Grosscup on Anti-Trust Laws, V: Securing an Interest in Combinations

This portion of Judge Grosscup’s talk brings in an assumption with which we disagree: that the process of capital formation in an advanced economy necessarily means that enterprises must be big, bigger, and biggest just to survive.  On the contrary, given the use of future savings to finance new capital formation and the operation of a truly free market, enterprises should be the optimal size for efficiency, not big or small to fit preconceived ideas.  This does not, however, invalidate the point Grosscup was making.  As he continued,

People Have No Means of Securing an Interest in Combinations

No means of securing ownership.

The third fact is, that the people’s lack of ownership in the incorporated property of the country is not because the men and women who have saved something have no wish to set these savings at work for something more, nor that the workman and employee have no wish to have some proprietary part in the enterprise to which they are attached, but chiefly because, as the corporation is now organized and managed, there is no reasonably secure way to set such savings at work, or to acquire such part toward the general diffusion among the people of incorporated property, both the national government and the States thus far have been entirely indifferent. They have acted as if, having invited settlers into some fertile new region, the hands of the states and nation were at once withdrawn, leaving the land without law. It is indeed a thousand times worse than that, for such a region would be small and remote, while the region covered by the corporations of the country is bounded only by the nation’s boundaries, and lies close at every man’s door. At every turn of the year we see some part of this region of incorporated property ravaged — during the past few months deeply ravaged — but we stand still, never thinking, perhaps, that it is on account of just such ravages, and of the indifference of our national and state government, that the country’s richest property field is effectively withdrawn from popular occupation — that the whole institution of private property is suffering shocks that may eventually wreck it.

There is still another fact that must not be overlooked, and that is, that competition will never be effectually restored until the capital of the country, springing, as it does, from every quarter of the country, and from the energy and frugality of all her people, is at the call, not of those who would suppress competition, but of those who would encourage it; and that this will never be the case until the corporation, the only medium through which capital can effectively be wielded, becomes, in the eyes of the people, a trustworthy medium for the wielding of the people’s wealth and energy.

What, then, is the work that confronts us? Should we, for the sake of election tactics, be content to merely denounce or hawk at this industrial institution? Should we follow those so-called leaders who think that what it took the human race all its lifetime to build up can be taken down in a day and without a jar? They have had the center of the stage for a good while back and nothing practical has yet been accomplished.

Should we, on the other hand, go over to those who would leave the whole problem to time to work out — who would do nothing for fear that conditions might be disturbed? It is out of this do-nothing policy — this unrestricted license that has prevailed — that the problem has risen. But for that license the corporation scandals that confront us would not have been. Had the corporations been known trustworthy institutions the wealth of the country, instead of being poured into Wall Street, would have been expended elsewhere in the development of the country’s industries — each community depending much more largely upon itself for the means of working out its own development. And had our development proceeded on such lines, the bank failures that have been startling us for the last few days would not have occurred, for in nearly every instance such failure has been due to some overleaping personal ambition having too easy access to great money deposits. No, no. The work to be done is not to tear down, nor yet again to let alone. The work to be done is to reform — if need be, to rebuild — this intermediary between the country’s wealth and the country’s industries; to readjust it to the American instinct for fair play and for every man having a fair part in the affairs of life.

(Tomorrow: “National Commission on Corporation Reform”)

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