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GIFT OF 
 
 

 The Anti-Trust Laws 
 Special Reference to the Mennen Co. Decision 
 The Hardwood Lumber Decision 
 And the Edge Resolution 
 
 An Address hy 
 
 FELIX H. LEVY 
 
 Of the New York Bar 
 Former Special Counsel to Dept. of Justice 
 
 Delivered Before the 
 
 AMERICAN SUPPLY & MACHINERY 
 
 MANUFACTURERS ASSOCIATION 
 
 At Its Annual Convention 
 
 Held at 
 Atlantic City^ N. J. 
 May 9, 1922. 
 
/J-0 3.-77 ^ 
 
 Gift 
 
THE ANTI TRUST LAWS, WITH SPECIAL REFERENCE 
 TO THE MENNEN CO. DECISION, THE HARDWOOD 
 LUMBER DECISION, AND THE EDGE RESOLUTION. 
 
 Mr. Chairman and members of the Convention: I desire 
 at the outset to express my appreciation and thanks for the 
 privilege involved in your invitation to appear before you to- 
 day. Upon the courteous suggestion of your Secretary, Mr. 
 Mitchell, I came here from' New York a day or two in advance 
 of the time set for my address. The result has been that I 
 have been able to mingle with you and to listen yesterday, with 
 more than ordinary interest, to the proceedings of your Con- 
 vention so that, if I may say so, I feel in a certain sense like 
 one of your number rather than like a stranger from without 
 the gates. 
 
 I also had the opportunity of reading the stenographer's 
 transcript of the proceedings of your recent Birmingham Con- 
 vention, and I hope you will believe that I say it not in idle 
 words of flattery but with sincerity and as an observer outside 
 of your own field of combat, who perhaps therefore can get a 
 better perspective, that I have rarely read anything of more 
 genuine interest than the proceedings of that Convention. 
 
 I listened yesterday with great interest not merely to 
 the general proceedings of your Convention, but also to the 
 eloquent and inspiring address by Captain Gorby on ^'optim- 
 ism". And then, when I reflected on the proceedings of your 
 Birmingham Convention and, without making invidious com- 
 parisons, bore in mind the masterly presentation of various 
 topics affecting not merely your own industry but also the 
 country at large, by your President, Mr. Gladding, and the 
 scholarly and statesmanlike speech made by Mr. Williams, I 
 felt like adding to the catalogue pronounced by Captain Gorby 
 of the elements and items which ought to make us all optimistic, 
 the further element that a country which possesses an industry 
 like yours, containing men of the marked talents and vision 
 shown by Mr. Gladding and Mr. Williams and by many others 
 
 53953^ 
 
of your membership, that a country possessing such men need 
 not fear for its future. 
 
 If the majority of the members of the two houses of 
 Congress, were customarily men of the business experience 
 and acumen and of the vision and foresight of men like Mr. 
 Gladding and Mr. Williams, the welfare of our country would 
 be greatly promoted. 
 
 The gentlemen whom I have thus named, leaders in your 
 industry, are but types of the forceful, . aggressive and far- 
 sighted men who are to be found in every kind of industrial 
 activity in this country. Are our business men — endowed as 
 they are with rare gifts of energy, initiative and vision — free 
 to use their talents without hindrance? They are not, for, 
 aa I shall endeavor to demonstrate (to you today, they are 
 shackled and fettered by antiquated and out-worn legal 
 doctrines which have long ago been abandoned by Great 
 Britain and by all other civilized countries. I refer to the 
 ancient common-law doctrine known as "restraint of trade", 
 a doctrine born in England centuries ago to meet conditions 
 then existing but now utterly changed. 
 
 In England, with a system of jurisprudence vastly superior 
 to our own, the changed conditions of modern business have 
 progressively brought about an amelioration of this ancient 
 legal principle, so that today it rests very lightly upon the 
 shoulders of British industry; whereas in this country it re- 
 tains, virtually without change, its old-time rigor, to the great 
 detriment, as I shall endeavor to show, of our trade and com- 
 merce. 
 
 Economists who have studied the subject, maintain that 
 the greatest obstacle and hindrance to the legitimate exercise 
 of their natural powers and capabilities by the business men 
 of our country, is to be found in our own laws, framed by our 
 own servants, interpreted and enforced by our own ofiScials. 
 For such is the situation which the Anti-Trust Laws of the 
 United States have created as a result of a grave and funda- 
 mental misconception which has befallen those laws. 
 
 I shall devote a brief part of your time to a discussion of 
 the history and the evolution of the Sherman, Law. 
 
 It was passed in 1890 for a definite, distinct and exact 
 purpose. It was passed in order to disrupt, and prevent the 
 
recurrence of, great trusts — the whiskey trust, the oil trust, 
 the sugar trust, and the like. The debates in Congress indis- 
 putably show that to be the only purpose for which the Sher- 
 man Law was enacted. To a substantial extent it has per- 
 formed that duty. In breaking up, ineffectually, the oil trust 
 and the tobacco trust, the Sherman Law was not at fault, but 
 the officials were at fault who permitted farcical dissolutions 
 of those trusts — dissolutions which resulted in the greater 
 enrichment of the owners of those monopolies, but in little or 
 no benefit to the public. But that is not a criticism of the 
 Sherman Law. Court decisions without number show, on the 
 contrary, that it has performed, in a very substantial degree, 
 the purpose for which that law was enacted. 
 
 But when we examine the subject further, what do we 
 find ? We find that the operation of that law has been extended 
 far (beyond its original purpose of breaking up these great 
 combinations which did so much harm. They did great harm, 
 indeed. They did things which were oppressive and wicked 
 and, as Mr. Chief Justice Taft once said, it would "miake you 
 choke" to think that men would do to others what the con- 
 ductors of those great trusts did to their small rivals. The 
 result was that the people of this country were so inflamed, 
 their righteous indignation was so aroused, that it has not yet 
 cooled off and they have permitted that law to be extended to 
 the multitudinous details of daily business, so that there is 
 scarcely an act that a^erchant or a manufacturer can do by 
 way of concert with his competitor, which is lawful. As every- 
 one knows, it prohibits the discussion of price agreements. You 
 would be just as indictable for making a price agreement, or 
 an agreement to prevent overlapping of territory, as if, by 
 way of illustration, you committed arson. It is a crime in the 
 one instance and in the other. 
 
 A speaker who preceded me at your Convention, said that 
 this is "the most governed and the worst governed country on 
 earth". I adopt his phrase as a basis for saying that there 
 is not a country on earth that has a law which is interpreted as 
 is our Sherman Law. I took the trouble before I came here to 
 look up the laws of England on this subject. Now, I think 
 England is a pretty good example with respect to industrial 
 matters. Napoleon called it a nation of shop-keepers and 
 Britain is proud of the appellation. I believe the controlling 
 
thought of Lloyd George at Genoa today is the restoration of 
 trade activity, because that is the mainspring of the life of 
 nations. 
 
