Chatper V - Useless U.S. Boards and Commissions

,CHAPTER V USELESS U. S. BOARDS AND COMMISSIONS I HAVE tried to show the futility of governmental attempt to break up big business. This attempt was necessarily accompanied by the creation of governmental machinery, to continue the interfer ence with big business, and carry out the permanent regulation contemplated. It has become the fashion for Congress and the state and city legislative bodies to establish special Boards or Commissions, charged each with the duty of regulating public service and particular industries. This fashion has been, to. put it broadly, just as mischievous and useless as the attempt to minimize business by break ing up great organizations. The most conspicuous illustrations are, of course, the Interstate Commerce Commission and the Federal Trade Commission, because they are national in their jurisdiction. There are also, I think, in every state in the Union, State Railway and Warehouse Commissions, Public Utility Boards, and special Boards and Commissions of all sorts, almost ad infinitum.

These Boards and Commissions are necessarily appointive; the appointment resting with the execu tive, and often subject to confirmation of the legisla tive body. The logical and invariable effect is to subdivide and divert responsibility, usually for the expenditure of large sums, from the directly elected executives and representatives of the people. It is [ 159 ] Too Much Government-Too Much Taxation true that subdivision and minimizing of responsi bility are characteristic of the whole system of politi cal "checks and balances" handed down to us by our distrustful forefathers; but that does not better the situation. It was bad enough before; and to mul tiply the subdivision simply makes it worse. It is high time that we took the back-track toward sim plicity, and concentration of responsibility in very few and most conspicuous hands. Let us consider the results so far achieved by a few typical boards and commissions.

INTERSTATE COMMERCE COMMISSION. We have already seen what the Interstate Commerce Commission has accomplished in the way of bank rupting the railways; and in the general course of freight rates and of service rendered we have seen how utterly it failed to benefit the people. Whom, then, has it benefited? It has considered a very large number of complaints of shippers against carriers and has, during the 30 years ormore of its life, made a great many decisions; establishing a large body of rules and precedents which now constitute a· working code more or less intelligible to a few experts and, presum ably, fairly understood in practice· by railway offi cials. By examining the annual reports of the Com mission one can get some idea as to who have been the sheep and the goats throughout. The excellent intention of the law was, of course, to protect the "great inarticulate, unrepresented public"; but it is hardly an exaggeration to say that they never appear from beginning to end of the I. C. C. record. Those who do appear as complainants are for the most part the great corporations, the big shippers, eager for competitive advantage in the way of freight rates over their competitors in their own lines of business.

Only now and then an unknown name of a small [ 160] Useless U. S. Boards and Commissions shipper, appears. But communities and regions come before the Commission, to demand differentials or routings of freight, that will put them in better competitive position against other communities. St. Louis or Kansas City, for instance, wishes to be put on a competitive basis with Chicago, as to freight rates to points northwest of Omaha. The Gulf ports wish to be put on better competitive basis as against Baltimore and New York. In old times, the raii ways that served the different ,regions. used to get together with the individual shippers, or parties by or to whom the freight was routed, and agreed upon rates and routing possible and profitable to both parties under the immediate and local conditions prevailing, the competition of the different roads serving the same ultImate shipping point being the deciding factor in fixing the rates. This led in old times to freight and passenger wars, and then to freight and passenger pools; but Government in its wisdom had prohibited both, attempting to sub stitute a sort of poetic justice in railway service, in place of the hard-boiled law of supply and demand.

Of course that poetic justice had to tread on various toes in various localities; and various squeals re sulted. It became the endless task of the Inter state Commerce Commission to hear the squeals and try to quiet the various squealers. If the attempt had a sound basis, the results should be lower rates, better service all around, and everybody hap py. The figures given, alas, prove the exact con trary. Let me go further and analyze the report of the Interstate Commerce Commission say for 1920, which summarizes its operations as follows: 1,040 complaints were filed by shippers, communities, boards of trade, etc.; 478 of them were decided for or against the [ 161 ] Too Much Government-Too Much Taxation railroads on their merits; 142 were dismissed by con sent of complainant, and 420 were pending at the end of the year. 1,203 hearings were held; and 15°,986 pages of testimony were taken. At the close of the year, the docket stood as follows, complaints brought to statement of issue, 146; ready for hearing, but not heard, 92;. heard, but not submitted for decision, 505; submitted for decision, 383; total 1,126. Inves tigations made, 47; total expenditure of Commission, $5,732,673.I 8. ..

