if found advantageous by the unions. Mr. Richberg discussed at length the original intention of the union exemption in the Clayton Act, and suggested that Congress should legislate to distinguish clearly between the allowable effects of legitimate union activity and efforts to use union power for monopoly profits not sanctioned by the public. He opposed industry-wide contracts and cited in contrast the company contracts of the railway unions. Mr. Arnold also discussed labor monopoly practices, referring particularly to the building industry. Professor Handler stated that in most cases of union monopoly practices collusion can be proved, and that the antitrust laws must not be carelessly used to control the legitimate activities of unions. Mr. Kassalow referred to the subject of labor monopoly as a red herring.

Several of the witnesses described specific examples of the difficulties that arise in maintaining an antitrust policy.

Dr. Teper gave details of the squeeze on clothing manufacturers because of concentration in the textile industry on one hand, and among the buyers and distributors of women's clothing on the other. Secretary Brannan stated that business concentration both in buying farm products and in selling to farmers has forced the concentration of certain features of agriculture, under Government auspices and regulation.

Governor Arnall testified that practically unregulated railroad ratemaking placed the South at a serious disadvantage, and that effort to obtain a revision of rates had led only to the Reed-Bulwinkle Act exempting the railroads from antitrust action. Governor Arnall also gave a description of restraints in the moving picture industry, which he stated had been only partially relieved by recent court decisions. The Governor pointed out that the Webb-Pomerene Act, originally passed to enable American exporters to fix prices for commodities when sold abroad and thereby aid small business, has lent itself "not only as a shield against foreign competitors, but as a sword against domestic competitors here at home.'

Messrs. Ernst, Berle, and Arnold referred to conflicts between the tax laws and the antitrust laws, in particular the effect of taxes in forcing small concerns to merge with large ones, or in penalizing any voluntary splitting up of large combines. The undistributed profits tax, with a $25,000 exemption, was favored by Professor Adams. Mr. Ernst noted the fact that postage rates favor catalogs of large firms over small.

Government procurement policies were criticized by several witnesses, especially by Messrs. Ernst and Berle. Secretary Matthews, speaking for the National Military Establishment, stated that an effort is being made to increase the facilities for doing business with small concerns. Professor Adams also criticized the policies of the War Assets Administration in the disposal of plants, with particular reference to steel.

Mr. Ernst cited several examples of incidental restrictions in one industry by the policies of another. He referred to practices of telephone companies placing small radio stations at a disadvantage, to advertising rates favoring large advertisers, and especially to the concentration of investing power in the large insurance companies.

RECOMMENDATIONS BY WITNESSES

The objectives of antitrust laws are commonly assumed to be, first, to protect consumers against high monopoly prices; and second, to protect independent businessmen against ruin or oppression by concentrated economic powers. Additional objectives were suggested by some of the witnesses. Dr. John D. Clark pointed out the purpose of Congress at the time of the passage of the Sherman Act also included as an objective the promotion of increased production through the maintenance of competition. Dr. Hamilton emphasized that concentration tends to render the management of an industry secure and to give it both the power and the inclination to exclude new men with progressive ideas. He cited Henry Ford as an example of a man whom the bankers would have obstructed had they been able. Mr. Arnold suggested that modern conditions call for more stress on decentralization of industry and for keeping absentee ownership of local enterprises to a minimum in order to preserve important social and political values.

There was also implied in the testimony of most of the witnesses the thought that free political institutions are now so much less secure than in 1890, that maintenance of a competitive and diversified economic system is imperative as one of the mainstays of political freedom. The weight of opinion seemed to place the safeguarding of political freedom in the first position, followed by freedom for technical progress and production growth, with the detailed protection of competing business operators and consumers as immediate means or methods for the underpinning of free political institutions and prosperity. Further hearings may throw light on the relative importance of the objectives of the peculiarly American institution of antitrust legislation. The subcommittee hopes for wide public discussion of this feature of its work, since the formulation of the law and the expression of the intent of Congress as a guide to interpretation must be based as firmly as possible upon the actual will of the American people and their intentions as to their future course of development.

Specific suggestions for changes in the law dealt with various means by which its major objectives might be better attained, or with means for attaining the fundamental purposes of the law with a minimum of strain on business institutions.

