2305) summarized under this head all cases
centered
around "acts and practices [which] are .
Brady - Business as a System of Power
I.
DuPont de Nemours and Co.
, General Electric Co.
, General Motors Corp.
, Goodyear Tire and Rubber, International Harvester Co.
, Irving Trust Co.
, Standard Oil Co.
(of New Jersey), United States Rubber Co.
, Westinghouse Mfg.
Co.
Subse- quently two other concerns, the American Telephone and Telegraph Co.
(1925) and
? 2 14 THE AMERICAN WAY
time ^^ for the purpose of formulating common labor-relations pro- grams for all American industry, and has led in systematizing the promotion of policies consistently pursued by the NAM since its formation.
Not only are most of the member corporations of the Special Conference Committee at once members of the inner controlling group of the NAM and the leaders among American industrial giants in their respective fields,/^^ but also they represent a secret coalition in direct furtherance of the specific forms of company union fathered by the Colorado Fuel and Iron Company. Since its inception, the Committee has met at the offices of the Standard Oil of New Jersey, central unit of the gigantic Rockefeller oil, mining, banking, real-estate empire. "Two members of the staff of Industrial Relations Counselors, Inc. , a firm which specializes in advising corporations on problems of industrial relations, have served individually as members of the committee. " ^* From its
the United States Steel Corp. (1934) were added. LaFollette Committee Reports, Part 45, p. 16783.
72 Monthly meetings of personnel executives; semiannual meetings of corporate executives.
73 The Irving Trust Co. alone is not a member of the NAM. "The Committee con- sidered the desirability of enlarging its membership through the inclusion of repre- sentatives from corporations in additional industries. However, investigation led to the decision that this would be inadvisable because other corporations which were outstanding leaders in their respective industries in the same degree as the sponsors of the Special Conference Committee could not be found. Omitting the Irving Trust Co. , in 1937 the corporations represented on the Special Conference Committee em- ployed more than 1,300,000 persons and paid total wages and salaries of more than $2,400,000,000. At the end of 1937 these 11 corporations claimed total assets in excess of $13,500,000,000. The American Telephone and Telegraph Co, has almost a com- plete national coverage in the public utility field which it serves. The United States Steel Corp. and the Bethlehem Steel Co. rank first and second, respectively, in the steel industry--with Bethlehem, through its subsidiaries, also ranking first in ship- building. E. I. DiiPont de Nemours and Co. is easily first in chemicals, and the General Motors Corporation maintains an approximately, similar position in the motor car industry. The Goodyear Tire and Rubber Co. and the United States Rubber Co. rank first and second, respectively, in their industry. The International
Harvester Co. is the outstanding manufacturer of farm equipment. The Standard Oil Co, of New Jersey is not only the largest of the Standard Companies; it is also regarded as the largest oil company in the world. The General Electric Co. is the largest producer of electrical equipment, while the Westinghouse Electric and Manufacturing Co. is next in rank . . . the United States Steel . . . through its subsidiaries is the largest producer of coal in the country and also largest producers of iron ore in the United States. " La Follette Committee Reports, Part 45, pp. 16781,
16783-84.
74 It was set up by the Standard Oil Company. Offices are now located in Rockefeller
? THE AMERICAN WAY 215
earliest days this same firm, in turn, has been under the domination of Standard Oil, United States Steel, and the du Pont interests. Its secretary since 1923 has been E. S. Cowdrick, previously associated with the Colorado Fuel and Iron Company in an executive ca- pacity.
The most important line of policies within the NAM, in short, seems to be traceable directly or indirectly to this inside clique within the inner councils of the organization ^^--a conclusion which is especially interesting when coupled to the fact that the original antilabor program was taken over from the heavy indus- tries (National Metal Trades Association, in large part), and that that original program (Parryism) is still the ''Bible" of the NAM. ^(R)
10. As the larger concerns which now constitute the central command of the NAM have come to the fore, the doctrinal position of its business leaders has been further coordinated in the elabora- tion of "public relations" propaganda. Nowhere else is shown so clearly the dominating position in the NAM of concerns such as those which are member to the Special Conference Committee. Public relations techniques were born," nurtured, and brought to flower within these ranks. The specific purpose of the Com- mittee is to coordinate all policy interests of the business com- munity in order to "sell" to the public justification of the position taken by the configuration of those interests on any and all mat- ters. Thus it brings together, into a single, central, and unified propaganda, "labor relations," "legislative relations," "agricul-
Center, New York City. For a number of years its director was A. H. Young, member of the Special Conference Committee as the representative of International Harvester. Leaving Industrial Relations Counselors in 1934, Young became vice-president of the United States Steel Corp. , in charge of personnel relations.
75 At any rate, the policies laid out by the Special Conference Committee are en- tirely coherent with those advocated by the NAM. It seems scarcely conceivable thai the direction of influence could run the contrary direction, from the NAM to the members of the Special Conference Committee--particularly in view of the fact that these same members are the recognized leaders and pioneers in the policies adopted by the two interlaced gioups. This holds for the policy of partial recognition of trade unions as bargaining agents, adopted subsequent to Supreme Court decisions upholding the NLRA.
76 See footnote 26, above.
77 Pioneer was Ivy Lee, the man who is given credit for transforming the elder John D. Rockefeller from the ogre of Ida M. Tarbell's History of the Standard Oil Company and "Bloody Ludlow" into the "seer of Pocantico Hills. " Ivy Lee is still regarded as a sort of Solon of "public relations" technique.
? 2i6 THE AMERICAN WAY
tural trade relations," "^^ and all other "relations" involving con- tacts with groups whose interests may at any point come in conflict with their own. Employing the techniques, the criteria, and in many ways the services of advertising agencies,^^ the NAM has moved into this field in a big way; this is evidenced by the phe- nomenal increase in public relations expenditures cited on p. 198, above.
THE "scalar principle"
The ten points outlined above do not by any means exhaust the list of ways of centralizing power within the structure of the Amer- ican industrial system. ^^ They do, however, show the principal lines of growth--lines which take on greater significance when it is realized that their effect is additive. These trends are unidirectional and convergent, and their result is to mobilize gradually Ameri- can industry into a pattern of control adapted to the prototype of the corporation.
The principle underlying the organization of the prototype is called by Mooney and Reiley,^^ the "scalar principle. " They define it as follows: "The scalar process is the same form in organization which is sometimes called hierarchical . . . a scale means a series of steps; hence, something graduated. In organization it means the graduation of duties, not according to differentiated functions, for this involves another and distinct principle of organization,^^ but simply according to degrees of authority and corresponding re- sponsibility. For convenience we shall hereafter call this phenom- enon of organization the scalar chain. "
The "scalar chain" is given effect through "1. Leaderships 2. Delegation, 3. Functional Definition. " The first defines the line of direction, as running from the top down, along any given line of policy. The second describes the principles of delegating power
78 Separate bureaus and departments have been set up within the NAM for each of these divisional interests.
79 Young and Rubicam, one of the largest advertising agencies in the world, handle public relations for the NAM.
80 A particularly important omission is the influence exerted on the educational system of the country through the activities of such an organization as the American Management Association.
D. Mooney and A. C. Reiley, Onward Industry! Mooney is an outstanding
81
executive of the General Motors Corp.
J.
82 "Functional organization" as used here refers to division of authority from executive headquarters down.
? THE AMERICAN WAY 217
down through the hierarchy of command and subordination. The third traces the lines by way of which leadership circumscribes fields of specialized authority through the pyramid of control.
Within the corporation, all policies emanate from the control above. In the union of this power to determine policy with the execution thereof, all authority necessarily proceeds from the top to the bottom and all responsibility from the bottom to the top. This is, of course, the inverse of "democratic" control; it follows the structural conditions of dictatorial power. In so far as the lines of control native to the private business corporation have been kept unsullied by important compromise of principle, they approx- imate those long familiar in the structure of modern military for- mations. Here, what in political circles would be called legislative, executive, and judicial functions are gathered together in the same hands. And these controlling hands, so far as policy formulation and execution are concerned, are found at the peak of the pyramid and are manipulated without significant check from its base.