Here are a few typical titles of cases under consid,., eration: Cheboygan Association of Commerce vs. Chicago & Northwestern Railroad. Subject of complaint, that the railway freight rates to and from Cheboygan were such as to discriminate against the merchants of that town in favor of Milwaukee. Merchants' Freight Bureau of Little Rock, Ark., vs. the Atlantic Coast Line Railway. Complaint, that rates on knitting factory products from the south eastern states were such as to discriminate against the merchants of Little Rock. Case 88. Substance of complaint, that through second-class express rates on cream in cans from points in New Mexico and Texas via interstate routes to EI Paso exceeded the aggregate of inter mediate rates and were, therefore, unlawful. Case 89. Beaumont Chamber of Commerce complains that "rate of 25 cents per hundred pounds on clean rice in carloads from Beaumont to New Orleans, though not unreasonable, was exceedingly prejudicial, as it exceeds by more than 5 cents per hundred pounds the rate from Lake Charles, La., to New Orleans."

Among the names frequently occurring as com plainants in this report are those of the DuPont de Nemours Powder Co., United Shoe Machinery Co., [ 162 ] Useless U. S. Boards and Commissions Solvay Process Co., Mathiesen-Hegeler Zinc Co., the American Steel & Wire Co., and other great ship pers. What indication can the student detect in the 1920 report of the Interstate Commerce Commission, or in any of its predecessors, that the great, inarticulate public is in the least protected by that costly tri bunal; or even .that the efforts of· various trade centres to secure competitive advantage against each other are more justly handJed by the I. C. C. than they would have been had ordinary competitive policy governed the railroads which served them? These decisions as to differentials, routingof freight, and other matters of regional dispute between dif ferent communities seem to me the most important and far-reaching work of the Interstate Commerce Commission; but are they sound, and do they satisfy anybody? Take the city of Boston, where I live.

Just now its Chamber of Commerce is agitating, as it has long agitated, for some revision of the freight differentials which make Baltimore a good ocean shipping terminal and Boston a poor one. Boston has a magnificent harbor, and splendid municipal pier, and a considerable railroad system, virtually including the Canadian roads. The port is many hundred miles nearer European destinations than are the ports of N ew York and Baltimore. Nevertheless, it is comparatively a "dead one." Now, life is too short, for me or any other man but an Interstate Commerce Commissioner to study and do justice, if . justice can be done, between the conflicting interests and variable factors which enter into this vexed question. On the other hand, I am perfectly certain, from past experience and common sense, that, if the trunk-lines, which· are natural feeders to the port of Boston, were free to make their individual bargains [ 163 ] Too Much Government-Too Much Taxation with the individual shippers, routing directly or otherwise as conditions might permit, and taking freight at such rates as for the moment might satisfy their traffic managers-lam certain, I repeat,· that . the dead port of Boston would come to life again, without doing mischief or injustice to any other port.

Under such free conditions most of the traffic must come from the "hinterland" tributary to each port, by the most direct and cheapest route available. This certainly must facilitate traffic, reduce transpor tation costs, and stimulate trade in general. Another salient illustration is that of the freight rates to Rocky Mountain cities; such as Spokane, Washington, and Colorado and Utah points. There has been a controversy for years before the I.C.C. between the wholesale merchants of Spokane and, Seattle on the question of freight rates. Through' railroad rates to Seattle are fixed to some extent by transcontinental rail-competition, both for Pacific Coast and Asiatic traffic, with water rates via the Panama Canal. Transcontinental railroads, to get Seattle freight, must meet, or nearly meet, the water rates. The merchant in Spokane, however, cannot take advantage of water rates via Panama without paying also the rail rate from Seattle back to his own city. The practice has, therefore, grown up of mak ing the direct rail rate from eastern points to Spo kane equal to the sum of the through rate to Seattle, plus the local rate from Seattle back to Spokane.