 The decisions of the English Courts are plainly to the 
 effect that cooperative activities of business competitors, which 
 are declared unlawful by our Sherman Law, are entirely law- 
 ful in England. Striking confirmation of this fact is furnished 
 by the definition or description of trade associations given 
 in the ''Encyclopaedia Brittanica", as showing the functions 
 of such associations in England. It is stated in these words : — 
 "Those which are themselves engaged in trade, .... 
 or which result from the combination of firms or individuals 
 in the same or connected trades, for the purpose of facilitating 
 or restricting Ipjroduction, limiting cofmpetition, regula^ting 
 prices, etc.". This is an open, avowed public declaration that 
 such is the purpose of trade associations in Great Britain. 
 What a striking contrast it presents to the permissible activ- 
 ities of trade associations in this country ! And now to show 
 you that in England the purposes thus stated are in fact per- 
 formed, I shall read to you briefly from a notable book, treating 
 of trade practices in Great Britain. It is written by a learned 
 professor, Prof. Macrosty of the University of Birmingham', 
 and is entitled "The Trust Movement in British Industry". 
 The book shows that every industry in Great Britain has a 
 trade association. The author, in describing their functions 
 and purposes, says: "Price Associations, the next highest 
 grade, aim at the regulation of sale prices as well as of the 
 conditions of bargaining, and exhibit a great variety of struc- 
 ture The simplest form is where the manufac- 
 turers or traders meet, either as individuals or as members 
 of an association for general trade purposes and determine on 
 a rise in prices to meet some special circumstance, such as an 
 increase in the price of raw materials. The agreed rise may 
 either be for an indefinite period so long as the conditions re- 
 main the same, or for a fixed period, after which competition 
 is once more free. Thus we find the Associations of Coal 
 Masters raising the price of coal at the beginning of Winter 
 and Associations of Grocers trying to make the retail price 
 of sugar follow advances in the wholesale price. The next 
 stage is where the members combine for a definite period, 
 usually a year, for the specific purpose of fixing prices from 
 time to time." 
 
It goes without saying that procedure of this nature on 
 the part of trade associations in this country would be grossly 
 violative of the Sherman Law. In order, however, to show you 
 that this procedure in England is done openly and not under 
 cover, and is done without legal interference, I call your atten- 
 tion to these succeeding statements made by Prof. Macrosty, 
 in which he specifically names two associations. In succeeding 
 sentences of his book other associations are also named, but 
 time will not permit me to read them now. 
 
 His further statement to which I refer, is this : "Regulation 
 may take place irregularly as trade demands, as is done by 
 the Fife Coal Association, or normally at meetings weekly, 
 monthly, or even quarterly, as in the case of the Midland Un- 
 marked Bar Association Generally speaking, 
 
 the rules of a Price Association provide the ordinary machinery 
 of a Committee, President, Secretary and Treasurer, annual 
 and other meetings. Sometimes a deposit of money, or secur- 
 ities, or a promissory note is required, out of which penalties 
 for breach of the rules are levied." (Laughter). 
 
 When you consider the contrast which the foregoing state- 
 ment of conditions prevailing in England present, as compared 
 with the conditions affecting trade associations in this coun- 
 try, you may well laugh. Of course, in speaking thus, I do 
 not mean to be flippant, for the subject involves too many seri- 
 ous aspects to be treated jestingly. I venture to suggest, as 
 I shall later more fully point out, that if Secretary Hoover, 
 in his laudable efforts to increase the efficiency of trade asso- 
 ciations in this country, would investigate the conditions thus 
 shown as prevailing in England, and determine whether the 
 more liberal policy prevailing in England may not, at least 
 to some extent, be utilized in this country, he would greatly 
 advance the useful efforts which he has been making in behalf 
 of trade association activities. 
 
 It may be said by the advocate of the strict enforcement 
 of the Sherman Law, that the practices thus disclosed as pre- 
 vailing in England are done without sanction of law. I have, 
 however, shown that they are done publicly and openly, and 
 I will now show that they have the highest judicial sanction 
 and support. I refer to the important decision rendered in 
 1912 by the Privy Council of England, one of the highest 
 
courts in that country, in a case which has become widely 
 known as the Australian Collieries case. 
 
 That important case arose in the following manner. The 
 great and progressive commonwealth of Australia has a statute 
 largely resembling our Sherman Law ; but, as you will see, very 
 differently enforced. Some years ago the entire coal industry 
 of Australia got together in one combination; the members 
 of the combination were the coal operators, the coal-carrying 
 steamships and railways, the wholesalers and the retailers. 
 Now that is A to Z, from the ground to the consumer. They 
 got together and agreed on how much each operator should 
 produce, at what price he should sell, what freight rates the 
 railroads and steamships should charge, and at what price the 
 retailer should buy and should sell. And a suit was brought 
 by the Attorney- General of the Commonwealth of Australia, 
 who asserted that this was a violation of the law; but the 
 Privy Council declared it lawful and stated: 
 
 "It can, in their Lordships' opinion, never be of 
 real benefit to the consumers of coal that colliery 
 proprietors should carry on their business at a loss, 
 or that any profit they make should depend on the 
 miner's wages being reduced to a minimum. Where 
 these conditions prevail, the less remunerative col- 
 lieries will be closed down, there will be great loss 
 of capital, miners will be thrown out of employment, 
 less coal will be produced and prices will consequently 
 rise until it becomes possible to re-open the closed col- 
 lieries or open other seams. The consumers of coal 
 will lose in the long run if the colliery proprietors do 
 not make fair profits or the miners do not receive fair 
 wages." 
 
 Now, I say, that is an astonishing statement when con- 
 trasted with Court decisions in like cases in this country, and 
 with the speeches you hear in Congress. For there they say 
 that the only one to be considered is the ultimate consumer, 
 that anything that prevents prices being reduced is detrimental 
 to the public, that therefore competition must be carried on to 
 the (Uttermost extreme and that competitors cannot get to- 
 gether in great emergencies and say, "We agree that the price 
 should be raised thus and so", in order that weaker members 
 of an industry shall not be ruined. The prevailing American 
 
 8 
 
argument is that competition is the life of trade. The dis- 
 tinguished Judge who wrote the sentence which I have read to 
 you, apparently believed that if competition is the life of trade, 
 it is usually the death of the competitors. 
 
 It is not open to the slightest question that if a situation 
 similar to that which was disclosed in the Australian Collieries 
 case had been presented to the courts of this country under the 
 Sherman Law, our courts would have declared the combination 
 thus disclosed to be unlawful. Indeed, there is not the slightest 
 doubt that persons comprising such combination would, under 
 the Sherman Law, have been subject to indictment and criminal 
 prosecution. 
 
 It will be observed that the controlling thought in the 
 minds of the Privy Council, which led it to declare the 
 Australian Collieries agreement to be lawful, was that such 
 agreement enabled the parties thereto to conduct their business 
 without loss, and that consumers of coal would "lose in the 
 long run if the colliery proprietors do not make fair profits". 
 In other words, the principle upon which the decision was 
 based is that competitors should be permitted to combine if 
 such a course is necessary in order to prevent the closing down 
 of the less remunerative units in the industry, and the con- 
 sequent loss of capital and reduction of the number of men 
 employed in the industry. 
 
 The courts of this country, in their decisions under the 
 Sherman Law, have acted in direct disregard and contradic- 
 tion of this principle. This is amply shown in numerous deci- 
 sions of our Supreme Court, of which the following are typical 
 instances. In the famous Danbury Hatters' case, the Supreme 
 Court declared certain acts to be unlawful, although, to use 
 the Court's words, "the impelling motive of the combination 
 was an effort to better the conditions of the combiners, which, 
 except for the anti-trust act, might be proper and lawful". In 
 another decision, the Supreme Court used the following lan- 
 guage : 
 
 "It is argued that the main purpose of this agree- 
 ment being to increase the trade of the parties, to en- 
 hance competition in a larger field, and improve the 
 character of the product, these objects are beneficial 
 to the public as well as to the private parties, lawful 
 
 9 
 
in their scope and purpose, and justifying the indirect 
 and partial restraint of trade involved in the execution 
 of the agreement .... Wider markets and 
 more trade may be the inducements to such agree- 
 ments, but they are purposes which the Act of Con- 
 gress does not permit to interfere with the freedom of 
 interstate traffic." 
 
