
Sherman law. When tho Harvester
Steel, Can, Lehigh Valley, Reading!
Kodak and Shoo Machinery cases
now being prepared by the depart
ment for argument before tho su
premo oourt shall havo been de
cided, tho so-called area of debatable
ground will havo been greatly cir
cumscribed. It is believed at tho department of
justice that thero has been real and
not unfounded dissatisfaction in tlie
past with the results of the enforce
ment of tho Sherman act. Under
previous administrations important
anti-trust cases were won, but no
nouceaoio euect in restoring compe
tition in monopolized industry fol
lowed tho "dissolutions" which were
brought about,
"The law wa brought into de
rision, and almost into public con
tempt," officials say. "For while
boasting o4L Victories the government
!wn.s nermlr.t.hiir trnct. ,i ...
VlleS tO dlsSOlVO bV lliYMIm' l.m
solves Into convenient parts which
were distributed among tho old own
ers. Tho result was merely a change
of form. Thoso who controlled tho
industry beforo controlled it after
ward and were no moro anxious to
compoto with themselves than they
had ever been. A court decree may
look well on paper, but it does not
chango human nature. Tho law was
thus practically nullified. This was
truo both as to tho principal caso of
tho Roosevelt administration (the
northern securities case) and In the
principal cases of tho Taft adminis
tration (tho Powder, Tobacco and
Standard Oil cases).
''In marked contrast tho present
administration has insisted on real
dissolution. In every caso it has de
manded that the parts into which
tho unlawful combination or mon
opoly was or may bo dissolved be put
into separato and distinct ownership
and not left in the hands of the old
owners. Such real dissolutions were
insisted upon by tho department in
tho Union Pacific-Southern Pacific
merger caso, the Harvester caso, the
Telephono case, the New Haven case,
tho Reading case, and tho Kodak
case.
Tho Rending Caso
The Reading case is pointed to as
a good example of genuine dissolu
tion. The defendants proposed tnat
the combination be dissolved by au
thorizing the parent company to dis
tribute its stockholdings in the con
trolled company to its own minority
stockholders. This would have been
an improvement over the Standard
Oil case, but it was inadequate. The
government insisted that the parent
company be compelled to dispose of
uoi oniy its stocK but also of its
bonds and other securities of the
controlled, company, and to dispose
also o them to persons other than
stockholders of the parent company.
The court sustained the position of
the government and the result will
be an entire severance of ownership
of the parent company and the com
pany which it formerly controlled.
Under such conditions real competi
tion will bo possible. ,
The success of the prosecutions
brought Under the Sherman law and
the enactment of the Clayton act and
the federal trade commission brought
about a real and marked reforma
tion in many quarters. Illegal
methods of doing business were seen
to be dangerous and were abandoned.
The "consent decree" is one of the
evidences of this wholesome develop
ment, it is sta,ted. More' and more
often the men in charge of large en
terprises, whose legality has been
questioned, have volunteered to co
operate in making their affairs square
with the law and thus avoid pro
tracted and expensive litigation.
These men the Department of Justice
has assisted in everv nnsHiitiP wnv
The complaints in the New Haven,
Telephono and Thread cases' were
for example, disposed of by decree
entered by consent of the parties and
results present striking examples of
the advantages of this ''policy of
mutual reasonableness," as it is often
called. Other important cases have
been so ended.
Union Pacific and New Haven
This is illustrated by a comparison
of the Union Pacific and the New
Haven cases. Both were mergers of
railroad corporations. The first
case could be settled only by a law
suit, which was fought by the de
fendants to the end The original
position of the government seeking
dissolution was filed February 1
IflOR. Thp case was decided by the
Supremo court in f,avor of 'the gov
ern meht on December 2, 1J12
nearly five years later, aiuMhe final
proceedings winding up' the matter
ware not. had until Deceniber .22,
1915. The expenses of this .Htiga-
tion were very largo both to tho
ernment and to the railroad 80v"
pany. Tho court costs paffby
company amounted to over $2n n?J
but that sum takes no account of thfi
many thousands spent by tlio i
fendent corporation for counsel ?
and for the other very large S3
incident to such a eJatSS
ing bill alone amounted to thousand
of dollars, which was divided hi
tween the defendants and the K0T
ernment. On the other hand, the
New Haven case was settled within
ninety days from the filing of ,
bill by the entering of "I afec e
which was in every respect as effec
tive a decree as if it had been entered
into after tho case had been heard
by the lower courts and by the su
premo court. It differed .from such
a decree only in that it was entered
with the consent of the defendants
who agreed that it might be entered
against them anc.were consulted as
to its terms. In comparison with the
Union Pacific case the cost to tho
parties was almost insignificant.
Telephone Caso
The telephone case presents an
other instance of the advantages to
the public of the consent decree
There had long been complaints by
independent companies that the
American Telephone & Telegraph
Company and its affiliated com
panies, the Bell system, were at
tempting to monopolize communica
tidn by wire in this country. Sucn,
indeed, was the declared purposo of
tho American company as shown by
its report for the year 1910, and
very considerable progress had been
made toward that end. Over half
of the telephones in use in the coun
try were on its lines and it had ob
tained substantial control by stock
ownership of the Western Union
Telegraph compliny. In July, lOia,
suit was beguii against- this system
under the anti-trust act. Thereafter
conferences with the department
were sought by its officers and as a
result the Bell 'system committed
itself to a course of action which is
designed to protect the continuance
of desirable competition in inter
state communication without hin
dering the co-operation of telephone
and telegraph companies where the
result is a supplemented service
which could not otherwise be given.
The pending suit was ended by a de
cree in favor of the government to
'which the defendants consented, and
tho threatened monopoly, was thus
prevented.
The most recent government vic
tory in anti-trust litigation was that
of June 24, -when Judge Hand, of
the New York circuit court ordered
the dissolution of the Corn Products
company. This company, it is held,
has exercised a vicious monopoly of
the manufacture of corn and glu
cose products huge quantities of
which are consumed in the United
States. In this case for tho first
time the provision of the trade com
mission act, which authorizes the
trade commission to sit as a master
in chancery and formulate a decree
of dissolution, is invoked,
Guardian of Public
The new commission will serve as
a guardian of tho public interest to
see that tho final decree carries out
tho intent of tho law to bring about
genuine dissolution. Space does not
permit a full statement of the cases
in which the department is endeav
oring to protect the public against
monopolization Watch cases, ri
per boardliqewelry, bicycle parts,
cotton, plumbing supplies, bill nest
ing and numbers of other fields of
industry have'Tieen made the subject
of attempts0 unlawful control aid
'monopoly. ffVmany of these prose
cution Wooing on. And, from
day to toaytlio department is con
stantly fefceVvihg and investigates
complaints and -waking up its nnmi