Thus the Spokane merchant pays on Chicago ship ments, for instance, which are put off the cars at his own door, as much as the Seattle merchant pays for transporting by rail 400 miles farther; and in addi tion, the local rate for another 400 miles from Seattle back to Spokane. Naturally this puts the Spokane merchant at a serious disadvantage In selling to towns [ 164] .

Useless U. S. Boards and Commissions on either of the three routes between his own city and Seattle. Now what can the Interstate Commerce Commis sion possibly do in such a case as this? Who but the traffic manager of the road in question can tell at the moment when asked by a merchant. for a rate, what car loadings and car movements are immediately be fore him? And who but the shipper can tell at the moment the purchase price and selling value of the particular shipment, and can judge as to the freight rate which .he can afford to pay? How can the Interstate Commerce Commission, at its distance, both of time and space, state in ad vance general rules to meet each particular case? Seattle is on the coast, and has the natural advantage of water com petition, which cannot and should not be taken away from it. How can the Commission attempt to equalize competitive conditions between the Spokane and the Seattle merchant? Evidently the Commis sion must force up the through rail rate to Seattle or force down that to Spokane. If the former, the business will go by water, and the railroads will oft.:.

times haul half-empty cars, which were better filled with cheap freight than not at all. Furthermore, Seattle and the other coast cities would be put en tirely out of Oriental and Alaskan business, so far as rapid-transit goods are concerned. On the other hand, if the Commission shall force down theSpokane rate, it will force the railroads to do Spokane busi ness at less than reasonable mileage rates; although not forced to accept them by water competition. This latter ruling would ignore the right of railways to reasonable returns, both upon investment and for services rendered. While it could perhaps be ap plied by the power of the I.C.C. to railroads already built, it would certainly tend to discourage the build[ 165 ] Too Much Government-Too Much Taxation ing of new ones into the mountain sections, where both construction and operation are necessarily costly. In the case of Spokane, as in that of Boston, it seems to me common sense to let the railway traffic managers be free and untrammelled judges of the rates which will best develop business, and keep their cars running regularly and fully loaded. They cannot make excessive rates without immediately seeing the result in empty cars. On the other hand, they cannot make unprofitable rates without at once seeing the result in lack of earnings. In any case, the merchant of Spokane has no local or moral right to be put on even competitive terms with Seattle at the expense of either railways or steamship lines.

As for the people of Spokane, presumably they do not live there, unless they can by so doing make a comfortable living, although paying freights pro portionate to their remoteness and inaccessibility from central markets. There must be compensating local advantages which even up the cost of freights. Why should the Interstate Commerce Commission disturb one community and not the other? What is true of Boston and Spokane would apply to all regional disputes. Next as to individual claims against the railways brought before the Interstate Commerce Commission-except to the extent that the existence of the Commission relieves what might be called "a state of mind" among shippers, politi cians, and agitators (the great public is profoundly ignorant and indifferent in such matters), I cannot see that working results achieved before the I. C. C. at all improve those formerly attained by direct ap peal of the shipper to the traffic manager of the road at fault; or, in case of unfair treatment from the latter, by going next time to the traffic manager of [ 166] Useless U. S. Boards and Commissions another road. Sometimes, of course, there was no other road, but that was the good old-fashioned way which for 50 years resulted in lower average freight and passenger rates for the whole country than have prevailed under the Commission, and in much build ing.of new roads. The proof of the pudding is in the eating.

I am free to say that my necessarily superficial study of the 25 or 30 volumes of reports issued by the Interstate Commerce Commission has deeply im pressed me with the utter wastefulness and super fluity of the whole huge machinery. If any of my readers will take the trouble to glance over a single volume and can then answer succinctly the question how any railroad traffic manager can be expected to apply in everyday railroading, to the thousands of transactions over his line, the multifarious rules and principles established in all these decisions by the I. C. C., I will take off my hat to his perspicacity. Moreover, looking back upon the 50 years of free railroading that preceded the I. C. C., I seek in vain for any record of great wrong un-righted, of business strangled or rising communities dwarfed; to justify such vast and resultless labor and expense as those of the Interstate Commerce Commission. I am confident that the reader will agree with me that its regulatory work is hardly worth the powder to blow it up with; and that he will share not only my im pression of present helpless strangulation, but my conviction of the impossibility of future helpful regulation, of railway service, by any centralized po litical bureau, or by any other thing on earth but the pressure of traffic and regional necessity, locally ap plied from day to day-leaving each traffic manager free to follow the momentary lines of least resistance.

