The speeches of Robert H. Jackson and Secretary Ickes, as well as the President's message to Congress and his Jackson Day address, have again brought to the foreground the problem of monopoly. It is now generally recognized that these utterances constitute an effective political counter-attack against those who have been blaming the administration for the depression. But what is the program of the President? Is he going to do anything about the situation except to make political capital out of it?
The retort frequently made to Mr. Jackson is that he is Assistant Attorney General with special supervision over anti-trust prosecution, and that if any groups of business men have been doing anything wrong, it is his duty and opportunity to stop it rather than to talk about it. The fact that this retort comes so frequently from big business men themselves is a little suspicious. It confirms the feeling of boredom which experienced progressives feel when they assume that what is in store is an old-fashioned trust-busting drive in the courts. That recalls the days of Theodore Roosevelt and Woodrow Wilson, and the kind of sterile economic liberalism that is typified by Senator Borah. It foreshadows long and intricate prosecutions carried up from court to court, to end either in decisions adverse to the government or in consent decrees and reshuffling of corporate units that, after all, do not have any concrete results. And it reminds one of the nostalgic desire of some Utopians to get back to the days of small, neighborhood business, as if we were still making carriages and depended on blacksmith shops for our iron. It would be impossible anyway to do anything about prices by this route in time to affect the present depression.
Another puzzle about the administration's trust policy is the complete cycle which it seems to have turned. No more definite encouragement to monopolistic practices has ever been adopted by government in the United States than the NRA, which explicitly suspended the anti-trust laws and permitted business men to agree upon "trade-practices" which were, in effect, agreements to sustain prices and restrict production. To be sure, the legal phrases of the NRA would have permitted the government to control prices in the interest of the consumer, but as a matter of fact the government scarcely could have done so under the circumstances, since it was not prepared with the necessary information or the necessary resolution to come into a head-on collision with private business. Experience shows that whenever business men are allowed to come together to "cooperate," the result is almost inevitably an effort to get more profits by some form of price-raising. Mr. Roosevelt's suggestion that he hopes to get industries together in consultation about prices, omitting, however, the faults of the NRA, is not promising
What method of dealing with the problem can there be, other than the futile gesture of trust-busting on the one hand, or the dangerous one of allowing business agreement on the other? The usual suggestions are governmental regulation such as is applied to utilities, or governmental competition similar to that which has been tried in view of the unsatisfactory results of utility regulation, or straight government ownership—of the sort usually visualized in programs of gradualist socialism. The drawbacks of these suggestions, in a situation like the present, are obvious. One or more of them, in some variation, may eventually have to be employed, but certainly the Roosevelt administration could not develop such a program and apply it without a long period of study, political preparation and legal conflict.
Assuming that the industries in which some action needs now to he taken would be regarded by the courts as within the realm of public interest, utility regulation of the ordinary type is hardly a good remedy. This regulation rests on the assumption that rates must be set so as to provide a "fair return" on the invested capital, however that investment may he reckoned. In such calculations the possible effects of lower rates or prices in enlarging sales are rarely considered by the courts. Yet that is the essence of the problem in the present situation. No steel prices, for instance, would he high enough to yield the steel companies a fair return when sales are as low as at present; the question is whether lower prices would not encourage the demand for steel, and, still further, how this demand might be increased by an integrated planning of prices and production in other industries. Government competition in such a highly organized industry as steel is a little difficult to visualize. As for government ownership of the whole industry, Mr. Roosevelt and the bulk of his supporters are scarcely prepared to go so far in a socialist direction.
It is important to note that the whole climate of opinion concerning the issue has changed since the old days of trust-busting. Then it was desired principally to protect the small business man against the large; the issue was mainly ethical and the emphasis was upon "fair competition" and the attempt to forbid "restraint of trade." Now the concern is about high prices and their effect upon production; what is desired is not observance of certain rules of business behavior but rather a situation that will permit full and stable production, in the interests of an economy of abundance. There is also the discovery by experts that prices may be maladjusted as a result of other things than simple monopoly in the old sense. The way in which prices are administered differs from industry to industry; the problem is much too complex to he solved by a mere attempt to abolish monopoly.
This gives a clue to procedure which may at least supply an approach to the problem. Why not have a series of congressional investigations, industry by industry, to reveal the relevant facts about costs, prices and production? Indefensible practices may thus be exposed, and the mere publicity would do some good. Certainly if any action it to be taken promptly, it must be taken by the private managers of industry, and the obligation to defend themselves in public sometimes provides a powerful motive for such action. The information derived could in the end be used for other purposes as well. It could he used as a basis for prosecution in cases where the law seems to have been violated and prosecution would do any good. Or it could provide the basis for action by the Federal Trade Commission. Or Congress could derive the information necessary for further legislation, to set up whatever controls seemed necessary. As an educational technique in our democracy there is little to rival a well conducted congressional inquiry.
This article originally ran in the January 19, 1938, issue of the magazine.