The War on Big Business

February 27, 1956

Recent actions and proposals of the Eisenhower Administration with respect to big business are disturbingly like those of the New and Fair Deals. Once more mere bigness is being treated as a crime in itself.

Stanley N. Barnes, Assistant Attorney General in charge of the Department of Justice Antitrust Division, hinted, in a speech on Feb. 8, at the possibility that antitrust action would be taken against the country’s major automobile manufacturers, because the three biggest producers now turn out almost 95.5 percent of the cars. Yet the United States has achieved by far the greatest industrial productivity that the world has ever known. And if one industry stands out above all others as the wonder and envy of other nations, it is our automobile industry. Nowhere is there keener competition in price, quality, and output. The intense competition between companies, in fact, forces competition nearly as keen within companies. The Oldsmobile competes for the consumer’s favor and dollars with the Buick, the Chrysler with the Imperial, the Ford with the Mercury.

But, alas, this intense competition does not fit the Justice Department’s preconceived numerical notions of what competition ought to look like. If there were twenty automobile companies, each doing forever just 5 percent of the business, the department would apparently be satisfied. What alarms it is that a few companies should achieve the goal of competition by being more successful than their rivals and attracting a higher percentage of consumer buying.

Even more disturbing evidence that there is something basically wrong with the Administration’s new attitude toward big business was the announcement by Attorney General Brownell on Jan. 24 of a “consent decree” under which the American Telephone & Telegraph Co. was compelled, among other things, to license 8,600 existing patents to all applicants without royalties. But what is the consistency or sense in granting patents by act of Congress, and then forbidding companies, by bureaucratic decree, to take advantage of such patents? Will the big companies continue to spend as much on research when they know they will be forced to give away what they discover? In the long run, will “consent” decrees of this sort advance scientific and technological progress—or retard it?

A final touch of “antitrust” absurdity is found in the consent decree announced on Feb. 6 forcing the Hilton Hotels Corp. to dispose of two of its 27 hotels within “a reasonable time.” It must sell, for example either the New Yorker or the Roosevelt in New York, so that it will have only four hotels in that city under one management instead of five. Just what will this accomplish? How does the Department of Justice know that in a city containing 400 to 500 hotels, the ownership of just five of them by a single management constitutes a threat of monopoly, but the ownership of four does not? Does the common ownership of five hotels reduce the number of rooms available? Does it make “monopoly pricing” possible? Incidentally, are local hotels in interstate commerce?

Not the least curious thing about this sudden preelection ardor against “monopoly” is that it utterly ignores the most serious monopoly of all—that of industrywide unions. These unions, in the railroad, automobile, steel, or coal industries, can at any time paralyze the economy of the whole nation until their demands are met. Yet instead of showing concern, the government deliberately builds up their power by making it illegal for an employer not to “bargain” with them.

Our antimonopoly laws need thorough revision. They should be clear, general, and, as far as possible, equal and certain in their application. Such vague formulas as “undue concentration of economic power” can mean anything an individual bureaucrat or judge wants them to mean. In the present nebulous and contradictory state of our antimonopoly laws, we are bound to suffer from government by bureaucratic caprice and discrimination. The legal and political consequences of this can be as serious as the economic consequences.