MONOPOLY MARCHES ON
Quinn, T. K.
MONOPOLY MARCHES ON By T. K. QUINN THE cold war in which we are presently engaged has the virtue of keeping us constantly aware that democracy and our way of life .ire not blessings that will...
...The Annual Economic Report of the President this year reminds us that we have come a long way even in the ten years since the days of opposition to the Employment Act...
...Does its gigantic purchasing and marketing power intimidate other companies...
...It will not save itself without our determined effort...
...Workable competition" along with the new "rule of reason" is presumed to offer the criteria for judging the legality of the alleged violations of the antitrust laws, and we find them approved by the Advisory Committee of the Department of Commerce and by the Attorney General's special Antitrust Committee...
...Where are they...
...Do they prosper fairly...
...Economic planning by government is commonly accepted today by the most conservative people and has become a part of the life of the nation...
...The expressions-free enterprise and competition—became part of a legendary ideal and are still in daily use, although, as every informed, intelligent person knows, they no longer fully represent the facts of our national life, where fixed prices on basic products in the major industries are the rule, not the exception, and the opportunities for new concerns to enter the field are declining, despite the efforts to put a better face on the facts...
...It remains to be proved whether or not the present policy of favoring investment by business tax benefits, principally to big business, can perpetuate a stable economy...
...We are not reminded that GM could have taken contrary action or none at all and thereby induced recession or depression...
...Any active giant is evil per se in a land that seeks to preserve life, liberty, and opportunity for the ordinary individual...
...They can and do decide who is to be employed, where, how long, and how much each is to be paid...
...Oligarchic control over groups of vital industries, even though such control may be exercised within the letter of the law, must inevitably exert a contracting influence on freedom of endeavor...
...MONOPOLY MARCHES ON By T. K. QUINN THE cold war in which we are presently engaged has the virtue of keeping us constantly aware that democracy and our way of life .ire not blessings that will last forever without our own everlasting vigilance and dedication...
...Does its payments to newspapers, magazines, and other communications media put them under such obligation that they no longer dare be critical of the company...
...An "authorized" appliance dealer who does any original experimenting not approved by his giant supplier does so at the risk of his business neck...
...They can and have on occasion assumed the wholly political prerogative of deciding whether or not an employee is loyal to the country...
...How are its suppliers treated...
...Rationalization and organization now constitute the effective methods of our new industrial, corporate society...
...And we cannot sit idly by and only hope for the best if we do not check the power of the super-giants...
...What is really an application of power is now and will be mislabeled "efficiency...
...The smallest size group of manufacturers in 1955 suffered a loss of 60 per cent in profit after taxes, compared with three previous years...
...What are the results of General Motors' huge operations...
...They were written high and gallantly on the banners that led covered wagons of explorers, hunters, and trappers, followed by miners and farmers and then by young and growing industry —all parts of the glorious, inspiring melting pot of adventurers in a new, exciting country...
...The profit margin of small businesses (those with less than a quarter of a million dollars in assets) has dropped sharply while that of big business has continued to grow...
...Unrestricted competition is not the answer...
...More money flows through the coffers of General Motors than is ever seen by the combined governments of 40 states in the union...
...The fundamental facts of monopoly and giantism remain substantially unchanged...
...The changes in progress now are leading us into a kind of society more like fascism than socialism...
...In a world of mice, cats are evil...
...When personal savings decline or consumer credit expands, farm prices fall, or the building rate slackens, it is no longer a matter for wholly private remedies...
...Concious or unconcious Marxists insist that the trend to industrial giantism is "natural" and "you can't do anything about it"—both manifest absurdities...
...We now have 68 private, billionaire, and a few score of near-billionaire corporations in the country, already largely in control of the economy and making rapid political inroads...
...neither are they "independent centers of business decision," and the President of the United States should not be led by his economic advisers into making any such misrepresentation...
...Giant corporations employ, directly and indirectly, about half of the 64 million presently employed in the U. S. They have writers, professors, reporters, and broadcasters on their payrolls, many known to the public only as impartial observers...
...monopolistic competition and to what is called "workable competition"—a theoretical condition in which prices respond to supply and demand, cost savings are passed along to the consumer, profits are "reasonable," and companies are efficient...
...He may not even see the ants or be conscious of them but every time he puts his foot down he may kill hundreds of them and send thousands scurrying in panic...
