A Question of Size

Abraham Lincoln once defined the proper length for a man's legs: long enough to reach the ground. Nobody has yet found such a simple way to measure the proper size for U.S. corporations. After five decades of sporadic U.S. trustbusting, the problem was still unsolved: Who could fix the boundaries beyond which corporate growth ceased to be healthy and became malignant?

Last week in Manhattan, at a forum sponsored by the Trade & Industry Law Institute, some topflight economists and lawyers tried to chart a way for the U.S. around the dilemma of bigness. Gaunt, grey Dr. Edwin G. Nourse, ex-chairman of the President's Council of Economic Advisers, led off with an attack against the current policy of the Truman Administration's trustbusters. Their heavy emphasis on the prosecution of big companies, said he, should be abandoned.

Dr. Nourse thought the Federal Government should recognize that bigness in itself is no evil. Said he: "Large-scale operations are essential to greater achievement and efficiency. The Government should accept business practices which . . . promote trade or facilitate maximum production. It should virtually abandon the attack on bigness as such."

100 into 1,000? This did not mean that monopoly should be condoned. It is a principle of U.S. democracy, said Harold J. Gallagher, president of the American Bar Association, that "monopoly and privilege shall not be permitted to grow up in the land." Said Gallagher: Congress hould "formulate specific legal standards o measure the legality of business practices"--a yardstick that could be read and understood by all.

To date, the Government's only remedy for bigness has been dissolution. But would it solve anything to split the 100 largest U.S. companies into 1,000? Edward S. Mason, dean of Harvard's Graduate School of Public Administration, bought not. Dissolution, said he, should DC reserved only "for situations in which size can be shown to hamper competition."

Manhattan Lawyer James V. Hayes, himself a onetime assistant U.S. Attorney General, put his finger on the basic trouble with the Government's antitrust policy. It was a "case-by-case approach," he said, following no thought-out long-range policy. It attempted to regulate the enormous U.S. economy of 1950 with a law drafted 60 years ago. "It may result," said Hayes, "in breakups of large enterprises even though it might be socially and economically advisable to maintain them as they are."

One into Seven? There were signs last week that these and other attacks on the trustbusters, notably the newspaper campaign of the Great Atlantic & Pacific Tea Co., had gotten under the Justice Department's skin. Before the National Retail Dry Goods Association in Manhattan, Attorney General J. Howard McGrath loudly denied--as he has before--that he is prosecuting bigness as such. Even in the case of the A. & P., McGrath said the question was not size but the company's "illegal gains at the expense of the American public and their competitors." The A. & P. is guilty and knows it, McGrath charged.

After this angry blast, McGrath held out an olive branch--of sorts. The department would be perfectly willing, said he, to listen to any reasonable proposition by A. & P. and settle the antitrust suit out of court. Did McGrath insist on breaking up A. & P. into seven separate companies, as the suit had asked for? Not at all, said McGrath; that was merely his department's "suggestion." Said the surprised A. & P.: this is the first time it had heard anything like that. But as long as the trustbusters kept swinging their club at bigness itself, neither A. & P. nor any other corporation had much hope of finding the yardstick to measure the difference between bigness and evil.

Officers of Philadelphia's five biggest department stores-appeared in federal court last week on a charge that they had conspired to fix prices by agreeing to sell goods in certain price ranges at a uniform price. The effect, said the Justice Department, was to raise prices which had been between 90-c- and 97-c- to a uniform 98-c-, those between $1.86 and $1.97 to $1.98, and so on up. The merchants said that they had abandoned the practice last October or November. On their plea of nolo contendere they were fined $2,500 each.

*Wanamaker's, Gimbels, Snellenburg's, Lit's and Strawbridge & Clothier.

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