Reviews

• Published date: 01 January 1930
• Date: 01 January 1930
• DOI: http://doi.org/10.1177/000271623014700127
• Subject Matter: Articles

204

REVIEWS:

Mergers

and

the

Law.

Pp.

x,

153.

New

York:

National

Industrial

Conference

Board,

Inc.,

1929.

$3.00.

Mergers

in

Industry.

Pp.

xiv,

205.

New

York:

National

Industrial

Conference

Board,

Inc.,

1929.

$3.00.

TOULMIN,

H.

A.,

JR.

Millions

in

Mergers.

Pp.

xv,

323.

New

York:

B.

C.

Forbes

Publishing

Company,

1929.

$3.50.

The

first

volume

was

prepared

by

Myron

W.

Watkins,

of

the

Conference

Board’s

Research

Staff.

In

153

interesting

pages

it

carries

either

a

lawyer

or

a

layman

through

a

subject

which

easily

could

be

involved

and

tiresome

under

less

skilful

treatment.

The

book

does

not

profess

to

be

exhaustive,

but

it

gives

the

reader

an

opportunity

for

a

bird’s-eye

view,

which

is

of

value

if

one

desires

to

investigate

in

detail

the

cases

relating

to

mergers.

The

development

of

public

policy

toward

corporate

consolidations

is

traced,

and

the

modifications

of

the

policy

and

its

present

status

is

touched

upon,

but

without

enter-

ing

the

controversial

field

of

suggested

re-

visions.

In

a

brief

opening

chapter,

the

common

law

policy

relating

to

combina-

tions

as

developed

in

England,

with

the

emphasis

placed

on

the

theory

of

laissez

faire

so

that

no

corporate

merger

as

such

has

ever

been

attacked

in

the

English

courts,

is

contrasted

with

the

American

doctrine

that

competition

must

be

fostered,

and

that

anything

which

stifles

it

is

eco-

nomic

oppression-a

policy

which

found

legislative

expression

in

the

Sherman

Act.

A

second

chapter

traces

the

three

stages

of

construction

of

the

Sherman

Act.

From

1890

to

1904,

corporate

consolida-

tions

were

not

reached

by

the

law;

from

1904

to

1911,

any

combination

of

units

formerly

competing

contravened

the

law;

after

1911,

industrial

consolidations

as

such

are

not

unlawful.

The

so-called

&dquo;rule

of

reason,&dquo;

as

applied

in

a

number

of

leading

cases,

is

the

subject

of

the

longest

and

perhaps

the

most

useful

chapter.

It

is

followed

by

a

discussion

of

factors

determining

the

lawfulness

of

busi-

ness

consolidations,

showing

the

growing

accommodation

of

judicial

opinion

to

busi-

ness

expediency.

The

Federal

legislation

following

the

Sherman

Act

is

analyzed.

The

summary

and

conclusions

bring

out

the

rather

surprising

fact

that

in

the

thirty-

seven

years

following

the

Sherman

Act

there

have

been

four

hundred

and

thirty-six

suits

predicated

upon

the

provisions

of

the

anti-trust

laws

decided

by

the

courts.

Of

these

suits,

forty

percent

were

prosecuted

by

the

Federal

Government.

The

author

concludes

that

this

record

demonstrates

the

need

for

the

protection

of

those

engaged

in

interstate

commerce

against

attacks

by

outsiders.

On

the

other

hand,

one

might

conclude

from

the

small

number

of

suits

in

comparison

with

the

size

and

complexity

of

modern

business

that

the

laws

were

ob-

served

to

a

surprising

extent.

The

need

for

certain

exemptions

from

the

Anti-Trust

Law

is

pointed

out,

especially

with

respect

to

natural

resource

industries,

where

present

competitive

conditions

lead

to

waste

of

natural

resources,

such

as

oil.

With

such

exceptions,

the

final

conclusion

is

that

the

present

legal

restriction

is

not

excessively

severe

or

repressive.

The

whole

treatment

of

the

subject

is

suggestive

and

provocative

of

general

dis-

cussion

on

this

interesting

subject,

which

must

be

helpful

in

the

solution

of

problems

hereafter

arising.

The

declared

purpose

of

the

second

vol-

ume

is

to

examine

industrial

consolidations

from

the

point

of

view

of

economic

theory

as

to

some

questions

raised

concerning

this

type

of

business

organization.

The

scope

is

limited

to

consolidations

where

there

is

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205

central

control

of

a

number

of

distinct

operating

units

and

where

their

products

are

marketed

over

wide

areas.

On

the

question

whether

such

consolidations

are

good

or

evil

from

an

economic

standpoint,

a

present

judgment

is

suspended,

but

the

facts

available

to

answer

the

question

are

briefly

reviewed.

In

such

consolidations

high

profits

are

promised

to

investors

through

economics

of

operation,

efficient

management

and

stabilized

industry,

so

that

the

public

is

not

injured.

