_10_: Optical Instruments 142

_11_: Miscellaneous Products 176

_12_: The Webb Act 192

_13_: Private Governments 208

_14_: Freedom or Control? 233

_Appendix I_: Recent Cases 250

_Appendix II_: Bibliography 257

Index 261

_Trusts to Cartels_

The problem of monopoly is no longer a distinctively domestic and
national phenomenon. It has come to encompass the wide world. Like a
parasite upon its host, monopoly has grown with the marketplace. Today
hardly a corner of the world remains free from the malignant influence
of its latest and most sinister form, the cartel. Diamonds discovered
in Arkansas may prompt agitated conferences within 48 hours in London
and the Belgian Congo; a lawsuit in New York challenging the aluminum
monopoly brings simultaneous outbursts of oratory in the House of Lords
and of vituperation on the Axis radio.

For over half a century, the Sherman Act has stood as a positive
expression of the inflexible will of the American people to preserve
freedom of economic opportunity. When this measure was enacted the oil,
whiskey, and sugar trusts had placed barriers directly athwart the
arteries of commerce and were exacting tolls for every gallon or pound
of product permitted to pass. Since nation-wide industrial monopoly of
a comparatively stable character first took the form of a simple trust
agreement the Sherman Act came to be designated an antitrust statute.
But its thrust was positive: the maintenance of free, competitive
markets and a democratic system of industrial control.

If such an Act were passed today, I am quite sure it would be called an
“Anti-Cartel Act.” For our attention is at the present time focused on
industrial monopoly in a different form, operating in a wider orbit.
But our basic concern is the same. We are as determined today as were
our grandfathers, two generations ago–indeed, as were the founders of
the republic–to countenance no infringement of the right to engage
in any legitimate enterprise and to conduct business without let or
hindrance from any self-constituted group presuming to monopolize trade
or industry.

The Sherman Act has proved an effective instrument no less for
dealing with the cartel problem than for curbing the trusts. It must
be conceded, however, that, in default of proper implementation and
appropriate supplementation, it has not fully realized the salutary
object for which it was designed. In particular, our policies with
regard to patents, trademarks, the tariff, monetary and credit matters,
interstate commerce, and foreign trade, all have a direct bearing
upon competition and the pattern of industrial organization. They
are important factors conditioning the efficacy of a free market for
performing its basic economic functions. To our comparative neglect of
the incidence of these policies on the problem of maintaining healthful
competitive conditions in industry must be attributed a large share
of the responsibility for the difference between antitrust goal and
business practice.

In these circumstances, cartels–which, in effect, are trusts magnified
to an international scale–have been able by clandestine means to
impress their sinister mark upon our economy. In mobilizing for war, we
discovered, almost too late, that they were responsible for shortage
after shortage of vital materials. The fact is that they have retarded
technological advance and the introduction of improved devices and
products, whenever such developments seemed to threaten their vested
interests despite the fact that thereby national security might be
jeopardized. They have, indeed, obstructed and in no small measure
thwarted the declared foreign policies of the American government,
placing their own business interests above the public interests.

In peace time, their high-price, restricted-output strategy has
impeded the advance of our living standards and general economic
well-being. Through the abuse of our patent system, cartel controls
have been established over large segments of technology. With this
leverage, industrial monopolies of international compass have at times
deliberately brought about the deterioration of quality standards.
When it might be to their advantage in maintaining or exploiting
their monopoly position, they have adulterated their products to an
extent and in a manner endangering the health, and even the lives, of
consumers. Almost incredible as these assertions may be, they are not
subject to contradiction–the incontrovertible facts are clearly set
forth in Congressional investigations and in the evidence in antitrust
cases of the Department of Justice.

Cartels are in essence private governments which threaten to subvert
and even engulf duly constituted authority. In Germany, Kaiserism and
later Nazism received enormous impetus, indeed decisive support, from
the regimented, cartelized structure of the national economy.