...The real issue today is size and its undue, private power...
...The plain, demonstrable truth is that prices are today largely controlled, they do not generally respond to supply or demand in the big industries, and goodness knows what we mean by "reasonable profits...
...Have we not learned that the giant corporations of today are entrenched in formidable capital positions, and that they cannot be successfully met on a competitive basis simply by freeing a few patents or slap-on-the-wrist restrictions...
...In the meantime the government stands by, ready to increase or decrease the supply of money, curtail or expand consumer credit, promote public schools, roads, or home building, and otherwise affect general business conditions...
...Historically, political health and freedom depend upon similar economic conditions...
...Certainly if profits for the billionaire corporations were formerly reasonable, they were all out of reason in 1955 and cannot safely continue at such exorbitant rates...
...We must know how the results are secured...
...Left to their own resources, General Motors, Ford, and probably Chrysler can eliminate the other three remaining automobile manufacturers, as they have scores of others...
...The very basis of a progressive, democratic economy is its small business units...
...Of all the damaging slogans which have quite generally been "sold" to America, principally by public relations experts, broadcasters and economists in the employ of the giants, the most seriously misleading is that bigness is not evil per se...
...General Motors—a combination of 40 or 50...
...They have thousands of factories and offices all over the world, employ millions of people, lobby in our state and federal capitals...
...T. made a little less absolute, and International Business Machines required to sell rather than merely lease its products...
...Cost savings are only partly passed along to the consumer...
...Through graduated income taxes with higher rates on bigger profits, legislation discouraging interlocking directorates, preventing mergers of giant companies and prohibiting the domination of dealers and suppliers, we can force decentralization, perpetuate a wholesome degree of competition and free enterprise, and save our democratic way of life...
...When General Motors announces that it is investing another billion or so in its own future, the friendly press to which it pays over fifty millions a year goes into ecstacies, and we are told how it will bolster the economy and restrain recession or promote prosperity...
...General Motors alone has an annual income of 12 billion dollars, which is several times the annual income of the sovereign "Empire" state of New York...
...Steel still determine the course of the country's development in opportunity, prices, profits, and direction, regardless of the people or their democratically chosen representatives...
...Are its dealers truly independent businessmen or are they virtual vassals under domination...
...This is a highly significant statement in that it recognizes how dependent we are for progress on the independence of the smaller businesses of the country...
...They are subtle, powerful, and gentlemanly, but unremitting in their profit purposes...
...Any force which restricts their freedom is damaging to the economy...
...funds available for reinvestment or expansion showed a decrease of 40 per cent...
...The Small Business Administration is receiving inquiries for loans at the rate of about a hundred thousand a year but is granting loans at the rate of only two hundred a year—one in five hundred...
...or General Electric —a combination of 80 to 90 companies...
...And along with effective checks on the giant companies we must do some intelligent planning to encourage small business...
...We did something about slavery, too, and we no longer accept the doctrine of unavoidable depression, unemployment, or poverty-stricken farms...
...In times of raw material shortages they have the power to preempt supplies for their own purposes...
...Reliable figures from Dun & Brad-street, the Federal Trade Commission, and the Securities and Exchange Commission show that the net growth in the number of business concerns stopped in 1953, after growing by 200,000 new concerns in the previous four year period...
...But it is in the increasing subordination, subjection, and growing dependence of small and so-called independent business that the great danger lies...
...But in the large view, what is the basic predicament of small and allegedly independent business which in numbers of units amounts to about 4,000,-000 of the grand total of 4,200,000 business units in the country...
...They are the one force which the Communist leader Lenin saw as the strength of capitalism...
...Free enterprise and price competition, except at the consumer, farm, and retail levels, are gradually disappearing...
...The decisions of monsters like General Motors and U.S...
...Under true democracy every citizen should have the right to have every act of power, economical and political, that is exercised over him, constantly questioned, examined, publicized, and if necessary changed...
...Giantism is not evil in a vacuum but we do not live in a vacuum...
...An automobile dealer is bound to confine the application of "new ideas" and "independence of decision" to the limits of what the manufacturer permits, under penalty of forfeiting his contract...
...Only to the extent that we have done something about it did we throw off the yoke of George III and build this great country...
...But what public-spirited citizen would choose to make our representative government smaller or weaker in the presence of the new giants of industry...
