Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-25
Law of Diminishing
Returns Trust Remedy
By HARDEN CoLFAx.

BUSINESS mas just become conscious OF
the operations of a law which has been
on the statute books of economics since
time began. In consequence, business is
far less concerned than 1t has been in
years with the problem of man-made
laws now under consideration by Con-
gress. Economists declare that the
Sherman antitrust laws and the Clay
ton act, revolutionary as they may have
seemed to be when passed, are to
q large extent superfiuous. They yield
precedence to the claw Of diminishing
returns" All that this economic law
means In that 1t Is economically possible
to expand only 30 far beyond q certain
point. Expenses of doing business then
advance 50 sharply as to more than
counterbalance any additional returns
In revenue.
In the law of diminishing returns,
business men and even legislators can
see today the most drastic and satisfac-
tory remedy for monopoly. Recognition
Of this fact has been the determining
lions and consultations to have them
tested thoroughly through the Depart
ment Of Justice as to their legality be-
fore being put into effect.
X n n X
The acquisition Of the radio manufac-
turing facilities Of General Electric and
Westinghouse Electric by the Radio Cor
poration Of America Il q case in point.
This Ii now being tested by q suit insti-
tuted by the Department of Justice,
which will involve the entire question Of
cross licensing Of patents. Another con-
solidation pending Is that Of Bethlehem
Steel and YOUNGSTOWN Sheet & Tube.
the communications facilities of Radio
Corporation Of America and It's affiliated
companies. with the International Tele-
phone & Telegraph Co. In another
field there remains to be decided by the
courts the question Of whether Standard
OIL Co. of New York and the Vacuum
Oil Go. may merge legally without vio-
l9ting the Supreme Court decision Of
90. Of New Jersey into Its component
parts.
It Is recognized universally in bust
ness circles that conditions have
changed and that what formerly repre-
scented rnonopolies no longer can obviate
competition. A new definition Of
trusts" and "monopolies" is necessary
In terms Of present-day conditions with
regard to mergers and acquisitions.
y + \
The retail merchandising field has
carried In q tremendous burden of
complaints and dumped them on the
steps Of the Department Of Commerce.
Strong objections have been voiced to
the growth Of the chain store and mall
order house business. Oficials of the
Department Of Commerce say there is
nothing they can do about it. On the
other hand, the retailers themselves
have come to realize that the chain
store systems can only grow so far and
that expansion beyond a certain point
involves loss in profit.
Perhaps the most startling illustra-
ton Of this point Is shown by the tele-
phone companies. If company oper-
ating telephones In certain town has
five exchanges, 1t can count on a differ
ent cost for the installation of each new
telephone. II, however. 1t decides to
expand to six central stations, the cost
Of installation per telephone increases
startlingly, since every phone In the
new district must not only be connected
width the new central once, but mlst