THE RESTRAINT OF TRADE ACTS.

The country has now had many years' experience with these acts; they have received constant interpretation by the courts, and the working results in our economic fabric in some directions are out of tune with our economic development. No one would contend that there be relaxation in the restraints against undue capital combinations, monopoly, price fixing, domination, unfair practices, and the whole category of collective action damaging to public interest. There has been, however, a profound growth of understanding of the need and possibilities of cooperative action in business that is in the interest of public welfare. Some parts of these cooperative efforts are inhibited by law to-day, but, of much wider result, many are stifled out of fear or shackled from uncertainty of the law. The two latter factors are far more widespread than can be appreciated except through wide contact with economic activities, and they definitely impede our national progress upon right lines. Relaxation of the acts has already been given by legislation in favor of the farmer and trades-unions, but the farmer and laborer are being even more greatly injured by these destructive shackles upon business in many directions, which produce instability of employment and increase distribution costs, than they were by the direct influence of these acts upon their own affairs.

At the time the Sherman Act was passed, the country was in the throes of growing consolidations of capital. These were consolidations of actual ownership, and the country was alive with deserved complaint of domination in business, in attempts to crush competitors with unfair practices and destructive competition. Collective action in its sense of benefit to public interest was much less known and, at any rate, was probably not contemplated as coming within the meaning of the act. In any event there is a wide difference between the whole social conception of capital combinations against public interest and cooperative action between individuals which may be profoundly in the public interest. The former extinguishes individualism through domination; the latter greatly advances it and protects it. Cooperative action has, however, struggled for development through the growth of chambers of commerce, trade associations, and conferences of one kind and another in an effort to meet various sorts of crises, to improve business standards, and to eliminate waste in production and distribution.

It is true that some minority of such activities has been used as a cloak for action against public interest, but it is also true that a vast amount of action in public interest has

been lost and even great national calamities brought upon us by lack of cooperative action. A case in point is that the instability of the bituminous coal industry and the disintegration of its employers' associations by pressure under the restraint of trade acts contributed directly to the prolongation of the coal strike, as no adequate organization of operators existed which could meet and bargain with the workers who were free from all restraint. The whole movement toward cooperative action arises from a fundamental need to which we must give heed. Where the objectives of cooperation are to eliminate waste in production and distribution, to increase education as to better methods of business, to expand research in processes of production, to take collective action in policing business ethics, to maintain standards of quality, to secure adequate representation of problems before the Government and other economic groups and to improve conditions of labor, to negotiate collectively with highly organized groups of labor, to prevent unemployment, to supply information equally to members and to the public, upon which better judgment may be formulated in the conduct of business; then these activities are working in public interest. There are some twenty-odd different functions of cooperative action which are at the same time in the interest of the different trades and the community at large. Any collective activity can be used as a cloak for conspiracy against public interest, as can any meeting of men engaged in business, but it does not follow because bricks have been used for murder that we should prohibit bricks. There is, moreover, a very wide differentiation between cooperative action open to an entire trade or region of a trade and capital combinations, because the former may be dissolved instantly without any disturbance of capital or production and does not represent increasing domination of a group of individuals in a trade, but the democratic development of a whole industry.

It has often been argued that the original intent of the restraint of trade acts was not to inhibit any sort of economic collective action which was in interest of public welfare, and that the time has come when the act should be limited so as to leave free all such action. Without entering upon debate as to the difficulties of such a course it is possible to consider a narrower field of liberalization of law; that is, for the law to be liberalized to the extent that cooperative organizations generally, as distinguished from capital consolidations, should be permitted to file with some appropriate governmental agency the plan of their operations, the functions they proposed to carry on, and the objectives they proposed to reach; that upon approval such of these functions as did not apparently contravene public interest might be proceeded

with; that upon complaint, however, either of individuals or the law officers of the Government that these functions had reacted against public interest, then after a hearing before some suitable tribunal the right to continue these particular functions should, if the complaints are justified, be suspended. If thereafter these functions were continued, or if it should be proved that the activities had been extended beyond the functions in the original proposals, the organization should be likewise subject to prosecution under the present acts. Parties who did not wish to avail themselves of this privilege could continue in the present status.