...Just as it plans today for economic balance and prosperity, so must the government plan for whatever degree of healthy competition and free enterprise we are to have...
...The academic economists have receded from ideas of pure competition to T. K. QUINN was formerly senior vice-president of the General Electric Company...
...I submit that the social efficiency of powerful General Motors, for example, cannot be measured by its balance sheets, profit margins, or stock market quotations...
...He wrote "Giant Business: Threat to Democracy" and, just published, "Giant Corporations: Challenge fo Freedom...
...There may be a certain independence of ideas and decision in the hundreds of thousands of barrooms, poolrooms, and barber shops that is not quite so marked or eloquent in the hundreds of thousands of hot-dog and coffee stands, road snack joints, beauty shops, appliance and notion stores and repair stations...
...They have been substantially reduced to slogans that no longer either fairly or fully describe our economic society...
...The elephant that walks over ant hills is to the ants an evil...
...To the extent that they are not free or independent to experiment with new men, processes, and products, the future is endangered...
...Organization, so universally applicable, has swept over the modern world...
...We must plan and do something to avoid it...
...And the subordinate suppliers by the thousands will be further integrated by purchase or mergers into their billionaire combines...
...And what do we mean by "efficiency...
...We were pleased indeed to see the Hilton hotel syndicate slightly restricted, the patent monopoly of A.T...
...legislators and public officials are deeply indebted to them...
...Reporting to the U. S .Senate in March of 1955, for a committee studying the subject, Senator John Sparkman stated, among other things: ". . . there are obscure, complex and underlying forces at work within our economy that are inimical to the future of small, independent enterprise . . ." ". . . Your Committee has long been disturbed over the multiplying evidences of concentrations of economic power in the managements of relatively few huge corporations...
...Its enormous purchasing power is a constant threat over the heads of tens of thousands of so-called independent businesses...
...In die first six months of 1954, the latest period for which figures are available, 10,300 fewer businesses of all types were started compared with the corresponding period of 1953, and Dun & Bradstreet recorded 2,224 more failures involving court proceedings or voluntary action likely to end in loss to creditors...
...Methods of control over goods and production, like voting and civil rights, provide answers to the needs of the individual...
...Is opportunity left open for new companies to enter the field...
...The gigantic oil industry serves as an illustration of the loss of independence by over two hundred thousand dealers who are pitifully under the control of the giant oil companies...
...In a flight of rhetorical fancy, the President's Council of Economic Advisers said in its 1955 report, "Our economy is strong and progressive because it contains, in addition to its five million farm enterprises, four million independent centers of business decision, each potentially free to experiment with new ideas, new m.en, new methods and new products...
...He carefully avoids any question of the dominance of private economic power...
...But these consent decrees, and others like them, can only slightly affect competition and free enterprise...
...The big corporations can create "ghost towns" by moving factory operations from one community to another...
...We face a truly alarming condition which the Senate Small Business Committee concludes will ultimately change the fundamental character of the American economy...
...The big are getting bigger and the small get smaller and fewer...
...Nor is any question raised as to how or why we ever permitted any private interest to get into the position of such command over the economy...
...The smug beneficiary of our system may proudly say, "I am a Nineteenth Century believer in freedom, who chooses it in preference to 20th Century liberalism because this so-called liberalism has come to mean increasing authority for the government...
...We have entered a new era of national planning and control by government and by giant, private corporations...
...Suppliers of parts to the giant companies are told what prices they may charge and are required to meet the most difficult specifications...
...We cannot reasonably oppose smaller mergers so long as we permit such huge combines as U.S...
...It is for the people of this republic to decide what minimum number of manufacturers in automobile and other industries we want to have continued...
...The simple fact is that most of the 4,000,000 small businesses of the country cannot fairly be considered free in any realistic sense...
...They are as hungry and predatory as giant corporations and they eat mice...
...Competition has been losing ground as a constructive force...
...Healthy competition and free enterprise, too, are democratic conditions and values that falter and lapse into decay unless they are constantly fostered and supported by an informed, determined, and appreciative society...
...They have influence everywhere...
...Great changes are taking place in the organization of our society as well as in the more obvious mechanical developments of the times...
...Otherwise the private giants will make the decision...
...Steel— a combination of 149 other corporations...
...They set profit rates and prices and largely decide whether or not the public is to be victimized by inflation...
Vol. 20 • June 1956 • No. 6
