"Important Precedents"

Advertising, the flossy handmaiden of Big Business, has long tempted certain rapacious New Deal reformers. But with the U. S. still clinging to Freedom of the Press, nothing had been done about advertising (with the exception of liquor) until last week when Assistant Attorney General Thurman Arnold produced a scheme which, snorted Columnist David Lawrence, "makes the late Huey Long, who tried to put a tax on publications of large circulation, look like an amateur." Trust Buster Arnold's scheme was deftly dovetailed into the long-expected announcement by the Department of Justice that its anti-trust suits against Chrysler Corp.

and Ford Motor Co. for certain financing practices had been ended by consent decrees. In these decrees Ford and Chrysler not only agreed to refrain from coercing dealers to finance car sales through finance companies affiliated with Ford and Chrysler--they also agreed to stop advertising their affiliated finance companies exclusively. This gave Thurman Arnold his cue. Said he: "Monopoly is fostered when advertising is used to put competitors at a disadvantage for the sole reason that they do not have resources sufficient to expend equally large sums in advertising. . . . In the automobile financing field vast sums are spent by manufacturers to advertise the services of particular finance companies. . . . Like conditions obtain in the advertising of commodities, vast sums being expended to advertise particular brands of such common products as gasoline and milk. In the oil industry to take one example, refiners are deprived of their market because of the belief induced by great expenditure that good gasoline is sold only under particular trade names. . . ." Admitting that present anti-trust laws are inadequate to limit advertising. Trust Buster Arnold nevertheless argued that "the purpose of the anti-trust laws will be furthered if advertising is limited to its proper function of building up consumption. . . ." How this limitation was effected in the Ford and Chrysler cases was readily apparent in Mr. Arnold's announcement that "antitrust prosecution will not be compromised upon mere agreement to cease the practices complained of. . . .

However, if a voluntary plan is submitted by defendants, which not only eliminates the practices complained of but goes farther and offers provisions in the public interest . . . it will be considered. . . ." In short, before the Department of Justice would call off its suit. Ford and Chrysler had to agree to stop doing something they had a legal right to do. Warned Thurman Arnold: "The decrees in the present cases may become most important precedents in preventing the misuse of advertising power in other fields."

This warning was echoed later last week in Chicago when Mr. Arnold's Executive Assistant Wendell Berge addressed the American Finance Conference. This association of independent finance companies got the Government into its finance company suits by charging that 75% of new car financing had been grabbed through coercive means by the four big companies owned or tied up with automobile companies.* At their annual convention in Chicago last week, members of the Conference heard Lawyer Berge discuss at length the theory of consent decrees as a justifiable compromise in the public interest and declare that advertising "probably cannot be dealt with under existing law and must be left for future consideration. . . ."

The Conference could take no official resolutions on the Chrysler and Ford consent decrees because they were still awaiting acceptance or rejection this week by Federal Judge Thomas D. Slick of South Bend, Ind.* Judge Slick's decision is complicated by the fact that General Motors refused to make terms with the Department of Justice and its suit will therefore be prosecuted shortly. Smart Ford and Chrysler lawyers stipulated in their consent decrees that if General Motors wins the decrees are invalid, since General Motors would then have a competitive advantage.

*General Motors Acceptance Corp. Commercial Credit Co. (Chrysler), Commercial Investment Trust (Nash, Hudson, Studebaker), and C. I. T.'s subsidiary, Universal Credit Corp. (Ford).

*At the first hearing of the suit in Milwaukee, Federal Judge Ferdinand Geiger was so outraged at learning that consent decrees were being arranged on the side that he tossed out the case.

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