United States v. W. T. Grant Company/Dissent Douglas

Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting.

Monopoly and restraints of trade are sometimes the products of practices and devices as ingenious as the minds of men. Sometimes they follow a blunt and direct course as is involved in the acquisition of the assets of a competitor-a way of growth of monopoly power to which the decisions of the Court have given a powerful impetus and encouragement. See especially United States v. Columbia Steel Co., 334 U.S. 495, 68 S.Ct. 1107, 92 L.Ed. 1533. More subtle are interlocking arrangements between directorates. This can accomplish disastrous consequences, as Mr. Justice Brandeis pointed out forty years ago. Interlocking directorates between companies which compete stifle the competition. Or to use the words of Mr. Justice Brandeis, the practice substitutes 'the pull of privilege for the push of manhood.' Moreover, those entwined relations are the stuff out of which concentration of financial power over American industry was built and is maintained. Mr. Justice Brandeis gave one example:

'They, the bankers, control the railroads, and controlling     the railroads, they were able to control the issue and sale      of securities. Being bankers, they bought those securities at     a price which they had a part in fixing or could have a part in fixing. They sold     those securities, as bankers, to insurance companies in which      they were able to exercise some control as directors. They     got the money with which to buy those securities from      railroads through their control of the great banking      institutions, and then, in their capacity of having control      of the railroads, they utilized that money to purchase from      great corporations, like the Steel Corporation, what the      railroads needed, and in their capacity as controlling other      corporations they bought from the Steel Corporation again,      and so on until we had the endless chain.'

The web that is woven may tie many industries, insurance companies, and financial houses together into a vast and friendly alliance that takes the edge off competition.

That condition is aggravated here. The interlocking control in the present case is not indirect. Mr. Hancock served as a director for each of three sets of companies which, on the state of the pleadings before us, we must assume to have been competitive. The fact that he resigned under the pressure of these proceedings should not dispose of the case. We are dealing here with professionals whose technique for controlling enterprises and building empires was fully developed and well known long before Mr. Justice Brandeis was crying out against the evils of 'the money trust.' Mr. Hancock is and has been for some years a partner in the investment banking firm of Lehman Bros. In 1940 he testified that when Lehman Bros. did financing for a company it was their 'traditional practice' to ask for representation on the board of directors.

It therefore seems to me that a District Judge, faced with violations such as were involved here, would want to know first, how investment bankers built their empires; second, how this particular firm built its own empire; third, the effect of these banker empires on competition between the companies which are tied to them.

The fact that the Lehman partner resigned to avoid a decision on the merits has little, if any, relevancy to the issue in the case, for we are here concerned with the proclivity of the house to indulge in the practice.

The relevant issues have never been weighed in this case. The District Court's ruling would be entitled to a presumption of validity if those various factors had been considered. But the District Court made no such considered judgment. It disposed of the case on the basis of mootness, a ruling now conceded to be erroneous. The case should go back for a consideration of the nature and extent of the web which this investment banking house has woven over industry and its effect on the 'elimination of competition' within the meaning of § 8 of the Clayton Act. Unless we know that much, we are in no position to judge the service an injunction against future violations may do. Unless we know that much, we are in no position to carry out Woodrow Wilson's policy expressed in § 8 of the Clayton Act that those interlocking directorates should be prevented which make 'those who affect to compete in fact partners and masters of some whole field of business.' Message, Joint Session of the Houses of Congress, Jan. 20, 1914.