The Law To Make Free Enterprise Free


As indictments of respectable people began to pour out from the Justice Department in unprecedented numbers, cries of outrage could be heard from coast to coast. I will never forget the pain and astonishment caused when criminal charges were brought against the American Medical Association, which had established a pretty effective boycott on all forms of group health plans. I was pictured as a wild man whose sanity was in considerable doubt. One major newspaper referred to me as “an idiot in a powder mill.” Letters of protest poured into the White House. Adverse publicity reached its peak when the Associated Press was charged with violation of the Sherman act for refusing to sell its news service to any new newspaper that would be competing with one of its member publications. Editorials appeared from coast to coast accusing the department of destroying freedom of the press.

Yet the enforcement program of the Antitrust Division on a nationwide scale between 1938 and the outbreak of World War II survived all such attacks. This was because American businessmen did not want to repudiate the principle of the Sherman act, however much they disliked particular prosecutions. It showed that the Henry Ford tradition was still dominant.

It is difficult now to appraise the economic effect of the revival of the Sherman act at that time. Opinions differ, and my own is, of course, biased. But this at least can be said: American business learned that the Sherman act was something more than a false front to our business structure. The public gained an idea of the purpose of the act, the act itself gained renewed vitality, and American business approved this revival.

There are two principal evils of concentrated economic power in a democracy. The first is the power of concentrated industry to charge administered prices rather than prices based on competitive demand. A second is the tendency of such empires to swallow up local businesses and drain away local capital. Prior to the Depression this condition had advanced so far that our concentrated industrial groups had helped destroy their own markets by siphoning off the dollars that could have been a source of local purchasing power. It is idle to say that periodic enforcement of the antitrust laws has solved these problems, but the laws themselves have given us as an image of what our economy should be. In the cartel economy no one could question the legitimacy of the recent rises in steel—or any other—prices. In an antitrust-minded economy it seems a legitimate and natural thing for a congressional committee to call the companies to account.

Some indication of what American industry might have become without the curb of the Sherman act is to be found in the Senate hearings on labor so widely publicized this past year. It had been my belief when I took office that labor unions, like any other organizations in business, were subject to antitrust laws when the large ones tried to swallow up the smaller ones by using the predatory practices of the old-fashioned trust.

A liberal majority on the Supreme Court of the United States refused to accept my argument that labor coercion (i.e., collective bargaining) should be limited to legitimate labor objectives. They gave the unions a broad and sweeping exemption from any application of the Sherman act, whatever they did, unless they combined with their employers. They permitted one union, by strike or boycott, to destroy another. Thus the Teamster with their control over transportation became the fastest growing labor union in the world. The only way employers could survive was to buy them off. The brigandry of the 1880’s was repeated, but now by unions in control of bottlenecks in transportations and building. The unhappy spectacle that is presented to the American public today is a direct result of the Court’s decision.

No doubt the liberal majority that bestowed the exemption felt, as Holmes felt about business in the Northern Securities case, that labor leadership if not curbed by the Sherman act would nevertheless be benevolent. But what has actually happened in the labor movement is the picture of what would have happened in American industry had Teddy Roosevelt lost his fight in the Northern Securities case fifty-six years ago.