The Future of Mononoly in America

...If not, there is the court decision in the background waiting to be applied...

...Federal Judge Young in 1912 declared Alcoa" a "substantial monopoly," ordered its cartel sgreement nullified, and decreed the end of price discriminations and other such practices...

...But at the same time a group of what might be called New Deal industrial tycoons have been pampered, men such as Henry Kaiser and Louis Reynolds, head of Reynolds metal...

...The real issue today is the government's disposal of surplus plant capacity, and this was the crux of the court decision...

...Within the country, the Circuit Court's decision, if not the government's power, will shake Alcoa's monopoly hold in the light metals field...

...But a court decision denning...

...Wilson's New Freedom of 1912, the cry against the money trusts and predatory wealth, brought at that time an examination of Alcoa's stranglehold on the development of aluminum In this country...

...It also, during the 1930s, made direct cartel deals with I.G...

...of Canada, a Mellon subsidiary, and Aluminum A.G...

...With their competitors eliminated the price of aluminum abet up from id cents to 80 cents a pound...

...This can be a turning point for progressivism in America...

...Attorney General Harlan Stone ordered an investigation and wrote to the FTC "it ia apparent that during the time covered by your report Alcoa violated several provisions of the decree...

...investigation also dis-clcsed a cartel agreement, signed in 1908, between North American Aluminum Ltd...

...Hut this decision it final...

...So the high court disqualified itself...

...it Has definite meanings for postwar price levels, the use of light medals, the nature of the automobile Industry and hundreds of other post-wsr questions...

...The Mae> of Alcoa In every economic text Alcoa haa been the classic model of a modern monopoly...

...But soon after the Federal Trade Commission issued its findings on the aluminum ware branch of the house furnishings industry...

...Simpson Windsor will hole up at the Waldorf-Astoria before embarking tor the sun-bathing at Cannes, and* 72 point, five column headlines splash across the front* page...

...Whether this extension ef the court's power rsn bt maintained is a question that will be tested, undoubtedly, in the high courts in the years to come...

...obtained a premise from the other not to touch the American market...

...Although the government owns the majority of plant capacity in the light metals field, operations of the major plants have been turned over to private companies...

...The court will "wait and see" in all such monopoly cases...

...Let a naval officer take a swipe at Dan Tobin or announce that Wall...

...it poses the question whether we will have monopoly or more competition after the war...

...Senator Walsh charged a whitewafh snd demonstrated that the government field investigators obviously were incompetent A Senate resolution to investigate "Alcoa was debated vigorously for several weeks and finally defeated 36-33...

...In some cases a company may And that through accidental circumstances it is the sole company in the field...

...But it waa a long process of squaring economic fact with legal doctrine...

...It does have the political and now ths legal power to redistribute that economic power among new social groups...

...Some years ago, the Justice Department brought suit against Alcoa as a monopoly...

...The principle* laid down by the court afeet every case where a monopoly charge is involved...

...The case then went to the Circuit Court...

...The Aluminum Company of America with Its complete monopoly of the production at aluminum In the United States, fortified bp a high protective tariff on imports, controls the domestic price of sheet aluminum to utensil manufacturers," the Commission stated...

...Stone's announcement was on October 20, 1924...

...Leas strangely, » cartel deal existed with a new Canadian Aluminum company participating with British and German companies...

...With the profits from that monopoly, the Mellons were able to corner almost the entire bauxite supply, the raw material of aluminum, in the United States, and later throughout a large section of the earth...

...Stone — had previous connections with the case when serving in the Department of Justice...

...Actually no hard and fast rule is drawn...

...The company, added the report, had violated Judge Young's injunction of 1912 and should be prosecuted...

...For the first time in recent years, it gives an Administration a legal whip against monopolies (in addition to the economic power the government holds through its war planti investments), thus permitting it to reshuffle a large proportion of economic and social power...

...The rarse will not go to the Supreme Court, since too many Justices...

...Whether the Administration will do so ii a political question that must be watched carefully over the next year...

...The tremendous implications which this court decision haa can only be indicated vaguely...

...Alcoa profited merrily, charging on the average about 28 cents a pound, making a clear profit of 11 cents a pound on all lis ingot production...

...The ALCOA decision reaches far beyond the momentarily academic issue of whether the Mellon-dominated enterprise is a monopoly...

...Automobile engineers testified that aluminum, one-third lighter, than steel, was not practical for use solely because of its high pike...

...One basic premise is a company's ability to fix a price for as entire industry...

...No legal relations existed between Alcoa and Canadian Aluminum Ltd., at least none that could be proved legally, yet the Canadian Co...

...Meanwhile Colonel William J. Donovan (now Major General Donovan, in charge of the Office of Strategic Services) was appointed special assistant Attorney-General in charge of the anti-trust division...

...Whether 1 capitalist economy can prevent, for long, the growth of new monopolies is another question for the moment...

...On January 8, 1926, be waa nominated for the Supreme Court and two months later sworn in as associate Justice...

...Its cartel agreements had been dissolved, but strangely the foreign Aluminum companies never dared enter the American field...

...In part, the significance of the decision was obscured because it was made by the Circuit Court of Appeals...

