George Howard Earle, Jr.

“ The business man is the "risk taker"; and, as Adam Smith correctly points out, the universal rule is that hope triumphs over fear, and that this vital element of risk is nearly always underestimated. It will be remembered that the Supreme Court has already decided that requiring compensation for the consequences of this risk is not profit at all. Again, it must be borne in mind that the function of money in trade, misunderstood until the time of Adam Smith, merely consists in aiding in the circulation of commodities, and is not the substance of the matter at all. ”

“ The carrying on of trade by the use of money does not change its essential character, but merely permits the various exchanges, of which trade is made up, to be divided into parts or steps, and thus more easily effected. When commodities are exchanged for money, but half a full exchange is completed. When a man sells a thing for money, it is to use the money in buying some other thing—and it is only as money has this power that anyone wants or will take it. ”

“ Everyone knows now that because of the impossibility of performing the burden of supplying adequate facts, millions of dollars of property, as a fact, have failed to receive the protection of the guarantees of the Constitution, and have suffered confiscation by the Government. ”

“ It was found that in a certain class of cases, such as water, gas, electric, and transportation companies, the public convenience was best served by the organization of enterprises monopolistic in their nature; and so great has been the evil of monopoly that the State has never given up its continuing control of such enterprises; even preferring all the uncertainty, danger, and difficulty of arbitrary and noncompetitive price fixing to the greater evil of permitting a substantial power of taxation to rest in the hands of individuals not representative of the people who pay the taxes. ”

“ That prima facie, the market price, that is to say, the price that is ever resulting from freedom in competition, is the right price; the one that will restrict over production and at the same time stimulate the needed production in times of scarcity. ”

“ It is beyond all possibility to prove that a matter is not what it is, and always has been.
It is manifest that in cases of a monopolistic nature, a decision in favor of the Government price is not necessarily a decision that the price fixed is reasonable, much less reasonable beyond all reasonable doubt (the Supreme Court is ever pointing out how uncertain and difficult the matter) , but is merely a decision that those complaining have not sustained the burden of proof placed upon them by public policy ”

“ A merchant knows only that it must take place, as it already has in the case of silk and leather commodities involving not only many individuals, but a great nation, in serious financial difficulty. All of us now know, as John Stuart Mill says, in "Principles of Political Economy," [24] "When a commodity * * * can be made in indefinite quantity * * * if the value * * * is such that it repays the cost of production with a higher rate of profit, capital rushes to share in this extra gain, and by increasing the supply of the article, reduces its value. ”

“ On the other hand, when we come to consider the production and sale of common commodities, the production and sale of which are open to anyone, without State grant or assistance, and there being no danger of this monopolistic taxation, it has been proven through the centuries that they will always, and inevitably, seek the "natural" or "normal" price that will tend to fair exchange with other commodities, and that absolutely no other method was ever tried with any success. ”

“ If anybody could know price fixing it would be the Supreme Court. Its decisions have been, in effect, always wise and right, and as correct as human genius permits, because it has always protested against and thoroughly realized the impossibility of performing this task satisfactorily even to itself. That no one else could have done better is easily demonstrated. ”

“ It is not thought necessary at the present moment to state the results that then had been reached at Common Law, and finally buttressed by the Constitution, with minute exactness or in great detail; but generally it was held that all restraints of trade—that is to say, "trade" itself, not merely "traders,"—where their restraint did not restrain trade itself,—were against the public welfare, and injurious; and that the greatest of all trade evils was when they reached the point of monopoly. ”

“ What man, when inflation and war have driven prices 400 per cent. above normal, can predict beyond reasonable doubt, when and how prices will recede below normal, although all know that this terrible decline and consequent risk are inevitable?
No more complete demonstration of the impossibility of the average human mind solving such uncertainties can be found than in the results of these efforts of the Courts, made necessary because of the monopolistic nature of this class of enterprise. ”

“ In the first place, at the end of the year, his illusory profit would, at the lowest, have to be divided with the Government. His taxation would, at the least, be fifteen million dollars, and then at any moment, and certainly some time, under demonstrated rules of political economy, the tremendous increase of production, inevitable from the stimulus of such prices, must drive the price below the original price, and probably keep it there for years, until increased consumption catches up with the oversupply thus resulting. ”

“ One who invests his money in a business of a somewhat hazardous character is very properly held to have the right to a larger return without legislative interference, than can be obtained from an investment in Government Bonds or other perfectly safe security. ”

“ Such attempts at price fixing, from their very nature, could not permanently succeed, and only tended to confusion and a resulting increase of prices through the accompanying increase of risk and uncertainty.
That the Harvester case is right, the Lever Act wrong, if it is to be so interpreted, seems of the easiest test.
Men may, of course, be indicted if (as Justice Holmes says in the Nash Case) "in many instances," they do not use the ordinary reasoning of the average man; to punish them for not having higher powers would be pure despotism. ”