So far as it is possible to trace trends within the organization of the NAM, they all appear to converge, in order to compress the general policy formulation of American business into the molds evolved by the corporation. Which is to say that just as the giant corporation takes on as an incident to its growth a definite political significance as a wielder of power over increasing numbers of people and their interests, so it is inevitable that the NAM should in its much larger sphere be transformed, as it grows and expands, into a community force ever more politically potent and politically conscious. On the evidence it would appear that three things then begin to happen to the propaganda program. All economic issues are transmuted into terms of social and cultural issues, increas- ingly, as the political implications and the military possibilities of cumulated economic power are realized. Propaganda then becomes a matter of converting the public, or all special divisions of the
public--small businessmen, consumers, labor, farmers, housewives --to the point of view of the control pyramid. This accounts for the vast outpouring of so-called "educational" literature of the NAM, now designed to enter into every nook and cranny of Ameri- can life, economic, political, social, and cultural. ^^ It is a prepa-
ys See in particular the NAM "You and Industry" series, eight in number. These are, seriatim, "The American Way," "Men and Machines," "Taxes and You," "The
? 2i8 THE AMERICAN WAY
ganda reaching to the roots of the principles which underlie con- temporary capitalistic civilization--that is to say, the propaganda is an ideological outpouring. **
Second, the combination of monopoly powers and competitive privileges (so far as the state is concerned) leads all discussion re- garding undesirable regulation *^ by the government to proposals for "self-management" or "self-government" in business. For the gigantic aggregations of economic power and the centrally manipu- lated, policy-forming pyramids, "self-government in business" rep- resent precisely what laissez faire does for competitive (that is, "unorganized") economics. It became the theme song of NRA: it is the perfect adaptation to the elaborate system of business ad- visory boards originally set up by leading trade associations under the auspices of the Chamber of Commerce of the United States, in connection with the War Industries Board. *^ It visualizes all eco- nomic activity organized in a system of eventually all-inclusive trade, industrial, and occupational categories, each of which will, through its governing hierarchy, establish and administer the poli- cies governing the behavior of its members in all important re- spects. "If business is to rule itself . . . it will be through trade associations," a circular of the American Trade Association Execu- tives announces. Can it be that full national expansion of this idea
American Standard of Living," "The Future of America," "Pattern of Progress," "What is Industry? " "Yardsticks of American Progress. " These are masterpieces of statistical, descriptive, and argumentative exegesis, designed to convert to a point of view. "A united front in presenting the case of industry to federal, state, and local governments and to the general public" is the objective, says a folder of the National Industrial Council (undated), and the techniques are those of the lobby and of ad- vertising applied to the "sale of ideas. " Concerning advertising, see the program of Battan, Barton, Durstine, and Osborn for the du Pont "Cavalcade of America" radio series and the McDonald Cook poster series for the NAM, "Prosperity Dwells Where Harmony Reigns. "
84 "The employer organizes the forces of production. He is the natural leader of his workmen, and is able by instruction, example and fair dealing to bring to bear constantly upon them influences for right thinking and action for loyalty to the common enterprise. " Open Shop Report, Proceedings of the 28th Annual Meeting of the NAM (May, 1923), pp. 156-59. (Italics mine. ) According to the New York Times (Dec. 11, 1940) report of the NAM textbook survey, the NAM found "faith building . . . lacks" in American public schools. These statements are typical of the more recent literature (compare with Italian, German, and Japanese material above).
85 "Undesirable" in terms of the needs, interests, and aspirations of the dominating elements in the business world.
86 See Mary van Kleeck, Creative America (New York, 1936).
? THE AMERICAN WAY 219
will lead here, as it surely has abroad, directly, to employ the medie- val expression, into a "corporatively organized society? " (R)^
In the third place, the obverse face of "self-government" in busi- ness appears clearly to seek for coordination of political policies to the requirements of monopoly-oriented business. Internally the NAM program favors maintenance of all domestic markets free from foreign competition. Externally it has always sought the maxi- mum of aid from government in the promotion of interests abroad. Rationalization of the internal emphasis would seem on all the evidence, to date, to lead directly to autarchy ^^ and the companion use of the government for the purpose of suppressing antagonistic social elements. (R)^ Externally it has already led to the business vari- ant of "Hemisphere Unity," a blocking out of the world into what
the Germans call Grossraumwirtschaften (and the Japanese, "Co- Prosperity Sphere")--literally, "great-space economics" for im- perial expansion. (R)^ Both these programs have evolved naturally
87 The pressures can lead directly to the type of proposal recently elaborated (Feb. 9, 1940) by sixteen Catholic prelates meeting in Washington, D. C. , in which they proposed a "Guild or Corporative System" for America, (a) At no point is this pro- posal at odds with the propaganda of NAM; (b) the proposal is practically identical with that of the papal encyclical Quadragesimo Anno (1931), which formed the basis of Chancellor Schuschnigg's Austrian variant of "Clerical Fascism. "
88 "Autarchy" is commonly applied as a term of derision to the "self-sufficiency" program of the Third Reich. But an examination of the elements of this "autarchic" program will merely show that some bad calculations have been made in regard to self-sufficiency as an argument for promoting higher tariffs, monetary and exchange controls, systems of subsidies and subventions, etc. , which are in no sense of the term new. Since the end of the Bliitezeit of laissez faire with the introduction of the Bis- marck tariff of 1879, programs along all these lines have been adopted by all the major industrial countries of the world. And, once these programs get well under way, there has been a long-run increase in their range of application, the severity of
their controls, and the political implications of their continued pursuit. "Buy British" or "Buy American" are just as clearly "autarchic" sentiments as anything the Nazis have devised. See also pp. 252-53.
89 See the "Labor Program of the NAM," formulated in 1903, and the speech of President David M. Parry in support thereof. See also a novel written by David M. Parry, called "The Scarlet Empire," which ran serially in American Industries in 1913--the story of how society goes to pieces through failure to suppress ideas and programs which run counter to the interests of the business public. See, further, "Industrial Strife and the Third Party," a special pamphlet of the NAM which states its whole doctrinal position on labor; and see also the NAM's more recent "Sentinels of America" campaign "on behalf of the private enterprise system," a program that calls for a modern private system for reporting "misstatements"--somewhat remi- niscent of the system of "delation" evolved by the Roman Emperor Tiberius, and copied so frequently in recent times by organized private espionage agencies of one sort or another.
90 These are seen in the future to be, respectively. Great Britain and the British
? 2 20 THE AMERICAN WAY
out of the lines of emphasis laid down in the original program of the NAM. Since then there has been no fundamental departure at any time from the tenets those proposals are based upon. Govern- ment, in this view, becomes an aid, an ally, a means for the instru- mentation of the interests of this transformed system of interlock- ing business-control pyramids,^^ and the indispensable means for dissolution of the national and ideological forms of its detractors.
Empire, France and her African and overseas possessions, Japan and hegemony of the Chinese, Siberian and Korean mainland, Italy and hegemony of the Mediter- ranean, and Germany with hegemony of Mittel-europa. More recently, the British have been talking of a "greater Turkey," to include parts of Iran, all of Turkestan, Azerbaijan, and other Turkish-speaking peoples of the Near and Central East.
91 See the discussions in the NAM publications centering around such topics as its interest and participation in the formation of the Department of Commerce and Labor; the Panama Canal; the formation of the War Industries Board; the infor- mational and promotion services of the Department of Commerce; tariff policies; NRA; the participation of its leading members in the Industrial Mobilization Plan; and the constitution of the new higher command of "National Defense" headed up by Mr. Knudsen. Whatever else may be the outcome of the current struggle, it is probably safe to say that American efforts will eventually mean the complete dis- placement by American interests of German, Italian, Japanese, and possibly the win- ning of British holdings throughout the two Americas.
? Part III
COMPARISON AND CONTRAST OF TRENDS IN BUSINESS POLICY FORMATIONS
? Chapter VII
ECONOMIC POLICIES: MONOPOLY, PROTECTION, PRIVILEGE
THE LEADING economic resultant of the evolution of centralized policy-forming power in business might simply be termed: Promotion of Monopoly. ^ Interpreted broadly, such an identifica-
tion would be consistent with the records, yet it also greatly over- simplifies the picture. For present purposes, the better to show the changed sources, nature, and interconnections among the principal carriers of monopoly powers, analysis may be broken down to deal with the collusive practices of:
the industrial, commercial, and financial giants in the corporate world; cartels, rings, pools, syndicates, and trade associations which may have
taken on one or more of the several cartel functions; and
trade associations, cartels, and similar federations of business interests when grouped or banded together into confederational, central, or
"peak" associations (Spitzenverbdnde).
Most analyses of monopoly trends deal primarily or exclusively with the first of these three. The more theoretical treatments cen- ter around problems in the mechanics of price manipulation under circumstances showing some determinate departure from perfectly or purely competitive norms. ^ Other writers confine themselves to
1 Compare pp. 7-10, above.
2 The Federal Trade Commission, in its Report to the Temporary National Eco- nomic Committee, ". . . Re Monopolistic Practices in Industries" (TNEC Hearings, Part 5-A, p.
2305) summarized under this head all cases centered around "acts and practices [which] are . . . calculated and tend to interfere with the natural play of normal competitive forces, with a resultant increased concentration of private eco- nomic power in the hands of private and limited groups, and in the imposition of unnatural limitations and restrictions on trade with consequent injury to the pub- lic. " I have italicized the obvious jokers, but more questionable still is the identifi- cation: decline of competition = corresponding rise of monopoly powers. Strictly
--
? 224 ECONOMIC POLICIES
*
'trust," combination, and "conspiracy policies" of the corporate giants as these "affect the public interest," or as they constitute objects of legislative and regulatory control by the government. The former consider monopoly problems solely within the eco- nomic frame of reference; the latter typically ignore both the eco- nomic and political frames of reference.
In the present connection, we wish to present a third--and par- tially overlapping--set of issues relating to the monopolistic poli- cies of organized business in which political and economic facets are inextricably interwoven. First, what are the long-run changes in the structure, functioning, and "balance-of-power" relationships within and amongst the great combinations which at once narrow and concentrate leadership within their own immediate corporate frontiers, while enhancing further their power to shape the larger destinies of the looser forms of business organization which are sub- sumed under the other two headings above? How far and how gen- erally are the "trusts" enabled to pose the issues for these other federations of business interests, and what is the nature and "direc- tion" of the issues they pose? In what manner and by what means are they enabled to implement policies advocated for the trade, the industry, and the economic system as a whole? And in what respects do the nature of the policies advocated on the one hand, and the means for partial or full instrumentation outside of their own immediate corporate frontiers on the other, become altered as interests broaden to the wider horizons?