The Attorney General pointed out that antitrust action is aimed at holding open the door for new competitors to enter any industry. Professor Adams suggested that separating the moving-picture companies from their exhibition outlets, for example, would promote the entry of independent producers, and that action against any concentration that has led to price leadership will encourage new enterprise. He advocated Government action to make credit more easily available to small concerns, a revision of tax laws favoring small enterprises, Government research in fields useful to independent business, and action to prevent the preemption of basic materials needed by small concerns. Testimony at these hearings, however, was generally directed more toward the control of concentration than toward specific actions to aid new or small enterprises.

Professor Adams suggested that in making laws to foster competition it is necessary to be clear as to the kind of competition to be fostered.

Perfect competition is not possible or necessary. The definition should be in terms of the basic objectives of the law; protection of consumers, prevention of price or production controls based on size, protection of new technology from artificial frustration, and maintenance of legal and economic freedom of entry for new enterprise.

The treatment of size as such was touched upon by practically every witness. The Attorney General and Mr. Bergson both stated that the Department has not attacked bigness as such, though it has often attacked illegal behavior based on concentrated power. Dr. Clark called attention to the connection of bigness with price leadership, which might be avoided where dispersal of industry is practicable. Mr. Ernst expressed a general opposition to bigness because of its leading to demands for Government control or nationalization, with consequent weakening of free political institutions.

Mr. Berle discussed the question of size at some length and suggested the principle that there is a top limit "beyond which mere size does become dangerous in and of itself." Dr. Teper "would not say that bigness per se is bad," but it becomes bad, for instance, when small manufacturers have to deal with unduly concentrated suppliers and distributors. Dr. Adams quoted Justice Douglas as saying that size which gives power to a handful of men is contrary to the philosophy of the Sherman Act and that "the fact that they are not vicious. is irrelevant." Mr. Arnold suggested that if some one business service requires large size the business should be confined to that service alone and not permitted to control other features that can operate efficiently on a local scale. Mr. Johnston said that he had not observed any oppressive use of size, but "there might be a point where we should step in and place limitations upon further growth." Professor Handler placed in the record his TNEC proposals for limiting new acquisitions by companies in accordance with their size.

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Mr. Ernst suggested that it is time for more information on the relation of size to efficiency. Mr. Richberg stated that in his experience as enterprises grow they often lose efficiency, and that if smaller concerns are protected from oppression by economic power they can take business away from larger ones. Mr. Toulmin noted. that "some of the greatest prosperity of the United States has come from the dissolution of large organizations." Dr. Blair quoted with approval the report of the Council of Economic Advisers of January 1949 that in many fields size appears to have passed beyond the point of optimum efficiency. Professor Adams pointed out that the most efficient size usually applies to the plant, and productive efficiency does not necessarily justify ownership of several plants by one mammoth concern. Mr. Bergson decried the common charge that dissolution of large concerns will threaten production, and quoted the recent report on German decartelization as showing increases in production when concerns were split up.

The chairman remarked on August 3 that

there seems to be a tendency on the part of most witnesses who appear before us to get a little jittery when they talk about size, as though they were worshiping size as a sort of sacred cow and that you cannot criticize it. willing to criticize size.

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The testimony, when reviewed as a whole, however, reveals a considerable amount of disrespect for size as such, a matter of vital impor

tance in the consideration of measures recommended for restraining concentration and monopoly power.

Acts relaxing the antitrust laws were condemned by most of the witnesses, though there was little testimony as to detailed operation of the acts. The Miller-Tydings Act was opposed by Dr. Clark, Governor Arnall, Mr. Bergson, Mr. Toulmin, and Professor Adams, but was supported by Mr. Ernst.

The Reed-Bulwinkle Act was condemned by the Attorney General and Mr. Bergson. Mr. Toulmin spoke favorably of it as a correction of a situation where enforcement of the antitrust laws went too far. Governor Arnall gave a detailed description of the railroad rate-making process and its effect on the South, in explaining his opposition to the act.

In connection with the Webb-Pomerene Act, Governor Arnall described an attempt, by an association formed under the act, to monopolize bookings of American films in Britain. Mr. Bergson stated that the act had been involved in several cases where domestic antitrust violations were prosecuted. Dr. Clark suggested reexamination of the Webb-Pomerene and Reed-Bulwinkle Acts.