...If the government turns ever its excess plants to these new men (some plants would necessarily have to be subsidised), it may reshape the entire domestic economic future of the West and South, Involved alee are the loans which Jesse Jones made as bead of RFC to the Aluminum Co...

...The court thus, in a novel mas-ner, bus taken jurisdiction over foreign cartels an4 declared them illegal if they affect this country...

...other witnesses exposed favoritism, pr'ce-fixlng, rebates and other invidious practices by which monopolies do business...

...The late Senators Walsh and Norris charged that Stone had been kicked upstairs and threatened a Senate investigation...

...With so many new usee developed for light metals, the Senate Small Business Committee feels that as many as 60,000 smaller companies can enter the previously closed field of aluminum fabrication...

...If the government doe* }o*ter*monvpoly «„„,„ by it* disposal policy, then th* court can still etaek down with a dissolution order...

...Alcoa coolly agreed...

...More important, the decision lays down a definite role of thumb on defining monopoly in every industry...

...Alcoa operates on contrast a majority of the government-owned plants...

...The requeat waa ignored...

...The first two stories are five boor wonders, the latter will make the deepest imprint on the mold of the postwar economy...

...ever the monopolies, uniting te use it, if the old monopolies are re-established...

...After a year's testimony, Federsl Judge McCsfferey ruled that Alcoa wss no monopoly...

...of Canada to create the Bhipehaw power project Jones's terms wan se favorable that the Canadian company, technically independent of Alcoa, and outside the reach ef the Assartcan anti-trust laws, can dominate the foreign markets and any new cartel that will be created...

...These , men have bean favored In government contracts .against the older monopolists...

...Thus, on the level of manufacture and on the level of refining, Alcoa's position is threatened...

...Its cartel agreements had been replaced by a high tariff policy, sanctioned by the Republican Party to which Andrew Mellon was a leading contributor...

...Tk* Future ot Monopoly The court's decision has wider implications than aluminum, although this in itself is a great gain...

...the Aluminum Company of America as a monopoly within the meaning of the Sherman Anti-trust Act IS lucky to receive some mention outside the New York Timet and some leftwing weeklies...

...After the war, Alcoa had smooth sailing...

...This may not affect Alcoa's grip on bauxite deposits or its plants for converting clay to aluminum, but it will permit competition in the utensils and houseware field...

...The test is: whether it has forced competitors out ef the industry or hai prevented the entry ef potential competitors...

...yet in that case it might not be declared a monopoly...

...Reed, Jackson snd Murphy, even Chief Justice...

...of Germany, whereby the Canadian company promised not to sell in cenjral Eurore while the German company would refrain from, entering the American market...

...On one ether important ground, the court's decisios is of major significance: it lays down a sweeping rale against cartels...

...It was William Howard Taft who made possible the ris ¦ of the aluminum monopoly In America...

...In other words it i» holding a big sties...

...In the 1924 election, the Democratic National Committee using Secretary of Treasury Andrew W. Mellon as a target challenged President Coolidge to release the Federal Tariff Commission's unpublished report on aluminum duties...

...Its price of 19 cents a pound in 1914 doubled in two years and dropped to 38 cents only on the plea of Bernard Baruch as chairman of the War Industries Board...

...Thus a company may exercise fit) percent control of an industry, but if it can enforce its price schedules it is a monopoly...

...Where international agreements am found which allocate sales territories and keep supplies from this country, affecting prices here, it will be declared unlawful...

...Nine month* later the Department of Justice absolved Alcoa of all charges...

...In the following years Alcoa flourished...

...The court declared Alcoa as of 1940 a monopoly but said that its anti-monopoly remedies would "be held in abeyance until it sees how the field shapes up after ths war...

...But the decision was meaningless: almost sil the bauxite was in the hands of Alcoa and no competitor could challenge it In 1912 a group of French capitalists sought to organise some competition, but when funds ran low it could not obtain any additional financing in Wall Street and it was forced to sell out to Mellon...

...In 1907, in token of Ra rise to eminence, the Pittsburgh Keduc-ti'-n Co., the original name, was changed to the august Aluminum Company of America, or Alcoa...

...The Future of Light Metals In its efforts to expend the war production of aluminum and magnesium, the government has invested over one billion dollars in light metal plants...

...It owns outright over half of all America's aluminum plant capacity and over 90 percent of magnesium plant ^capacity...

...Farben to restrict the production of magnesium, through its 60 percent ownership of Magnesium Development Company, the other half being owned by the German cartel, and its agreement with Dow Chemical Co...

...Sitting as a Federal judge in Cleveland in 1802 Taft made a historic decision on a patent infringement case which Mellon lawyers had brought against their major competitors, the Cowles brothers of Loekport, New York, That decision waa worth $100,000,000 to the Meltons...

...H» Circuit Court decision for the first time offers an answer to the vexing question: How much control of the market must a company have to be an illegal monopoly...

...As to its control of natural resources, ths TV A has recently announced a new process of utilising Clsy in its area which may challenge Alcoa's dominance in this held...

...World War I was a bonanza for Alcoa...

...The disposal of the government's surplus plants may affect Alcoa's grip on processing and refining...

...It affects nearly every business in the country...