Evening star., 1948-01-27
Smashing Of 70 Firms
In Oil Industry Sought
On Basis Of Size Alone
Yole Professors Study
Financed by Philanthropy
Urges Stote Socialism
By David Laurence

urges Stute SoCtotiSm
By David Laurence
A direct invitation to the Justice
Department to file an antitrust suit
seeking the breakup Of the 40 major
companies In the oil industry has
been issued by a group of professors
Of Yale University. Their book,
published today, is entitled "A Ma
tional Policy for the Oil Industry"
and presents the results of study
organized In 1946 at Yale University
by members Of the Department of
Economies and Political Science and
the School Of Law.
A most interesting fact about the
study, which assails one of the basic
practices Of the free enterprise sys-
tenn Of private capitalism, Is that
the funds for the publication Of the
book were provided by the Carnegie
Foundation and the Ganson Good
year Depew Memorial Fund of Yale
University.
Here Is an ironical example of
how the philanthropic funds of men
who earned their surplus in life
through individual initiative are
subsequently utilized, not In objec-
tive studies of factual nature but
in economic partisanship and class
conscious crusades.
Condemns Size as Such.
The Yale treatise condemns size
as such. 1t assails integrated COM
panies. Its doctrines apply equally
as we'll to every industry where
identity Of price emerges as a trade
custom. The grocer who sells an
article Of food regularly at 10 cents
must go apparently either to IL or
drop to 9-he cannot, in large-scale
operations at least, use the same
price level as his competitor.
The Yale study goes even further.
It argues that it is no longer neces-
sary under recent decisions of the
Supreme Court on the Sherman
Antitrust law to prove conspiracy
between competitors. They need
not even communicate with one an
other. The inspiration for this line
Of reasoning Is the tobacco case de-
cided last year by the Supreme
Court. The book, of which Prof.
Eugene v. Rostow is given as prin-
cipal author, declares:
Under the tobacco case, the eco
nomic fact Of monopoly is very close
to being legal proof of monopoly.
The decisive elements are the power
to assert a degree of control over
price and output in the market as
whole and the power to discourage
potential competition"
Size Is the main crime Efficiency
and service to the public are not to be
considered paramount because, the
professors say, efficiency can be OBJ
tanned by the breakup just the
same. To the argument that larger
companies can raise money more
easily for expansion than smaller
ones and hence give better service
to the public, the professors say
little thing like the defects in the
capital market should not interfere
with the reorganization of an indus
try. Presumably the government
will provide the money. Many other
objections are disposed of summariIy
as irrelevant or inconsequential as
the book states its main conclusion:
1.-THE key to an effectively compe-
titive reform of the petroleum in
dustry Is therefore the separation
Of the major companies into sep
arate units controlling their four
chief functions: Production, trans
portation, refining and distribution
and the further horizontal division
Of some Of the units which would
survive vertical dissolution Of the
great companies"
The study attacks the proration
policies of State commissions and
says the objective Is not conserva-
ton but production control and
calls for a Federal statute to require
compulsory unitization of the oil
fields" and, of course, control would
be in the hands of Federal agency.
Seen in True Light.
Much space is given in the book
to the tobacco cases wherein identity
of price was denounced, and the
Yale study says:
Against the background of these
cases, an action against the major
Oil companies as monopoly, as well
as a combination in restraint of
trade, should not face insuperable
obstacles"
Here at last emerges the radical
~ OF CNaio1icY,o ipH ifc
true companies must not grow
large and If they do the Government
must control them. Likewise success
must be penalized. Where as many
as 20 companies-admittedly large
number-do a major proportion of
the volume of an industry, they
must evidently be stunted in their
growth and penalized by the break
up method. Their selling arm must
be para1yzed and they must retro
gress while the marginal, high-cost
companies seek to catch up and the
public gets worse instead Of better
service. Will Congress permit such
an abuse of the Sherman Anti Trust
law and provide funds for such
prosecutions?
Never has radicalism in America
shown its colors more clearly as a
counterpart of State Socialism than
in the study made by these Yale
professors. AS such, the book will
be welcomed in the debate over
whether America is to permit the
sabotage of her private-enterprise
system and adopt instead State So
cialism.
(Reproduction Rights Reserved)