 In another case, the Supreme Court, speaking of the pro- 
 visions of the Sherman Law, said: 
 
 "Nor can they be evaded by good motives. The 
 law has its own measure of right and wrong, of what 
 it permits or forbids, and the judgment of the courts 
 cannot be set up against it in a supposed accommoda- 
 tion, of its policy with the good intention of the parties, 
 and it may be, of some good results." 
 
 The comprehensive contradiction involved in the words 
 just quoted, to the principle upon which the Privy Council 
 acted in the Collieries case, is strikingly obvious. Our Supreme 
 Court viewed the case then before it from Alpha to Omega, 
 that is, from its motives or inception, to its results or con- 
 clusion ; and stated that even though its inception be character- 
 ized by good motives, and its conclusion be characterized by 
 good results, the provisions of the Sherman Law may never- 
 theless declare it to be unlawful. Can sharper contrast be- 
 tween the liberal policy of England and the drastic policy of 
 our country on this important subject be conceived? Can 
 any man, properly informed, doubt the severity, not to say 
 the harshness, of our Sherman Law ? 
 
 It is hard to realize that such contradictory conditions 
 can exist in Great Britain and in the United States. The prin- 
 ciple which I have shown as prevailing in England, prevails 
 in all other countries except ours. We are the only country 
 on earth which forbids cooperation. Why, the very principle 
 of our Government is, in a way, symbolized by the motto "e 
 pluribus unum", out of many, one, meaning strength from 
 union, or by the other motto, '^united we stand, divided we 
 fall." Children's copy books are full of these maxims. But 
 our laws say you cannot cooperate. You cannot cooperate on 
 anything that is really vital to your business progress, such as 
 
 10 
 
prices, territory, production and the like. Why, during the 
 depth of the business crisis last year, in my practice, which 
 often consists of advising trade associations and groups of 
 manufacturers, a number of them came to me in an unnamed 
 industry — I mean one I must leave unnamed^ — and said, "We 
 are in a terrible condition; we were prosperous in the flush 
 period which has just passed, but now we are nearly 'broke' and 
 if we continue to operate our factories we will be 'broke' ; there 
 are about fifty belonging to our group and we find it a most 
 urgent business necessity to shut down our factories". And 
 they said to me, "Can we under the Sherman Law through our 
 trade association pass a resolution that our factories shall be 
 closed up?" And, I said, "If you do, you will violate the law. 
 It involves a curtailment of j^our unrestricted competition and 
 it is unlawful." And they said, "We are not going 'broke' by 
 virtue of any such notion as that; and we will shut our fac- 
 tories. We absolve you from any blame. We will shut our 
 factories." They shut the factories and thereby husbanded and 
 retrenched their resources and when times improved tliey 
 opened them again and were ready to go on and continue busi- 
 ness, but they violated the law in doing it as surely as if they 
 had violated the law against grand larceny, burglary or any 
 other like offense. 
 
 This is a very extraordinary situation. It is very extra- 
 ordinary that manufacturers and merchants should be for- 
 bidden from cooperating with one another in matters like those 
 which I have mentioned, where such cooperation would be 
 clearly beneficial to them and to their industry. But the laws 
 of this country forbid such cooperation. In my opinion that 
 is a very extraordinary situation. The reason for it is that 
 the public in this country has regarded with suspicion all 
 acts of cooperation among competitors, ever since the flagrant 
 violations practised by the great and notorious trusts in the 
 earlier days — violations which the Sherman Law was enacted 
 to prevent and for the continued prevention of which that law 
 should be maintained. Still aft'ected and influenced by the 
 righteous wrath of a time that has gone, Congress has set its 
 face implacably against any amelioration of that law, which, 
 in this country alone, of all countries on earth, compels its able 
 and farsighted leaders of industry to refrain from utilizing one 
 of the most important and fundamental factors in the promo- 
 
 11 
 
tion of efficieucy, namely, cooperation, and forces them to cut 
 one another's throats in relentless competition. 
 
 But, I beg that in what I have said and shall say today, 
 I will not be misunderstood as seeking to justify the many 
 instances of wrongful restraints of trade which still exist in 
 this country, or as advocating the repeal, or even the relaxa- 
 tion in severity, of the statutes which are intended to prevent 
 and to punish monopolistic practices and injurious agreements 
 calculated to hinder free competition with resultant detriment 
 to the public and to the commonwealth. I hope you will pardon 
 the personal element when I say that I regard with pride the 
 fact that for a period of some years under President Roosevelt's 
 admjinistration, I was of Government Counsel in the prosecu- 
 tion of one of the great trusts, so that it is but natural that I 
 should regard with approval, as, indeed I do, the power given 
 to the Government by the Sherman Law to disrupt the great 
 monopolistic aggregations of capital which, until a decade ago. 
 infested the highways of commerce in this country. It is often 
 said in Congress and elsewhere that the Sherman Law has 
 proven ineffectual, or, as it was called on the floor of the Senate 
 a few days ago, a "dead-letter". The basis for this characteri- 
 zation is believed by expert students of the subject to be the 
 ineffective decrees of dissolution in the Standard Oil case and 
 the Tobacco Trust case. That these decrees were ineffective 
 in the restoration of true competitive conditions, and particu- 
 larly in the creation of a new situation whereby independent 
 competition on the part of relatively small traders could arise 
 and flourish, cannot be doubted. But those who have carefully 
 studied the subject agree that it is equally indisputable that the 
 unfortunate outcome of the Government's prosecution of those 
 two notorious trusts under the Sherman Law, was in no way 
 attributable to any defect or weakness in that Statute, but 
 was due entirely to the way in which the decrees of the Supreme 
 Court directing the disintegration of those great monopolies, 
 were executed. Authorities agree that the Sherman Law, as 
 an agency and an instrument for the disruption and repressing 
 of trusts or other like monopolistic combinations, is the embodi- 
 ment of the highest legislative and judicial wisdom. It was the 
 creation of the most able lawyers who have been members of 
 the United States Senate since the Civil War. 
 
 Even the most hostile critic of the effectiveness of the 
 
 12 
 
Sherman Law will not question its potency and infinite value 
 when he recalls that that Law was the basis upon which the 
 Government rested its prosecution of the Northern Securities 
 Company — a prosecution which resulted in complete success, 
 namely, a decree of the Supreme Court directing the dis- 
 memberment of the Securities Company and the release of 
 the two great railway systems which had been held in its 
 grasp. History will record many achievements of that great 
 American, Theodore Roosevelt, upon which his imperishable 
 fame will be founded; but it is a matter of regret to students 
 of economics that it will not be long remembered that it was 
 Theodore Roosevelt, as President of the United States, who 
 directed the prosecution of the Northern Securities Co. and 
 pressed it to a successful conclusion. His brave and far- 
 sighted action in so doing ought, indeed, to be inscribed high 
 up on the roll of the courageous and patriotic deeds performed 
 by him to the lasting benefit of his countrymen, for it is gen- 
 erally admitted that if he had not thus successfully invoked the 
 power of the law against the Northern Securities Co., all of the 
 railway systems of the land would speedily have been brought 
 within the grasp and control of a small number of "holding" 
 corporations similar to the Northern Securities Company, these 
 "holding" companies, in turn, controlled by a small group of 
 men, with a resultant condition which would have been truly 
 menacing to the well-being of the, Republic. 
 