It will not be possible to offer here more than a rough classifica- tion of the reasons for such a relative increase in the manipulative
speaking, of course, "imperfect competition" and the exercise of monopoly powers through "monopolistic competition" cannot be used as though the terms are inter- changeable, as implied in the above FTC statement; see J. M. Clark, "Towards a Concept of Workable Competition," American Economic Review, XXX Qune, 1940), especially pp. 244-45). ^"^ ^^ ^^ only in an abstract, classificatory sense of the terms that competition and monopoly can be kept antiseptic to each other (cf. Robinson, Introduction) under the best of circumstances--perhaps not even then; and in general it is true that historically the decline of competition is practically coter- minous and coextensive with the advance of some one or more collusive controls which controls, to be true, may actually heighten the level and sharpen the edge of competition. But the new competition is cumulatively of a different type; it com- plies with different procedural rules, and pursues greatly altered ends, as compared with the old type, the cogent and witty Mrs. Robinson to the contrary notwith- standing.
--
? ECONOMIC POLICIES 225
powers of big business. ^ Nor is there need in the present connection for much more. The chief interest centers in the bearing such power has on the policies of looser types of business organization now growing with such amazing speed in numbers, influence, and range of interests throughout the capitalistic world. Similarly, pres- ent attention focuses on the activities of what might be called inter- mediate, or perhaps better, transitional, forms of collusion com- monly known as cartels, rings, pools, syndicates, and the like. Some writers, notably Germans following in the path blazed by Lief- mann, have devoted a great deal of attention to the monopoly features, trends, or results of these contractual and semicontractual devices for exercising controls similar to those long employed by several of the corporate giants. This latter interest is growing rap- idly, particularly in America, under the stimulus of a vigorous revival of antitrust prosecutions inaugurated by Jackson and Arnold. But here again we shall be concerned less with the tech- niques employed or the precise results of market, price, and pro- duction manipulation and more with the changes that have taken place in the structure, functioning, and effective powers of these bodies, changes which enable them to be used for effectuating some degree of uniform and monopoly-oriented policies throughout the economic system as a whole.
All of which is to say that our attention must here be focused primarily on the confederations and Spitzenverbdnde. It is now an indisputable fact that centralized business policies are directed by corporate giants which supply the Spitzenverbdnde with effective leadership. Increasingly, these policies cluster around and bear upon the fundamental sanctions in which are enmeshed the insti- tutional taproots for the capitalistic system as a whole; and, increas- ingly, monopoly-oriented pressures applied by the combines and cartels take on meaning as they are analyzed in this context, and lose significance--if they do not, in fact, become at times wholly inexplicable--when taken separately and in isolation therefrom. "People of the same trade seldom meet together, even for merri- ment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. " Thus
3 In this chapter, consequently, direct relationships between big business and various types of government regulatory, investigational, and taxing authorities are being deliberately ignored. They will be taken up in the following chapter.
? 226 ECONOMIC POLICIES
observed the wily Adam Smith, and the observation is as true today as when first uttered. But what happens to the quality and the objectives of such conspiracies when they are not only actively encouraged by the trend of leading opinion throughout both busi- ness and governmental circles, but also when they are centrally directed by huge combines which Smith would have assumed, out of hand, to be monsters of willful, capricious, and dangerous power?
In other words, the crux of the matter lies not in the absolute number, nor in the underlying structure, nor even in the rate of growth in these several nuclei of collusive practices, as such; rather the problem is how far these are more or less consciously being arranged by experienced and compactly organized groups in pat- terns designed to promote the continued functioning of this cumu- latively anticompetitive type of business system as a whole. It is not true, to repeat familiar warnings, that there are no important counter- or cross-currents working against the spread of collusive practices; but we shall deal in the following pages with the domi- nant not the recessive characteristics, with those which are con- vergent, mutually reinforcing and additive, not with those which cancel each other or which are absorbed in rear guard action.
Not, again, that the pattern is uniform in all respects, from one industry, or industrial area, or country, to another. Even the scat- tered and unsatisfactory data available to the interested reader should quickly put that question to rest. But just as when, despite infinite variations in individual members, the biologist recognizes that the species, sui generis^ still exists with wholly distinctive struc- tural and pathological characteristics which are determinate for the life cycles of every single member, so here there is a basic same- ness in purpose, a general uniformity of direction-impulse, an archetypal pattern of actual or projected controls which underlie the manifolds of variation in every major and minor country or- ganized on a capitalistic footing.
With attention focused, then, on policies, let us consider the more significant changes that bear most directly upon the nature, blending, configuration, and quality of the programs of the leading confederational groupings.
? ECONOMIC POLICIES 827
CHANGES UNDERLYING POLICY-FORMULATION OF THE CORPORATE GIANTS
In the first place, the more recent history of each major capi- talistic country shows clearly that there is no tendency for the com- bination movement as such to disappear, or perhaps even to slow down. No doubts on this score are permitted by a careful or even a casual examination of the data from the famous Pujo Investiga- tion down through the numerous chronicles of great American fortunes; of the records of the merger and combination movement during the World War and after; of the material published by Attorney General Robert Jackson when Commissioner of the Bureau of Internal Revenue; or of the data submitted by Thorp of Dun and Bradstreet before the opening meetings of the Tem- porary National Economic Committee; and of the Anti-Trust Division of the Department of Justice thereafter. A like story comes out of the investigations of the Balfour Committee, and the studies of Levy, Lucas, and others for England. Similarly for pre-Nazi Germany, as shown by the voluminous reports of the Enqueteausschuss,^ and for post-Nazi Germany by the extraordi- narily compact but exhaustive summary of Dr. Keiser. ^ Carl Schmidt has recently summarized the record of concentration in Fascist Italy, confirming thereby statements repeatedly made in the official Italian literature. (R) The same picture holds for France, and in an even more pronounced fashion for Japan, as set forth in the official published data.
4 As shown particularly in the reports dealing with the coal, iron and steel, heavy chemicals, and machine industries. See also various issues of Die Wirtschaftskurve through the twenties.
5 Dr. Reiser thinks there may be some tendency in the future for combination to slow down, though such a forecast cannot be read directly from the record to date.
6 Carl T. Schmidt, "Joint-Stock Enterprises in Italy," American Economic Review, XXX (March, 1940), pp. 82-86; see also various annual reports of the Confederation of Fascist Industrialists. At the 1928 meeting of the National Association of Manu- facturers, Miss Elizabeth Humes, Assistant Trade Commissioner in Rome of the United States Department of Commerce, reported that "Following in the footsteps of Germany, Mussolini's government is encouraging industrial amalgamations. To this end, taxation on industrial mergers has been abolished. The outstanding in- dustries of the country, including the automobile, the rayon, the cotton, the chemi- cal, the iron and steel industries are all in process of absorbing the smaller concerns and concentrating the buying, manufacturing and distributing branches in the hands of a few powerful corporations. " Proceedings of the 34th Annual Meeting (Oct. , 1929), pp. 381-84.
? 228 ECONOMIC POLICIES
These records of concentration do not necessarily show increased social concentration of either wealth or income. Such may very well be taking place, but they relate primarily to three phenomena: (a) growth in the relative importance of the corporate form of or- ganization (this differs from the case in Germany, as indicated on p. 40); (b) increase in the relative size of the larger concerns; and (c) a continuation of the process of absorption of, or morganatic alliance with, smaller and competing enterprises through merger, branch and affiliate status, minority shareholdings, and so forth.
In the second place, there is to be found within all these coun- tries the process termed by Berle and Means as the "splitting of the property atom. " Ownership is cumulatively being separated from management and control, just as previously the laborer was sepa- rated from ownership. But the matter does not come to rest there. Although the owners of corporate securities are steadily drifting into the status of a rentier class ^--formally, in the totalitarian
7 A number of writers (e. g. , Joan Robinson, Essays in the Theory of Employment, New York, 1937) habitually refer to holders of corporate securities as a "rentier class. " In testimony given by representatives of the big corporations of the German heavy industries before the Enquete Ausschuss, bitter complaint against the de- mands of stockholders for higher and higher dividends was frequently followed by proposals for fixing maximum and minimum dividend disbursements (commonly called "stabilization of dividends") which could be required of management in ex- change for non-interference by management in the flow when earned. Numerous American companies have advocated, and a few have experimented with, schemes of this sort. Of perhaps even greater significance is the growing importance in the investment markets of insurance companies, investment trusts, estates handled in trust, university and other special endowments for research, charitable, or other purposes (hospitals, dinics, etc. )--all of which have a much greater interest in regu- larity and reliability of return, than in the making of speculative gains. The pressures they exert, the influences they represent, and the policies they favor all restrict in- terest in management to--the while heavily emphasizing--safe, regular, conserva- tive return. We have here a certain institutionalization of the rentier-ownership- status and its appropriate mentality which, operating directly within the inner circles of private ownership, promises to become the rule and not the exception. In Japan a similar effect is achieved by the common practice of the general investing public of putting their money in savings accounts, and not in industrial securities. The banks then invest the funds in industrial, or commercial enterprises affiliated--more often than not--directly with them. Much the same appears to be the case in Italy.
M. Keynes, The General Theory of Employment, Interest and Money (London, 1936), p. 221, that the rentier class will, or should be allowed to, disappear as interest rates decline to zero, is bound to run into cumula- tively more determined opposition. As with Richard Jones's noted reply to Ricardo's theory of no rent land, given these powerfully organized groups with so definite and critical an interest, a regular surplus will be had whether it is earned or not! See TNEC Monograph No. 29, The Distribution of Ownership in the 200 Largest Non- Financial Corporations, particularly the detailed analysis of the twenty largest hold-
ings in each corporation in Appendix X, pp. 623-1439.
Thus the suggestion made by
J.