It is perfectly true that so doing will naturally [ 167 ] Too Much Government-Too Much Taxation establish a routine and a body of rates and customs which, though flexible, will amount to something like a standard code established by the laws of trade for each road and region; which is precisely what I suppose the Interstate Commerce Commission is intended to prevent. But why prevent it? Very likely a traffic manager or division freight agent might once in a while be dictatorial to a small shipper; but why cripple the whole railway system for that reason, with a perpetual rate dictatorship centralized at Washington? Why build a Krupp gun to shoot sparrows-and then miss every single shot? The statistical information accumulated 'by the I. C. C. is of value; and perhaps would not have been standardized by the roads themselves. The rail road valuation that the I. C. C. forced on the roads at a cost of many millions must be largely guess work as to the replacement costs-especially as to the right of way and terminal real estate owned, value of strategic positions, etc.; but they yet may prove worth their cost, in quieting the public mind as to watered stocks, etc.; provided Townley, La Follette, and the rest of the roaring company of demagogues do not succeed in pumping wild-western "hot-air" into railway securities in place of Wall Street "water."

Outside of this statistical information, and per haps of railroad valuation, I can see no use in taxing the country to pay for the I. C. C. It could well be cut down to a mere statistical bureau in the Depart ment of Commerce, except for dislodging a few bureaucrats from their handsome jobs. Federal Trade Commission. This institution, which was one of the pet creations of President Wil son, is not old enough to have a very long history, and has not figured importantly enough in the actual [ 168 ] Useless U. S. Boards and Commissions business of the country to attract much attention. It probably never will amount to anything as a real factor in business, large or small, except as a sort of blister or tormentor upon the commercial body pol itic. It has succeeded in spending quite a number of millions of money, and its jobs are among the per fectly dignified, respectable, and agreeable places at Washington, highly flavored plums shaken from the political plum tree as administrations change.

When, with some flourish of trumpets, President Wilson announced the formation of the Federal Trade Commission, it was to serve as a benevolent and friendly guide of big business along the path of rectitude. Those who wished to control or enlarge or exploit this or that situation in industry were first to go the Federal Trade Commission, to find out whether what they were about to do was or was not a breach of the Sherman or the Clayton Act, or of The New Freedom, or of any other existing or future humanitarian ideal. An amusing experience of my own will show how far this fine intent was realized. About 1915, I was looking after some slate quar, ries in Maine and Vermont belonging to a friend, and found a situation which seemed peculiarly to demand the merger of several quarries in order to give good service and make good profits. .. Slate is a very widely distributed commodity, and these quarries in question, if combined, could not have represented more than one tenth of the existing trade.

Under the rulings already made by the Courts of the United States as to greater industries, such as steel, the proposed combination was too small to tend toward monopoly, or rank as a restraint of trade. N ev ertheless, to make sure, I went to Washington and interviewed Mr. Hurley, then at the head of the Fed eral Trade Commission. He is a man of experience [ 169 ] Too Much Government-Too Much Taxation and common sense. He said in effect, "What you are planning is all right and, if I were you, I would go ahead and do it, but I cannot tell you so officially. It is not for the Federal Trade Commission to teach people how to combine. Suppose you go to the At torney General, whose office is really the one to pla cate. The fact that you have applied to this office in advance will of course count in your favor." So I walked over to the Department of Justice and inter viewed the Assistant Attorney General, who had charge of the subject of combinations in restraint of trade. He said to me, "Mr. Fay, the Department of Justice cannot decide supposititious cases. The only thing for you to do is to go ahead with your combination, and after you have got it formed, we mayor may not look into it; but if we do, and if we think you are breaking the law, we will then proceed against you. Of course the fact that you have ap plied to the Department in advance will count in your favor."