 There is high authority for the statement which I have 
 just made to the effect that the Sherman Law, in bringing 
 about the disruption of the Northern Securities Co., proved 
 its inestimable value to this country. In an address recently 
 delivered by Mr. Justice Clarke, an Associate Justice of the 
 Supreme Court of the United States, he said, referring to the 
 Northern Securities case, that if the Supreme Court had 
 decided that case against the Government, and had thereby 
 decreed the legality of the Northern Securities Co., 
 
 "no man can overstate what the effect would have 
 been upon our country. If the case had been decided 
 the other way and men had been left free, through 
 corporate organization, to combine the other great 
 transportation lines of the country and other great 
 departments of business, it seems very clear that our 
 free institutions would long ere this have been sub- 
 
 13 
 
jected to a test of strength and endurance to which 
 every patriot must hope they may never be exposed. 
 This one case .... illustrates the fact that 
 the scope of the jurisdiction of the Supreme Court 
 has become so fateful that the effects of many of its 
 decisions upon the welfare of our country are as 
 great as would be the results of decisive battles in 
 a great war." 
 
 I submit that the forceful language just quoted, emanating 
 from the high source from which it did emanate, is proof of 
 the highest character that the Sherman Law has proven of 
 immeasurable value to our country, and that it ought forever 
 to remain upon our statute books as a warning and as a defer- 
 ent to great monopolistic aggregations of capital which, until 
 their power was broken by the force of the Sherman Law, 
 threatened, as has been so aptly expressed by Mr. Justice 
 Clarke, the very existence of the Republic. 
 
 I hold no brief for "big business" in the sense that I would 
 seek to mitigate or condone the wrongful and oppressive 
 methods which, a decade or more ago, were frequently used 
 by the great corporations of this country. We all remember 
 the public indignation that was aroused by the methods em- 
 ployed years ago by the oil trust, the whiskey trust, the sugar 
 trust, the tobacco trust and other like monopolies. We also 
 well remember the irregular practices of the railway, companies 
 with respect to the granting of secret rebates. I challenge, 
 however, contradiction by any student of the subject who is well 
 versed therein, of the statement that these practices have to 
 a substantially complete extent been abandoned. Such aban- 
 donment, it will also, I think, be agreed, was the result of the 
 exertion, primarily under the leadership of President Roosevelt, 
 of the majesty of the law as embodied in the Sherman Act, 
 and in the statutes forbidding rebating. In these respects, the 
 Sherman Law has fully vindicated its wisdom. It follows 
 that the criticisms of that statute so often heard in Congress 
 and on the political hustings, to the effect that it is a "dead- 
 letter" or that it has been "emasculated" (both of these expres- 
 sions are much favored by critics of the Sherman Law), have 
 no basis in fact. 
 
 Many other instances, quite familiar to the expert student 
 
 U 
 
of the subject, could be cited where the Supreme Court, acting 
 under the Sherman Law, has issued decrees of drastic and 
 compelling force in bringing about the disruption of other 
 great combinations. 
 
 No mian, versed in the subject, can, therefore, doubt the 
 high wisdom and effectiveness of the Sherman Law in its dis- 
 ruptive force and power against the great trusts ; and no right- 
 minded and patriotic man, so versed, could wish that the force 
 and power of the Sherman Law, in that respect, should be 
 abated one "jot or tittle". In what has just been said, I am 
 by no means unmindful of the decision of the Supreme Court 
 which declared the U. S. Steel Corporation (the so-called "Steel 
 Trust") to be lawful under the Sherman Law. An adequate 
 exposition of the distinction thus involved would require more 
 time than is permissible on this occasion. The steel industry 
 is so closely related to your own, that I venture to believe that 
 such an exposition would be interesting to you and I indulge 
 the hope that at some later Convention of your Association, I 
 may be given the privilege of presenting the legal aspects of 
 the "Steel Trust" decision, as showing that the Sherman Law 
 still remains as the most drastic and efficient statute of that 
 character upon the statute-books of any country on earth. 
 
 Nor, in what I have said and shall say today, am I unmind 
 ful of the shocking disclosures recently made and still being 
 made in, New York City by the Lockwood Committee under the 
 guidance of that brilliant lawyer and cross-examiner, Samuel 
 Untermyer. With a display of skill and of incredible industry 
 amounting to genius, he has uncovered and disclosed a con- 
 geries of unlawful combinations and practices, both on the part 
 of capital and of labor, that has astonished and shocked the 
 country. No man in his senses, would dream of condoning such 
 offenses, nor dare to suggest any amelioration of the laws which 
 proscribe such grave misdeeds. 
 
 But even Mr. Untermyer, with a sense of discrimination 
 which justly denotes, and does credit to, his high abilities, 
 admits, I believe, that there are many forms of co-operative 
 activity among competitors, now forbidden by law, which could 
 with advantage to all, be made lawful, provided that the exer- 
 cise of such co-operative power be placed under suitable govern- 
 mental supervision so that it may not be abused. In that, if 
 
 15 
 
I may say so, I fully concur. In short, my contention is only 
 that the statutory condemnation against co-operative agree- 
 ments should be based upon a common-sense foundation of just 
 discrimination, to the end that on the one hand oppressive and 
 injurious combinations or agreements in restraint of trade 
 should as now be deemed unlawful, while on the other hand, 
 co-operative agreements among competitors, calculated to pro- 
 mote, and resulting in the promotion of, the general welfare 
 of an industry and of the general public, should, under adequate 
 supervision, be deemed lawful and permissible. By so doing, 
 this country would but take its place by the side of Great 
 Britain — good company, I make bold to say, in the high enter- 
 prise of commercial and industrial progress. 
 
 I find that I have trespassed upon your time and patience 
 so much that I must, with all dispatch, proceed to some par- 
 ticular phases of the subject having a special application to 
 your industry, and other like industries. 
 
 There have recently been two further developments of the 
 law of this subject intimately affecting the trade and commerce 
 of this country. One is the recent decision of the Federal 
 Trade Comission in the Mennen Co. case, and the other is the 
 decision of the United States Supreme Court in what is known 
 as the Hardwood Lumber Co. case. I read in the report of 
 your proceedings at your recent convention held last month at 
 Birmingham, Ala., that a letter was read by your president 
 from some business concern calling attention to the Mennen 
 Co. decision and asking the attitude of your Association con- 
 cerning it; and that it was referred to this adjourned meeting 
 of your convention now being held at Atlantic City. So, with 
 your permission, I shall say something about the Mennen deci- 
 sion. 
 
 THE MENNEN CO. DECISION 
 
 By way of appreciation of your courteous invitation to 
 address you here today, and in order that I might be able to 
 discuss that decision more intelligently, I have obtained from 
 the Federal Trade Commission at Washington, all of the papers 
 and documents necessary to an understanding of the decision 
 in that case. As a result of a close study of these papers, I 
 feel justified in asserting that it is a most surprising decision. 
 
 16 
 
In substance the Menuen case is this : Complaint was made 
 against the Mennen Co. to the effect that they would not give 
 the same discount and therefore would not make the same 
 prices for the same quantities, to non-wholesalers as they 
 would to wholesalers. Apparently, in that industry there had 
 been developed a system of cooperative buying, by which re- 
 tailers grouped themselves together and bought through a 
 common source in what may be called wholesale quantities, 
 and the Mennen Co. refused to give to the retailers thus pur- 
 chasing in wholesale quantities the same price as it gave to 
 wholesalers. Apparently, the position taken by the Mennen Co. 
 was that the wholesalers were a necessary part of the plan 
 of distribution of that company, being in substance, you might 
 say, salesmen of the company, so that it seemed to the com- 
 pany to be good policy and calculated to advance the best 
 interests of the company to give a lower price to wholesalers 
 than to retailers even where the latter purchased the same 
 quantities as the former. The subject was fully considered by 
 the Federal Trade Commission which reached the astonishing 
 conclusion that this procedure on the part of the Mennen Co. 
 is unlawful. 
 
