CHAPTER VII.

Analysis of the Results Obtained by the Enforcement of These Preventive Laws.

Liberal Powers Have Obtained Important Results.

While the annual reports of the Federal Trade Commission present an extended list of applications for the exercise of its remedial powers, we believe the cases we have discussed are sufficient in number and importance to afford us pretty accurate information regarding the highly interesting and novel field which that board claims for its own. With this bird's eye view of the situation before us, we think the work of the Commission resolves itself into the following classes:

First: Safeguarding trade by compelling competitors to discontinue practices which are underhand and unfair.

Circulating false or disparaging circulars or information; misleading advertisements; and bidding away employees, are illustrations of the class of acts which have been adjudged to be "unfair."

Second: Protecting manufacturers and merchants from attacks, either direct or indirect, on the part of aggressive, unscrupulous rivals.

Cutting off competitors' supplies and credit, institution of malicious and vexatious suits, and boycotts, are instances of trade-obstructions for the removal of which the Commission. has instituted prosecutions in the interest of fair competition. Third: Obviating Sherman Law prosecutions by preventive neasures calculated to destroy incipient monopolies and "trusts.”

The attempt to enforce a "tying" contract that would oblige cotton growers to use one particular brand of jute bagging, and efforts of harness manufacturers to place the saddlery business. of the nation under one central control, are trade-restraints which have felt the strong, restraining arm of the Federal Trade Commission.

But the Supreme Court (Federal Trade Commission v. Gratz, 253 U. S. 421, 40 Sup. St. Rep. 572) reversed the Commission because of the insufficiency of the complaint and of the closely associated relationship of ties and bagging. Justices Brandeis and Clarke dissent on both grounds; and their reasoning seems more logical and more in accordance with the legislative intent and the spirit of the times.

The majority ruling appears to ignore the economic and moral problems Congress sought to solve through the media of the Clayton Act and the Federal Trade Commission Law.

Numerous classes of cases demand disciplinary or preventive measures on the part of the trade-protecting body; it oftentimes, on the other hand, transpires that infractions are unintentional or too trivial for serious treatment; and in those instances, a cautionary official message on the part of the Commission is usually sufficient to bring about a speedy reform. Nearly onehalf of the 293 applications for relief during the years 1916 and 1917 were settled without the necessity for formal proceedings. This, upon the whole, is a favorable showing, and indicates, as an English historian (Lecky) remarked concerning his own people, that American businessmen are "sound at the core."

Among the Federal Trade Commission's affirmative rulings. we find the following:

First: It is permissible under the provisions of the Sherman Law to grant to an agent exclusive rights to sell goods within a specified territory.

Second: The Commission is itself without jurisdiction in a case where defendant's business is carried on within the boundaries of a given state, i. e., is not interstate trade.

Third: A situation which indicates the existence of traderestraining practices and may demand from the Commission the exercise of its statutory powers will receive official notice and attention even though the person applying for relief is not

directly concerned in the transaction or interested materially in the result.

Resume of Judicial Activities.

In concluding this division of our chapter and as a useful and illuminating summary, we quote from the Commission's report for the year 1917:

"The large number of industrial concerns seeking adjudication of their claims of unfair methods of competition in interstate commerce in the forum of the Federal Trade Commission now appears to justify the belief of Congress when it created the Commission, that the public interest required the establishment of a tribunal for the maintenance of fair competitive conditions in industry. It is already demonstrable that the procedure of the Commission is most efficacious in a large number of cases where the concern against whom unfair methods of competition are being practiced has no remedy for the unlawful methods used against it, or is without means to enter into contest with the party practicing the same, or where the penalties or the remedies provided by the Sherman Law are inadequate. Moreover, the mere power vested in the Commission is an evident deterrent to industrial concerns from unfair competitive aggression against their weaker rivals in business."

First:

Two METHODS OF OPPOSING MONOPOLIES.

Sherman Anti-trust Suits.

We believe it will be readily seen there is a wide difference between (a) prosecutions for injunctive relief and for dissolution of the offending corporations, brought in the Federal courts under the Sherman Anti-trust Law, and (b) curative or preventive proceedings maintained before the Federal Trade Commission, sitting as a semi-judicial body. The distinctive quality consists in the difference between prevention and cure, i. e., between the fire extinguisher and the fire department. Absolute freedom in trade-undiluted competition-means the survival of

the strongest; it means the application in trade of the Malthusian theory that the weak or the ailing have no inherent right to exist; and experiences by the American people during the period subsequent to the Civil War prove only too convincingly that this doctrine, when applied in a radical way, breeds monopolies and "trusts." It is regulated competition which is "the life of trade;" whenever society permits trade rivalry to continue without state-regulation, such "competition" spells death instead of life; for all enterprises except the strongest in each line of trade it means ultimate extinction or absorption.

If this was true in the unregulated trade-era of the '70s, when the condition or American business proved a veritable incubator of "trusts"-how much more surely and rapidly might traderestraints and monopolies spring into being in these later days, when enhancement of the nation's resources has brought into being aggregations with untold millions of capital at command or within call.

Subjected to the stress of maintaining a vigorous warfare against that powerful group, the Federal Department of Justice might consider itself (despite strenuous efforts) overwhelmed by sheer weight and numbers, and might "grow weary in well doing;" and public interest might thus suffer defeat through a default. Such a catastrophe would be disastrous and irreparable; for no individual citizen, however influential, could hope to maintain the people's cause against a combination of the powerful interests, which correspond to the "trusts" that formerly flourished and dominated entire fields in American commerce. Let us be genuinely thankful that we now have a Federal Trade Commission empowered to issue its "cease and desist" orders while the prospective monopoly as yet has not gotten beyond the early stages of development; that we possess a public board equipped to act promptly and effectually in defense of the public's rights and interests.

Second: Preventive Measures as Administered by the Federal Trade Commission.

Prosecution and prevention! These words embody the very essence of two distinct theories; but, fortunately, they are not

opposed; each occupies a useful place in matters pertaining to trade-protection under the Federal Trade Commission Act.

If, as we trust and believe, the period of centralized control in trade is drawing rapidly to its close it follows that we have entered upon a new era of American trade history-the era of regulated competition. Let us hope this era, in its turn, will be succeeded by a higher, a more ethical spirit in commercial dealings; that co-operation at some not far distant day will bind all business interests together in friendly rivalry; and that the motto of commerce in the United States will be the motto of the "Three Musketeers"-"One for all and all for one!"

Men of large affairs have adopted and maintained a publicspirited and helpful attitude toward government during the stress and strain of the war-time period now happily ended— and this responsive disposition is a helpful sign of the times; for where regard for civic duties is present in mind, deliberate enthrallment of commerce by "trusts" and monopolies drops out of the calculation; and the anti-trust laws, (preserved, even though unused), may come at length to be regarded as a collection of antiquities in the armory of Federal statutes. If Americans stand shoulder to shoulder and continue to display the same willingness to serve which characterized their acts at home and abroad in the Great War, the future of the American Commonwealth is assured!

We must not weakly surrender the vantage ground already achieved nor permit old standards and conditions to return. The anti-trust laws have had a moral as well as legal value and effect upon the development of American commercial life and character; and they must remain, like the Federal Constitution, part of the law of the land; they must not (as some zealous iconoclasts propose) be expunged from the rolls of our Federal statute books; upon the contrary, those cautionary as well as curative laws must continue to exert a deterrent though silent influence by pointing out the things that may not be done.

Secretary Redfield in his address before the Chamber of Commerce of the United States, delivered at St. Louis (April 30, 1919), declared: "Nothing is more certain than that there has