18. The Attack on Bigness in Business

18. The Attack on Bigness in Business President Truman recently said, "I would rather see a hundred steel companies than one United States Steel Corporation, and I would rather see a thousand banks than one National City Bank. "I would much rather see athousand insurance com panies with four million dollar assets each than one in surance company with four billion."1 And the remarks of Suprelne Court Justice William o. Douglas on the subject, though already quoted, are perti nent here also. He said: "We have here the problem of bigness. Its lesson should by now have been burned into our memory by Brandeis. The 'Curse of Bigness' shows how size can become a menace-. both industrial and social. . . ." 2 One must note a sharp distinction between this attack on bigness and the attack, outlined in Chapter 10, on the "Big Three's and Four's" of American industry. They are quite different. The other was an attack on what might be ~alled "comparative bigness in particular indus tries," wh.ich might apply to companies in small or nar rowly defined industries. This chapter is about the at tack on what might be called "absolute bigness." The other might be aimed at a merely million-dollar firm 143 144 ATTACK ON BIGNESS IN BUSINESS which happened to be the largest part of the can-opener or pretzel-bending industry; in this chapter, however, the hunters are looking strictly for big game in the bil'lion dollar category.

Thus, while the people who have this fear of sheer bigness often use the word "monopoly," the word is probably less well taken here than in the former case. As Charles E. Wilson whose General Electric Company is, of course, here under attack, recently put it, people often overlook "the fact that in many product lines small businessescome considerably closer to having a monopoly than do the larger ones. Especially is this true of those concerns which have been built around closely held patent positions. ... mour consideration of the prob lem of bigness in business we must recognize that it is a problem totally distinct and separate from that of illegal monopolization. Only by such a differentiation will we be able to achieve the dispassionate attitude essential to an intelligent approach to the problem. . . ." 3 Some critics complain that this fear of absolute bigness in business is not very discriminating or analytical.

There are two different kinds of business bigness-in assets or in sales. It takes up to 30 times as large assets in some industries as in others to do the same annual volume of business. To do a billion dollars of annual sales, a grocery chain may need an investment of only 100 million dollars, but a power company may need five billions. Which is the measure of size? At this point, however, this is no matter. The attack is due to a fear; fear is an emotion; and in emotional matters, figures do not matter too much. Nor does analysis. The fear is of the country's biggest companies. Statisticians who try to define a company in such cate gory will succeed no better than the Irishman who tried ATTACK ON BIGNESS IN BUSINESS 145 to tie a string around a puff of smoke. The nearest to such a definition might be: "Any company of whom an observer might say, "Is it biiig? Is it big! Is it big!" Sufficeit to say that this would include the blue-ribbon list of nationally known firms such as General Motors, Standard Oil Corripany (N. J.), United States Steel, A&P, National City Bank, Metropolitan Life Insurance Company, General Electric, American Telephone & Telegraph, and so on. Membership in this "club" comes high; to get on the list brings respect from some quarters, distrust from others.

The big business corporation of today seems to have inherited, in modem folklore, the horns and tail once pinned on the small owner-capitalist of the ninteenth century. The modem political cartoonist, particularly of the left wing, usually means "a big corporation" when he draws a fat man in a cutaway and top-hat. Half a century ago this usually meant Wall Street; a century ago its earlier counterpart meant. a private capitalist. Congressional committee hearings were held through out most of 1949 on the subject of "monopoly power" and concerned themselves largely with big companies like Metropolitan Life Insurance, du Pont, and United States Steel. These hearings produced no legislation, and in fact were not expected to. The Chairman of the House Judiciary Committee, who conducted them, Rep resentative EmanuelCeller, introduced and publicized a bill, however, which said: Any corporation whose.size and power are such as sub stantially to lessen competition or to create a monopoly in any line of commerce in any section of the country shall be dissolvedinto a number of independent enterprises suffi cient to restore competition in such line of commerce; pro vided that no action under this section shall be taken if the 146 ATTACK ON BIGNESS IN BUSINESS corporation . . . can demonstrate that the proposed action would materially lessen efficiency in any line of commerce.

If Congress passed any such bill, its effect would, of course, depend entirely on how the Supreme Court in terpreted it. The Court has already gone about as far as this bill would seem to go. But the bill would make the Court's path easier, or its progress faster, in at least three ways. First, it adds five important ~Tords to the present law and changes two. The predicate of the first sentence is taken from the Clayton Act which says "where the effect may be substantially to lessen competition, etc., in any line of commerce." But this bill strikes out the important "may be," at the beginning, and, at the end, adds "in any section of the country." The present Supreme Court could do lots of things with those changes. More important, such an Act of Congress would end the Court's troubles, once and for all, over how to get round its earlier finding, in 1920, that "mere size is not an offense against the Sherman Act."

And lastly, it would vastly simplify the present com plicated legal procedure through which the Antitrust Division must go to get a corporation broken up (as in the A&P case, in which it had first to win a criminal suit, then bring a civil suit). While Congress seems unlikely to pass any such legis lation in the near future, it has shown some sympathy. Thus, in the law for the disposal of war plants, it placed handicaps on their sale to larger corporations. President Truman, in his proposed bill in January, 1950, for the sale of government synthetic rubber plants, proposed somewhat sin1ilar handicaps on their sale. to the bigger companies who might bid, even to those who had de signed, had built, and had been running them.

ATTACK ON BIGNESS IN BUSINESS 147 There seem to be two major fears of sheer bigness in business. One is, of course, the concern lest it crush little business. The other is a broader fear that it will produce serious social and economic changes.