 With all of the respect and deference that a law-abiding 
 citizen must have for a governmental tribunal, I venture to 
 assert that this decision is wrong and cannot prevail. I have 
 here the brief of the Government counsel showing that he based 
 his demand that the Commission decide against the Mennen 
 Co., upon the contention that the company's procedure vio- 
 lated Section 2 of the Clayton Law. There never was a greater 
 misconception as to a proposition of law, as I respectfully 
 believe. Section 2 of the Clayton Law says in substance: 
 "It shall be unlawful for any person engaged in 
 commerce .... either directly or indirectly 
 to discriminate in price between different purchasers 
 of commodities .... where the effect of such 
 discrimination may be to substantially lessen compe- 
 tition or tend to create a monopoly in any line of 
 commerce." 
 
 Basing his contention upon the mere letter of this section 
 as thus quoted, and, as I respectfully believe, disregarding its 
 
 17 
 
history and its true intent as disclosed by such history, and 
 overlooking court decisions to the contrary, the Government 
 counsel claimed in his brief, and the Federal Trade Commis- 
 sion sustained the claim, that the Mennen Co. violated that 
 section. In my opinion, it did no such thing. Any one who 
 has studied the history of the Clayton Law knows that Section 
 2 was enacted for a totally different purpose. The section was 
 written in order to prevent the recurrence of practices fre- 
 quently employed by the great trusts in former years. For 
 example, the records of the Federal courts will show that some 
 years ago there was a minor cigarette company in the South 
 which had begun to make a cigarette which proved attractive 
 and a good seller, so that this minor company was beginning 
 to make some headway in the cigarette industry. Thereupon 
 the Tobacco Trust, in order to choke off and destroy the com- 
 petition of this minor company, started to sell a certain very 
 popular cigarette in the same territory in which the minor 
 company was selling its product, and, in order to prevent the 
 latter company from having a market for its product, the 
 Tobacco Trust not only cut the selling price of its popular 
 cigarette in that territory but actually gave away packets of 
 its cigarettes gratis on the streets of towns in the territory 
 in which the minor company was selling its product. During 
 this time the Trust was selling its popular cigarette throughout 
 the rest of the country at its regular prices. The result of the 
 discrimination thus practiced by it against the minor company 
 was only what might have been expected. Confronted with 
 the vast power of the Trust and unable to meet the ruinous 
 competition mentioned, the minor company failed in business 
 and went into bankruptcy. The court records will show similar 
 discriminatory methods which, in days now long past, the 
 Standard Oil Trust employed to drive out of existence smaller 
 competitors in particular territories. The purpose and the 
 effect of such procedure is manifest. The two trusts just 
 mentioned, and, perhaps, other trusts, resorted to a species of 
 discrimination in prices for the avowed purpose of driving out 
 of existence particular competitors in particular districts or 
 territories. It is this character of discrimination against 
 which Section 2 of the Clayton Law is aimed. In substance, 
 that section says to manufacturers occupying a dominating 
 position in an industry: 
 
 18 
 
"You cannot go into a particular district where 
 some competitor is selling his product in competition 
 with your product, and by discriminating in the sales 
 price of your product in that territory as compared 
 with your regular selling price elsewhere, drive that 
 competitor out of existence. For, experience has shown 
 that, with the power you possess, you can keep up 
 this price-cutting procedure until you drive your com- 
 petitor out of existence and then you will restore your 
 prices in that district to the same level as you have 
 maintained throughout the rest of the country, the 
 final result being that the community in question has 
 been deprived of the existence of a business establish- 
 ment whose continued existence would be helpful to 
 the community, and you have caused loss to the owners 
 of the competing industry which you have thus 
 destroyed and have driven into bankruptcy. This 
 procedure shall not be permitted, and, accordingly, 
 this section forbids you ^to discriminate in price be- 
 tween different purchasers of commodities', that is, 
 between the purchasers of your commjodities in the 
 particular district referred to as compared with the 
 purchasers of your commodities in the rest of the coun- 
 try, for the result of such discrimination will be 'to 
 substantially lesKsen competition or tend to create a 
 monopoly' in your line of business." 
 
 The point which I am now endeavoring to present is of 
 the essence of the matter under consideration, and I therefore 
 desire to emphasize that, in my opinion, the true intent and 
 meaning of Section 2 of the Claj^ton Law was to prevent con- 
 cerns of the nature of the great trusts which occupj^ a dominat- 
 ing position in their respective industries from destroying 
 competitors by discriminating in prices the territory in 
 which such competitors operate, while maintaining their regu- 
 lar prices elsewhere. 
 
 But the situation occupied by the Mennen Co. is quite dif- 
 ferent. It is not claimed by the Government, nor can it be 
 claimed, that the procedure adopted by that Company has 
 hurt or can hurt any competitor of that Company. The Mennen 
 Co., by the procedure referred to, does not aim, nor could it, if 
 it wished to, aim to drive out of business some competitor or 
 
 19 
 
some particular brand manufactured by a competitor. The 
 effect and purpose of the Mennen system is to encourage and 
 keep alive wholesalers as a necessary element in the company's 
 scheme of distribution. This could not be done if retailers, 
 grouping themselves together and thereby being able to pur- 
 chase in wholesale quantities, should be able to obtain from 
 the Mennen Co. the same price as the wholesaler obtains. Obvi- 
 ously in such a case the wholesaler would lose the business 
 which he would otherwise obtain from the retailer, for if the 
 latter were unable to obtain the wholesaler's price from Mennen 
 Co., he would make his purchases from the wholesaler. If the 
 requirement of the decision made by the Federal Trade Com- 
 mission should be carried to its logical conclusion, it would 
 mean the destruction of the wholesaler. Clearly this would 
 be to the great disadvantage of Mennen Co. and of other like 
 large manufacturers. For with the multiplicity of articles 
 dealt in by such manufacturers, with the infinitely varied 
 quantities which retailers from time to time require, with the 
 vast number of accounts which the manufacturer would have 
 to carry, clearly the cost of doing business on the part of the 
 manufacturer would be enormously increased if he were de- 
 prived of the wholesale scheme of distribution and were com- 
 pelled to make his sales directly to the retailer. I digress to 
 say that every merchant knows that there are some lines of 
 industry where the number of articles dealt in are not numerous 
 and the quantities required by retailers are not necessarily 
 small and the number of accounts dealt in not necessarily large, 
 where direct dealing by the manufacturer with the retailer is 
 economically possible. But in a business like Mennen's, and, 
 for example, in the dry goods business, the jewelry business, 
 the hardware business, and the like, it is not economically 
 feasible for the manufacturer to deal directly with the retailer. 
 I repeat that it is presumably upon this sound economic basis 
 that Mennen has established his policy of preferential treat- 
 ment of wholesalers. The Federal Trade Commission has, how- 
 ever, in this important decision, declared this to be unlawful 
 and in violation of the Clayton Law. 
 
