Automatic Age

68
T he A
u t o m a t ic
would probably be enough to enable
them all to .make a profit. It is
likely, though, that this remedy
would prove to be only temporary.
After a time, these remaining con­
cerns would find that the competition
which had been bothering them still
existed despite the fact that, as far
as they are able to see, the source of
the competition has been removed.
I f business men would dig deeper,
they would find that their serious
competition does not, as a rule, come
from inside their industries. The
worst competition nearly always lies
outside o f the industry. It comes
from another industry making a pro­
duct or offering a service that is be­
ing sold as a substitute for the pro­
duct or the service that you are
offering.
A
ge
coming from outside their industries.
In fact, at first this outside competi"
tion did not exist to any great ex­
tent. Competition among industries
did not become noticeable until about
1900. Since then, competition o f this
character has been increasing each
year.
So, perhaps, it was natural for the
earlier associations to feel that by
reason of the organization they had
succeeded in killing inside com pel'
tion, and were, therefore, free to
manipulate conditions for the b enefit
of the members of the1 group.
In some instances they began to
fix prices, to raise prices and in other
ways to bring about conditions that
virtually
eliminated
competition
within the industry. It was to meet
situations such as this that the Sher­
I
have been studying this question man Law, the Clayton Act, and the
Federal Trade Commission Act were
o f outside competition for several
passed. By virtue of these statutes,
years. It is both my observation
it is illegal for business men to en­
and experience that it is the under­
gage in any practice that directly or
lying cause of most o f the major ills
indirectly restrains or limits compe­
o f business. I am not alone in this
tition.
belief. Dozens of our greatest in­
dustries have come to the same con­
As the Government began to take
clusion, What is more—many of
action against various associations
these industries have proven that it
for violating these anti-monopoly
is this outside competition that was
acts, and the courts began to hand
the cause of their troubles. We
down decisions upholding these stat­
know this because since these indus­
utes, it looked bad for the trade-
tries took steps to fight back at in­ association movement. Several as­
vading competition, they have found
sociations jumped to the conclusion
their troubles gradually disappearing.
that if the whole question o f price
Now let us see what these steps was prohibited, the trade association
had no other excuse for existence.
were that these industries took. They
got together and formed associations.
But this was a short-sighted view
The manufacturers within an indus­
of the matter. Dealing with ques­
try stopped fighting one another, and
tions of price and . engaging in prac­
banded together to fight the indus­ tices to restrain competition are two
tries that were cutting in on their
of the least important things that an
fields.
association can do. There 'are actu­
Trade associations began to be or­ a lly hundreds o f other activities in
ganized on a fairly extensive scale
which it can engage, of vastly more
in this country in the period follow­
value to the members. In fact, we
ing the Civil War. For forty or fifty
now know that combinations to up'
years, however, the business men
hold prices and to establish monopo­
who entered these associations did lies are worse than useless. They do
not recognize their competition as not come within a thousand miles of
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