That experience has been repeated several times on larger scale by other inquirers. As far as bene ficial guidance is concerned, the Federal Trade Commission has proved to be a fake, pure and simple. As to its restraints, take next its recent action in so conspicuous a case as that of the meat packers. It examined and reported a dangerous tendency to practical control, not only of meat packing, but of the fruit trade, and of various farm products; also an accomplished control of stockyards and refriger ator car lines, prejudicial to the farmer and the public. It recommended legislation, which has since been enacted by Congress, divorcing fruit and dairy prod uct trades, and putting the meat-packing industry under its own (F. T. C.) control; all of which has now been done. [ 17°] Useless U. S. Boards and Commissions Throughout the whole investigation, the Federal Trade Commission, which is supposed to act in the interest of the whole people, consistently ignored the great outstanding, dominating fact (in the compre hension of the ordinary man) that the huge business built up by the packers has been transacted for many, many years upon the unprecedentedly minute margin of from I to 3 per cent. on gross turnover! The Commission has apparently been blind to the ex traordinary service thus done by the packers, in furnishing the public with perhaps three quarters of its meat supply, at minimum cost plus but say 2 per cent. profit; also to a minimum cost extraor dinarily low, reached only by uncommonly good management combined with large capital; and, finally, to the fact that there is no other agency in sight either able or at all likely to serve the public at anything like the packers' cost, even adding their minute profit.

In other words, the Federal Trade Commission has deliberately set out to destroy in part the existing efficiency and economy of these great industries, and to force upon the public the burden of higher cost; for no reason under heaven but the fact that the concerns attacked are very large, and are able tv hold down to the minimum the prices asked by smaller and more local competitors. But why, in the name of honesty and common sense, the United States Government should create an elaborate and expensive Commission at Washington, to raise the cost of living to the public, and inflict heavy loss upon men whose operations have been a public bene faction, is a mystery! It is probably true that the Big Four (or Five or Six) packers do not fight each other to a finish, fiercely competing and cutting prices with each other until one only survives the [ 17 1 ] Too Much Government-Too Much Taxation struggle; and it is for that reason doubtless that the Federal Trade ·Commission attacks them without stopping to ask whether the public would be the gainer if they did fight to a finish and but one should actually survive. But let me ask, how much better off would the public. be if Armour alone controlled 75 per cent. of the country's beef business instead of dividing that large fraction with Swift, Morris, Wilson, and the rest? Is the Federal Trade Com mission entirely destitute of business judgment?

No; I beg the reader's pardon. What is the use of asking politicians questions that go straight to the root of the real injury or interest of the people? Such questions to them are purely academic; not practical politics t The Federal Trade Commission was and is, and probably always will be, an elaborate piece of bureaucracy; and, as such, will continue to serve party politics so long as the voters can be humbugged into believing that it serves a public purpose. Here is its record. It spent, according to its re ports for part of 1917 and 1918, $1,423,394; for 1919, $1,543,894; for 1920, $964,735; for 1921, $924,680. For this sum it conducted certain cost investigations, for use in making war purchases (for instance, gaso line and fuel oil, lumber, steel, ore, cement, alum inum, print paper, meat and food supplies, etc.), though the war purchases were made, as a matter of fact, largely upon liberal. prices rather hastily agreed to; often fixed by the various trade associations formed under government initiative during the war.* In the slate trade, for instance, with which I. was familiar, such an association was formed and a com mittee was appointed; bids were invited by the Government on electrical slate, and roofing slate *The Government is just now suing cantonment contractors for over~ charges said to total $78,000,000.

[ 17Z 1 Useless U. S. Boards and Commissions propositions for army and navy housing. The com.... mittee suggested good prices, which the Government allowed; nevertheless, patriotism prevailed to the' extent that the Government was not unduly held up. The Federal Trade Commission exerted no influence whatever upon these particular bids; and I very greatly doubt whether its reports seriously affected other bids. Those who were bidding would hardly have been likely to combine to ask higher prices than those they actually did ask. The Commission also served and serves as a source of information for Congress during Congressional investigations, most of which are equally barren of results. Finally, it receives and hears complaints of unfair competition, which seemed to be increasing in number. It entertained 154 such complaints in 1918; 1,040 in 1920. Both figures are, of course, insignificant in comparison with the innumerable business transactions in this great country. Most of the crooked practices complained of could be remedied by private suit brought under the Common Law, but such action would have to be taken at the expense of the complainant; while complaints brought before the Federal Trade Commission are prosecuted largely at the expense of the Govern ment, if entertained. The reader will see at once the clever point that, if a man does not like his competi tor's methods, it is much cheaper to get back at him at the expense of the Government, than to pay law costs out of his own pocket.