 I have stated that, in my opinion, the decision is contrary 
 to the purpose for which Section 2 of the Clayton Law was 
 enacted. I now venture to go a step further and to say that 
 this decision is directly in conflict with two of the most recent 
 
 20 
 
decisions of the United States Supreme Court under the 
 Sherman Law, namely, its decision in the Colgate & Co. case 
 and in the Beech-Nut Packing Co. case. In those cases Colgate 
 & Co. and the Beech-Nut Co., respectively, undertook to require 
 their customers to observe certain resale prices by refusing to 
 sell such customers as failed to observe such prices. In both 
 of those cases, the Supreme Court decided that this was law- 
 ful. I may add that the Federal Trade Commission, in the 
 Beech-Nut Co. case, had declared it unlawful and was reversed 
 by the Supreme Court in that respect. 
 
 The language used by the Supreme Court on this point 
 in the Beech-Nut case is : 
 
 "It is settled that, in prosecutions under the 
 Sherman Act, a trader is not guilty of violating its 
 terms who simply refuses to sell to others, and he may 
 withhold his goods from those who will not sell them 
 at the prices which he fixes for their resale." 
 
 Now you will observe that, although the Supreme Court 
 said, in substance, "You are not compelled to sell your cus- 
 tomer at all if you do not wish to do so", the Federal Trade 
 Commission now says to the Mennen Co. "You must for like 
 quantities sell to the retailer at the same price as you sell to 
 the wholesaler." This is equivalent to saying to the Mennen 
 Co. "that you are obliged to sell to the retailer and also that 
 you are obliged to sell to him, for the same quantities, at the 
 same price as you sell to the wholesaler." I respectfully sub- 
 mit that, as a matter of law, this dictum involves a contradic- 
 tion of the decisions of the Supreme Court in the Colgate and 
 in the Beech-Nut cases. 
 
 Now, permit me to read to you from the brief of the 
 Government counsel in the Mennen case, where he sums up the 
 accusations made against the Mennen Co. and points out what 
 he claims to be the objects that Mennen had in mind in estab- 
 lishing the policy under consideration. He says the purposes 
 of Mennen were threefold ; namely, that, in making a discrimi- 
 nation in price as between wholesaler and non-wholesaler his 
 purpose was, first, to force the resale of its products at its 
 suggested prices. I submit that the Supreme Court, in the 
 Colgate and Beech-Nut cases, has decided that Mennen had a 
 perfect right to do this. 
 
 21 
 
Second, that the object of Mennen was "to penalize eflfi 
 ciencj and economy." I say, quite respectfully, that it seems 
 incredible that such a proposition should be seriously asserted. 
 But it was asserted, in the words as above quoted, by the 
 Grovernment counsel. I venture to say that it is a surprising 
 thing to assert of Mennen, or of any business concern, that 
 its object under any circumstances is "to penalize efficiency and 
 economy." Of course, what was meant was that Mennen, in 
 endeavoring to keep alive the wholesale scheme of distribution, 
 was tending to minimize the field of operations sought to be 
 occupied by what are known as "cooperative purchasing 
 agencies". I shall not stop to explain the meaning of this term, 
 as it is well understood by you and by merchants generally. 
 But surely Mennen did not have in mind any onslaught upon 
 such purchasing agencies, or any purpose to penalize them, or 
 to lessen their efficiency. His aim clearly was to keep alive the 
 wholesaler as a necessary element in his scheme of distribu- 
 tion ; and if in doing so the "cooperative purchasing agencies" 
 should lose business or otherwise suffer, clearly this was not 
 because Mennen was endeavoring to "penalize efficiency and 
 economy". 
 
 Can you imagine the executive head of the Mennen Co., 
 or any sane executive head of any business concern, having in 
 his mind or in his heart any such foolish — nay, detestable — 
 purpose as the "penalizing of efficiency and economy"? And 
 yet the Government counsel has seriously urged this as one 
 of the motives actuating the Mennen Co. in the matter now 
 under consideration. 
 
 The third purpose stated by the Government counsel is 
 to "satisfy complaints and demands of individual members of 
 the National Wholesale Drug Association — competitors of 
 cooperative wholesale houses". 
 
 Now, what is there wrong about that, either legally or 
 morally? Under what kind of a government are we living if 
 Mennen has not the right to endeavor to please its customers, 
 if it does so by methods which are economically, moralh% and 
 legally correct? Clearly the procedure is unobjectionable from 
 an economic and a moral standpoint. And with all confidence 
 I venture the assertion that no legal decision can be cited to 
 show that such a procedure is objectionable from a legal stand- 
 
 22 
 
point, bearing in mind that the objection as above quoted 
 which was made by the Government counsel is that Mennen 
 sought to satisfy the complaints and demands of individual 
 memhers of the Drug Association. There are decisions that, 
 if a manfacturer yields to the united demands of the memlbers 
 of an association thereby acting under the coercion of numbers, 
 it may be unlawful. But there is no decision which holds that 
 a manufacturer may not of his own free will and accord meet 
 the individual requests or demands of the members of an asso- 
 ciation. I respectfully submit that none of these three grounds 
 of objection urged by the Government counsel and sustained 
 by the Federal Trade Commission, is sound in law. And yet 
 they are the accusations made against the Mennen Co. which 
 have resulted in the Federal Trade Commission denouncing the 
 policy established by that Company. 
 
 I respectfully, and with all deference, venture to say that 
 the order tbus made by the Commission will not stand, if, as 
 provided by law, it is reviewed by the Circuit Court. I cannot 
 imagine that any court of law would permit such an order to 
 stand. 
 
 THE HARDWOOD LUMBER DECISION 
 
 The next topic which I shall discuss is the decision of the 
 Supreme Court rendered a year or so ago in the Hardwood 
 Lumber case. This was a prosecution instituted by the Govern- 
 ment under the Sherman Law against a number of associations 
 and companies in the hardwood lumber business. In the 
 aggregate they constituted an important proportion of the 
 hardwood lumber industry. They had formed an "open price 
 competition system", and the evidence showed that they had 
 pushed to the full limit, the possibilities afforded by such a 
 sj^stem for the fixing of prices and the curtailment of produc- 
 tion. 
 
 Advocates of the open price plan contend that the purpose 
 of such plan is merely to acquaint its members with prices in 
 past transactions. They argue that thereby members are placed 
 in a more intelligent position to conduct their business, inas- 
 much as a knowledge of the trend of prices in past transactions 
 will enable them the better to forecast the future tendency of 
 prices and in that way the members will be able to govern their 
 selling policies more judiciously. Such advocates contend, 
 
 23 
 
however, that the open price plan is not intended to be the 
 basis or the medium, and is in fact not the basis or the medium, 
 for agreeing upon or fixing future prices or for doing anything 
 with respect to curtailing production by concerted agreement. 
 
 The court records in the Hardwood Lumber case show that 
 the Supreme Court viewed the purposes of the open price plan 
 employed in that case as having the definite purpose and 
 result of fixing future prices and of curtailing production. 
 In other words, the Supreme Court decided that the open price 
 plan was employed in that instance not for the limited pur- 
 poses urged by its advocates, namely, the obtaining of infor- 
 mation as to past transactions, but was employed to the full 
 limit of its possibilities for the purpose of fixing by agreement 
 future prices, and, likewise, for the purpose of agreeing upon 
 a curtailment of production. I quote the following from the 
 opinion of the Supreme Court in that case : 
 
 "But not only does the record thus show a per- 
 sistent purpose to encourage members to unite in 
 pressing for higher and higher prices, without regard 
 to cost, but there are many admissions by members, 
 not only that this was the purpose of the 'plan' but 
 that it was fully realized .... the 'plan' is, 
 essentially, simply an expansion of the gentleman's 
 agreement of former days, skilfully devised to evade 
 the law. To call it open competition because the 
 meetings were nominally open to the public . 
 cannot conceal the fact that the fundamental pur- 
 pose of the 'plan' was to procure 'harmonious' indi- 
 vidual action among a large number of naturally com- 
 peting dealers with respect to the volume of produc- 
 tion and prices . . . ." 
 
