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Mr. WILSON. There has been a lot said here about the danger of socialism coming from these large, gigantic corporations. Do you not consider it equally dangerous to build up a strong statism to control profits and prices and to regulate size and all that? Is that not practically the same thing as socialism?

Mr. JOHNSTON. Well, I am naturally opposed to it very much.
Mr. KEATING. It is a little quicker.

Mr. WILSON. Much quicker.

Mr. BRYSON. They are both bad.

Mr. JOHNSTON. They are both bad; yes, that is right. It is an effort to try to accomplish the best results in the public interest without going either way. That is a difficult problem, and I appreciate the difficulties which you gentlemen face.

Mr. WILSON. Certainly neither of those theories

Mr. JOHNSTON. I appreciate the difficulties which you gentlemen face in that direction.

Mr. WILSON. (continuing). Of government made this country great; did they?

Mr. JOHNSTON. That is right.

Mr. WILSON. Free enterprise did it.

Mr. JOHNSTON. Free enterprise did it; no question about that. If there are no more questions, gentlemen, I thank


Mr. BRYSON (presiding). Thank you. We are very much obliged to you, Mr. Johnston. We are sorry the chairman had to go to the Rules Committee.

He asked me to announce that this will conclude the meeting at this session. We will meet again Friday morning at 10 o'clock. The first witness will be Professor Milton Handler of Columbia University, and the next witness will be Mr. Steinkraus, president of the United States Chamber of Commerce.

(Whereupon, at 11:15 a. m., the committee adjourned, to reconvene at 10 a. m., Friday, August 5, 1949.)




SPECIAL SUBCOMMITTEE ON THE STUDY OF MONOPOLY POWER OF THE COMMITTEE ON THE JUDICIARY, Washington, D. C. The special subcommittee met, pursuant to adjournment, at 10:05 a. m., in room 346, Old House Office Building, Hon. Emanuel Celler (chairman) presiding.

Present: Representatives Celler, Bryson, Denton, Wilson, Michener, Keating, and McCulloch.

The CHAIRMAN. The meeting of this subcommittee will come to order.

The chairman wishes to announce that the witnesses scheduled for this morning were to be Prof. Milton Handler, of Columbia University, who is here, and Mr. Steinkraus, president of the United States Chamber of Commerce.

We have been informed that the latter will not appear here this morning. That is rather disappointing. We had hoped that we would get some expression of opinion from the United States Chamber of Commerce in connection with our study of the growth of monopoly


We hoped also to get some expression of opinion from somebody representing the National Association of Manufacturers, but apparently both those organizations, at least presently, have declined to


It is hoped that at subsequent meetings of this committee they will change their attitude and give us the benefit of their views on this very momentous subject, to wit, the growth of monopoly power.

Professor Handler, we are very happy to have you with us and you may proceed. You may stand or be seated, as you wish.


Mr. HANDLER. Thank you, Mr. Chairman.

The Sherman Act has been aptly described by the Supreme Court as a "charter of freedom" (Hughes, Chief Justice, in Appalachian Coals, Inc. v. United States (288 U. S. 344, 1933)). It is the economic counterpart of the Bill of Rights. Though enacted less than 60 years ago, its roots are deeply embedded in ancient common-law doctrines announced by English courts even before the discovery of the New World. We often think of the progression of economic activity from freedom to regimentation-from competition to monopoly. The reverse is the fact.

The CHAIRMAN. May I interrupt you at this point?

Mr. HANDLER. Yes, sir.

The CHAIRMAN. I have just been handed a communication from Herman W. Steinkraus, president of the Chamber of Commerce of the United States. I think it is important enough for me to read into the record at this point.

It is dated August 3, 1949, and is addressed to the chairman, and is as follows:

I have just asked our Mr. Milton Smith to advise your general counsel that I will not be able to appear before your subcommittee Friday, August 5. You have been so gracious with respect to my testimony that I want you to know the reasons for this decision.

When I accepted the presidency of the National Chamber it was with the understanding that I would not be able to divorce myself from my business duties and devote full time to the chamber. My business obligations, since receiving your invitation of July 15, have been such that I have been unable to prepare adequately for this hearing.

