What Constitutes An Unlawful Trust

Performed by William H. Taft
Recorded August 5, 1908

The combination of capital in large plants that manufacture goods in the greatest economy is just as necessary as the assembling of the parts of a machine to the economical and more rapid manufacture of what in old times was made by hand. The government should not interfere with one any more than the other when such aggregations of capital are legitimate and are properly controlled, for they are then the natural result of modern enterprise and are beneficial to the public. In the proper operation of competition, the public will soon share with the manufacturer the advantage in economy of operation and lower prices. When, however, such combinations are not based on any economic principal but are made merely for the purpose of controlling the market to maintain or raise prices, restrict output and drive out competitors, the public derives no benefit and we have a monopoly. There must be some use for the company of the comparatively great size of its capital and plants and the extent of its output either to coerce persons to buy of it rather than of some competitor or to coerce those who would compete with it to give up their business. There must usually, in other words, be shown an element of duress in the conduct of its business towards the customers in the trade and its competitors before a mere aggregation of capital or plant becomes an unlawful monopoly. It is perfectly conceivable that in the interests of economy of production, a great number of plants may be legitimately assembled under the ownership of one corporation. It is important, therefore, that such large aggregations of capital and combination should be controlled so that the public may have the advantage of reasonable prices and that the avenues of enterprise may be kept open to the individual and the smaller corporation wishing to engage in business. In a country like this where in good times there is an enormous floating capital awaiting investment, the period before which effective competition by construction of new plants can be introduced into any business is comparatively short, rarely exceeding a year and is usually even less than that. Existence of actual plants is not therefore necessary to potential competition. Many enterprises have been organized on the theory that mere aggregation of all, or nearly all, existing plants in the line of manufacture without regard to economy of production destroys competition. They have, most of them, gone into bankruptcy. Competition in a profitable business will not be affected for the mere aggregation of many existing plants under one company unless the companies thereby affect great economy. The benefit of which it shares with the public or takes some illegal methods to avoid competition and to perpetuate a hold on the business.