All who know the situation in such matters will realize that the problems of cooperative action are mainly the concern of the smaller businesses. Such a measure as that suggested above would serve actually to protect small business and thus to maintain competition. Big business takes care of itself. Legitimate trade associations and other forms of business cooperation would be greatly stimulated along lines of public welfare if such a plan were adopted.

It appears to me that the time has come when we should take cognizance of these necessities if we are to have a progressive economic system. Its growing complexity, its shift of objective and service, require a determination based upon a proper sense of maintenance of long-view competition, initiative, business stability, and public interest.

UNEMPLOYMENT DUE TO THE BUSINESS CYCLE.

The slump we have just passed through was in part the rotation of the business cycle of alternate prosperity and depression in our productive industries. Thirteen times since the Civil War have we passed through these experiences. Their human interpretation is always vast unemployment, suffering, and stagnation of enterprise. If the future is like the past, such periods will reoccur.

The peak periods of boom are times of speculation, overexpansion, wasteful expenditure in industry and commerce, with consequent destruction of capital. The valleys are periods of economy and gains in national efficiency. It is the wastes, the miscalculations, and maladjustments, grown rampant during the booms, that make unavoidable the painful processes of liquidation.

The obvious way to check the losses and misery of depression is to check the destructive extremes of booms. Mitigation of booms and depressions is a task for consideration by our business men and bankers, by labor, by the producer and the con

sumer, and so far as it involves Government employment, by our legislatures. The intelligence of a people who have solved prevention of the financial panic and its interpretation into the widespread waste of bankruptcy can surely apply itself also to some measure in the solution of the prevention of commodity slumps and their fatal interpretation in vast unemployment.

Nor are the lines of solution wholly visionary. The special committee of eminent business men, manufacturers, and economists appointed through this department are convinced that in certain directions it is possible at least to devise some mitigation of both peak and valley. For instance, sound public policy plainly indicates that a smaller percentage of public work should be undertaken when private industry is active and a larger percentage in periods of depression, when capital and labor are not fully employed. It is surely short-sighted policy for public-work activities to compete with private industry for men, money, and materials when private industry is fully engaged. It is estimated that fully one-third of our construction industries lies in the control of local and General Government. Moreover, these possibilities do not lie alone in governmental works but can be translated into the larger public utilities.

Another direction in which mitigation can be secured is by a much more effective statistical service, through which better judgment may be formed by business at large as to the true picture of current business trends. It is possible to point out in retrospect the disaster from overstocking and speculation which came upon many industries during the last depression, due solely to lack of information as to the volume of stocks in raw materials and manufactured goods; to lack of knowledge at an early date of the incipient signs of retreating consumption. Such statistical information, its understanding and use, would in itself contribute greatly to stabilization by erecting signs of danger and clear road ahead.

Part III.-LEGISLATION NEEDED.

The requirements of the organic act include recommendations for the effective performance of the department in fostering and developing commerce and industry. In this purpose many steps are needed in matters directly connected with the departmental activities, in revision of legislation that has not kept pace with our national growth, to make for better administration and public welfare. Further Reorganization of the Department of Commerce.

A great deal of study has been given during the year to reorganization in the department in order that it may more ef fectively serve American commerce and industry and effect economies in Federal administration. The Department of Commerce was created "to foster, promote, and develop the domestic and foreign commerce, mining, manufacture, shipping, and fishing industries, and the transportation facilities." Excluding all of the semijudicial functions in the Government respecting these matters and excluding the Shipping Board, there are still a large number of functions of the import designated in the organic act which are administered outside the department. They lie in seven different departments and independent agencies of such widely divergent major purposes as the War and Navy. There is inevitable overlap, duplication, and lack of concentration of purpose. In the interest of economy, efficiency of administration, and better service to the public, all the functions of the Government of the character enumerated in the organic act should be at once concentrated in three different groups (a) industry, (b) trade, and (c) navigation, and each should be under an assistant secretary. Whether each of these groups is brought into this department is secondary to the necessity for the grouping itself in order to obtain concentration of purpose and elimination of overlap. Direct savings of upwards of $1,000,000 per annum in administration could be made and many times this amount given to the public in increased values and service. Foreign-Trade Zones.

Foreign-trade zones in the ports of the United States have long been urged by trade and official bodies as a measure of benefit American commerce, as they eliminate waste of time,