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.