One

naturally

asks

whether

such

consoli-

dations

have

been

profitable

through

busi-

ness

efficiency.

Have

they

shown

techni-

cal

efficiency?

The

inquiry

is

therefore

directed

to

such

aspects

of

consolidation

as

lend

themselves

readily

to

economic

and

statistical

analysis,

and

the

discussion

is

further

limited

to

mergers

in

manufactur-

ing

industries.

After

considering

numerous

statistics,

the

conclusion

is

reached

that

industrial

con-

solidations

have

not

provided

a

safe,

sure

and

easy

way

to

business

success.

Con-

trary

to

the

popular

conception,

successful

consolidations

are

the

exception

and

not

the

rule.

The

book

is

apparently

intended

as

a

companion

volume

to

Mergers

and

the

Law,

since

it

supplements

that

volume.

In

Millions

in

Mergers,

we

learn

from

the

title

page

that

the

author

is

of

Toulmin

and

Toulmin,

attorneys-at-law.

A

brief

intro-

duction

has

been

written

by

C.

M.

Chester,

Jr.,

President

of

General

Foods

Corporation.

Mr.

Chester

reviews

the

book

in

his

intro-

duction,

and

cites

his

company

as

a

suc-

cessful

example

of

the &dquo; circular &dquo;

type

of

merger,

composed

of

non-competitive

organ-

izations,

as

distinguished

from

the

&dquo;hori-

zontal&dquo;

and &dquo;vertical&dquo;

types-the

former

joining

competitive

units

and

the

latter

illustrated

by

the

Ford

Motor

Company.

The

need

for

an

&dquo;up-to-the-minute&dquo;

book

on

mergers

for

public

consumption

was

apparently

so

urgent

that

the

author

makes

his

statements

in

what

he

calls

&dquo;business

language.&dquo;

This

perhaps

ac-

counts

for

such

phrases

as

&dquo;genius

and

species&dquo;;

&dquo;a

presumptive

of

intent&dquo;;

&dquo;mergers

by

purchase ...

is

far

better&dquo;;

;

and

for

a

nomenclature

which

refers

to

&dquo;circular,&dquo;

&dquo;horizontal&dquo;

and &dquo;vertical&dquo;

types

of

mergers.

Does

it

account

for

chapter

headings

such

as

&dquo;Are

We

in

a

Merger

Mirage?&dquo;

and

&dquo;We

Paint

the

Back

Drop?&dquo;

The

text

in

general

is

composed

of

short

paragraphs,

more

or

less

disconnected-

many

of

which

are

&dquo;business

language&dquo;

epigrams,

such

as,

&dquo;Thus

the

motto

of

the

United

States

is

’Out

of

Many,

One’-not

only

politically,

but

in

business&dquo;;

&dquo;So

in

later

years,

just

prior

to

1862,

good

whiskey

sold

for

fourteen

cents

a

gallon,

and

there

were

no

bootleggers&dquo;;

&dquo;If

there

is

any one

certain

road

to

success

in

building

these

skyscrapers

of

business,

it

is

on

the

solid

foundation

of

public

service.&dquo;

In

between

these

high

spots

is

interspersed

a

sprinkling

of

statistics.

The

whole

constitutes

a

scrapbook,

which,

as

a

good

scrapbook

should

do,

contains

much

interesting

infor-

mation

and

many

practical

suggestions.

The

chapters

on

&dquo;Shall

We

Enter

a

Merger?&dquo;;

&dquo;How

to

Merge

Companies&dquo;;

&dquo;Why

Do

Mergers

Fail?&dquo;;

and &dquo;How

to

Make

Mergers

Pay,&dquo;

set

forth

in

a

popular

manner

an

A-B-C

outline

of

the

subjects

treated.

They

deal

with

fundamentals

in

a

way

that

makes

interesting

and

useful

reading.

Under

the

heading

&dquo;Mergers

and

the

Law&dquo;

the

author

closes

his

treatise

as

follows:

&dquo;To

determine

what

is

a

legal

merger

we

must

answer

these

questions:

(1)

What

are

the

motives

for

merger?

(2)

Is

it

conducted

on

the

principles

of

fair

play?

(3)

Does

it

render

a

public

service?

Affirmative

answers

to

these

questions

pass

the

merger

legally.&dquo;

The

author

leaves

us

in

doubt

as

to

how

the

first

question

can

be

answered

affirma-

tively ;

but

a

book

entitled

&dquo;Millions

in

Mergers&dquo;

is

not

written

to

explain

every-

thing,

and

after

more

than

three

hundred

pages

of

business

language

some

breathless-

ness

is

excusable.

ARCHIBALD

TODD

JOHNSON.

SEAGER,

HENRY

R.,

and

GULICK,

CHARLES

A.

Trust

and

Corporation

Problems.

Pp.

xii,

719.

New

York:

Harper

and

Brothers,

1929.

$3.50.

Trust

and

Corporation

Problems

is

a

study

in

failures.

The

great

failure

is

the

lack

of

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