this policy. For that purpose the ends of justice, as expressed in the Department's procedure, required among other things:

(1) That trade-restraining agreements be cancelled where necessary to render illegal combination ineffective, as in the Powder Trust decree of June 21, 1911.

(2) That certain enumerated illegal practices, which make possible the renewal or perpetuation of types of unfair competition, be specifically enjoined, as in the Pacific Coast Plumbing Supply Association, involving twentyfour corporations.

(3) That an open market, one in which free and fair competition actually prevails, be made one of the essential conditions through which equitable treatment is insured in trade relations among competitors.

In brief, the Courts in enforcing the antitrust acts are gradually formulating anew the legalized standards of economic freedom (a) by defining what is free in principle; (b) by forbidding what is unfair in methods, and (c) by formulating the accepted canons of equitable business conduct within whose limits economic efficiency must work out its salvation.

5. More Recent Legislation on Trusts

Most recent of anti-trust law amendments was the Act of October 15, 1914, entitled "An Act to supplement existing laws against unlawful

restraints, and monopolies." Just as the Federal Trade Commission Act of September 26, 1914, was expressly made to prohibit unfair competition so the one enacted nineteen days later was designed to correct certain well-known abuses whose effect was to substantially lessen competition, "to restrain commerce or to tend to create a monopoly of any line of commerce."

Of these forbidden evils there were five, including (1) price discriminations; (2) exclusive or "tying" contracts, involving price-fixing agreements or re-sale control; (3) inter-corporate stock acquisition, excepting for investment not resulting in any substantial lessening of competition; (4) interlocking directorates of banks and trust companies having over $5,000,000 of deposits, capital, surplus, and undivided profits; also all corporations whose limit of like assets is $1,000,000; (5) dealings of $50,000 a year on the part of common carriers with corporations having the same officers, and providing for "free and fair competition among bidders."

In the Trade Commission Act its sponsors had in mind the creation of a regulative tribunal with powers ample enough to insure free and fair business activity and at the same time to correct abuses complained of among industrial concerns. In the grant of powers the Interstate Commerce Commission was taken as the standard. The danger of empowering a small group of men with too much inquisitorial

authority was recognized. Furthermore, the type of control and investigation exercised by the government in the national banking system served to show to what extent public examination could go without disclosing legitimate business secrets to competitors.

The labor view of the policy of making labor associations exempt from the anti-trust act prevailed in the Clayton amendments thereto. Section 6 of the Clayton Act reads:

"That the labor of a human being is not a commodity or article of commerce. Nothing contained in the anti-trust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purpose of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organization from lawfully carrying out the legitimate objects thereof; nor shall such organizations or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws."

Organized labor's efforts to restrict the use of injunctions in disputes between employers and employes was to a large extent embodied in Section 20 of the Clayton Amendment. By this the right to terminate employment and of "persuading others by peaceful means" (picketing) were declared lawful under anti-trust statutes.

CHAPTER VII

COMMAND OF CAPITAL AND CREDIT

EVERY public question is entitled to be

viewed from the twofold aspect of its general purposes and of its specific problems. In the discussion thus far the trust in its more theoretical bearings has received attention. We have viewed from the outside the facts and the forces of its evolution. It began as a tendency and has now acquired the status of an institution rooted deep in our economic life. The result of our examination is a restatement of the leading principles of its guidance and control during fully a quarter of a century. Briefly stated, the trend of legislation, of judicial decrees, of corporate policy, and of economic criticism is to divide the field between competition in private pursuits and monopoly in public service. But everywhere are corporate combinations being brought under stricter public control. That is one aspect only. In this time a firmer grip has been gotten on the application of these principles - legal, economic, and administrative to the solution of the more essential problems arising from within. This marvelous growth in the business corporation is now to be

considered from the viewpoint of its internal developments.

1. Supply of Investment and Working Capital

Large-scale production is continually under the necessity of adjusting itself to changing conditions in the pursuit of its main purpose to gain maximum net returns on its investment. One of its first problems is, therefore, to assume that form of organization which will best enable it (1) to command adequate capital, and (2) to reach larger markets. It has been often said that America is but another name for opportunity. When John D. Rockefeller was beseeching farmers in Indiana to sell their farms to build pipe lines out of the proceeds, his main aim was to get capital to cut out the railway costs of getting products to market. So of the trusts in general, their first great task was to get capital enough to take advantage of an ever-enlarging scale of marketing goods. To do this, combination of working resources as a means of reaping greater profits was the most available method.

One of the financing stages of trust organization is admirably outlined in Professor Mead's portrayal of the promoter (Chaps. II-III.): "The advantage which the trust promoter sought to obtain was to capitalize the economies of combination, sell the certificates of capital, and obtain a share of the proceeds as