It seems to me that your study is one of great significance and that when I speak for the chamber I should be equipped to make a real contribution to the several facets of your inquiry. Consequently I would appreciate it if I could have additional time to permit me to consult not only with our staff but with business leaders who are conversant with the problems you have under consideration.

May I express the hope that you will be so kind as to invite me to appear when you resume your hearings this fall.

Sincerely yours,


I am sure that I express the opinion of the committee when I say that we will be most happy to embrace the suggestions made by Mr. Steinkraus at a hearing in the fall when he will have had sufficient time to confer with those persons mentioned in his letter. I am sure that the Chamber of Commerce of the United States, being such an important organization, will make a considerable contribution to our study.

You may proceed, Mr. Handler.

Mr. HANDLER. The competitive system as we know it was preceded in English economic history by the authoritarian and monopolistic controls of the medieval guilds and the centralized regulation of trade by the British Crown. It took centuries before English law sanctioned the freedom of the individual to engage in a calling of his own choice. It took centuries before private groups were shorn of their quasi-governmental powers of regulating prices, production, and even entry into various fields of economic activity. The few terse words of the Sherman law thus epitomize a voluminous history. Though not technically a part of our written Constitution, its significance is no less than the great constitutional safeguards of human freedom. It is not to be wondered, therefore, that some of the States have incorporated their condemnation of monopoly into their written constitutions (32 Columbia Law Review 347, 1932). Nor is it surprising to find in the final report of the Temporary National Economic Committee the statement that no witness in the course of its comprehensive and exhaustive investigation into the monopoly problem questioned the underlying philosophy of our antitrust laws.

* * * it is significant that in all the hearings held before this committee no witness so much as suggested any substantive change in the basic philosophy of those laws (p. 35).


Antitrust is the minimum regulation possible in a free society. The self-regulating force of competition obviates the need for the pervasive control of industry which monopoly inevitably compels. The alternatives to antitrust would ultimately transform our way of life and carry us down paths which we have up to now resolutely avoided. There have been numerous legislative inquiries into the monopoly problem. I trust you will not deem me presumptuous if I assert that what is needed today is not more investigation but more action. The facts are well known. The need for corrective measures is widely recognized. The main question today is how can the salutary objectives of antitrust be more effectively achieved. It is to that question that I shall address myself.

While the Sherman law is one of the principal bulwarks of our democracy, it of course does not provide the answer to all of our economic ills. It is but one of our regulatory instruments. My concentration on the implementation of our Sherman Act policy does not imply any lack of recognition or sympathy for measures dealing with other important economic problems which are beyond the purview of antitrust.

The deficiencies of the antitrust laws can be divided into two categories: (a) substantive and (b) procedural.

The intensification of antitrust enforcement during the past decade has led to a vast outpouring of judicial decision. Appraisals of the law made in the early forties are completely out of date. This is true of the monograph I prepared for the TNEC on the judicial construction of the antitrust laws. The statute in recent years has received a friendly interpretation by all the courts, and notably the United States Supreme Court. Obscurities in the law have been largely eliminated, although at times only to be replaced with new perplexities. The Supreme Court to use a homely phrase-has performed a face-lifting operation upon our antitrust laws. It has in case after case plugged important loopholes. The ambit of the statutory prohibition has been enlarged to embrace every conceivable collusive restraint. Antitrust has fared well in its hands.

That does not mean, however, that there no longer is any need for remedial legislation. There are certain substantive problems which still require corrective action.

As I have been requested by your chairman to revise and bring my monograph up to date, and as the matters I am discussing are quite technical, I shall deal with them summarily, leaving for my written report the necessary amplification and documentation.

The substantive doctrines of antitrust relate to four main fields: (1) Collusive restraints among competitors;

(2) Concentration of economic power through corporate integration;

(3) Misuse of patents; and

(4) Elimination of commercial competition by labor.

I propose to discuss briefly those four subjects.

The CHAIRMAN. Are you going to submit in addition and as a supplement to your statement, a written report?

Mr. HANDLER. Sometime in the latter part of the investigation. I did not have a chance to do it up to now. This statement is a sum

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