Do Business Mergers
Endanger Business Economy?
The answer, emphatically, is NO!
toy* Colonel Alvin Mansfield Owsley, attorney, diplomat, soldier and business executive.
America possesses lhe largest corporations in the world, and by reason ol
their bigness, efficiency, modern methods
nl organization, production, and distribution heiM- brought Americans the
necessities of life al a price the masses
can buy. We enjoy a greater measure of
plenty, abundance, not "iilv of the necessities but luxuries, than eill lhe' other peoples nl the wurlil combined. Vmericans
have accepted bigness as their ielcei of the
besl means of serving the nation. \\ lial-
ever is best for the masses of working
people, is besl in, Vmerica.
There eire those in puhlie life who
make a pretense of being afraid of big
business. \ "Senate Smeill Business Com-
mitiee. ' lee,,k- after tlie interests of the
-inei 11 businesses of the country. Now this
i- a good thing. In the allocation of government contracts there should be no discrimination against a company eir an in-
divillueil lice5111-1' eel -i/a'. I.ell'gi' nr small
mil Vmerican -\sie'in of private enter-
prise has brought the greatest measure of
prosperity and blessing to one hundred
and sixty-five millions of people, the
world ever looked upon.
A merger is no reason for alarm. Now
numerous government agencies for our
protection eigainst monopolies have been
established by leiw. such as the Federal
Trade Commission, and through the l)e-
paitini'iit of Justice prosecutions take
place under the Sherman Anti-Trust law.
Here is the guardian of the country
againsl monopoly and combinations in
restraint of trade. The hand of the law
is laiel heaviU upon the transgressor, the
big fellow, who undertakes to push out
of business a -uieill businessman, or Inmost likely competition.
When is a merger permissible? Now
the law says the firsl of the many questions that musl be asked is. "\\ heel would
be the reasonable, probable effeel of the
proposed merger.'" We don'l have In
find whether the merger will create a
monopoly, hut whether there i- a tend-
enc) I" create ;i monopoly; nol only must
you find thai there is a lessening bul you
have to go into the quantitative analysis
as to whether it is a substantial lessening
These are the main reasons for a
merger: i I i Add to total capacity, i 2 i
Add to capacity of a specific area, lot
Product diversification. (4) lieiin the
source of supply. (5) Move into the con-
sumer market. There are and always will
be calamity howlers, men who are trying
to find something wrong with the economy, with the laws, with our institutions
or with the Constitution. These have
served our country, have brought us to
the summit of success, prosperity and
economic freedom far above then ol am
other people, under any other government on the face of the globe.
Is the economy of the country sound?
Let us see. One of the latest indicators
of business activities reads like this:
"The retail trade has reached a record
high ei- rising employment and increased
wage rates bring aii expansion of payrolls. I i\ili;iii jobs reached 65 million in
July—three million above July. 1954.
llninK wages anel manufacturing are all
eil a record high. The I nited States em-
plo; nt for women and girls tups 21)
million at ihis lime."
Little business has more money, has
mure business than ever before. \\ hett is
the- advantage or the disadvantage of big
business over a smeill business or small
business over ee big business? This question is answered in ei recciil issue of The
Nations Business l<\ ;i small manufacturer of air-conditioning, lie- said. "The
big advantage, the big strength, of a
small manufacturer i- his maneuverability. He doesn't have the mone; or the
factory space or the equipment of the
'big box's." so he makes ein with when he
does have. This brings oul ingenuity. Our
plant can engineer a product in six
months that would leikc a Kig manufacturer a \ceir and a half. From a eom-
petitive standpoint ei big corporation
does not hold a candle to the little outfit
with the know-how."
Now there is a satisfied "Small Businessman.
Our economy is sound. Wilh fceir behind and hope ahead we may look forward to our greatest era of prosperity
It is a dangerous movement!
soys U. S. Senator John J. Sparkman, (D) of Alabama.
As chairman of the Senate's Small
Business Committee, I have had an unusually g I opportunity to know of
the special importance of free competition to the welfare of small business. I'm
keenly aware ol em\ threat raised againsl
small business, thus my deep concern
over the increasing number of mergers
now plaguing the nation's industrial and
Vccording to ei reporl recently published b) the Federal Trade Commission,
the number of business mergers is near
an all-time high. The number of significant merger- has increased tremendously during the lasl two and ei half years,
and in 1954 was three times as greal as
in 1919. Thai ihi- spiraling movement is
continuing unchecked during 1955 i- revealed in the fad thai for iln- firsl six
months of this yeeir. some 212 signili-
iami mergers were recorded by the Federal Trade Commission. By the term
"significant mergers" I mean those consolidations which ni.13 have anti-trust
The great increase in bank mergers is
equall) a- disturbing. Vn g banking
institutions the number of mergers has
increased from a figure of 91 fm- ihe
thirty-month period from January 1,
1950 to June 30, L952, lo a total of
183, mini' than double for ei like' period
between July I. 1952 and December
31, 1954. During the firsl si\ months of
1955, lhe pace wa- stepped up wilh 60
banking mergers taking place.
These figures show lhe -teirtliug pro-
portions ni iln- presenl merger move-
F\( TS FORI \l NEWS, Sovember, 1955