The Commission has made one or two rather far reaching rulings, which have been sustained by the courts; probably upon complaints brought by deal ers who found themselves under some competitive disadvantage by reason of the business practices of the parties complained of. I have not examined into [ 173 ] Too Much Government-Too Much Taxation the history and origin of these complaints; but neither is very material here. I refer to resale price rul ings, rulings against A. B. Dick & Co., covering license restrictions upon mimeograph supplies and a ruling against the United Shoe Machinery Co. as to "tying contracts." As I understand it, the Dick Co., which had from the first exploited and developed the Edison mimeo graph patents, many of which have long ago expired, were using later or subsidiary patents to prolong their practical monopoly, by treating their patents, expired and unexpired, asa whole, and licensing their use accordingly. That is to say, they would not permit the use of competing mimeograph supplies, the manufacture of which was free by reason of the expiration of patents, in connection with their own machines and supplies, still protected by living patents. The Federal Trade Commission and the courts decided, probably rightly enough as a matter of law, that the Dick Co. should place no restrictions upon the use of its still protected specialties along with supplies made by competitors.

The United Shoe Machinery Co.'s case was some what similar. That company had from the outset developed the McKay sewing-machine patents and machinery upon which the entire shoe-manufacturing industry of the country i$ largely based. The ori ginal patents must have expired years ago; but as is always the case, many subsidiary patents have developed, and will continue to develop, which tend to continue the commercial control of the trade in machinery largely in the hands of the original ex ploiters. Other manufacturers had entered into the shoe-machinery business; and of course had disre garded the basic expired patents. The Shoe Machinery Company, however, treated their own [ 174] Use[ess U. S. Boards and Commissions system of special machines, which supplemented each other, as a co-ordinated whole. It made con tracts, as I understand the matter, with shoe manu facturers to use its system as a whole, taking all or none of its machines. The Federal Trade Com mission and the courts decided, probably rightly enough as a matter of law, that this constituted a practical prolongation of the original basic patents far beyond the original term, and was, therefore, un lawful.

In both cases, the real question is one rather of public policy than of legal construction. The ori ginal purpose of granting patent monopoly was and is the stimulation of invention. In order to induce inventors and capitalists to risk the many years of time and many thousands of dollars needed to place any essential invention at the service of the public, the United States enacted the Patent Law, granting absolute monopoly of new inventions for 17 years. The Patent Laws of the United States have been much broader, more far-reaching, and more protec tive than those of other· countries; in consequence of which, and of American inventive energy and ge nius, the development of invention in this country has far exceeded that in all others. The same principle has been applied to copyrights and trademarks, which are intended to reward the original author of a useful book, or the original crea tor and advertiser of a widely used article of com merce by protecting the same from piracy.

This protection has enabled the publisher of a book or the manufacturer of for instance a toilet article to risk the investment required in facilities for quantity production and for national advertising, under guarantee of a monopoly; and protection of a retail-or resale-price, fixed by the manufacturer at [ 175 ] Too Much Government-Too Much Taxation a figure sufficiently large, as compared with the wholesale price, to insure a profit for handling his goods, even to the small retailer. The practice had become almost universal, among manufacturers of widely advertised goods,· of fixing retail prices so as to give the large retailer no advantage over the smaller. This resulted, of course, in the sale of such articles by a vastly increased number of retailers; and in consequence of a far wider market. It seems to me that, from the point of view of public interest, this policy was wise· and legitimate ; for, if a thing is useful, the more readily it can be obtained, at a price which the public is willing to pay, the better for the public!

