the known ability of the trust to undersell without loss create such a fear that competition for long periods would not dare to raise its head? Superior efficiency of trusts may be an argument in favor of the policy of tolerating combinations subject to government regulation, but hardly in favor of a policy of laissez faire.

Experience and theory thus unite at least to warn us of the possible danger of trusts and pools. We cannot feel sure that the restriction of unfair competitive methods and the removal of special monopolistic privileges would rob them of power to mulct the consumer. Moreover, we have not yet been shown that it is possible to eradicate unfair competitive methods and special privileges. The government has been trying to put a stop to railroad discriminations for more than twenty years. It has reduced them greatly, but it has not wholly eliminated them. The task of preventing unfair methods of marketing goods would be even harder. It is easy to talk about prohibiting price discrimination, for example. Actually to prevent it would require elaborate administrative machinery. Price discrimination is practised more or less in almost every branch of industry and trade. Small concerns having no thought of monopoly often discriminate in prices. In some cases the practice is excusable if not desirable. The government would have grave difficulty in determining just where to draw the line. Indeed, to prove the fact of discrimination would often be virtually impossible, because of differences in the grade of goods sold, in the quantities sold to different purchasers, and in the costs of sale and delivery.

Difficult also would it be in many cases to deprive combinations of special monopoly privileges. For example, take patent rights. The patent possessed by a concern standing alone may give it only a limited

degree of monopoly power. By combining with other concerns having patents for related machinery or processes the monopoly may become complete. We may prevent such combination by law. But if we permit it, how can we then deprive the combination of the added power which the pooling of patents gives? The only remedy for monopoly in that case would be regulation of the prices of the products. Again, a number of separate concerns having each part of a limited natural resource may unite so that they together control the entire resource or the greater part of it. This gives

them an advantage over competitors that did not exist before. The combination might have been prevented, but if it is permitted the advantage thereby acquired with respect to the natural resource cannot be taken away save by the difficult method of government regulation of prices.

The restriction of unfair competitive methods and of special monopoly privileges would be a proper enough adjunct of the policy of prohibiting combinations, or of the policy of regulating their prices and profits. But standing alone it is not a sufficient safeguard against monopoly.

The solution of the trust problem, therefore, must be found either in prohibition or in regulation, not in laissez faire. Those who ask us to remove the ban of law from trusts and pools without substituting the controlling hand of government over prices are asking a departure from a policy that is as old as Anglo-Saxon civilization. They are asking us to leap into the dark. The results, tho conceivably not disastrous, might yet be extremely disastrous. The great majority of the American people have no desire to risk the experiment. I for one believe that they are right in refusing to do so.

II

THE POSSIBILITY OF PREVENTING COMBINATION

If the conclusion is reached that there is need for either regulation of combinations or prohibition of them, the question immediately arises whether the latter course is practicable. Can the government successfully break up existing combinations and prevent the formation of others?

The limited experience of this country thus far in "trust busting" is often cited as proving the impossibility of destroying the trusts. In some cases the socalled dissolutions have in fact failed to bring about real competition. Yet in some other instances a considerable measure of competition has apparently been restored. As regards the great majority of the cases no information concerning the results is available. So little time has elapsed since the anti-trust laws began to be enforced with some vigor that a pessimistic judgment as to the ultimate outcome is premature. Moreover, the methods of dealing with the combinations thus far have been relatively gentle and the results do not justify a conclusion as to what might be accomplished by a really rigorous policy of repression.

The opinions of most people concerning the results accomplished under the Federal anti-trust act are based on a few conspicuous cases. They do not even know that there have been scores of prosecutions and suits in equity under that act, the great majority of which have been decided in favor of the government. While the earliest decisions of the Supreme Court tended greatly to narrow the scope of the Sherman law, later decisions have turned increasingly in the other direction. The court has not only upheld the constitutionality of

the act in every respect, but it has held its broad terminology applicable to almost every specific form of combination or of contract in restraint of trade, and to almost every monopolistic practice of which complaint is made. Supposed rights of property and of contract have in large measure been brushed aside by the court when urged as a defense for monopoly. The Sherman Act needs little, if any, modification with respect to its scope and its definitions. The state courts also have shown vigor in enforcing the various state anti-trust laws.

Yet repression has not thus far taken drastic form. It is one thing for the courts to adopt a broad policy in holding a combination, contract or practice unlawful. It is quite another to use vigorous measures to punish it or prevent its recurrence. Thus far there has been scarcely a single instance of imprisonment for violation of either state or Federal anti-trust laws. Juries have not shown a disposition to convict where imprisonment was the necessary penalty, or where they believed that the judges would probably impose that penalty. Where judges have had a choice between fining and imprisoning offenders, they have uniformly inflicted the fine. fact, many of the fines have been unreasonably light, in some cases far less than the profits which the combination had gained through violation of the law.

In

It would have been harsh to imprison men in the first campaign against the trusts under the Sherman law. The law had long been allowed to remain a dead letter. Business men generally did not look upon monopolistic combinations or practices as immoral. Hence administrative officers, judges and juries were justified in leniency. It does not follow that leniency is desirable for the future, or that the people will be disposed to tolerate it. Now that the public has shown that it

means business in attacking combinations and monopolies, and that the meaning of the laws is clearly established and generally known, men who form combinations, make contracts in restraint of trade, or pursue monopolistic practices, know that they do so at their peril, and severe pusnishments will be perfectly proper. If necessary, the anti-trust laws could be so amended as to make imprisonment the only penalty in criminal cases, or to increase greatly the minimum and maximum fines. A vigorous enforcement of anti-trust laws, especially by imposing prison sentences, would virtually stop the more formal combinations and contracts in restraint of trade as well as the more obvious methods of unfair competition. The average business man fears the jail mightily. Very few are deliberate law-breakers. Tho some secret combinations in plain violation of the laws might be attempted even in the face of severe punishment if discovered, they would probably be very few. The question whether informal understandings could be prevented and whether genuine and active competition could be brought about is, however, different and will be considered later.

A large proportion of the proceedings under the Sherman Act have not been criminal indictments, but bills in equity seeking injunctions. In a few cases the same combination has been pursued both criminally and in equity. The injunction is under certain conditions a very necessary device for enforcing the statute. It is difficult to see how a closely knit trust like the Standard Oil Company could be satisfactorily broken up without an order of the court as to the method of doing so. Merely to impose penalties upon a trust or its managers, and to leave them to devise means of dissolving it, would often open the door for endless litigation among the members and stockholders of the combination.

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