? ECONOMIC POLICIES 229
countries ^ and de facto in the liberal-capitalistic--the changed status is no longer traceable entirely either to reduction of equity rights through stock and debenture reclassifications or to mere blocked holdings strategically placed at the head of a control pyra- mid such as the holding company. In the huge corporate complexes of all major capitalistic countries there are growing up inner blocs of bureaucratically self-perpetuating interests; these blocs may have next to no ownership stakes in the vast properties, which neverthe- less they are able to manipulate, through the exigencies of special knowledge, outside contacts, inside personal or committee com- pacts, or other methods of acquiring strategic position. ^ The in- fluence of the purse (banking and finance) has long been recognized in the management of corporate affairs. But in recent years the powers of strategically interlocking legal, accounting, manage- ment engineering,^^ and other special "competence" and contact groups have grown step by step with--and sometimes follow more or less closely the lines of--increasing functionalization of duties
and offices. This is, in turn, a by-product of increase in the size, complexity, and range of corporate interests. ^^
The net effect is not only that the "atom of property" is split, but also that ownership is, in a sense, being "set aside. " The limits of property holdings, as determined by the fictions of legally cir- cumscribed, corporate and quasi-corporate ownership rights, no longer define the membership of, nor restrain closely the strategic massing of power by, closely cooperating inter- and intra-corporate
8 Most clearly in Germany where disbursements have been limited to 6%--in a few cases to 8%--irrespective of amounts earned. Simultaneously stock- and bondholders have lost practically all ownership or contingent property rights.
9 Interesting in this connection are the data tabulated by Robert A. Gordon, show- ing the remarkably low percentage stockholdings of management in a sample of 155 large corporations. "Ownership by Management and Control Groups in the Large Corporations," Quarterly Journal of Economics (May, 1938), pp. 371, 378, 381. Most recent and most reliable are the data of the TNEC Monograph, No. 29, The Distribu- tion of Ownership, p. 104.
10 An interesting example is offered by Thurman Arnold of how a group of ef- ficiency engineers, having practically no ownership rights in the properties in ques- tion, managed to obtain control of almost the whole of the paper-box industry. The Bottlenecks of Business, pp. 181-82. See also TNEC Monograph No. 29, Appendices VI and VII, pp. 357-558.
11 See, in particular, the data on concentration in the National Resources Com- mittee, The Structure of the American Economy; see also TNEC Monographs No. 11, Bureaucracy and Trusteeship in Large Corporations, Chapter VI, and No. 27, The Structure of Industry, Parts V and VI.
? ECONOMIC POLICIES
cliques. There has grown up a sort of inner-council condottiere, whose members are no longer constrained by the changing location of their own property holdings or those of others within or without the expanding corporate frontiers. So far as these inner governing cliques are concerned, one by one all the old ownership frontiers are being abandoned, and power flows out from the inner sancta like water through a shattered system of dykes. The corporation, as Sombart has pointed out at great length, is enabled to amass and extend holdings without limit; but in pursuit of effective power the Realpolitik of corporate direction, having once sprung the old restraints of ownership, now enables management to stride afield in a handsome pair of Seven-League Boots.
No better evidence of how this change takes place can be sub- mitted, in the third place, than is to be found in examination of the bewildering array of devices, some already in use and others newly forged, for creating effective strategic alliances amongst the major corporate groups. A useful illustration is the growing mo- nopoly of patents. ^2 This is employed as a springboard for en- hancing market, price, production, capacity, and numerous other controls which greatly transcend the normal limits and cut in a thousand ways athwart the lines of ordinary corporate power. Such controls may be effected in a number of ways. One method results in drawing the giants closer together at the top of the corporate
12 The American Telephone and Telegraph Co. controls 15,000 patents; the Gen- eral Electric Co. between 8,000 and 9,000. See, Arnold, Bottlenecks of Business, p. 27. A report of the ^Patent Office notes an increase in the number of patents granted a small percentage of concerns from 1900 on: "The greatest number of patents re- ceived by any corporation in 1936, was by the General Electric Company, with 476.
lit also received the greatest number in 1935, with 521, and even in 1900, it was then at the top of the list of recipients of U. S. patents, having received in that year, 100 patents. Corporations that received more than 100 patents in 1936, are: General Electric Co. , 476; Radio Corporation of America, 364; DuPont Company, 346; Gen- eral Motors Corp. , 263; W^estinghouse Electric and Mfg. Co. , 248; Bell Telephone Laboratories, Inc. , 236; United Shoe Machinery Corp. , 189; General Aniline Works, Inc. , 152; Westinghouse Air Brake Co. , 136; I. G. Farbenindustrie Aktiengesellschaft, 132; American Telephone and Telegraph Co. , 110; Celanese Corp. of America, 102. " In the same year, "15 corporations received from 50 to 100 patents each; 50 corpora- tions received from 25 to 50 patents each; and 132 corporations received 10 to 25 patents each [the number of patents granted in 1900 was 60% of the number granted in 1936] . . . and these constituted only 2% of the total number of patents granted that year. " John Boyle, Jr. , "Corporation Patent Holdings," Journal of the Patent Office Society, XIX (Sept. , 1937), No. 9, pp. 698-99. See also TNEC Monograph No. 31, Patents and Free Enterprise.
230
? ECONOMIC POLICIES 231
pyramids. Thus the establishment of the Ethyl Corporation brought together certain special interests of Standard Oil of New Jersey, General Motors, and Du Pont. The patents underlying RCA came largely from Westinghouse, General Electric, and Bell Telephone, and the subsequent segregation was more a matter of convenience than of separation through incompatibility. The Car- boloy Company, manufacturing hard-metal compounds for cutting dies in machine-tool construction, brought together Krupp and General Electric into a close price-fixing and market-allocation agreement. The two huge German electric-manufacturing con- cerns, the Siemens and A. E. G. groups, pooled their incandescent lamp patents to form Osram, as did General Electric and Westing- house in the United States to establish Mazda. Zeiss and Bausch and Lomb; the great German dye trust, I. G. Farbenindustrie A. G. , and Standard Oil of New Jersey; the armaments producers of Germany, Italy, France, England, and the United States; these and many others have been similarly brought together in close working agree- ments resulting in price, market, production, and other controls. ^^
A number of other well-known factors contribute to this result, among them control over technical innovations due to ownership of large research facilities,^* interlocking directorates, "communi- ties of interest," common dependence upon the same financial in- terests. But coincident with the processes of drawing together at the top is the spread downward and outward of power and influ- ence to reach the small concerns--a process which springs from the same ability to manipulate resources and controls by inner cliques operating amongst the giants. The licensing agreement of the
13 A particularly interesting example of how research and patent exchange has brought industries together is shown on an "Electronic's Chart of the Sound Picture Industry of the World," reproduced as a frontispiece by Toulmin, Trade Agree- ments and the Anti-Trust Laws, which shows how Westinghouse, General Electric, and the American Telephone and Telegraph Co. via RCA have been brought into close working arrangements with British, French, German, and Dutch producers of film apparatus on the one hand, and systems of movie distribution on the other. See also TNEC Monograph No. 21, Competition and Monopoly in American Industry.
14 In some cases--the great German dye trust is an outstanding example--pooling of research facilities played a major role in the grouping of the chemical industry first into a series of interlocking cartels, then into a "community of interests," and finally into formal corporate consolidation. Arnold, Bottlenecks of Business, cites a number of examples where through leverages of a similar character large concerns have been able to absorb the small.
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ECONOMIC POLICIES
Hartford-Empire, Owens-Illinois group in the glass-container in- dustry is symptomatic. Here the group was able to decide who should produce what types of glass containers, in what amounts, and also in what territories they might sell, and at what prices. ^^ Similar controls are exercised by the Ethyl Corporation, the large movie-producing companies (block-booking), Osram, Montecatini, Schneider-Creusot, Krupp, Vickers, Imperial Chemicals, and many others. The net effect of such controls is to place the small, so-called "independent" producer or distributor ^(R) in a position of permanent vassalage to the giants. The various reports of the Tem- porary National Economic Committee, the Senate Committee on Patent Pooling, and the Nye Munitions Committee show how far and how exacting this type of control over the small businessman is becoming. The field of distribution offers many similar exam- ples. ^^ In Japan the small are likened to "sub-contractors" to the large. But the picture is reproduced wherever the giant enterprises have struck root, and wherever the forms and fictions of law ^^ make possible establishment of such coercive controls by the large over the small.
A fourth development is the rise to dominating positions within the larger corporate complexes of closely interlinked families and blocked familial and interfamilial interests. "America's 60 Fami-
15 See TNEC Hearings, Part 2, "Patents, Automobile Industry, Glass Container Industry. "
16 An excellent example is provided by the case of the McKesson-Robbins fiasco, in which it developed that through a system of job-lot selling on long-run contracts the firm had been able to force increasing numbers of retail drug outlets into a position of almost complete financial dependence on it. It has been estimated that, in the city of San Francisco, calling in of outstanding obligations to the defunct con- cern would immediately have bankrupted about 40% of all the retail drug outlets in the city.
17 See, in particular, the Hearings on the Robinson-Patman Act, the recommenda- tions of the TNEC for repeal of the Miller-Tydings Act in their final Report and Recommendations, and the Anti-Trust indictments of the Department of Justice against the Borden and National Dairies Companies; also literature on the agita- tion in Germany against the department store combines of Wertheim, Leonard Tiets, Karstadt's, Bata (stores serving as outlet for the manufacturing plants of Bata).
18 Thurman Arnold has intimated in a number of speeches that the net effect of attempts to enforce the Sherman Anti-Trust Act has been only to streamline, and, in some respects, render more circuitous--but not seriously to inhibit the growth of--"combinations in restraint of trade. " A like fate seems to have befallen the famous "law against the abuse of economic power" passed in Germany in 1923. See Neumann, Behemoth, pp. 16, 238, 261-63.
