The Commoner.
FEBRUARY 25, 1910
EDUCATIONAL SERIES
. Monopoly and National Incorporation
At the democratic dinner given at Lincoln,
Neb., on tho evening of February 14, Hon. James
A. Reed of Kansas City, Mo., spoke as follows:
The recent message of President Taft clearly
embraces tho following propositions:
1. That there has been a marked tendency
.toward combinations of capital .and manufac
turing plants.
2. That this has resulted in economy of oper
ation and in the removal of excessive competi
tion. 3. That these combinations have frequently
"resulted in complete monopoly.
' Then follows the unequivocal statement that
a combination, no matter how large or how com-
'plete its monopoly, is not within the inhibitions
of the Sherman act merely because of its size
or the completeness of the monopoly:
"It is possible for owners of a business, as
manufacturers and sellers, to so cqnduct their
business as not to violate the anti-trust law,
and yet to secure to themselves the .benefits of
the economies of management and production
due to concentration under one control of largo
capital and many plants. If they use no other
inducement than the constant low price of their
product and its good quality to attract custom,
they violate no law."
But he adds: "If they attempt, by exclusive
contracts or temporary reduction of prices, or
threats of non-dealing or other unfair, unbusi
nesslike and coercive methods to frighten off
competition, then they violate the act."
, He expressly says: "The object of the anti
trust law was to suppress the abuses of business
of- the kind described. It was not to interfere
with the great volume of capital which concen
trated under one organization, reduced the cost
of production and made its profit thereby, and
'took no advantage of its size by methods akin
to duress to stifle competition with it."'
- Here,' then, we have the statemerit', plain aqd
unmistakably, that under the anti-trust law, as
construed by our courts, a corporation may grow
to any size may, in fact, occupy the entire field
become a complete monopoly, and yet be free
from any prosecution under the anti-trust act.
It would seem that such a condition is all
that the most ardent advocate of concentrated
capital could demand. The only institution com
ing within the inhibition of the act, is "one
.which resorts to coercive, dishonest and unbusi
nesslike methods." In a word, it is an aggre
gation which uses the great power and force of
its money to destroy, by unfair and dishonest
methods, competition.
A little later on in the message, this thought
is emphasized in the declaration that recent de
cisions of the courts have rendered unnecessary
any amendment of the act whereby combinations
shall not be held to have violated the act merely
because of the restraint of trade which results
from' such combination. The president concludes
his expression of this idea in the following lan
guage: "The necessity, therefore, for an amend
ment of the statute so as to exclude these Inci
dental and beneficial covenants in restraint of
trade, held in common law to be reasonable,
does not exist."
The president then declares that "The depart
ment of justice has power at the present time to
inquire into the history and purposes of all in
. dustrial companies, and to ascertain whether
they are conducting business on ar p!an which is
' in violation of the anti-trust law. And
that this work is not beyond the power of the
department of justice."
These several declarations may be epitomized
as follows:
1. A combination may be so large as to con
stitute a complete monopoly and yet be perfect
ly legal.
2. The law only reaches those combinations
" which resort to coercive, unfair and intolerable
tnethods in order to crush their rivals in busi
ness. 3. The department of justice is powerful
enough to ascertain whether a corporation is
pursuing legal methods and to punish those in
stitutions which have violated the law.
If these statements are true, then we have
arrived at a condition which ought to, satisfy
the most ultra-believer in the wisdom of large
combinations provided, at the same time, he is
Satisfied to have such combinations resort only
to fair and decent methods in transacting their
business.
The only person who believes in great -combinations
who can complain at all, must ground
his complaint upon tho fact, that those combina
tions which pursue dishonest or coercive meth
ods may be punished therefor.
There are many of us who believe that no
corporation or combination should be permitted
to become large enough to exercise a monopolis
tic control over the production or price of any
-article in common and general use. We might,
therefore, well desire a change in the law so as
'to prohibit the existence of combination's large
enough to exercise such monopolistic control.
If we are to change the present law, surely
it should be in the direction of limiting, rather
.than extending, the rights of these-great com
binations. If the president's message had for its recom
mendation such limitation, then we might look
upon it as the utterance of a patriot, devoted to
the protection of the interests of the people.
The president does recommend a change but
the change he recommends is not in favor of
" limiting the march of monopoly, but rather to
facilitate its progress. He plainly states that
the present condition under which monopolies
may grow to any size whatsoever, may exercise
complete control of the market, yet not violate
the present law, is not sufficiently favorable to
these concerns and on their behalf, pleads for a
change of the statute. A change, not in the di
rection of limiting their power or capital, but
one which will enable them to do those things
.which at the present time they may nqt do.
What is thiu proposed change and what are
.the reasons given for a change? We find the
answer in the statement:
"Many people conducting great businesses
.have cherished a hope that in some way a line
may be drawn 'between good trusts and bad
.trusts' and that it is possible by amendment to
the anti-trust law to make a distinction under
which good combinations may be permitted to
organize, suppress competition, control prices,
and do it all legally, if only they do not abuse
the power by taking too great profit out of the
business. They point with force to certain no
torious trusts as having grown into power
through criminal methods, and urge the estab
lishment of some legal line of separation by
which 'criminal trusts' of this kind can be pun
ished, and they, on the other hand, bo permitted,
under the law, to carry on their business."
