How Bad Is Big?

In Atlantic City last week, General Electric's broad-shouldered President Charles E. Wilson rose to grapple with the toughest problem confronting U.S. big business. The problem: How can big corporations make long-range plans to expand, provide more jobs and produce more goods in the face of the Federal Government's determined attempts to break up bigness?

"There is not a shred of actual evidence," Charlie Wilson told an electrical dealers' convention, "that bigness has been an evil force either economically or socially. No company and no industry has yet been big enough to bring enough goods to enough people. To fulfill its promises and deserve its power, industry must continue to grow." There are few large industrial concerns today anywhere near monopoly proportions, said he. In fact, many small businesses, built around closely held patents, "come much closer to having a monopoly."

Same day, in Philadelphia's federal district court, Antitrust Chief Herbert Bergson went after a small company which had closely held patents: Servel, Inc., sole maker of U.S. gas refrigerators. Charged Bergson: Servel has a monopoly on gas refrigerators, through exclusive licenses from Sweden's Aktiebolaget Electrolux, founded by International Financier Axel Wenner-Gren (TIME, Jan. 5, 1948). Bergson asked the court to break up the patent arrangement. Servel's Chairman Louis Ruthenburg retorted that his company already competed with "a dozen large manufacturers aggressively in the market with refrigerators of all types, sizes and prices."

A Fresh Appraisal. Bergson had gone after small companies before (e.g., part of Philadelphia's live fish industry). But his major strategy had caused even such Administration stalwarts as Secretary of Commerce Charles Sawyer to worry, with Charlie Wilson and other businessmen, about the effect of antitrust's attacks on the U.S. economy. As chairman of a Cabinet-level committee which includes the Attorney General and the Federal Trade Commission chairman, Sawyer had sought for months to "clarify" vague antitrust procedures', so far with little success.

Secretary Sawyer was convinced that the measurement of corporations should not be their size, but their efficiency in providing better goods at lower prices. "Public policy," said he last week in a speech before the Harvard Business School Association in Boston, "should continue to favor the development ... of limited advantages" for companies which develop new and better products. He had no fears of diminishing competition. "Those who claim that competition does not exist between giant firms," he said, "do not know what they are talking about. The competition which goes on between large business organizations is as real as the struggle between contending armies in war."

What Sawyer was seeking was "a fresh appraisal of American competition in fact," to "see if our legal situation conforms to the real-life facts . . . What we need is a new, modern definition of competition . . . upon which we can base a realistic clarification of the law."

Eager Herb Bergson, 41, thought there was no need for clarification. The most zealous trustbuster since Thurman Arnold (who brought 341 antitrust suits in five years), Bergson obviously preferred the vagueness of the present laws; they were broad enough for him to find specific "violations" for almost any target he might choose. And he had found plenty. In two years he had filed 116 cases and had already won 58 of them in the lower courts.

A New Answer. Time & again Bergson had insisted that he was not prosecuting business for bigness. "Size in itself," says he, "is not an antitrust crime," But Bergson firmly believed, in line with the U.S. Supreme Court in the tobacco case four years ago (TIME, June 24, 1946), that companies big enough to restrain competition were violating the antitrust laws, even though they never made any attempt to do so. The natural result was that almost any big corporation was a potential target for the antitrust sharpshooters. Last week Trustbuster Bergson was reported getting ready to attack the U.S. Steel Corp.

What worried Secretary Sawyer, and businessmen in general, about the Bergson attacks on bigness was the failure of the Government to recognize the realities of mass production and mass distribution. Providing they were efficiently run, only huge aggregates of capital and manpower could turn out the most efficient and cheapest products. In short, they felt that the solution was not to break up efficient giants and thus cut their efficiency; the solution was to let them grow bigger as long as they did not actually restrain competition.

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