? ECONOMIC POLICIES
lies ^(R) are paralleled by the French "200," ^"^ the aristocracy of British "Cousinhood," ^i the Junker-Industrial baronry of Nazi Germany,22 the Zaibatsu of Japan, and the aristocratic latifondi- industrial princelings of the Rome-Milan-Turin "Axis.
? 2 14 THE AMERICAN WAY
time ^^ for the purpose of formulating common labor-relations pro- grams for all American industry, and has led in systematizing the promotion of policies consistently pursued by the NAM since its formation.
Not only are most of the member corporations of the Special Conference Committee at once members of the inner controlling group of the NAM and the leaders among American industrial giants in their respective fields,/^^ but also they represent a secret coalition in direct furtherance of the specific forms of company union fathered by the Colorado Fuel and Iron Company. Since its inception, the Committee has met at the offices of the Standard Oil of New Jersey, central unit of the gigantic Rockefeller oil, mining, banking, real-estate empire. "Two members of the staff of Industrial Relations Counselors, Inc. , a firm which specializes in advising corporations on problems of industrial relations, have served individually as members of the committee. " ^* From its
the United States Steel Corp. (1934) were added. LaFollette Committee Reports, Part 45, p. 16783.
72 Monthly meetings of personnel executives; semiannual meetings of corporate executives.
73 The Irving Trust Co. alone is not a member of the NAM. "The Committee con- sidered the desirability of enlarging its membership through the inclusion of repre- sentatives from corporations in additional industries. However, investigation led to the decision that this would be inadvisable because other corporations which were outstanding leaders in their respective industries in the same degree as the sponsors of the Special Conference Committee could not be found. Omitting the Irving Trust Co. , in 1937 the corporations represented on the Special Conference Committee em- ployed more than 1,300,000 persons and paid total wages and salaries of more than $2,400,000,000. At the end of 1937 these 11 corporations claimed total assets in excess of $13,500,000,000. The American Telephone and Telegraph Co, has almost a com- plete national coverage in the public utility field which it serves. The United States Steel Corp. and the Bethlehem Steel Co. rank first and second, respectively, in the steel industry--with Bethlehem, through its subsidiaries, also ranking first in ship- building. E. I. DiiPont de Nemours and Co. is easily first in chemicals, and the General Motors Corporation maintains an approximately, similar position in the motor car industry. The Goodyear Tire and Rubber Co. and the United States Rubber Co. rank first and second, respectively, in their industry. The International
Harvester Co. is the outstanding manufacturer of farm equipment. The Standard Oil Co, of New Jersey is not only the largest of the Standard Companies; it is also regarded as the largest oil company in the world. The General Electric Co. is the largest producer of electrical equipment, while the Westinghouse Electric and Manufacturing Co. is next in rank . . . the United States Steel . . . through its subsidiaries is the largest producer of coal in the country and also largest producers of iron ore in the United States. " La Follette Committee Reports, Part 45, pp. 16781,
16783-84.
74 It was set up by the Standard Oil Company. Offices are now located in Rockefeller
? THE AMERICAN WAY 215
earliest days this same firm, in turn, has been under the domination of Standard Oil, United States Steel, and the du Pont interests. Its secretary since 1923 has been E. S. Cowdrick, previously associated with the Colorado Fuel and Iron Company in an executive ca- pacity.
The most important line of policies within the NAM, in short, seems to be traceable directly or indirectly to this inside clique within the inner councils of the organization ^^--a conclusion which is especially interesting when coupled to the fact that the original antilabor program was taken over from the heavy indus- tries (National Metal Trades Association, in large part), and that that original program (Parryism) is still the ''Bible" of the NAM. ^(R)
10. As the larger concerns which now constitute the central command of the NAM have come to the fore, the doctrinal position of its business leaders has been further coordinated in the elabora- tion of "public relations" propaganda. Nowhere else is shown so clearly the dominating position in the NAM of concerns such as those which are member to the Special Conference Committee. Public relations techniques were born," nurtured, and brought to flower within these ranks. The specific purpose of the Com- mittee is to coordinate all policy interests of the business com- munity in order to "sell" to the public justification of the position taken by the configuration of those interests on any and all mat- ters. Thus it brings together, into a single, central, and unified propaganda, "labor relations," "legislative relations," "agricul-
Center, New York City. For a number of years its director was A. H. Young, member of the Special Conference Committee as the representative of International Harvester. Leaving Industrial Relations Counselors in 1934, Young became vice-president of the United States Steel Corp. , in charge of personnel relations.
75 At any rate, the policies laid out by the Special Conference Committee are en- tirely coherent with those advocated by the NAM. It seems scarcely conceivable thai the direction of influence could run the contrary direction, from the NAM to the members of the Special Conference Committee--particularly in view of the fact that these same members are the recognized leaders and pioneers in the policies adopted by the two interlaced gioups. This holds for the policy of partial recognition of trade unions as bargaining agents, adopted subsequent to Supreme Court decisions upholding the NLRA.
76 See footnote 26, above.
77 Pioneer was Ivy Lee, the man who is given credit for transforming the elder John D. Rockefeller from the ogre of Ida M. Tarbell's History of the Standard Oil Company and "Bloody Ludlow" into the "seer of Pocantico Hills. " Ivy Lee is still regarded as a sort of Solon of "public relations" technique.
? 2i6 THE AMERICAN WAY
tural trade relations," "^^ and all other "relations" involving con- tacts with groups whose interests may at any point come in conflict with their own. Employing the techniques, the criteria, and in many ways the services of advertising agencies,^^ the NAM has moved into this field in a big way; this is evidenced by the phe- nomenal increase in public relations expenditures cited on p. 198, above.
THE "scalar principle"
The ten points outlined above do not by any means exhaust the list of ways of centralizing power within the structure of the Amer- ican industrial system. ^^ They do, however, show the principal lines of growth--lines which take on greater significance when it is realized that their effect is additive. These trends are unidirectional and convergent, and their result is to mobilize gradually Ameri- can industry into a pattern of control adapted to the prototype of the corporation.
The principle underlying the organization of the prototype is called by Mooney and Reiley,^^ the "scalar principle. " They define it as follows: "The scalar process is the same form in organization which is sometimes called hierarchical . . . a scale means a series of steps; hence, something graduated. In organization it means the graduation of duties, not according to differentiated functions, for this involves another and distinct principle of organization,^^ but simply according to degrees of authority and corresponding re- sponsibility. For convenience we shall hereafter call this phenom- enon of organization the scalar chain. "
The "scalar chain" is given effect through "1. Leaderships 2. Delegation, 3. Functional Definition. " The first defines the line of direction, as running from the top down, along any given line of policy. The second describes the principles of delegating power
78 Separate bureaus and departments have been set up within the NAM for each of these divisional interests.
79 Young and Rubicam, one of the largest advertising agencies in the world, handle public relations for the NAM.
80 A particularly important omission is the influence exerted on the educational system of the country through the activities of such an organization as the American Management Association.
D. Mooney and A. C. Reiley, Onward Industry! Mooney is an outstanding
81
executive of the General Motors Corp.
J.
82 "Functional organization" as used here refers to division of authority from executive headquarters down.
? THE AMERICAN WAY 217
down through the hierarchy of command and subordination. The third traces the lines by way of which leadership circumscribes fields of specialized authority through the pyramid of control.
Within the corporation, all policies emanate from the control above. In the union of this power to determine policy with the execution thereof, all authority necessarily proceeds from the top to the bottom and all responsibility from the bottom to the top. This is, of course, the inverse of "democratic" control; it follows the structural conditions of dictatorial power. In so far as the lines of control native to the private business corporation have been kept unsullied by important compromise of principle, they approx- imate those long familiar in the structure of modern military for- mations. Here, what in political circles would be called legislative, executive, and judicial functions are gathered together in the same hands. And these controlling hands, so far as policy formulation and execution are concerned, are found at the peak of the pyramid and are manipulated without significant check from its base.
