federal government and the states would have to maintain elaborate and powerful machinery to control the combinations. The task of regulation could not possibly be left to the courts, lacking as they are in the necessary machinery for investigation and occupied as they are with many other duties.

Consider for a moment the nature of the task which would confront such an administrative body. In the first place, it would have to possess at all times detailed information regarding all the concerns under its jurisdiction. It could not rest content with making special investigations from time to time on its own initiative or on complaint. Railroad rates and the charges of public service corporations are ordinarily comparatively stable, and properly so; but the prices of many other commodities, if not of most, are necessarily variable. The costs of materials may change greatly and rapidly. The conditions of demand are changeable. Grave injury might be done to the public during the time required for securing information on which to base action if such information were not continuously in the possession of the regulating authority. Even annual reports would not usually be adequate; quarterly or monthly data would be required.

In the second place, the amount of detail involved would be enormous. A proper fixing of prices would require complete knowledge of the costs of production and of the amount of investment. In order to make sure of obtaining accurate information, the government would have to prescribe the methods of accounting. It would be impossible to prescribe uniform methods, as is done by the Interstate Commerce Commission in the case of the railroads. The bewildering variety of con

ditions in the different industries would have to be provided for. On the basis of accounting methods thus prescribed, detailed reports would have to be made to the government and these would have to be scrutinized and studied with utmost care. The federal government particularly would have to employ a vast corps of expert accountants, statisticians, and specialists familiar with the peculiar conditions in the different industries.

The difficulties of cost accounting are so great that many even of the largest business concerns have found it impossible to ascertain the costs of their products on scientific principles, or at any rate have considered it not worth while to incur the necessary expenses for that purpose. The business concern can get along without accurate knowledge of its own costs. Its prime interest is in demand and in profits. The government, however, in fixing prices, must know all about costs—both oper ating costs and capital charges. They are the very things which primarily determine the reasonableness of prices. The limiting of profits would require somewhat less detailed information than the limiting of prices, but would still require a vast mass of data.

ment.

In the third place, the determination of costs and of investment for the purpose of fixing prices or profits would involve immensely difficult problems of judg-t The judgment of the regulating body would be constantly challenged by the combinations and the probable result would be endless litigation. The proper allowance for depreciation and obsolescence, the proper apportionment of overhead charges among different products and services, the proper methods of valuing the different elements of investment, these and

similar matters would have to be passed upon by the regulating authority. Such problems are difficult enough as they confront the Interstate Commerce Commission, which has to deal with one kind of business only. They would be far more difficult for a body dealing with multifarious combinations in widely differing industries.

Even if the regulating authority should succeed in working out a satisfactory determination of costs of production and value of investment, it would still be! beset with troubles in fixing prices or limiting profits. Demand for goods is variable even in non-competitive industries. Even if the combinations should be protected against competition from domestic concerns, foreign concerns would have to be reckoned with. Unchanging prices or prices bearing an unchanging relation to costs would not be practicable in mining, manufacturing and mercantile business. A combination might at times be justified in reducing prices and consequently profits below a normal level in order to stimulate demand and keep its force employed, or in order to meet foreign competition. The government would have then to determine to what limit prices or profits could subsequently be advanced in order to offset these reductions. In other words, the government would be dealing with a constantly changing problem of demand, just as the manager of any private business does.

Particularly difficult would be the fixing of proper/ prices for products produced at joint cost. Take petroleum, for example. A wide variety of commodities are derived from the one raw material, crude oil. Some of these are in so little demand that they must be

sold for less than the price of crude oil itself. Others are in great demand and can be sold for high prices. It is impossible to use cost as a basis for determining prices of the specific products. The relative demand for the several products varies from day to day. For a regulating body to determine the proper relationship of the prices of these joint products is virtually impossible. This and several other important industries would have to be regulated, if at all, by limiting profits rather than prices.

It is sometimes suggested that the same problem of joint costs confronts the Interstate Commerce Commission with respect to the relative freight rates on different commodities. It should be noted, however, that after making due allowance for actual and measurable differences in the cost of transporting different commodities, the Commission could, without actually destroying railroad business, fix precisely the same rate per unit for every class of commodities. Such a policy is by no means unthinkable and might be better than the often extraordinary differences which now exist. For petroleum products on the other hand, - and the same is true of a good many other products similarly produced under joint cost, flat prices would be absolutely impossible. Furthermore, it cannot be said that the Interstate Commerce Commission has satisfactorily solved the problem of fixing relative rates on different commodities. It has in fact left that problem almost untouched, and if it ever does enter seriously upon it, the Commission may find difficulties practically insuperable.

One could continue almost indefinitely setting forth the complexities and difficulties of government regula

tion of the prices and profits of combinations. Most people feel that for the government actually to fix definite prices for a multitude of industries, or even to limit their profits specifically, would be impracticable. Many advocates of government regulation hope somehow to get along in a more rough and ready manner. They vaguely contemplate a vague form of regulation. They expect the government to exercise a general restraining influence, to intervene occasionally and to render its judgments in a more or less hit and miss fashion. They hope that with the hand of the government resting upon them, as it were, in a general sort of way, and with potential competition also exercising some restraining influence, the combinations for the most part will behave themselves decently. They count upon the alleged superior efficiency of the trusts in production and marketing to counterbalance the ineffectiveness and incompleteness of regulation.

Doubtless we could get along after a fashion with such a superficial form of regulation as this. It would be difficult, however, to prove that the public would be any better off under such a régime of half-regulated monopoly than under a régime of competition enforced as well as possible by laws against combinations and monopolies. Remove once the fear of penalties or of dissolution, and the combinations would always be crowding the limit of public tolerance. On the average, and in the long run, their prices and charges might not be greatly above a fair level, but they would almost certainly be somewhat above that level. Combination/ must be proved decidedly more efficient than competition before the people would be justified in trusting trusts under any but most rigid government control.