The president adds: "The business public
ought to rid themselves of the idea that such
a distinction is practicable or can be introduced
into the statute."
Yet the president had just stated most forcibly
that no such amendment to the statute is neces
sary, when he set forth the fact that the courts
have already drawn clearly the distinction be
tween trusts pursuing criminal and non-criminal
methods.
If the courts have drawn this distinction, then
obviously, no business enterprise however large,
if it be conducted honestly, need be alarmed or
disturbed. It knows its own purposes it pur
sues its own methods it formulates its own
policies and is fully protected, according to the
president's own statement, by the decisions of
the courts so long as its methods are honest
and decent, even though it may exercise the
. complete and dangerous powers of a great
monopoly!
Having thus repeatedly shown that there is
absolutely no necessity for any change In the law
for the purpose of making it easier for the great
combinations to exist having completely dem
onstrated that aggregations of capital may be
created large enough to occupy the .entire field
of commercial enterprise and that they may do
this with absolute safety so long as they pursue
honest means surely the president has at the
same time demonstrated clearly tho fact that
there is absolutely no reason to change the law
in order to make it more favorable to these
institutions, unless his purpose, be to extend the
powers and make safer the field ,of commercial
aggregation. This alone can constitute the rea
son for any, proposed change. . . j
At the threshold, therefore, of 'any discussion
of the proposed national corporation law, we
are forced to the conclusion that Its prime ob
ject is to grant to corporations greater powers
and privileges than they now possess, and that
as they now pOHacss power to become ho great
as to exercise monopolistic control, with tho
singlo limitation that they must not resort to
coercive and dishonest methods, that the chango
is intended to enlarge their power so that they
may pursue those methods which .are now held
by tho courts to bo illegal.
It is no answer to this statement to say that
corporations are in danger of being harrassed
by federal investigation, or that they are in
danger of inadvertently and innocently violating
the law, for these reasons apply to every citizen
and to every lino of business.
The individual, in his daily life, must see to
it that he does not violate either tho civil or
criminal laws of the country. If he is guilty of
violation, then he must pay the penalty. Why
should tho same rule not apply to any business
institution?
The natural man is constantly liable to in
vestigation by the authorities. Why should not
the artificial body or aggregation bo in like man
ner subject to investigation?
Manifestly, it is not investigation by the fed
eral or state authorities which these aggrega
tions seek to escape, because tho president's
recommendation is of law which will enlarge and
facilitate the powers of the investigation by tho
federal government. Plainly, therefore, It is
not to escape espionage or investigation. But
it is to escapo the penalties now resultant from
discovery by means of Investigation. The mon
opolies fear punishment, not publicity.
A little further on In the president's message,
hidden in a maze of long and involved sen
tences, we find the real reason. Hero it Is:
"I therefore recommend the enactment of a
general law providing for tho formation of cor
porations to engage in trade and commerce
among the states and with foreign nations, pro
tecting them from undue Interference by tho
states, and regulating their activities, so as to
prevent the recurrence, under national auspices,
of these abuses, which have arisen under state
control. The conflicting laws of tho differ
ent states of tho union with respect to foreign
corporations, make it difficult, if not impossible,
for one corporation to comply with their re
quirements so as to carry on business in a num
ber of different states."
And now, stripped of all gloss and pretense,
we arrive at the purpose of tho administration.
1. That purpose is to lay the heavy hand of
the government on the respective states and to
deprive them of that power, which they now
exercise, of declaring the conditions upon which
business may be done within their respective
borders by foreign corporations.
2. To arrest the efforts of the various states
to protect their people against the aggregations
of criminal monopolies.
3. To enable the monopoly to pursue methods,
which, under the decisions of the federal courts,
are now declared to bo illegal.
4. To make of the capital .of the nation a
city of refuge to which every criminal conspiring
against free and open trade every monopoly
engaged in coercive and dishonest methods
every scoundrel who desires, through the power
of aggregated money, to crush individual or cor
porate enterprise, can flee and cry "sanctuary!"
It Is the last step toward centralization.
It will reduce the powers of the sovereign
states so that they will not exceed those now
possessed by county governments.
The' plain purpose is to give to the monopolies
of this country a habitat in the city of Washing
ton, and to place them beyond the control of
the various sovereign states. Nay, more to en
able them to Invade the territory of these states
set at defiance the will of the people thereof,
and to exercise the powers of complete and crim
inal monopoly under the wings of the federal
government.
To what condition will this lead?
1. These Institutions, operating under a fed
eral license, can enter our states against our
will and can transact business despite our pro
test. We will bo compelled to grant to them tho
protection of our laws we will be forced to
do all this, even though their objects, purposes
and methods be such as are by our laws de
nounced as illegal or even criminal.
2. These concerns will be permitted to have
the protection of our courts when they desire;
to use our machinery of justice; to enforce
claims against any of our citizens. But if a
citizen of the state has complaint to make
against them, he will be dragged into federal
courts to there litigate his rights.
, 3,jThe federal incorporation act will either
.be' drawn so that (a) all concerns engaged in
interstate commerce must, or at least, may avail
themselves of its privileges; or (b) it will be
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