BIGNESS AND CONCENTRATION OF ECONOMIC POWER-A CASE STUDY OF GENERAL MOTORS CORPORATION 1. INTRODUCTION One of the fundamental issues to which the Subcommittee addressed itself was the problem of determining what should be the proper relation of the antitrust laws to business size and concentration. Vast changes have occurred in the size and structure of the American economy since the Sherman Act became law. That the great advances in technology, transportation, management, and distribution, which have made possible the incredible growth of our economy, have brought great benefits to the American people is attested to by the high and still-increasing standard of living which we enjoy and of which we are so justly proud. At the same time, an industrial transformation so dynamic and far-reaching has inevitably been accompanied by destruction of old ways of doing business and the creation of new patterns. One of the most striking changes which has taken place is in the size and power of business firms. Many factors in our present business system undoubtedly contribute to, and in some cases, necessitate, large size and a high degree of concentration. If bigness and concentration give cause for concern, it is not because of a failure to appreciate the material benefits which we have derived from mass production or a failure to recognize the place of large-scale enterprise in the economic world. Rather, such concern stems from a deeprooted sensibility of the need for maintaining adequate opportunities for the same kind of individual initiative, and adequate freedom for the same kind of business innovation, which to a large extent have made possible the progress we have achieved. On the subject of bigness and concentration, the Report of the Attorney General's National Committee to Study the Antitrust Laws is largely silent. It inadequately treats the problem of oligopoly, confining itself for the most part to a consideration of existing law dealing with conduct which results in restraint of trade or monopolization. The Attorney General's committee stated that there was a need for factual studies by which the report's specific recommendations could be tested. However, it did not feel that it was equipped, or that it was its function, to make the type of factual findings that would be required. Such matters are properly within the province of the Subcommittee, and its activity in this field can make a vital contribution to the preservation of our system of free competitive enterprise. In the course of its inquiry the Subcommittee received a wide range of proposals for dealing with the antitrust problems engendered by business size and concentration. Some have suggested placing a limit or ceiling on business size either in terms of absolute size or of a given percentage of an industry or market. Still others have proposed that the Government be empowered to prevent business integration not justified by production or distribution economies and to compel the reorganization of excessively large enterprises. A number of economists have maintained that the basic antitrust problem at the present time is not so much business size as such, but rather "oligopoly," i. e., the domination of industries or markets by relatively few producers whose competitive behavior is characterized by "mutual forbearance" instead of active rivalry. Others believe that if a business has grown to large size without resort to unfair or predatory practices the Government should have no right to regulate that size. Still others stress the need for a "positive approach" to the problems of business size and concentration, such as measures for strengthening smaller enterprises or facilitating the entry of new enterprises into industries where such entry is now extremely difficult if not virtually foreclosed. In order to obtain a close insight into the workings of large corporations in our business system, the Subcommittee undertook a "case study" of the biggest manufacturing enterprise in the United States, the General Motors Corp. On November 8, 1955, the Subcommittee began public hearings which continued until December 9, 1955. At the commencement of the hearings, Senator Joseph C. O'Mahoney, acting chairman, announced: The hearings which open today are an attempt to continue the review of the antitrust laws which was initiated in the summer of 1953, by the present Attorney General of the United States, Mr. Herbert Brownell, Jr. The committee which he appointed consisted of lawyers, economists, and professors. Their report was submitted to the Congress on March 31 this year, and the Antitrust and Monopoly Subcommittee of the Senate Judiciary Committee, headed by Senator Harley M. Kilgore, of West Virginia, has been studying the report ever since. Many hearings have been held, at which the heads of great business corporations, including corporations engaged in the automotive industry have testified, and today we launch a study of the General Motors Corp., the largest manufacturing company in the world. General Motors and its wholly owned subsidiary, General Motors Acceptance Corp., are respectively the largest manufacturing and sales finance companies in the world. In its manufacturing operations General Motors operates 119 plants in 64 cities in the United States as well as plants in 18 foreign countries (VII, 3481).1 It employs more than one-half million persons in its worldwide activities. General Motors Corp. and its sales finance subsidiary utilize banks in 289 cities, including all cities with populations of over 350,000 persons and some below that level (VIII, 4024). It owns and operates insurance companies and a capital financing unit for dealerships. It is the leading producer of passenger cars, trucks, automotive parts, buses, and locomotives in the world and an important producer of off-thehighway earth-moving machinery. It is the single largest prime contractor for defense equipment in the country. Also, contrary to the popular belief that soaps, cigarettes, and breakfast-foods manufacturers are the leading advertisers, General Motors has the country's largest advertising budget, about $100,000,000 (VII, 3671). General Motors produces 5 passenger car lines in the United States and 3 abroad. Since 1931 it has been the leading producer in this field, and in each of the past 2 years it has sold more cars in the United 1 References to roman numerals are to part (volume) and page of the printed hearings. |