Letter to the President of the Senate Requesting Appropriations for the Enforcement of Antimonopoly Legislation.
[Released October 13, 1951. Dated October 12, 1951]
I have the honor to transmit herewith for the consideration of the Congress, a proposed supplemental appropriation for Fiscal Year 1952 in the amount of $300,000.
This sum is urgently needed so that the Federal Trade Commission can begin a full-scale effort to enforce Public Law 899, the anti-merger statute passed last year by the 81st Congress. Approval of this appropriation request would restore funds eliminated by the Congress in passing the Independent Offices Appropriation Act for this fiscal year.
This anti-merger statute which I signed on December 29, 1950, is one of the most important anti-monopoly measures enacted by the Congress since 1914. But without funds for enforcement, its constructive purpose will be nullified.
The purpose of Public Law 899 is to arrest the continuing rise in the concentration of economic power by prohibiting business mergers which seriously injure competition and promote monopoly. This statute closes a gaping hole in the Clayton Act of 1914. Under that Act, the Federal Trade Commission had been empowered, among other things, to prevent one concern from obtaining control over a competitor through the purchase of stock, if the result would be to promote monopoly and injure competition in the industry.
However, the Act left a loophole for firms to consolidate their control over an industry by bringing about actual mergers with competitors, buying up their assets rather than their stock.
In the years since the Clayton Act was passed, this practice of acquiring assets had made the restrictions on stock acquisition virtually meaningless. In the last three decades, more than 12,000 mergers have taken place through the purchase of assets, entirely outside the control of the Federal Trade Commission. Undoubtedly, the effect has been to overcome in many industries the restraints on monopoly which the Clayton Act intended.
For years I joined with many others in urging that this loophole be closed. These efforts ended in success when the 81st Congress amended the Clayton Act by Public Law 899, to make acquisition of assets as well as stock subject to review by the Federal Trade Commission.
Yet, it is obvious that the purpose of this new law will be served only to the extent that the Federal Trade Commission can undertake vigorous enforcement. To begin effective enforcement, the Commission must have more funds.
Early this year, shortly after enactment of Public Law 899, I transmitted to the Congress an amendment to the Budget, providing a $500,000 increase in the Commission's appropriation for Fiscal 1952. Unfortunately, while the House Appropriations Committee approved two-thirds of this additional amount, that increase was cut out by an amendment adopted on the House floor. And although $250,000 was at first restored by the Senate Appropriations Committee, that sum, too, was drastically reduced by application of a general cut of 10 percent in the appropriations for most of the agencies under the Independent Offices Appropriation Act.
As a result, the funds which have now been appropriated to the Federal Trade Commission for this fiscal year will not permit anything approaching general enforcement of Public Law 899. The Commission is going to do all it can out of its present appropriation. But at best that will only make possible examination of a small portion of the many mergers now taking place.
This is a very serious prospect which may have really harmful effects on our whole antimonopoly program. The seriousness of the situation is dramatized by what has been happening to corporate mergers since the passage of Public Law 899.
Before that law was enacted, these mergers were taking place at the rate of about 200 a year. But in the months since the law was passed, the rate has shot up to about 750 a year. In the second quarter of 1951, the merger rate reached the highest level in twenty years. Of course, all mergers are not necessarily harmful to competition and do not necessarily increase monopoly. But some of the current mergers undoubtedly are having that effect. And all this is happening after the Congress has passed legislation which is supposed to regulate these mergers and screen out the dangerous ones.
So long as the Federal Trade Commission is denied adequate funds to begin an effective enforcement job, we can only assume that mergers will continue at an increasing rate. If this is allowed to go on, we may well find ourselves in worse circumstances than before Public Law 899 was ever passed.
That would be a tragic reversal of the fine, progressive action taken by the 81st Congress when it passed this law. I cannot believe that the present Congress would wish to let that happen.
Therefore, it is my earnest hope that the Congress will complete action on this supplemental appropriation in the time remaining before adjournment of the present session. The amount involved is the minimum required by the Federal Trade Commission to begin adequate enforcement of Public Law 899 during the balance of this fiscal year.
Details of this appropriation estimate are set forth in the attached letter from the Director of the Bureau of the Budget.
HARRY S. TRUMAN
Note: In the Second Supplemental Appropriation Act, 1952, signed by the President on November 1, 1951 (65 Stat. 760), the Federal Trade Commission was given an additional appropriation of $100,000 for salaries and expenses. For a statement by the President upon signing the act, see Item 285.
For the statement by the President upon signing bill amending the Clayton Act on December 29, 1950, see 1950 volume, this series, Item 319.
Harry S. Truman, Letter to the President of the Senate Requesting Appropriations for the Enforcement of Antimonopoly Legislation. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/231019