 Inasmuch as the Sherman Law by its own plain language, 
 reinforced by countless decisions of the Federal Courts, has 
 indisputably declared to be unlawful, concerted action among 
 competitors for the purpose of fixing prices and regulating 
 production, nothing is more natural than that the Supreme 
 Court should declare, as it did declare, the plan thus pursued 
 in the Hardwood Lumber case to be unlawful. As the Sherman 
 Law now stands, the Supreme Court could not reasonably do 
 otherwise. It is quite another thing to argue that, from an 
 
 24 
 
economic standpoint, agreements with respect to prices and 
 with respect to production, under suitable supervision and for 
 the purpose of meeting industrial emergencies, are commend- 
 able and should be deemed lawful. In Great Britain, as has 
 been pointed out, such is the law of the land. But it is not the 
 law of this land, and the Supreme Court, in my opinion, 
 decided the lumber case correctly ; and I venture to predict that 
 it will stand hereafter as a correct interpretation of the Sher- 
 man Law until and unless that law shall in that respect be 
 amended. 
 
 THE EDGE RESOLUTION 
 
 What I have just said brings me logically to a considera- 
 tion of the third topic which I desire to present to you today, 
 namely, the brave and commendable but diflScult enterprise 
 undertaken by Senator Edge, of New Jersey, as embodied in 
 what has now become widely known as the "Edge Resolution". 
 The resolution is thus entitled : 
 
 "Joint Resolution creating a committee to in- 
 vestigate existing conditions of industry and com- 
 merce in the United States for the purpose of recom- 
 mending to Congress legislation defining the rights 
 and limitations of cooperative organizations as dis- 
 tinguished from illicit combinations in restraint of 
 trade." 
 
 The resolution was elaborately debated on the floor of 
 the Senate, on April 17, 1922, but no action was taken thereon. 
 These debates contain the statement made by Senator Edge 
 that he is not a lawyer. Although the subject involves ques- 
 tions of a strictly legal nature. Senator Edge, with commend- 
 able courage and animated by the laudable purpose of liberat- 
 ing trade associations and the industries of the country gen- 
 erally, from the handicaps imposed by the Sherman Law, 
 undertook to present and to argue his resolution although he 
 knew he would be confronted, as he was in fact confronted, 
 by astute lawyers in the Senate who look upon any amendment 
 of the Sherman Law with horror. 
 
 The substance of Senator Edge's argument is that the 
 decision in the Hardwood Lumber case has caused such ob- 
 
 25 
 
scurity on the part of trade associations with respect to the 
 meaning of the Sherman Law and of its application to trade 
 association activities, as greatly to hamper their efficiency. 
 
 I regard the effort which Senator Edge is making as most 
 commendable, and, while I believe that he has set in motion 
 a suggestion which will eventually accomplish much good, I 
 am, nevertheless, strongly of the opinion that he is in error 
 when he states to be the basis of his resolution, the correction 
 of obscurity growing out of the Hardwood Lumber decision, 
 and when he further states, as he did state in the Senate 
 debates, that he did not aim at any amendment of the Sherman 
 Law for the purpose of carrying out his object of liberating 
 trade associations from the handicap under which they are 
 now resting. I say that, in my opinion, he was in error in say- 
 ing that there is any obscurity in the Hardwood Lumber deci- 
 sion, because there is, in fact, no obscurity. It is the same thing 
 that we have heard throughout the country for years past, 
 namely, that business men do not know what they may lawfully 
 do or may not lawfully do under the Sherman Law. That 
 assertion is not correct for, in the broadest sense, they do, or 
 can, know what they may do and what they may not do, if 
 they take the least effort to find out. Leaving aside mere 
 mjatters of administration or of executive management, they 
 cannot do anything lawfully under the Sherman Law which is 
 in the nature of genuine and practical cooperation, such as is 
 freely permitted in Great Britain and in all other countries 
 except this. The Hardwood Lumber decision does not in the 
 least involve any obscurity in this respect. It definitely and 
 clearly declares that trade associations may not lawfully fix 
 prices or agree upon production. The obscurity to which 
 Senator Edge alludes is not with respect to what that decision 
 means; but with respect to the wisdom of the law upon which 
 the decision is based. In other words, the question should not 
 be, "What does the Hardwood decision mean" for its meaning 
 is plain enough, but the question should be, "Why is it the 
 law as shown in the Hardwood decision, that trade associa- 
 tions are prevented from acting in cooperation with respect 
 to those subjects which, above all others, require cooperation, 
 namely, the fixing of prices when an emergency requires it, 
 and the curtailment of production when an emergency requires 
 such curtailment?" Of course this question should not com- 
 
 26 
 
prise the consideration of such a right when an emergency does 
 not exist, nor when the purpose is to fix prices extortionately, 
 nor when the production is curtailed so as to do damage to the 
 community. In such instances the law should remain as it is. 
 But where the continued existence of an industry in the face 
 of some emergency requires concerted and cooperative action 
 with respect to the fixing of prices and the curtailment of pro- 
 duction, it seems most logical and natural that such coopera- 
 tion should be permitted. This is true in England and in all 
 other civilized countries except ours. I have read to you to- 
 day, but it is worth reading again, the illuminating statement 
 made by one of the distinguished judges of the Privy Council 
 of England in the Australian Collieries case as follows: 
 
 "It can, in their Lordship's opinion, never be of 
 real benefit to the consumers of coal that colliery pro- 
 prietors should carry on their business at a loss, or 
 that any profit they make should depend on the miners' 
 wages being reduced to a minimum .... 
 The consumers of coal will lose in the long run if the 
 colliery proprietors do not make fair profits or the 
 miners do not receive fair wages." 
 
 Now I submit that when Senator Edge was confronted 
 by objections made by other senators to the effect that any 
 amendment of the Sherman Law was not to be dreamed of, his 
 correct reply should have been : 
 
 "My resolution is not aimed at clearing up any 
 obscurity in the Hardwood decision, for there is no 
 such obscurity. It is intended to liberate the trade 
 associations of this country and likewise the legitimate 
 trade and commerce of this countr^% as distinguished 
 from illicit combinations in restraint of trade and as 
 distinguished from trusts and monopolies, from the 
 antiquated and illogical handicap placed upon them 
 by the Sherman Law in forbidding resort to coopera- 
 tive agreements where the result of such agreemlents 
 will be beneficial to the industries involved and not in- 
 jurious to the community at large. The Commission 
 which the Edge Resolution seeks to create should be 
 given the power to investigate this important subject 
 in order to ascertain why it is that, in this country 
 
 27 
 
alone, trade associations and merchants generally are 
 forbidden to act in concert with respect to questions 
 like prices and production, even if such concerted 
 action be necessary for the continued existence of an 
 industry and cannot be harmful to the community. 
 In other words, the Edge Resolution boldly asserts 
 that the Sherman Law, in its just effort to repress 
 trusts and other monopolistic combinations, has gone 
 too far and commits a grave injury^ to the commercial 
 welfare of this country by extending its prohibitions 
 to concerted action upon the part of legitimate busi- 
 ness units possessing no power or purpose of creating 
 a monopoly. The Edge Resolution therefore aims at 
 an amendment to the Sherman Law which will provide 
 that, under suitable governmental control and super- 
 vision, trade associations and competitors generally 
 may agree with one another as to prices, as to produc- 
 tion, and as to other like fundamental matters, all of 
 which are now forbidden by the Sherman Law. 
 
