The Government's Week

Now that there is reason to believe Depression II has turned the corner, nothing is of more importance to business than the Government's drive to reshape the antitrust laws. Last week, as the Monopoly Investigation sharpened its pencils and Big Business received a thumping endorsement from the Brookings Institution (see col. 3), the Federal Trade Commission polished off a two-year investigation of the farm-equipment industry by proposing a major change in the 24-year-old Clayton Anti-Trust Act. This product of the first trust-busting era made it illegal for one company to purchase the capital stock of another when the result might substantially lessen competition or tend to create a monopoly. FTC claims that the farm-equipment industry is an example of this law's effective evasion through the purchase of competitors' assets rather than stock. FTC therefore recommended to Congress that the Clayton Act be revised so that no company controlling 10% or more of its industry can absorb any other company in the same industry.

First section of FTC's report on farm equipment went to Congress month ago (TIME, June 13), pointed out that eight companies dominate the field but that two are pre-eminent--International Harvester Co. and Deere & Co. Part II which went to Congress last week pointed out how these companies came to control a large portion of the market by buying up competitors, listed the following factors as "indicating serious monopolistic conditions": 1) dominant position of International Harvester; 2) big advance in farm-equipment prices as compared with other manufactured products; 3) price rigidity in farm equipment during Depression; 4) swift rebound of farm-equipment prices after the Depression years to levels higher than 1929; 5) International Harvester's greater profits in 1937 ,than in 1929 though farm income in 1937 was 18% lower than 1929; 6) only slight decline in International Harvester's prices during Depression but sharp declines in production and employment as contrasted with competitive industries; 7) exchange of price lists among companies; 8) evidence of dealer coercion.

International Harvester's President Sydney G. McAllister immediately retorted that his company's case had not been heard, that its high profits in 1937 resulted from the "unusual banked-up volume of sales to customers who had deferred purchases during the Depression," that FTC's analysis of price changes over the years "ignores" many factors, that "if decline in percentage of trade and extraordinary growth in competitors . . . indicates no competition and dominance by the company which has lost the trade, this can only be because of a unique conception of what constitutes competition and dominance. The FTC's conception is not, we believe, in accord with common understanding."

Last week the U. S. Government also did the following for and to U. S. Business :

P: Predicted the smallest cotton acreage for harvest since 1900--26,339,000 acres. Prices at once jumped from 9.04-c- to 9.17-c- a lb. for spot cotton.

P: Began interstate regulation of natural gas companies. Under the Natural Gas Act passed by Congress last month, the Federal Power Commission was given powers similar to those it has over interstate transmission of electricity. Last week FPC started a broad investigation of the whole field, filed preliminary rules & regulations for the industry effective July n, ordered the filing by all natural gas companies of rates, charges, contracts and agreements for the interstate transport and sale of natural gas.

P: Raised passenger coach fares for Eastern railroads from 2-c- to 2 1/2-c- a mile. Having refused this grant three months ago, the Interstate Commerce Commission reversed itself in keeping with the Government's broad policy of being as lenient as possible with the hard-pressed roads. But the new fares mean only an estimated rise of $32,000,000 in yearly income for the roads involved, only a slight aid since the Eastern roads are losing about $13,000,000 a month.

P: Started an investigation of freight rates for farm products. A favorite thesis of Secretary of Agriculture Henry Wallace is that freight rates should rise in good times, fall in bad. Under the new AAA set up by Congress five months ago, he was authorized to create a division of transportation in the Department of Agriculture with power to plead before the ICC. Last week Secretary Wallace started the ball rolling by putting Dr. Ralph L.

Dewey in charge of the department, assigned to work out a program of flexible freight rates for farm products. Because of the present state of U. S. railroading. no immediate demands for lower rates will be made. Dr. Dewey, sedate, brown-haired, 37, got his Ph.D. at University of Michigan, made special studies of transportation and public utilities, has lately been chief of the division of transportation for the Bureau of the Census and Bureau of Foreign and Domestic Commerce.

P: Jumped on the Elite Social Correspondence Register of Los Angeles. FTC announced that Elite's proprietors had agreed to stop saying that they are the largest advertisers in the social club world and that they have available for introduction to their members of both sexes persons who are "worth while," "cultured" and "wealthy." Said FTC: "They admit in their stipulation that they cannot always establish for their clients contacts which will lead to happiness and lasting contentment. . . ."

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