The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1916-02-21


The fundamental error in the Clayton law and
the Trade Commission Law is their failure to
recognize the needs of the moderate-sized business
of the country.
The Sherman law, enacted in 1890, was intend
ed to meet situation of compelling Importance
at that time. This situation arose out of the
rapid and formidable growth of great trusts and
monopoes Beginning with 1872, and following
the example of the Standard Oil Trust, the i'm
portant industries of the country were gradually
being absorbed into the control of powerful trusts
and combinations. Independent competition was
rapidly becoming more and more difficult. The
oppressive and often criminal practices of the
great trusts had aroused the indignant remon-
STRANGE of the plain people of the country. Both
political parties responding to the demands OF the
country at large demanded Federal legislation
which should keep the channels of trade free for
independent competition. They demanded specif-
csly the repression of great trusts and monopolies
In 1888 Senator John Sherman, of Ohio, intro
duced the hrstbill the subject After protracted
debate by the abest lawyers that Congress has
had in its ranks during living memory, debates
which continued throughout period of two years.
the Sherman law enacted in 1890. 1t is of
supreme Importance. in view of the later confusion
which has arisen, to point out that throughout
these debates the only subject which was consid-
cred the enactment of legislation for the re-
preston of trusts and monopolics. Not word
was uttered if it uttered it has left no i'm
preston to the effect that legislation was needed
to prevent corporation among business units
where monopoly was not aimed at or possible. In
short, Congress, in enacting the Sherman law,
never contemplated anything more than to correct
the situation which then confronted the country,
situation requiring the disruption and prevention
Of great trusts and monopolies.
After many years of hating and uncertain de-
csions by the courts notably the abortive decision
in the Sugar Trust case in 1885, the Supreme Court
finally took up the Sherman law in deadly earnest
and, beginning with the Addyston decision in the
year 1899 and ending with its great decisions in
the Standard Oil case and the Tobacco Trust case
in 1911, the Supreme Court gave to the Sherman
law drastic power which similar statute pos
sesses. The Supreme Court extended its power
not merely to the prohibition and disruption of
trusts and monopolies, but declared that the law
forbade all cooperative agreements even on the
part Of moderate-sized units if the result should
lbe substantial interference with free competition
The result has been that it is impossible for bust
ness units of the most moderate size to enter into
agreements with each other honestly intended to
prevent "cut-throat" competition and in no way
intended to bring about monopoly or capable Of
doing so. In so doing the Sherman law has been
given a scope never contemplated by its trainers
The courts interpreted the Sherman law upon the
strict letter of the ancient maxim that "compet-
iS he II r,de -,
respects competition is often the death of trade
This was a situation which gricvously affected
the business prosperity of this country Great in
dustries, such the hardware industry. the gro
Gerry industry, the dry-goods industry and the like
the bone and sinew of the business life Of the
country-have been groaning under the burden Of
this prohibition which forbids them from sensible
Incorporation but compels them to deal with each
other in the dark and to cut each others throats
In other country than this docs such situation
exist
In address delivered by Hon Joseph E.
Davies, the chairman of the Federal Trade Com
mission, he referred to the fact that all other gov
crnments, like our own, make monopoly crime
against the State and further said, referring to
the Clayton law and the Trade Commission law:
great body of the business units OF this country,
constituting ninetynine per cent thereof from the
menace OF possible unfair competition of the other
one per cent"
Mr.. Davies was right in saying that all govern
ments make monopoly crime against the State, /"
but the rest of his statement falls amentably short
of the mark. 1t is true that the new laws aim to
preserve the great body of the business units of
this country from the menace of possible unfair
competition of the other per cent, but they
wholly fail to preserve the great body of the bust
ness units Of this country, constituting, as Mr.
Davies justly says. ninety-nine per cent thereof,
from the menace of ruinous competition among
themselves. On the contrary, it seems to be the
purpose of these laws to compel moderate sized
business units to cut each others threats by max
/ ing impossible any kind of cooperation.
In no other country does such condition exist