Chandler Minimizes Capability Of Law to Regulate Business
Alfred D. Chandler Jr. '40, Straus Professor of Business History, said yesterday at Winthrop House that antitrust law has had little effect on the degree of concentration in industry.
Chandler, who is completing a book on the modern corporation, told an audience of about 30 students that the Sherman Antitrust Act, the basic legislation against monopolies, has at most prevented markets dominated by a few firms from becoming controlled by a single firm.
In his talk Chandler concentrated on the development of the firm in the period 1850 to World War I. The crucial change in organization, he said, that from entrepreneurial to managerial control of firms, resulted from the invention of the telegraph, which greatly facilitated communication.
It was during this period, Chandler said, that American firms developed worldwide markets. He cited the Singer Sewing Machine Corp. as one of the first multinational corporations. Chandler said that Singer developed an extensive organization of production and distribution and was one of the first firms to use consumer credit on a large scale.
The Business School professor said that from 1897 to 1903 many U.S. firms chose to merge with and acquire other companies, thus circumventing the Sherman Act, which only prohibited monopoly.
Firms which refused to change with the times, Chandler said, lost their market dominance. Henry Ford, he said, stubbornly refused to follow the 1930s trend of other firms toward increasing managerial control and, as a consequence, lost a sizable part of its market share to General Motors.