The testimony showed little dissatisfaction with the RobinsonPatman Act, although Dr. Clark suggested that the act be clarified, or with the Clayton Act, except for the loophole in section 7, which while prohibiting certain mergers by purchase of stock, permits action to the same effect by purchase of assets.

The methods now used by the Department of Justice for breaking up large concerns were discussed by the Attorney General and Mr. Bergson. Mr. Bergson explained that divorcement, divestiture, or dissolution are available as remedies under the present law, and stated that several cases, seeking these remedies, are now in the courts. Mr. Bergson regards the existing law as adequate, except in situations. where monopoly power has not yet been fully achieved. The Attorney General expressed dissatisfaction with the amount of relief afforded by some of the court decrees.

Professor Adams suggested that industries where administered prices are found should be treated case by case, usually by breaking up the leading firms into smaller units. In moving pictures, independence of the theaters might suffice to bring new competition among producers. He suggested vigorous dissolution proceedings in new industries where vested interests might be less well entrenched, and quoted Dr. Corwin Edwards as favoring new legislation enlarging the dissolution powers of the Government. Mr. Toulmin was emphatic in recommending divorce of distribution from manufacturing, divorce of manufacturing from sources of materials, and divorce of nonanalogous companies. Mr. Toulmin objected particularly to a large company waiting until small companies have developed a new product, and then entering the market with dominant economic power.

There was some testimony on possible improvements of the methods. of law enforcement. Mr. Bergson did not believe any new legislation would be desirable for expediting the trial of antitrust cases. He spoke of various methods now being used to streamline the legal processes by stipulation with defense counsel. Mr. Celler announced that Chief Justice Vinson has been asked to request the Judicial Conference of the United States to consider time-saving procedures in antitrust cases.

Senator O'Mahoney suggested that antitrust enforcement would be simplified by Federal charters for interstate corporations on terms prescribed by the Congress, and specifying many of the limitations on concentrated power that otherwise must be imposed by regulatory commissions or through antitrust procedure.

The choice of criminal or civil process was discussed by the Attorney General and Mr. Bergson. The Attorney General stated that criminal action is most often used where there is intentional price-fixing, but that in attacking business methods that some lawyers have deemed to be legal, civil process is considered more appropriate. Mr. Bergson expressed a preference for civil action in borderline or uncertain cases, and also pointed out that actual reforms of business practice are best obtained in civil proceedings.

Penalties for criminal violation were generally held to be too small. The usual suggestion was to increase the maximum fine on each count from $5,000 to $50,000, though Dr. Hamilton would set no upper limit. Mandatory jail sentences were considered impracticable by many witnesses.

Several of the witnesses complained about the obstacles to collection of triple damages for a small concern injured by an antitrust violator. Dr. Hamilton discussed the triple-damage problem at length, and recommended that the courts be directed to treat these as public cases, and to frame the decree so as adequately to protect the public interest. Mr. Bergson did not agree with suggestions that damages might be assessed at less than treble at the courts' discretion. Professor Handler suggested that when the court has determined that the antitrust laws have been violated, it should appoint a special master to assess the damages of all injured parties without requiring further proof of the violation itself. The Attorney General, Mr. Bergson, and Dr. Hamilton suggested the advisability of legislation authorizing the Federal Government to sue for triple damages when injured by monopoly prices in its own purchase of materials.

FEDERAL CONTROL OF CONCENTRATION

Several witnesses recommended that some Federal agency be charged with responsibility for watching the development of concentration and either advising or taking action before conditions had extended so far as to be excessively difficult to correct.

Mr. Arnold suggested a continuing joint committee of the Congress, which would study the concentration problem and the antitrust laws, and would deal with cases where governmental policies or laws are inadequate or in conflict. Mr. Ernst would direct the Secretary of Commerce to act as advocate for the competitive system, with authority to call the attention of other agencies, the Congress, and the public to any situation that endangers the system.

Mr. Berle suggested that the Federal Trade Commission, or other commission with jurisdiction, be directed to examine any industry in which competition fails to operate, and impose public-utility responsibility upon it, with the alternative of allowing it to split up into enterprises of a size able to compete.

Professor Adams favored a case-by-case treatment of concentrated industries, probably by the Federal Trade Commission, and suggested that over-all policy be defined by an amendment to the Sherman Act.