 ^'In conclusion, the Edge Resolution asserts that 
 the obscurity which now exists is not an obscurity 
 as to the meaning of the law, but an obscurity as to 
 why it is that the law of this country, ignoring the 
 dictates of sound economy, disregarding the well-con- 
 sidered doctrines and judicial decisions of a leading 
 commercial country Uke Great Britain, forbids its 
 merchants from acting in harmony with one another 
 and compels them to compete with one another in the 
 dark and to the extent of relentless, cut-throat hostil- 
 ity." 
 
 SECRETARY HOOVER'S EFFORTS 
 
 Now, with all possible respect and admiration for Mr. 
 Secretary Hoover, whose notable achievements during the 
 European War have gained for him lasting fame, I venture to 
 point out that Mr. Hoover is laboring under the same misap- 
 prehension with respect to this important subject as Senator 
 Edge has labored. I think it was on the same day upon which 
 the Senate debated the Edge Resolution, namely, April 17, 
 1922, that Secretary Hoover met in his office in Washington, 
 by his own invitation, from five hundred to one thousand sec- 
 
 28 
 
retaries of important trade associations for the purpose of 
 discussing the means whereby the efficiency of such associa- 
 tions could be promoted. In doing this Mr. Hoover did a most 
 commendable thing, for the trade associations of this country 
 — and I refer to those whose purposes are entirely legitimate 
 and proper — have been and are laboring under great disad- 
 vantages — disadvantages which I respectfully believe are un- 
 justly and unnecessarily placed upon thenn by the laws of this 
 land. 
 
 I respectfully believe that just as Senator Edge has over- 
 looked the fact that trade associations are not handicapped 
 by any obscurity in the law, but are handicapped by definite 
 barriers created by the law, so, also, Mr. Hoover has overlooked 
 the like fact. 
 
 I believe that Mr. Hoover will perform a service to his 
 country equal in its importance to the inestimably valuable 
 services which he has already rendered, if he will boldly state 
 that the Sherman Law requires amendment for the reason 
 that it forbids cooperation among merchants in broad fields 
 where cooperation is vitally important; that no other country 
 does this; that other countries like Great Britain have forged 
 far ahead of us in the world's commerce ; that they have done so 
 largely because of the handicaps placed by our laws upon the 
 trade and commerce of this country; that these laws should 
 be amended so as to permit such cooperation in the same 
 manner that is permitted in Great Britain ; that such permis- 
 sion should be safeguarded against the abuses which human 
 cupidity has shown will arise, by the creation of suitable Gov- 
 ernmental supervision and control in order to make sure that 
 the permission thus given will not be abused by utilizing it 
 for the purpose of practising extortion or suppressing compe- 
 tition or creating monopoly. 
 
 The courts of England have found no difficulty in thus 
 safeguarding the similar liberty given by the laws of Great 
 Britain to the merchants of Great Britain. There can be no 
 reason why similar safeguards cannot be established and en- 
 forced in this country, to the end that the merchants of this 
 country (I speak of plain business units and not of great mon- 
 opolistic combinations) may be liberated from the obstacles 
 and barriers imposed upon them by the laws of this country — 
 
 29 
 
obstacles and barriers which check their initiative, impair 
 their energies, prevent reasonable and sensible cooperation and 
 drive them, against their will and against their interests, into 
 relentless and senseless competition with one another. 
 
 THE SUGGESTED REMEDY 
 
 I believe that if the state of the law on this subject, which 
 has resulted in such an anomalous and potentially hurtful 
 decision as that which was rendered in the Mennen case, and 
 which has been exemplified in the Hardwood Lumber case, 
 and which Senator Edge and likewise Secretary Hoover have 
 by mistaken methods, laudably sought to correct — if this state 
 of the law of this country were plainly set forth before the 
 people of this country and before the Congress of this country, 
 a just understanding of the subject would result, and a just 
 and proper discrimination would be created with respect to 
 the distinction between the wrongful practices of monopolistic 
 combinations and the beneficial activities arising from coopera- 
 tive measures on the part of plain merchants — all to the end 
 that the incubus and burden placed upon the trade and com- 
 merce of this country shall be removed and our merchants 
 placed upon a par with the merchants of Great Britain. We 
 have all recently read the courageous statement made by 
 Senator Borah, of Idaho, a man of statesmanlike stature and 
 calibre. He had the courage, a few weeks ago, to say on the 
 floor of the Senate that, even if it cost him his re-election, his 
 conscience compelled him to declare himself in opposition to 
 the so-called "Bonus Bill", because he thought it was based 
 upon erroneous financial, economic and patriotic foundations. 
 I venture to suggest that, if statesmen of the courage and fore- 
 sight of Senator Edge and of Senator Borah (others also could 
 be named), could, through the efforts of trade associations 
 such as yours, acting in conjunction with other like important 
 associations, be persuaded to take up this subject in the force- 
 ful and vigorous manner in which both of these distinguished 
 senators have taken up and pressed forward other important 
 measures, a proper understanding of the question would result 
 and, remedial legislation would be adopted whereby the diffi- 
 culties which I have mentioned as resting upon the industries 
 of this country would be corrected and the merchants of this 
 
 30 
 
country be placed upon an even footing with the merchants of 
 Great Britain and of other countries, all to the lasting benefit 
 and advancement of the trade and commerce of the United 
 States. 
 
 CONCLUSION 
 
 I beg your indulgence for a final word. The trade and 
 commerce of the entire world has been shaken to its founda- 
 tions by the destructive effects of the European War. The 
 countries of Europe are, for the most part, bankrupt. The 
 business of this countrj^ during the years 1920-1921 underwent 
 an experience the like of which has not been seen since the 
 Civil War. Bankruptcies occurred to an amazing extent. It 
 is generally believed that, except for the beneficial influence of 
 the Federal Reserve Law, the number of bankruptcies would 
 have been vastly increased. Many business concerns which 
 were hot driven into actual bankruptcy, have to a large extent 
 been so imipaired financially that they are barely able to con- 
 tinue. It is generally believed that the worst of this condition 
 has passed and that the commerce of this country is gradually 
 regaining its vitality. While this recovery will be steadily 
 progressive, the best opinion is that a period of years must 
 elapse before the commerce of this country will regain its 
 normal vigor and prosperity. This slowness of recovery will 
 be attributable largely to the badly crippled condition of most 
 of the European countries, especially Russia and the countries 
 formerly known as the "Central Empires". 
 
 Under these circumstances can any reasonable man doubt 
 that there is a paramount duty upon the part of the public 
 of this country and upon the part of the Congress of this coun- 
 try, to view the problems which beset the business men of 
 this country, with a sympathetic and a helpful mind — to the 
 end that the business of this country may be placed in the 
 most advantageous position to overcome the difficulties which 
 now rest upon it as a result of the most destructive war that 
 human history has recorded; and to the end that the business 
 of this country may be equipped to regain its former position 
 of vigor and prosperity and to meet the competition of the 
 business men of other countries upon an equal footing? 
 
 31 
 
Finally, if "in union there is strength", if it be admitted 
 that cooperation is a natural human tendency, and if it be 
 admitted that the laws of Great Britain have found a way by 
 which cooperation among its merchants is permitted without 
 at the same time permitting injury to the Commonwealth, why 
 may not this country throw off the burden which is the nega- 
 tion of all of the foregoing and by suitable amendment of its 
 laws permlit its merchants helpfully to cooperate with one 
 another and no longer be obliged, against their will and against 
 the general interests of the Republic, to-dfisd^oy one another 
 
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