“ But, as statisticians generally agree that but one man who attempts business out of each ten, succeeds, that would be to declare a thing only guessed at, proven beyond reasonable doubt, in the face of the fact that the chances of the guess being right is "only one in ten."
And when that does occur to any large degree, it is largely the result of unusual and superior ability in guessing. Under modern methods, most of these great businesses are conducted by corporations, whose stocks can readily be obtained on the Exchange. ”

“ It is manifest, therefore, that if this power of forecast really existed, those happily possessing it would shortly divide the wealth of the world. It is equally manifest that if the agents of Government, or members of juries could, even in a majority of cases, forecast such matter, no amount of salary that could be paid them would be adequate to keep them in Government employ. ”

“ And it is equally well known that annual returns upon capital and enterprise the world over have materially increased, so that what would have been a proper rate of return for capital invested in gas plants and similar public utilities a few years ago furnishes no safe criterion for the present or for the future. ”

“ Where an existing freight rate is attacked, the burden is on the complainant to establish that it is unreasonable in fact. * * * While some elements of value are fixed, the market price of property and work is affected by so many and such varying factors as to make it impossible to lay down a rule by which to determine what any article or service is worth. ”

“ Before coming to the question of profit at all, the Company is entitled to earn a sufficient sum annually to provide not only for current repairs but for making good the depreciation and replacing the parts of the property when they come to the end of their life. ”

“ In the second place, it is demonstrated that the great body of Americans engaged and expert in the business were equally wrong, because, had they purchased their supplies in an adequate amount at the then market price, the subsequent rise would have been impossible, because of a lack of market. Again, you have a demonstration of the impossibility of which the Supreme Court so well treats in the Harvester case. ”

“ A finding, therefore, that any charge is illegal because of the omission of such an essential feature, is a conclusive finding that those traders who have included it in their calculations have done so reasonably, and that if there is no ascertainable basis of reaching a definite test, no basis that excludes as a necessary element speculation, guessing or surmise, they have not, at least beyond all reasonable doubt, violated their duty ”

“ Finally, with all this the Supreme Court had to predict the disaster that has come, were it not to receive still further and better assistance. And all these high experts were dealing with the easiest possible cases of price fixing; all of them had all the resources of the Government at their service, and, as has been said, none of them had to act hourly, with no time for deliberation or investigation, as is inevitably the case in the sale of commodities. ”

“ The world would be at their feet. The truth is that if laws against profiteering could be just, there would be no occasion for profiteering at all; for if there were no excessive risks or inordinate losses to be guarded against, there would be no occasion for equal profits to balance them, as all men could grow enormously rich, by the continued flow of never-failing gain. A broker, some years since, stated that not one per cent. ”

“ Later, that the writer may not be thought to stand alone in his conclusions, undisputed authority will be quoted to sustain the views expressed. The present effort is only to state their results succinctly. The primary distinction of business from other means of gaining livelihood is "risk taking." ”

“ That all this has been realized by the generations who have built up the Common Law upon the subject, through an unvarying experience, came from the fact that during that time the nature and character of business was gradually being learned and understood. ”

“ Loans are not the only kind of contract of which Governments have thought themselves qualified to regulate the conditions better than the persons interested. There is scarcely any commodity which they have not, at some place or time, endeavored to make either dearer or cheaper. ”

“ There then came the inevitable competition from all parts of the world, and an enormous drop of nearly the equivalent of thirty-eight dollars a barrel for refined sugar has taken place—a decline, doubtless, largely in excess of any advance for which anyone has been indicted, and, yet, a decline that was as inevitable, at some time, as further large declines that are sure to take place. ”

“ It is a delicate and dangerous function. * * * The Courts ought not to bear the whole burden of saving property from confiscation, though they will not be found wanting where the proof is clear. The Legislatures and subordinate bodies, to whom the legislative power has been delegated, ought to do their part. Our social system rests largely upon the sanctity of private property, and that State or community which seeks to invade it will soon discover the error in the disaster which follows. ”

“ That its real utility is not in changing commodities for money, but in facilitating the change of commodities for commodities. "The fact is, that all trade in the last analysis is simply what it is in its primitive form of barter, the exchange of commodities for commodities. ”

“ Most of these prosecutions when the matter is understood, are simply attempts to punish men for not exchanging a greater amount of sugar, for a less amount, or in other words for not agreeing to an actual confiscation of their stock. ”

“ It will be found that, even if standing alone, they demonstrate that a criminal statute such as the Lever Act cannot possibly be constitutionally enforced, because of the natural impossibility of proving that which is absolutely requisite. ”

“ Not only this, but the calculations have been so far astray that the Government itself, these industries being essential, has already had to tax the people millions of dollars, and will probably ultimately have to increase the taxpayers' burdens even by billions to relieve the situation. ”