So far as it is possible to trace trends within the organization of the NAM, they all appear to converge, in order to compress the general policy formulation of American business into the molds evolved by the corporation. Which is to say that just as the giant corporation takes on as an incident to its growth a definite political significance as a wielder of power over increasing numbers of people and their interests, so it is inevitable that the NAM should in its much larger sphere be transformed, as it grows and expands, into a community force ever more politically potent and politically conscious. On the evidence it would appear that three things then begin to happen to the propaganda program. All economic issues are transmuted into terms of social and cultural issues, increas- ingly, as the political implications and the military possibilities of cumulated economic power are realized. Propaganda then becomes a matter of converting the public, or all special divisions of the
public--small businessmen, consumers, labor, farmers, housewives --to the point of view of the control pyramid. This accounts for the vast outpouring of so-called "educational" literature of the NAM, now designed to enter into every nook and cranny of Ameri- can life, economic, political, social, and cultural. ^^ It is a prepa-
ys See in particular the NAM "You and Industry" series, eight in number. These are, seriatim, "The American Way," "Men and Machines," "Taxes and You," "The
? 2i8 THE AMERICAN WAY
ganda reaching to the roots of the principles which underlie con- temporary capitalistic civilization--that is to say, the propaganda is an ideological outpouring. **
Second, the combination of monopoly powers and competitive privileges (so far as the state is concerned) leads all discussion re- garding undesirable regulation *^ by the government to proposals for "self-management" or "self-government" in business. For the gigantic aggregations of economic power and the centrally manipu- lated, policy-forming pyramids, "self-government in business" rep- resent precisely what laissez faire does for competitive (that is, "unorganized") economics. It became the theme song of NRA: it is the perfect adaptation to the elaborate system of business ad- visory boards originally set up by leading trade associations under the auspices of the Chamber of Commerce of the United States, in connection with the War Industries Board. *^ It visualizes all eco- nomic activity organized in a system of eventually all-inclusive trade, industrial, and occupational categories, each of which will, through its governing hierarchy, establish and administer the poli- cies governing the behavior of its members in all important re- spects. "If business is to rule itself . . . it will be through trade associations," a circular of the American Trade Association Execu- tives announces. Can it be that full national expansion of this idea
American Standard of Living," "The Future of America," "Pattern of Progress," "What is Industry? " "Yardsticks of American Progress. " These are masterpieces of statistical, descriptive, and argumentative exegesis, designed to convert to a point of view. "A united front in presenting the case of industry to federal, state, and local governments and to the general public" is the objective, says a folder of the National Industrial Council (undated), and the techniques are those of the lobby and of ad- vertising applied to the "sale of ideas. " Concerning advertising, see the program of Battan, Barton, Durstine, and Osborn for the du Pont "Cavalcade of America" radio series and the McDonald Cook poster series for the NAM, "Prosperity Dwells Where Harmony Reigns. "
84 "The employer organizes the forces of production. He is the natural leader of his workmen, and is able by instruction, example and fair dealing to bring to bear constantly upon them influences for right thinking and action for loyalty to the common enterprise. " Open Shop Report, Proceedings of the 28th Annual Meeting of the NAM (May, 1923), pp. 156-59. (Italics mine. ) According to the New York Times (Dec. 11, 1940) report of the NAM textbook survey, the NAM found "faith building . . . lacks" in American public schools. These statements are typical of the more recent literature (compare with Italian, German, and Japanese material above).
85 "Undesirable" in terms of the needs, interests, and aspirations of the dominating elements in the business world.
86 See Mary van Kleeck, Creative America (New York, 1936).
? THE AMERICAN WAY 219
will lead here, as it surely has abroad, directly, to employ the medie- val expression, into a "corporatively organized society? " (R)^
In the third place, the obverse face of "self-government" in busi- ness appears clearly to seek for coordination of political policies to the requirements of monopoly-oriented business. Internally the NAM program favors maintenance of all domestic markets free from foreign competition. Externally it has always sought the maxi- mum of aid from government in the promotion of interests abroad. Rationalization of the internal emphasis would seem on all the evidence, to date, to lead directly to autarchy ^^ and the companion use of the government for the purpose of suppressing antagonistic social elements. (R)^ Externally it has already led to the business vari- ant of "Hemisphere Unity," a blocking out of the world into what
the Germans call Grossraumwirtschaften (and the Japanese, "Co- Prosperity Sphere")--literally, "great-space economics" for im- perial expansion. (R)^ Both these programs have evolved naturally
87 The pressures can lead directly to the type of proposal recently elaborated (Feb. 9, 1940) by sixteen Catholic prelates meeting in Washington, D. C. , in which they proposed a "Guild or Corporative System" for America, (a) At no point is this pro- posal at odds with the propaganda of NAM; (b) the proposal is practically identical with that of the papal encyclical Quadragesimo Anno (1931), which formed the basis of Chancellor Schuschnigg's Austrian variant of "Clerical Fascism. "
88 "Autarchy" is commonly applied as a term of derision to the "self-sufficiency" program of the Third Reich. But an examination of the elements of this "autarchic" program will merely show that some bad calculations have been made in regard to self-sufficiency as an argument for promoting higher tariffs, monetary and exchange controls, systems of subsidies and subventions, etc. , which are in no sense of the term new. Since the end of the Bliitezeit of laissez faire with the introduction of the Bis- marck tariff of 1879, programs along all these lines have been adopted by all the major industrial countries of the world. And, once these programs get well under way, there has been a long-run increase in their range of application, the severity of
their controls, and the political implications of their continued pursuit. "Buy British" or "Buy American" are just as clearly "autarchic" sentiments as anything the Nazis have devised. See also pp. 252-53.
89 See the "Labor Program of the NAM," formulated in 1903, and the speech of President David M. Parry in support thereof. See also a novel written by David M. Parry, called "The Scarlet Empire," which ran serially in American Industries in 1913--the story of how society goes to pieces through failure to suppress ideas and programs which run counter to the interests of the business public. See, further, "Industrial Strife and the Third Party," a special pamphlet of the NAM which states its whole doctrinal position on labor; and see also the NAM's more recent "Sentinels of America" campaign "on behalf of the private enterprise system," a program that calls for a modern private system for reporting "misstatements"--somewhat remi- niscent of the system of "delation" evolved by the Roman Emperor Tiberius, and copied so frequently in recent times by organized private espionage agencies of one sort or another.
90 These are seen in the future to be, respectively. Great Britain and the British
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out of the lines of emphasis laid down in the original program of the NAM. Since then there has been no fundamental departure at any time from the tenets those proposals are based upon. Govern- ment, in this view, becomes an aid, an ally, a means for the instru- mentation of the interests of this transformed system of interlock- ing business-control pyramids,^^ and the indispensable means for dissolution of the national and ideological forms of its detractors.
Empire, France and her African and overseas possessions, Japan and hegemony of the Chinese, Siberian and Korean mainland, Italy and hegemony of the Mediter- ranean, and Germany with hegemony of Mittel-europa. More recently, the British have been talking of a "greater Turkey," to include parts of Iran, all of Turkestan, Azerbaijan, and other Turkish-speaking peoples of the Near and Central East.
91 See the discussions in the NAM publications centering around such topics as its interest and participation in the formation of the Department of Commerce and Labor; the Panama Canal; the formation of the War Industries Board; the infor- mational and promotion services of the Department of Commerce; tariff policies; NRA; the participation of its leading members in the Industrial Mobilization Plan; and the constitution of the new higher command of "National Defense" headed up by Mr. Knudsen. Whatever else may be the outcome of the current struggle, it is probably safe to say that American efforts will eventually mean the complete dis- placement by American interests of German, Italian, Japanese, and possibly the win- ning of British holdings throughout the two Americas.
? Part III
COMPARISON AND CONTRAST OF TRENDS IN BUSINESS POLICY FORMATIONS
? Chapter VII
ECONOMIC POLICIES: MONOPOLY, PROTECTION, PRIVILEGE
THE LEADING economic resultant of the evolution of centralized policy-forming power in business might simply be termed: Promotion of Monopoly. ^ Interpreted broadly, such an identifica-
tion would be consistent with the records, yet it also greatly over- simplifies the picture. For present purposes, the better to show the changed sources, nature, and interconnections among the principal carriers of monopoly powers, analysis may be broken down to deal with the collusive practices of:
the industrial, commercial, and financial giants in the corporate world; cartels, rings, pools, syndicates, and trade associations which may have
taken on one or more of the several cartel functions; and
trade associations, cartels, and similar federations of business interests when grouped or banded together into confederational, central, or
"peak" associations (Spitzenverbdnde).
Most analyses of monopoly trends deal primarily or exclusively with the first of these three. The more theoretical treatments cen- ter around problems in the mechanics of price manipulation under circumstances showing some determinate departure from perfectly or purely competitive norms. ^ Other writers confine themselves to
1 Compare pp. 7-10, above.
2 The Federal Trade Commission, in its Report to the Temporary National Eco- nomic Committee, ". . . Re Monopolistic Practices in Industries" (TNEC Hearings, Part 5-A, p.
2305) summarized under this head all cases centered around "acts and practices [which] are . . . calculated and tend to interfere with the natural play of normal competitive forces, with a resultant increased concentration of private eco- nomic power in the hands of private and limited groups, and in the imposition of unnatural limitations and restrictions on trade with consequent injury to the pub- lic. " I have italicized the obvious jokers, but more questionable still is the identifi- cation: decline of competition = corresponding rise of monopoly powers. Strictly
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? 224 ECONOMIC POLICIES
*
'trust," combination, and "conspiracy policies" of the corporate giants as these "affect the public interest," or as they constitute objects of legislative and regulatory control by the government. The former consider monopoly problems solely within the eco- nomic frame of reference; the latter typically ignore both the eco- nomic and political frames of reference.
In the present connection, we wish to present a third--and par- tially overlapping--set of issues relating to the monopolistic poli- cies of organized business in which political and economic facets are inextricably interwoven. First, what are the long-run changes in the structure, functioning, and "balance-of-power" relationships within and amongst the great combinations which at once narrow and concentrate leadership within their own immediate corporate frontiers, while enhancing further their power to shape the larger destinies of the looser forms of business organization which are sub- sumed under the other two headings above? How far and how gen- erally are the "trusts" enabled to pose the issues for these other federations of business interests, and what is the nature and "direc- tion" of the issues they pose? In what manner and by what means are they enabled to implement policies advocated for the trade, the industry, and the economic system as a whole? And in what respects do the nature of the policies advocated on the one hand, and the means for partial or full instrumentation outside of their own immediate corporate frontiers on the other, become altered as interests broaden to the wider horizons?
It will not be possible to offer here more than a rough classifica- tion of the reasons for such a relative increase in the manipulative
speaking, of course, "imperfect competition" and the exercise of monopoly powers through "monopolistic competition" cannot be used as though the terms are inter- changeable, as implied in the above FTC statement; see J. M. Clark, "Towards a Concept of Workable Competition," American Economic Review, XXX Qune, 1940), especially pp. 244-45). ^"^ ^^ ^^ only in an abstract, classificatory sense of the terms that competition and monopoly can be kept antiseptic to each other (cf. Robinson, Introduction) under the best of circumstances--perhaps not even then; and in general it is true that historically the decline of competition is practically coter- minous and coextensive with the advance of some one or more collusive controls which controls, to be true, may actually heighten the level and sharpen the edge of competition. But the new competition is cumulatively of a different type; it com- plies with different procedural rules, and pursues greatly altered ends, as compared with the old type, the cogent and witty Mrs. Robinson to the contrary notwith- standing.