As I said above, I have not examined into the history and origin of the complaints brought before the Federal Trade Commission upon which these various decisions were rendered; but their immediate effect is to help the sale ,of competing mimeograph supplies to users of the Dick Machines; to help the sale of certain competing shoe machines, for use along with other machines made by the United Shoe Machinery Co.; and to leave the large department and chain stores, who buy in great quantities, free to cut the retail prices of certain advertised articles to figures far too low for the small retail store to meet with reasonable profit. These last should suffer! What may be the ultimate result upon cheap and abundant supply to the public of mimeograph and other supplies, of shoes and of toilet articles, would be pure guesswork on my part. * Offhand, however, *Since the foregoing was written, the United Shoe Machinery Co.

has rearranged its lease forms in accordance with the decree of the Court. It will hereafter lease 75 machines out of a total of 325; of which 60 will be on a royalty basis as against 15 heretofore. Shoe manufacturers figure that the increased cost resulting from this change will be about 2 cents per pair of shoes; others say it will not be [ 176 ] .

Useless U. S. Boards and Commissions it does not seem to me that the public is likely to gain in the long run, either in quantity or price of the articles in question; while as to good service, it is almost certain to lose in the long run. The effect upon established trade in now well-known articles will probably be insignificant; but mischief is bound to result to those who undertake the development of new inventions and the supply of new commodities, which require, but will not receive, the broad protec tion which had heretofore so rapidly achieved com mercial results. As to the principle I have most at heart, to wit, simplification of government activity, and the protection of the taxpayer from the bureau crat, I am certain that the interference of the Federal Trade Commission is unwise and costly. I have, of course, no means for guessing the net results, but I doubt that the saving to the public, which has re sulted from the policy of the Federal Trade Com mission to date would cover its actual cost to the United States Treasury in millions of dollars ex pended. Moreover, the mere determination of a wise and consistent policy for the Commission to pursue is exceedingly difficult.

Take as an illustration complaint 168 in the report of 1918: "Wrongfully and unlawfully engaging in a combination to 'discourage, stifle, and prevent com petition in the wholesale drug trade; and unfairly hampering certain competitors, by inducing manu facturers to refuse to recognize competitors as job bers, entitled to the benefits such competitors as jobbers would receive, by means of notices to manu facturers that certain competitors, not members in over I cent. Either way, it is perfectly plainthat the labors of the Federal Trade Commission in this particular instance are going to add at least I cent per pair to the cost of the shoes of the United States. Further comment is unnecessary. [ 177 ] Too Much Government-Too Much Taxation the said association, were not entitled to recognition as jobbers; also by notice to manufacturers that such competitors were underselling"; etc. etc.

Does not the reader agree with me, not only that the mere title of this complaint would puzzle a Philadelphia lawyer but that the jobber who chose to stay outside of, and fight the combination, doubt less because it left him free to do business in his own way, ought himself to have borne the cost of attack ing the combination at Common Law, instead of loading onto the Government the expense of making his perfectly selfish commercial fight for him? Or take the report of the Commission for 1919: and note the argument in the Sears-Roebuck case, which reads: "The Commissioners, representing the Government as parens patrice, are to exercise their common sense to stop all those practices that have a tendency to injure competitors directly or through discipline of purchasers." The Report goes on to say: "As the Commission must substitute a construc tive measure for destructive, revive an economic principle or remove an economic factor, the task must appear almost overwhelming. Were it not for its Economic Department, the work would be im possible."

Does it not appear to the reader that, with or without an Economic Department, the work at tempted by the Commission actually is impossible? For it is nothing more nor less than the attempted supervision of the simply unbelievably huge mass of the nation's daily business transactions, in the course of which this or that competitor, out of many hundred thousands, will occasionally work this or that trick. Is it hu~anly possible for the Conunis sion to accomplish anything worth while? Will not and does not the great flood of commerce flow on, [ 178 ] Useless U. S. Boards and Commissions almost absolutely ignoring the existence of the Commission? Is the latter not exactly like a raft or boat borne along on the surface of a tremendous river, entirely impotent to affect its flow? To apply what is called "horse sense" to this par ticular attempt of Wilsonian paternal government (note the "parens patrice") to scoop up the ocean with a dip net, one need only observe that for about 140 years the vast business of the United States went on perfectly well without a Federal Trade Commission; and would continue to go on perfectly well without one if let alone. If, however, bureauc racy insists on levying and spending' a million or so of extra taxes, the taxpayers will have to grin and bear it; and the most conscientious business men will suffer the greatest handicap. Their competitors who have no consciences will, on the other hand, possess a slight advantage, by devising ingenious expedients to get around the Commission's rulings.

