"Ceremonial Channels"

Thurman Arnold has spent most of the last 16 years lecturing, wittily, on law. Last October, when he was a Yale Law School professor, Yale University Press published a book of his called The Folklore of Capitalism. In it he said of the anti-trust laws that their actual result "was to promote the growth of industrial organizations by deflecting the attack on them into purely moral and ceremonial channels. . . . Men like Senator Borah founded political careers on the continuance of such crusades, which were entirely futile but enormously picturesque, and which paid big dividends in terms of personal prestige." Senator Borah was on the Senate Committee which three months ago approved Thurman Arnold's appointment as Assistant Attorney General in charge of enforcing the anti-trust laws.

Mr. Arnold's predecessor in charge of trust-busting was Robert Jackson who, last December, ran up against a haymaker from Federal Judge Ferdinand Geiger in Milwaukee. For a year Mr. Jackson's department had been investigating the connection between the Big Three motor-makers (Ford, General Motors, Chrysler) and the Big Four auto-financing companies (General Motors Acceptance Corp., Commercial Credit, Universal Credit Corp.. Commercial Investment Trust). The Assistant Attorney General was trying to get criminal indictments against them for violating the Sherman Anti-Trust Act. But Judge Geiger discharged the grand jury when he discovered that attorneys for the companies were trying to settle with Robert Jackson out of court.

Judge Geiger thought that Robert Jackson had been using the criminal prosecution only as a threat to force the Big Three to cut the umbilical cord binding them to the "Big Four. Mr. Jackson and his boss, Homer Cummings, thought Judge Geiger was "arbitrary, unjust and unfair."

The Government's case against the auto-firms was briefly this: Half of all automobile sales, new and old, are made on terms. The Big Four finance companies handle an easy 70% of the new-car business. Also in the field are some 500 independents. Most auto dealers are on contracts with the factories; the factories, complained the independents,* could threaten to cancel the contracts unless dealers had their installment paper financed through their affiliated finance companies.

Despite the sudden end of the suit in Judge Geiger's court, another suit before another judge was still an immediate possibility. The companies (General Motors and G. M. A. C. excepted) continued to negotiate with the Attorney General's office for a consent decree. But the final draft proposed last fortnight by the companies' lawyers had so many complicated provisions that the jittery independents thought it was designed to give them even less business than usual. Negotiations broke off. Thurman Arnold had the criminal case reopened before a grand jury in Judge Thomas W. Slick's court at South Bend, Ind.

A few days later, Trust-Buster-in-Chief Arnold, who knows the value of publicity, got together with Mr. Cummings and put out a statement making their position clear. There was no earthly reason, they said, even though they were conducting a criminal anti-trust suit, why they should not also consider any "practical solution" which was "of major and immediate benefit to the industry, to competitors and to the public."

The grand jury was expected to take at least six weeks to come to a decision, but last week, after hearing 150 witnesses in five days, it returned three sweeping indictments. First was against General Motors, G. M. A. C., General Motors Sales Corp., Alfred P. Sloan Jr., William S. Knudsen, and 17 other General Motors and G. M. A. C. executives. Second was against Chrysler Corp., Chrysler Sales Corp., Dodge, De Soto, Plymouth, Commercial Credit Co., and 18 executives, including Walter P. Chrysler. Third was against Edsel Ford, Ford Motor Co., Universal Credit Corp. and twelve more executives. Maximum penalty for conviction on the indictments of violating the Sherman Act is $5,000 or a year in jail, or both. But the case is not likely to go before a jury until October, and Thurman Arnold presumably still believes in "practical solutions."

*It usually takes an organization of independents to get the Attorney General's office started. In the Madison Oil Case (see above) it was the National Oil Marketers' Association. In the auto case it was the American Finance Conference.

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