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powers of big business. ^ Nor is there need in the present connection for much more. The chief interest centers in the bearing such power has on the policies of looser types of business organization now growing with such amazing speed in numbers, influence, and range of interests throughout the capitalistic world. Similarly, pres- ent attention focuses on the activities of what might be called inter- mediate, or perhaps better, transitional, forms of collusion com- monly known as cartels, rings, pools, syndicates, and the like. Some writers, notably Germans following in the path blazed by Lief- mann, have devoted a great deal of attention to the monopoly features, trends, or results of these contractual and semicontractual devices for exercising controls similar to those long employed by several of the corporate giants. This latter interest is growing rap- idly, particularly in America, under the stimulus of a vigorous revival of antitrust prosecutions inaugurated by Jackson and Arnold. But here again we shall be concerned less with the tech- niques employed or the precise results of market, price, and pro- duction manipulation and more with the changes that have taken place in the structure, functioning, and effective powers of these bodies, changes which enable them to be used for effectuating some degree of uniform and monopoly-oriented policies throughout the economic system as a whole.
All of which is to say that our attention must here be focused primarily on the confederations and Spitzenverbdnde. It is now an indisputable fact that centralized business policies are directed by corporate giants which supply the Spitzenverbdnde with effective leadership. Increasingly, these policies cluster around and bear upon the fundamental sanctions in which are enmeshed the insti- tutional taproots for the capitalistic system as a whole; and, increas- ingly, monopoly-oriented pressures applied by the combines and cartels take on meaning as they are analyzed in this context, and lose significance--if they do not, in fact, become at times wholly inexplicable--when taken separately and in isolation therefrom. "People of the same trade seldom meet together, even for merri- ment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. " Thus
3 In this chapter, consequently, direct relationships between big business and various types of government regulatory, investigational, and taxing authorities are being deliberately ignored. They will be taken up in the following chapter.
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observed the wily Adam Smith, and the observation is as true today as when first uttered. But what happens to the quality and the objectives of such conspiracies when they are not only actively encouraged by the trend of leading opinion throughout both busi- ness and governmental circles, but also when they are centrally directed by huge combines which Smith would have assumed, out of hand, to be monsters of willful, capricious, and dangerous power?
In other words, the crux of the matter lies not in the absolute number, nor in the underlying structure, nor even in the rate of growth in these several nuclei of collusive practices, as such; rather the problem is how far these are more or less consciously being arranged by experienced and compactly organized groups in pat- terns designed to promote the continued functioning of this cumu- latively anticompetitive type of business system as a whole. It is not true, to repeat familiar warnings, that there are no important counter- or cross-currents working against the spread of collusive practices; but we shall deal in the following pages with the domi- nant not the recessive characteristics, with those which are con- vergent, mutually reinforcing and additive, not with those which cancel each other or which are absorbed in rear guard action.
Not, again, that the pattern is uniform in all respects, from one industry, or industrial area, or country, to another. Even the scat- tered and unsatisfactory data available to the interested reader should quickly put that question to rest. But just as when, despite infinite variations in individual members, the biologist recognizes that the species, sui generis^ still exists with wholly distinctive struc- tural and pathological characteristics which are determinate for the life cycles of every single member, so here there is a basic same- ness in purpose, a general uniformity of direction-impulse, an archetypal pattern of actual or projected controls which underlie the manifolds of variation in every major and minor country or- ganized on a capitalistic footing.
With attention focused, then, on policies, let us consider the more significant changes that bear most directly upon the nature, blending, configuration, and quality of the programs of the leading confederational groupings.
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CHANGES UNDERLYING POLICY-FORMULATION OF THE CORPORATE GIANTS
In the first place, the more recent history of each major capi- talistic country shows clearly that there is no tendency for the com- bination movement as such to disappear, or perhaps even to slow down. No doubts on this score are permitted by a careful or even a casual examination of the data from the famous Pujo Investiga- tion down through the numerous chronicles of great American fortunes; of the records of the merger and combination movement during the World War and after; of the material published by Attorney General Robert Jackson when Commissioner of the Bureau of Internal Revenue; or of the data submitted by Thorp of Dun and Bradstreet before the opening meetings of the Tem- porary National Economic Committee; and of the Anti-Trust Division of the Department of Justice thereafter. A like story comes out of the investigations of the Balfour Committee, and the studies of Levy, Lucas, and others for England. Similarly for pre-Nazi Germany, as shown by the voluminous reports of the Enqueteausschuss,^ and for post-Nazi Germany by the extraordi- narily compact but exhaustive summary of Dr. Keiser. ^ Carl Schmidt has recently summarized the record of concentration in Fascist Italy, confirming thereby statements repeatedly made in the official Italian literature. (R) The same picture holds for France, and in an even more pronounced fashion for Japan, as set forth in the official published data.
4 As shown particularly in the reports dealing with the coal, iron and steel, heavy chemicals, and machine industries. See also various issues of Die Wirtschaftskurve through the twenties.
5 Dr. Reiser thinks there may be some tendency in the future for combination to slow down, though such a forecast cannot be read directly from the record to date.
6 Carl T. Schmidt, "Joint-Stock Enterprises in Italy," American Economic Review, XXX (March, 1940), pp. 82-86; see also various annual reports of the Confederation of Fascist Industrialists. At the 1928 meeting of the National Association of Manu- facturers, Miss Elizabeth Humes, Assistant Trade Commissioner in Rome of the United States Department of Commerce, reported that "Following in the footsteps of Germany, Mussolini's government is encouraging industrial amalgamations. To this end, taxation on industrial mergers has been abolished. The outstanding in- dustries of the country, including the automobile, the rayon, the cotton, the chemi- cal, the iron and steel industries are all in process of absorbing the smaller concerns and concentrating the buying, manufacturing and distributing branches in the hands of a few powerful corporations. " Proceedings of the 34th Annual Meeting (Oct. , 1929), pp. 381-84.
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These records of concentration do not necessarily show increased social concentration of either wealth or income. Such may very well be taking place, but they relate primarily to three phenomena: (a) growth in the relative importance of the corporate form of or- ganization (this differs from the case in Germany, as indicated on p. 40); (b) increase in the relative size of the larger concerns; and (c) a continuation of the process of absorption of, or morganatic alliance with, smaller and competing enterprises through merger, branch and affiliate status, minority shareholdings, and so forth.
In the second place, there is to be found within all these coun- tries the process termed by Berle and Means as the "splitting of the property atom. " Ownership is cumulatively being separated from management and control, just as previously the laborer was sepa- rated from ownership. But the matter does not come to rest there. Although the owners of corporate securities are steadily drifting into the status of a rentier class ^--formally, in the totalitarian
7 A number of writers (e. g. , Joan Robinson, Essays in the Theory of Employment, New York, 1937) habitually refer to holders of corporate securities as a "rentier class. " In testimony given by representatives of the big corporations of the German heavy industries before the Enquete Ausschuss, bitter complaint against the de- mands of stockholders for higher and higher dividends was frequently followed by proposals for fixing maximum and minimum dividend disbursements (commonly called "stabilization of dividends") which could be required of management in ex- change for non-interference by management in the flow when earned. Numerous American companies have advocated, and a few have experimented with, schemes of this sort. Of perhaps even greater significance is the growing importance in the investment markets of insurance companies, investment trusts, estates handled in trust, university and other special endowments for research, charitable, or other purposes (hospitals, dinics, etc. )--all of which have a much greater interest in regu- larity and reliability of return, than in the making of speculative gains. The pressures they exert, the influences they represent, and the policies they favor all restrict in- terest in management to--the while heavily emphasizing--safe, regular, conserva- tive return. We have here a certain institutionalization of the rentier-ownership- status and its appropriate mentality which, operating directly within the inner circles of private ownership, promises to become the rule and not the exception. In Japan a similar effect is achieved by the common practice of the general investing public of putting their money in savings accounts, and not in industrial securities. The banks then invest the funds in industrial, or commercial enterprises affiliated--more often than not--directly with them. Much the same appears to be the case in Italy.
M. Keynes, The General Theory of Employment, Interest and Money (London, 1936), p. 221, that the rentier class will, or should be allowed to, disappear as interest rates decline to zero, is bound to run into cumula- tively more determined opposition. As with Richard Jones's noted reply to Ricardo's theory of no rent land, given these powerfully organized groups with so definite and critical an interest, a regular surplus will be had whether it is earned or not! See TNEC Monograph No. 29, The Distribution of Ownership in the 200 Largest Non- Financial Corporations, particularly the detailed analysis of the twenty largest hold-
ings in each corporation in Appendix X, pp. 623-1439.
Thus the suggestion made by
J.
