It was arguably the toughest week in 40 years for U.S. corporations, their employees and their shareholders. The auto industry, reeling from the gathering disaster in new-car sales, was laying off workers by the tens of thousands; at least 14 auto plants will be closed and more than 200,000 auto production workers, clerks and executives will be out of jobs during part or all of December. Oil companies grappled with new uncertainties about their future as the House Ways and Means Committee approved a tax bill that fairly soon is likely to wipe out the celebrated depletion allowance. Prospects for a quick end to the nationwide coal strike darkened as mine-union leaders raised new objections to a proposed contract that provides well over a 50% raise in wages and benefits over three years. On Wall Street, the Dow Jones average worried its way back down toward the 600 level, as signs of deepening recession mounted every day.
Zeroing In. Astoundingly, with confidence and capital markets quavering, the Government decided that this was the time to file the biggest antitrust suit in history. It called for the breaking up of the American Telephone & Telegraph Co., the world's largest business enterprise in assets ($67 billion), employees (1,005,000),. shareholders (2,930,000) and profits ($2.99 billion last year). Evidently, it is also to be the big coonskin in what President Ford claimed recently would be a major campaign to "zero in on more effective enforcement" of the antitrust laws. Long before the surprise suit is resolved, it is likely to raise serious doubts about just what is the pur pose and direction of the Ford antitrust policy. Inevitably, there was speculation that the suit was politically motivated —the Administration's attempt to show that Big Business was by no means exempt from the sacrifices called for by its anti-inflation drive.
On the New York Stock Exchange, AT&T shares fell 2 points in two days of trading, to 43%, representing a loss of $1.1 billion to Bell stockholders. Washington's move came just as Bell had launched a massive $600 million bond issue; the company was forced to withdraw the offering until the capital markets could quiet down. Many investment analysts echoed Wall Street's Joel Leff: "You don't help by going out and attacking the widest-held and bluest-chip stock in the whole economy. You need to stimulate confidence in capitalism at this time, not stick pins in it."
The Justice Department's spare, 15-page complaint charged AT&T with violating the Sherman Act by monopolizing much of U.S. telecommunications. The trustbusters' main goal: to force A T & T to sell off Western Electric, the wholly owned manufacturing subsidiary that plays a key role in A T & T's unique position in American business.
Under the Communications Act of 1934, AT&T operates as a regulated monopoly. Its 23 regional phone companies own more than 80% of the telephones in the U.S., and it handles well over 90% of all long-distance traffic; in return, AT&T accepts regulation by the Federal Communications Commission and various state agencies, which set phone rates and thus control the company's profit level. Except for some defense work, Western Electric is almost totally engaged in supplying about 90% of the equipment that the Bell System buys.