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Supreme Court in 1895' that it applied only to commercial and not to manufacturing concerns. Later decisions modified the position by pronouncing favourably on the application of the Act to railway combinations, to “ holding companies ” (i.e. the merging of two or more competitive concerns in a corporation which acquires their stock and controls them), and to corners in staple products. It was also laid down that a labour boycott was a restraint of trade, and therefore illegal under the Act.

The real defect of the Sherman Act, however, was that it provided no sound basis for discrimination between legitimate and illegitimate competition. “Big Business," as both Mr. Roosevelt and Mr. Wilson recognized, is not necessarily an evil. It may result in large-scale production, enabling the manufacturer to supply the consumer with a better article at a lower price. The judges themselves appreciated that, and in the famous Standard Oil case in 1911 the Supreme Court laid it down that in each case the Court must decide “in the light of reason" whether the combination under discussion was or was not a deliberate attempt to restrain trade and competition. That was a common-sense ruling, but it threw a heavy responsibility on the Courts, and tended to divert to the judiciary a good deal of hostility that should have been directed against the legislature.

The great merit of Mr. Wilson's proposals for the reinforcement of the Sherman Act was his

United States v. Knight Sugar Refining Company.

recognition of the fact that great combinations were not of necessity against the public interest, and his resolve to proceed by administrative as well as legislative methods. Mr. Roosevelt, who had worked the Sherman Act hard during his terms of office, had taken the view that "the true way of dealing with monopoly is to prevent it by administrative action before it grow's so powerful that even when courts condemn it they shrink from destroying it." Mr. Wilson was of the same opinion, and the central feature of the anti-trust legislation initiated by him in 1914 was the institution of a Federal Trade Commission, such as Mr. Roosevelt had advocated but been unable to create. The essential reform, the President had repeatedly insisted, 2 was to “ let in the light" on the constitution and operations of great corporations, and the Federal Trade Commission was invested with powers of investigation and mandate that went far towards dispelling the secrecy that proved so effective a protection to numbers of combinations palpably detrimental to the public interest.

The Presidential message of January 1914 had

* Autobiography, chap. xii.

* E.g. "The processes of capital must be as open as the processes of politics. Those who make use of the great modern accumulations of wealth, gathered together by the dragnet process of the sale of stocks and bonds, must be treated as under a public obligation; they must be made responsible for their business methods to the great communities, which are, in fact, their working partners, so that the hand which makes correction shall easily reach them, and a new principle of responsibility be felt throughout their structure and operation" (The New Freedom, chap. vi).

been awaited with anxiety by the great commercial interests, but their apprehensions were largely allayed by its conciliatory tone. Mr. Wilson disclaimed all intention of “unsettling business or breaking its established course athwart," and let it be understood that there was to be no blind and undiscriminating attack on all forms of big business, good and bad. The specific proposals he outlined provided for

1. The prohibition of “interlocking director


2. An increase of the power of the Inter-State Commerce Commission over new railway issues.

3. A clearer definition of the term “in restraint of trade and commerce.”

4. The creation of a Federal Trade Commission.

5. The prohibition of “ holding companies."

6. A simplification of legal processes in the interests of individuals suing a corporation on facts proved in a Government suit.

This programme was before Congress all the summer. The Bills encountered much opposition and underwent considerable emendation in the Senate, but before the session closed in October the President had secured the essence of his demands. He set his signature to two important measures, one the Federal Trade Commission Act, the other the Clayton Act, the main provisions of which (1) strengthened the hands of an injured party under the existing anti-trust laws ; (2) defined certain abuses, discriminations, and re

See p. 94, supra.

straints of trade, and empowered the Trade Commission to deal with them; and (3) legalized the boycott in labour disputes. There is a close analogy between this last provision and the right of combination guaranteed to Labour in Great Britain under the Trade Disputes Act of 1906.

The functions of the Federal Trade Commission have been outlined above. The central feature of the law instituting it is the clause declaring that “unfair methods of competition in commerce are hereby declared unlawful.” The Commission was furnished with extensive powers of investigation into the affairs of corporations, with authority to issue orders, against which appeals lie to the Federal Courts. Its creation meant a large and beneficial extension of administrative control over monopolies, corners, rings, and combinations. The President could with justice claim that closed doors had been thrown open, dark places explored, and the wholesome light of publicity turned on the conduct of enterprises that formed in a fundamental sense a subject of public concern.

1 P. 110.

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