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countries ^ and de facto in the liberal-capitalistic--the changed status is no longer traceable entirely either to reduction of equity rights through stock and debenture reclassifications or to mere blocked holdings strategically placed at the head of a control pyra- mid such as the holding company. In the huge corporate complexes of all major capitalistic countries there are growing up inner blocs of bureaucratically self-perpetuating interests; these blocs may have next to no ownership stakes in the vast properties, which neverthe- less they are able to manipulate, through the exigencies of special knowledge, outside contacts, inside personal or committee com- pacts, or other methods of acquiring strategic position. ^ The in- fluence of the purse (banking and finance) has long been recognized in the management of corporate affairs. But in recent years the powers of strategically interlocking legal, accounting, manage- ment engineering,^^ and other special "competence" and contact groups have grown step by step with--and sometimes follow more or less closely the lines of--increasing functionalization of duties
and offices. This is, in turn, a by-product of increase in the size, complexity, and range of corporate interests. ^^
The net effect is not only that the "atom of property" is split, but also that ownership is, in a sense, being "set aside. " The limits of property holdings, as determined by the fictions of legally cir- cumscribed, corporate and quasi-corporate ownership rights, no longer define the membership of, nor restrain closely the strategic massing of power by, closely cooperating inter- and intra-corporate
8 Most clearly in Germany where disbursements have been limited to 6%--in a few cases to 8%--irrespective of amounts earned. Simultaneously stock- and bondholders have lost practically all ownership or contingent property rights.
9 Interesting in this connection are the data tabulated by Robert A. Gordon, show- ing the remarkably low percentage stockholdings of management in a sample of 155 large corporations. "Ownership by Management and Control Groups in the Large Corporations," Quarterly Journal of Economics (May, 1938), pp. 371, 378, 381. Most recent and most reliable are the data of the TNEC Monograph, No. 29, The Distribu- tion of Ownership, p. 104.
10 An interesting example is offered by Thurman Arnold of how a group of ef- ficiency engineers, having practically no ownership rights in the properties in ques- tion, managed to obtain control of almost the whole of the paper-box industry. The Bottlenecks of Business, pp. 181-82. See also TNEC Monograph No. 29, Appendices VI and VII, pp. 357-558.
11 See, in particular, the data on concentration in the National Resources Com- mittee, The Structure of the American Economy; see also TNEC Monographs No. 11, Bureaucracy and Trusteeship in Large Corporations, Chapter VI, and No. 27, The Structure of Industry, Parts V and VI.
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cliques. There has grown up a sort of inner-council condottiere, whose members are no longer constrained by the changing location of their own property holdings or those of others within or without the expanding corporate frontiers. So far as these inner governing cliques are concerned, one by one all the old ownership frontiers are being abandoned, and power flows out from the inner sancta like water through a shattered system of dykes. The corporation, as Sombart has pointed out at great length, is enabled to amass and extend holdings without limit; but in pursuit of effective power the Realpolitik of corporate direction, having once sprung the old restraints of ownership, now enables management to stride afield in a handsome pair of Seven-League Boots.
No better evidence of how this change takes place can be sub- mitted, in the third place, than is to be found in examination of the bewildering array of devices, some already in use and others newly forged, for creating effective strategic alliances amongst the major corporate groups. A useful illustration is the growing mo- nopoly of patents. ^2 This is employed as a springboard for en- hancing market, price, production, capacity, and numerous other controls which greatly transcend the normal limits and cut in a thousand ways athwart the lines of ordinary corporate power. Such controls may be effected in a number of ways. One method results in drawing the giants closer together at the top of the corporate
12 The American Telephone and Telegraph Co. controls 15,000 patents; the Gen- eral Electric Co. between 8,000 and 9,000. See, Arnold, Bottlenecks of Business, p. 27. A report of the ^Patent Office notes an increase in the number of patents granted a small percentage of concerns from 1900 on: "The greatest number of patents re- ceived by any corporation in 1936, was by the General Electric Company, with 476.
lit also received the greatest number in 1935, with 521, and even in 1900, it was then at the top of the list of recipients of U. S. patents, having received in that year, 100 patents. Corporations that received more than 100 patents in 1936, are: General Electric Co. , 476; Radio Corporation of America, 364; DuPont Company, 346; Gen- eral Motors Corp. , 263; W^estinghouse Electric and Mfg. Co. , 248; Bell Telephone Laboratories, Inc. , 236; United Shoe Machinery Corp. , 189; General Aniline Works, Inc. , 152; Westinghouse Air Brake Co. , 136; I. G. Farbenindustrie Aktiengesellschaft, 132; American Telephone and Telegraph Co. , 110; Celanese Corp. of America, 102. " In the same year, "15 corporations received from 50 to 100 patents each; 50 corpora- tions received from 25 to 50 patents each; and 132 corporations received 10 to 25 patents each [the number of patents granted in 1900 was 60% of the number granted in 1936] . . . and these constituted only 2% of the total number of patents granted that year. " John Boyle, Jr. , "Corporation Patent Holdings," Journal of the Patent Office Society, XIX (Sept. , 1937), No. 9, pp. 698-99. See also TNEC Monograph No. 31, Patents and Free Enterprise.
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pyramids. Thus the establishment of the Ethyl Corporation brought together certain special interests of Standard Oil of New Jersey, General Motors, and Du Pont. The patents underlying RCA came largely from Westinghouse, General Electric, and Bell Telephone, and the subsequent segregation was more a matter of convenience than of separation through incompatibility. The Car- boloy Company, manufacturing hard-metal compounds for cutting dies in machine-tool construction, brought together Krupp and General Electric into a close price-fixing and market-allocation agreement. The two huge German electric-manufacturing con- cerns, the Siemens and A. E. G. groups, pooled their incandescent lamp patents to form Osram, as did General Electric and Westing- house in the United States to establish Mazda. Zeiss and Bausch and Lomb; the great German dye trust, I. G. Farbenindustrie A. G. , and Standard Oil of New Jersey; the armaments producers of Germany, Italy, France, England, and the United States; these and many others have been similarly brought together in close working agree- ments resulting in price, market, production, and other controls. ^^
A number of other well-known factors contribute to this result, among them control over technical innovations due to ownership of large research facilities,^* interlocking directorates, "communi- ties of interest," common dependence upon the same financial in- terests. But coincident with the processes of drawing together at the top is the spread downward and outward of power and influ- ence to reach the small concerns--a process which springs from the same ability to manipulate resources and controls by inner cliques operating amongst the giants. The licensing agreement of the
13 A particularly interesting example of how research and patent exchange has brought industries together is shown on an "Electronic's Chart of the Sound Picture Industry of the World," reproduced as a frontispiece by Toulmin, Trade Agree- ments and the Anti-Trust Laws, which shows how Westinghouse, General Electric, and the American Telephone and Telegraph Co. via RCA have been brought into close working arrangements with British, French, German, and Dutch producers of film apparatus on the one hand, and systems of movie distribution on the other. See also TNEC Monograph No. 21, Competition and Monopoly in American Industry.
14 In some cases--the great German dye trust is an outstanding example--pooling of research facilities played a major role in the grouping of the chemical industry first into a series of interlocking cartels, then into a "community of interests," and finally into formal corporate consolidation. Arnold, Bottlenecks of Business, cites a number of examples where through leverages of a similar character large concerns have been able to absorb the small.
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ECONOMIC POLICIES
Hartford-Empire, Owens-Illinois group in the glass-container in- dustry is symptomatic. Here the group was able to decide who should produce what types of glass containers, in what amounts, and also in what territories they might sell, and at what prices. ^^ Similar controls are exercised by the Ethyl Corporation, the large movie-producing companies (block-booking), Osram, Montecatini, Schneider-Creusot, Krupp, Vickers, Imperial Chemicals, and many others. The net effect of such controls is to place the small, so-called "independent" producer or distributor ^(R) in a position of permanent vassalage to the giants. The various reports of the Tem- porary National Economic Committee, the Senate Committee on Patent Pooling, and the Nye Munitions Committee show how far and how exacting this type of control over the small businessman is becoming. The field of distribution offers many similar exam- ples. ^^ In Japan the small are likened to "sub-contractors" to the large. But the picture is reproduced wherever the giant enterprises have struck root, and wherever the forms and fictions of law ^^ make possible establishment of such coercive controls by the large over the small.
A fourth development is the rise to dominating positions within the larger corporate complexes of closely interlinked families and blocked familial and interfamilial interests. "America's 60 Fami-
15 See TNEC Hearings, Part 2, "Patents, Automobile Industry, Glass Container Industry. "
16 An excellent example is provided by the case of the McKesson-Robbins fiasco, in which it developed that through a system of job-lot selling on long-run contracts the firm had been able to force increasing numbers of retail drug outlets into a position of almost complete financial dependence on it. It has been estimated that, in the city of San Francisco, calling in of outstanding obligations to the defunct con- cern would immediately have bankrupted about 40% of all the retail drug outlets in the city.
17 See, in particular, the Hearings on the Robinson-Patman Act, the recommenda- tions of the TNEC for repeal of the Miller-Tydings Act in their final Report and Recommendations, and the Anti-Trust indictments of the Department of Justice against the Borden and National Dairies Companies; also literature on the agita- tion in Germany against the department store combines of Wertheim, Leonard Tiets, Karstadt's, Bata (stores serving as outlet for the manufacturing plants of Bata).
18 Thurman Arnold has intimated in a number of speeches that the net effect of attempts to enforce the Sherman Anti-Trust Act has been only to streamline, and, in some respects, render more circuitous--but not seriously to inhibit the growth of--"combinations in restraint of trade. " A like fate seems to have befallen the famous "law against the abuse of economic power" passed in Germany in 1923. See Neumann, Behemoth, pp. 16, 238, 261-63.
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lies ^(R) are paralleled by the French "200," ^"^ the aristocracy of British "Cousinhood," ^i the Junker-Industrial baronry of Nazi Germany,22 the Zaibatsu of Japan, and the aristocratic latifondi- industrial princelings of the Rome-Milan-Turin "Axis.
