in restraint of trade, and that fair competition in business will make a more contented public, a more secure government, and in the end give greater protection to property. * * *To my mind free competition is not sane competition.

"The biggest business in the country was founded almost entirely upon the principle of free competition, namely that of making prices what and when you will and of taking all the business from your competitor that you can. * * *A Trade Commission seems to me to be needed in a well rounded plan of business legislation."

Criticisms and Suggestions by Professor Seager.-Henry R. Seager,15 professor of Political Economy, Columbia University, in treating of the proposed trust legislation, said: "The feature of the proposed trust legislation which I have been asked to make the starting point of my comments is the Interstate Trade Commission. In urging the creation of such a commission, President Wilson is certainly voicing the mature judgment of students of the trust problem. * The Newlands' bill to create an Interstate Trade Commission has received more prolonged and careful attention than any of the other three [supplemental Antitrust] measures now before Congress. *** The creation of such a commission means inevitably an extension of government by commission. I am in favor of it because I believe that with the growing complexity of business relations, it is only through the guidance of commissions of experts that we can hope to keep these relations straight and to advance sound business policy. We all agree that unfair methods of competition which enable big corporations to wrest markets from their smaller rivals, not because they can produce more economically or make a profit while selling more cheaply but through the sheer force of their larger resources and the wider range of their operations, must be stopped." While affirming his belief in competition as "a dominant force in business," Professor Seager advocates the adoption of the principle that there is a higher method than the individualism which is the prevailing factor in competitive endeavors. He adds these words of caution: "But let us not make a fetish of competition. It also has its bad as well as its good side. While recognizing its value and making strenuous efforts to insure it a fair field for its operation, let us not ignore the fact that co-operation

*

15 Id., page 67.

also has its legitimate place. On a higher moral plane than competition, its extension, under conditions that compel adequate regard to the public interest, must prove advantageous not only to business men but to the whole community."

The Legal View Point,-from Another Angle.-Louis D. Brandeis,1 lawyer, in treating of the pending legislation supplemental to the anti-trust laws, commented upon the general situation, as follows: "The program of President Wilson is not a program of free and unrestricted competition, but it is a program of regulating competition instead of regulating monopoly."

I look forward to the trade commission which we are about to establish as an instrument which will be of inestimable advantage to the business and the future of America by making the common property and the common knowledge of American business men the best that has been done and is being done in every department of business throughout the world."

11. REMARKS on field for COMMISSION.

General Conclusions in Aid of Subject.-In concluding these comments by experienced and keen observers of our country's affairs and interests, it may be permitted to add that cheapness in price is not the sole criterion by which to estimate the success that competition achieves. The prosperity of the average producer and merchant means prosperity in which all can and will share; and a reasonably enhanced price is a small consideration to pay for a condition which affords the customer the means to provide for his needs more readily than he could do if monopolies produced goods at prices which mean stagnation in all businesses except their own. For, in the words of Lincoln,-"Cheapness is an insult to the person without the means to buy."

A commission which is ushered into being amid the favorable greetings and commendations of the business world has an incentive and advantage which is incalculable at the inception of its career. The field is wide and the mission plain. It is proper and necessary for the public to afford the Federal Trade Commission that loyal support which is at once the inspiration and the means of success in a democracy.

In the words of an able writer and recognized authority in an

16 Id., page 75.

other sphere of recent legislation: "Practical faith and mutual confidence is what we need."1

17 F. A. Vanderlip, president of The National City Bank of New York,

"Intellectual Freedom in Currency Legislation," page 4 (1913).

CHAPTER II.

MONOPOLIES AND COMBINATIONS TO PREVENT COMPETITION.

1. Definition.

2. Development of Anti-trust Sentiment.

3. Distinction Between Exclusive Rights and Monopolies.

4. Public Interests Protected.

5. Constitutionality of New Legislation Seems Assured.

1. DEFINITION.

1. A Monopoly Defined.—The meaning of the word “monopoly" has been expressed as the sole power (or a power largely in excess of that possessed by others) of dealing in some particular commodity, or at some particular market or place, or of carrying on some particular business.1

2. DEVELOPMENT OF ANTI-TRUST SENTIMENT.

Evolution of Anti-Monopoly Idea.-The granting of monopolies is a very ancient right, which is still exercised by governing bodies, though the practice is generally condemned when undertaken by individual initiative.

Thus, the state, by the patent franchise, accords sole rights to make, sell and use patented discoveries and inventions. Under the police powers of the state the marketing of liquor, tobacco, conducting of slaughter houses, and numerous other forms of human activity are confined by statute within certain prescribed limits, in the interest of the public welfare and health.

Banking, insurance and dealing in tickets are other instances of lines of business which are confined to certain persons or classes; and there are forms of semi-public institutions such as railroads, telephone and telegraph companies, which require vast aggregations of capital and are often classified as quasi-monopolies.

The existing condition which is familiar to every one has not crystallized into the shape we see about us without a history at once interesting and of service in enlightening us as to the subject in hand.

I U. S. v. American Naval Stores Co., 172 Fed. 455.

It was from the practice of the English sovereigns in granting to favorites, or as a stimulant to good service, monopolies in the manufacture or sale of commodities, that the present manner of protecting inventions arose.

So common did this practice become in the time of the Tudors, that it led to many protests on the part of Parliament, as will be seen by reference to the history of Queen Elizabeth. Such an early authority as Sir Edward Coke, however, laid it down that while by the ancient common law the king, in aid of inventors, could grant a temporary monopoly covering the manufacture or importation of an invention, it was illegal to make grants in restraint of trade

The first recorded case, decided in 1602, holds the same way; and while in practice the rule was frequently evaded, the decision was never overruled.2

Under the Stuarts, these abuses were not likely to grow less in number nor to become less burdensome to the people; and in fact the owners of monopolies-known generally as "purveyors" -grew so rapacious as to have a considerable influence in bringing about the death of Charles I and the flight of his son James. In response to a widespread demand, the Statute of Monopolies was enacted by Parliament in 1623. This law was sweeping in its condemnation of the evil of favoritism in trade, and being rigidly enforced, had lasting effects; indeed, it is not too much to say that it created the rule that still prevails prohibiting restraint of trade.

In that basic enactment there appeared two exceptions, viz: That Parliament might grant legal monopolies, and that the Sovereign might exercise its ancient right for the encouragement of new manufacturers or inventions.3

On these exceptions are built up: First, the modern system of legislative grants of exclusive rights to trade in certain commodities, and second, the system of letters-patent for inventions.

3. DISTINCTION BETWEEN EXclusive rightS AND

MONOPOLIES.

Terms "Monopolies" and "Exclusive Rights" not Ident

2 Darcy v. Allen, 11 Coke 84; Noy. 173; Moore 673; 8 Coke 125. Consult able discussion of principles contained in 7 Harvard Law Review, page 342. See article, "Monopoly," in Encyc. Brit., 11th Ed. 3 See Price's Eng. Patents of Monopoly. 1906.