Let me say in fairness that there is one. useful pub lic purpose that it attempts to serve, and may well serve in perpetuity, namely: the gathering and com piling in form for use of trade information. Mr. Hoover has rightly said that broad and accurate in formation is vital and necessary for the guidance of the individual in modern trade. It is true that there are many trade associations which compile their respective trades information (and are at tacked by the Attorney General and the F. T. C. for so doing), but no one can study the C.ensus Re ports, the Reports of the Departments of Commerce, Agriculture, etc., without realizing the great labor of compiling accurate totals and their great value when compiled. Well-organized government de partments, especially if conducted under the rules governing private business, can cover the whole range [ 179 ] Too Much Government-Too Much Taxation of statistics better than can private agencies. The work is akin to that of education; which last must always be carried on at public expense because too great and too unprofitable for private exploitation.

I am not sure that such statistical work might not be properly done by the departments, each for itself, but that is a matter of detail. My main conclusion is that what might be called the meddling function of the Federal Trade Commis sion is a costly and perfectly useless parasite upon our commerce. Attack upon trade combinations is superfluous. Unless useful, they are bound to perish automatically, in due time! One combination in any trade invariably means more combination; it means always continued competition, only on a larger scale. Free commerce and free operation of the law of supply and demand are the only effective and only needed protection for the public interest. Both always come, with or without Federal Trade Com missions, in the market's own good time. To sum up, the reports of the Federal Trade Com mission show small reason for its continuance. It could and ought to be abolished; and its statistical work might be done by a bureau of the Department of Commerce. * U. S. Railway Labor Board. Before leaving the subject of useless boards and commissions I can not omit a short discussion of the Railway La bor Board; although in preceding chapters I have *Since writing the foregoing short commentary on the Federal Trade Commission, to-day's paper (October 17, 1922) announces that the California Cooperative Canneries have appealed from the District of Columbia Supreme Court's refusal to allow them to in tervene in the case brought by the Federal Trade Commission in that court against "The Big Five" packers. The reader will remember that the Commission sought to compel the packers to abandon un related lines of business such as refrigerator car transportation and dealing in fruits and dairy products handled in refrigerator cars. By [ 180 ] Useless U. S. Boards and Commissions already pretty fully covered the principles which it sets at naught.

The Railway Labor Board represents an attempt by Congress to protect the railw~yworkers' wages, while forbidding them to strike. Now, Congress in tended to protect THE NATION, a majority twenty times as great as the minority called "Organized Labor," by preventing railway strikes; nevertheless, it has recognized the great national railway unions, which are essentially strike machines, as legitimate organizations, for a lawful purpose! It sought to interpose a railway-labor board as a sort of arbi tration and conciliation machine, between the public on the one hand and the strike machines on the other. Like all political straddles, this attempt was a first-class political blunder. For two things were perfectly evident from the outset: first, that the leaders of Organized Labor would fight every limita tion of their own arbitrary power to call strikes upon which rests their whole power, and the control of their respective organizations; second, that the Railway Labor Board would appeal to and be sup ported by the rank and file of union labor only so long as it continued to mark wages up. The mo ment it should attempt to mark wages down, there was bound to be trouble, with the political hostility of the labor vote, previously educated to that end.

All along, moreover, the Railway Labor Board agreement with the complainant, the packers did abandon these various lines of business and have conveyed them to independent corporations. The California Cooperative Canneries, who are large handlers of fruits and had contracted with Armour & Co. to pur chase their output for ten years, now seek to rescind the decision of the Court and permit Armour to carry out their contract. This is a very pretty illustra~ion of the stupidity of the Federal Trade Com mission's original attack. They seem to have succeeded in injuring California fruit shipllers; as they undoubtedly will injure the public consumers of fruit before they get through. [ lSI] Too Much Government-Too Much Taxation had to face the immense practical difficulty of ar riving at what is called "social justice"; that is, what actually constitutes a fair wage, not only for different workers, but for different classes of workers, on dif ferent roads, under different traffic and climatic conditions and facing different costs of living. As I have often said elsewhere, there is nothing so purely local as the question of fair wages, which is and must always be determined by local supply and demand of labor and by local living conditions.