In their Monopoly in America: The Government as Promoter (New York: Macmillan. 221 pp. $3.50), Walter Adams and Horace M. Gray have hit upon a profound truth—that it is the State itself which establishes and fosters the conditions making for monopoly. Unfortunately these two crusading professors—Dr. Adams teaches economics at Michigan State University while Dr. Gray has been connected with the University of Illinois—have no antidote for the poison of monopoly except to come up with a plea for even more state intervention and control than we have at present.

The book begins rather nobly, and at first one is inclined to overlook the occasional non sequiturs that interrupt the drive of an inexorable logic. There is a first-rate chapter called “Looking Backward” in which the authors canvass the history of royal grants and common law opposition to monopoly in England. The section on “Regulation and Public Utilities” is intermittently brilliant; the authors conclusively prove that such governmental regulatory agencies as the Federal Communications Commission and the Civil Aeronautics Board nor-really wind up by becoming the creatures of vested interests, choking off competition at the fringes by various short-sighted applications of “due process of administration” and by inane interpretation of congressional enabling acts. But even in the authors’ most brilliant chapters the non sequiturs are puzzling.

As the book progresses, the non sequiturs pile up, ending with the big logical howler that, since the government has failed to use its existing regulatory powers to forestall and eliminate monopoly, it should be granted an even greater and far more pervasive role in the industrial process.

The basic trouble with the Messrs. Adams and Gray is that they confuse bigness per se with monopoly—or, to use the fancy new word, with oligopoly. But Adams and Gray misread their own evidence, which is to the effect that bigness makes for softness, not monopoly. On page fourteen the authors deal somewhat contemptuously with the U. S. Steel Corporation, quoting Professor Stocking to the effect that “the Steel Corporation has lagged, not led,” and that “it was neither big because it was efficient, nor efficient because it was big.” According to the authors, the management consulting firm of Ford, Bacon, and Davis “ostensibly pictured the Corporation . . . as a big sprawling giant . . . with less efficient production facilities than its rivals had; slow in introducing new processes and new products.”

Whether this picture of U. S. Steel is right or wrong need not concern us for the moment. The really important thing to note here is that, whether efficient or not, U. S. Steel has not succeeded in monopolizing the steel business in America. Adams and Gray inadvertently admit this when they say subsequently that the “medium-sized companies (Bethlehem, Republic, American Rolling Mills) have been more progressive than the giant U.S. Steel Corporation.”

In short, the history of U. S. Steel would seem to demonstrate the impossibility of sewing up a field without assistance from a government regulatory agency. When U. S. Steel was put together by Morgan at the beginning of the century, it controlled just about everything connected with its business, from mining to ore boats, from billets and rod to structural shapes and wire. And it had most of the steel business by volume. But U. S. Steel broke upon a single factor: the human equation. It couldn’t contain the effervescent spirit of Charlie Schwab.

Moving over to Bethlehem Steel, Schwab started competing. Before long there were other valiant competitors: Republic, J & L, Armco, Ernest Weir’s National Steel. And with the coming of differentiation in the basic steel product, a score of small companies started ballooning on their own. From the rise of Crucible Steel and Allegheny Ludlum to the extremely recent emergence of Eastern Stainless Steel, the list is dotted with corporate Horatio Alger stories. It is true that the small company generally makes a specialty product. But when the small company, sensing an opportunity when a big fellow becomes sluggish in a particular line, goes in for variegation on its own hook, then the door is blown wide open.

The curious thing is that giants in other fields refuse to depend on the giants of steel. Thus General Motors has helped finance the McLouth Co. of Detroit in order to have an “independent” source of steel. The Ford Motor Co. has its own steel mill. And the International Harvester Co., maker of agricultural machinery and trucks, is in the steel business, too.

For whatever reason, then, the steel monopoly that seemed imminent at the turn of the century has eroded away. The same thing has happened in oil. The Messrs. Adams and Gray seem to think that oil is a monopoly industry because of international consortiums and the control of “hot oil” by the proration policies of Texas, Oklahoma, and other states. They speak of the “alienation of the public domain.” But what would be the alternative to a privately organized oil industry? Have governments ever been good at tapping hidden resources that are wrapped in geological mystery? If Adams and Gray would ponder Wallace Pratt’s marvelously revealing little book, Oil in the Earth, they might feel differently about the conditions making for a progressive state of affairs in oil.

Parenthetically, one would like to protest the pejorative use of the phrase, “alienation of the public domain,” that crops up in the Adams-Gray book. The whole history of America is one of “alienation” if one is to accept the Adams-Gray usage. The early settlers took up land that ostensibly belonged to the Crown of England, or to the great trading companies. The post-Civil War farmers got their quarter-sections under the Homestead Act. This was all “alienation” as Adams and Gray implicitly define it. Was homesteading “fair” to the mechanics of the East who didn’t go West to avail themselves of governmental largesse? The answer must be that it was just as fair as the ownership that came as a result of staking a claim to a mine or an oil well. No more, no less. It is only in a world of inhuman abstraction that the system of private ownership of the earth’s surface or sub-surface can be called “alienation.” Anyway, if one wishes to be sticky about definitions, the government “alienated” the land from Indians in the first place. The futility of the “alienation” approach was demonstrated once and for all by Franz Oppenheimer’s book, The State, which proved that all ownership originated in “alienation” of natural resources by conquering tribal kings and their retainers. Oppenheimer is right, but so what? Since the original “alienation,” private individuals have succeeded in wresting property from governments here and there in certain parts of the earth. These parts of the earth have proved to be the more progressive regions. Ergo, it has been historically demonstrated that “alienation” by private individuals, if you want to call it alienation, is a good thing, pragmatically considered.

Adams and Gray have worked in Washington, as economic consultants and advisers. They know a great deal about the Washington end of things. Some of their criticism of government purchasing habits is quite well-taken. But when the Pentagon enters into a contract, it is forced by the very act of choice to “discriminate.” No doubt the Chrysler Corporation had a right to feel slighted when General Motors got an exclusive contract to produce the M-48 tank. But if Chrysler had shared in the program, what about Ford and American Locomotive? They would have had a right to squawk, too. All choices imply exclusions. The fact of the matter is that somebody is going to be slighted as long as the government is in business for any reason, anywhere.

This is not to say that the government should be permitted to hand out contracts without considerations of cost, or of proper dispersion of facilities. Maybe Chrysler should have shared in that tank contract for reasons of proper dispersal, even though the General Motors bid was lower by some 10 per cent. Such points are always arguable. Where I would differ from Adams and Gray is on the score of what government favoritism does to alter the pattern of U. S. industry as a whole. For example, a year or so ago I visited a small electronics manufacturer in Long Branch, New Jersey. During the Korean War this manufacturer had done a lot of business with the government. With the cessation of hostilities in the Far East, the government became less dependable as a buyer. Inevitably, the electronics manufacturer was compelled to find a market for his specialties in private industry. The “root, hog, or die” imperative forced an inventiveness that has resulted in a vast improvement of the company’s position in its field. And who knows, maybe the fact that Chrysler isn’t making tanks has had a lot to do with the “forward look” of the company’s 1955 and 1956 cars. Energy released from one thing is bound to show up in another. It could even be that government orders are bad things for a company in the long run; they induce satiety at the same time they make for vulnerability. In any case, the problem is nowhere near the simple thing which the Adams-Gray approach would make it out to be.

The over-all virtue of the Adams-Gray book is that it indicates the role which governments play in cultivating monopoly. The overall defect is that it fails to push the logic of its own insight to the proper conclusion: let governments get out of business, and let there be less regulation rather than more.