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pass from a régime of competition to one of monopoly is easy. To return from a régime of monopoly to one of competition is immensely difficult. The American people have not yet tried out fully the possibilities of competitive industry. It would be foolish to abandon the experiment thus early in our national development. If we destroy as far as possible the trusts that now exist, if we prevent trusts and combinations from being formed, we shall soon see whether it is possible to secure real competition, and whether under competition efficiency can reach a high point. If not we can readily enough change our policy. On the other hand, to accept the trusts today is to leap in the dark. Every step in that direction is difficult to retrace. The results of an experiment with permitting trusts, freely to organize and with regulating them could not be determined for such a long period of time that the trusts would meantime get a grip almost impossible to shake off. In fact, we never could satisfy ourselves by such an experiment that a trust régime was more satisfactory than a régime of competition, for we should have no fair example of the working of competition under similar conditions with which to make comparison.

Particularly weak would it be to allow the mere fear of a temporary disturbance of business to turn us from a safe permanent policy. The thoughtful man can have no patience with the complaint that the government is interfering with business or lowering the prices of securities by enforcing the anti-trust law. Suppose an industrial depression should be brought about? Is that a heavy price to pay for protecting the decades and the centuries of the future against a mighty evil ? Granted that it is uncertain whether the trust régime would

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be a mighty evil, the mere possibility that it would prove such is enough to justify a present sacrifice to avert it.

The thoughtful opponent of trusts does not urge that, as the phrase goes, the government should “run amuck." It need not in a year or two attack every combination without due inquiry as to whether it actually possesses or threatens monopoly power, or as to the manner in which it is exercising such power as it does possess.

A policy once determined upon and definitely announced may be carried out with reasonable deliberation and consideration of all interests. But it is high time that an end shall be put to all doubt of the intention of the people. Either they must proclaim their determination to maintain a régime of competition in manufactures and trade for an indefinite period to come, or they must promptly declare themselves for the policy of regulation. The safe policy for today is prohibition of trusts and other monopolistic combinations. It is the vigorous enforcement of the antitrust laws, aided by the provision of expert administrative machinery such as the new trade commission.

Whether the ultimate policy adopted toward the trust be laissez faire, regulation or prohibition, we shall, in all probability, find it necessary to supplement the chosen policy by vigorous exercise of the taxing power. Taxation can take away a large part of monopoly profits and other unearned gains whether derived from trusts and pools, from railroads, from banking, from control of land and other natural resources, or from any other source.

Direct taxation of trusts and other business enterprises with a view to taking away excessive gains would encounter practically the same difficulties as regulation

of prices and profits. Heavy income taxes upon individuals, particularly if progressive, are very hard to enforce. Inheritance taxes would be more feasible. Progressive inheritance taxes, even with rates such that much the greater part of the largest fortunes would be taken by the government, would, in the opinion of many thoughtful men, be neither unjust nor socially disadvantageous. They are defensible even when applied to fortunes derived from strictly legitimate business. Taxes of this sort might in some degree tend to check the accumulation of capital and to prevent the efficient captain of industry from exercising his talents to the utmost, but the effect in these directions would probably not be very marked. There might, too, be some difficulty in enforcing collection and preventing evasion, but on the whole the system would go far toward correcting that immense disparity of wealth and of opportunity which is the main source of social unrest.

CHAPTER V

THE TRUST LEGISLATION OF 1914

Two important acts relating to trusts and corporations have just been adopted by Congress. They represent the fruition of the policy laid down in the last national platform of the Democratic party. They are “ administration measures." In fact, it is doubtful whether without the persistent and forceful leadership of President Wilson the conflicting views in Congress could have been harmonized and the legislation passed in addition to the other important and long-debated measures which have occupied the attention of that body.

The "administration” bills regarding trusts and corporations were introduced into Congress at the very beginning of 1914. They were under almost continuous consideration by the two houses and their committees for nine months before enactment. Many of the crudities of the original bills have been eliminated and in general the provisions as adopted are workable and understandable. In fact, if the destruction of trusts and the maintenance of competition be accepted as the proper policy, these acts must be approved for the most part as a valuable aid in carrying out that policy. The present work has sought to prove that this policy is on the whole the best for the American people.

As might be expected, there were efforts in Congress, particularly on the part of the Progressive party, to

turn the trust legislation in the direction of regulation rather than prohibition. The Democrats, however, stood with practically united front for the policy of suppressing combinations and many Republicans joined with them.

The two acts are entitled respectively: “An Act to supplement existing laws against unlawful restraints and monopolies and for other purposes,” and “ An Act , to create a federal trade commission, to define its powers and duties and for other purposes. We shall call them briefly the anti-trust act and the trade-commission act. The trade-commission bill, as it passed the House, was substantially confined to procedure, to machinery and methods for enforcing the laws. The Senate, however, inserted in this bill provisions with respect to unfair competitive methods, and these stand in the act as finally adopted, altho they more logically belong in the other act, which is chiefly concerned with prohibitions of unlawful practices.

It is perhaps needless to call attention to the fact that both these acts are, of necessity, limited to fields over which the federal government has jurisdiction. Except certain provisions on national banks, they deal exclusively with interstate and foreign commerce.

The new prohibitions and definitions of unlawful practices in the two acts fall under three main heads: (1) those relating to competitive methods; (2) those relating to methods and forms of combination in restraint of trade; and (3) those relating to mismanagement of railroads.

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