Notes INTRODUCTION

1. Clair Wilcox, Public Policies Toward Business, 4th ed. (Homewood, Ill.: Richard D. Irwin, 1971), 8.

2. Paul Douglas, Controlling Depressions (New York: W. W. Norton, 1935), 247.

3. Some of the more significant contributions have included Gabriel Kolko, The Triumph of Conservatism (Glencoe, Ill.: Free Press, 1963); Gabriel Kolko, Railroads and Regulation, 1877–1916 (Princeton: Princeton University Press, 1965); James Weinstein, The Corporate Ideal in the Liberal State, 1900–1918 (Boston: Beacon Press, 1968); G. William Domhoff, The Higher Circles (New York: Random House, 1970); Michael Parrish, Securities Regulation and the New Deal (New Haven: Yale University Press, 1970); Robert Cuff, The War Industries Board (Baltimore: Johns Hopkins University Press, 1973); Murray Rothbard, America’s Great Depression (Princeton, N.J.: D. Van Nostrand Co., 1963); Ron Radosh and Murray Rothbard, eds., A New History of Leviathan (New York: E. P. Dutton, 1972); Melvin Urofsky, Big Steel and the Wilson Administration (Columbus: Ohio State University Press, 1969); James Gilbert, Designing the Industrial State (Chicago: Quadrangle Books, 1972); Ellis Hawley, The New Deal and the Problem of Monopoly (Princeton: Princeton University Press, 1966); and Robert Himmelberg, The Origins of the National Recovery Administration (New York: Fordham University Press, 1976).

4. Kolko, Triumph, 57–58.

5. Myron Watkins, Public Regulation of Competitive Practices in Business Enterprise, 3d ed. (New York: National Industrial Conference Board, 1940), 38.

6. Robert Wiebe, The Search for Order, 1877–1920 (New York: Hill and Wang, 1967), 297.

7. Carl Taeusch, Policy and Ethics in Business (New York: Arno Press, 1931), 258

8. Ibid., 258–59.

9. Joseph Schumpeter, Capitalism, Socialism, and Democracy, 3d ed. (New York: Harper & Bros., 1950), 156. It should be noted that a contemporary economist of the Austrian school, Israel Kirzner, minimizes the distinction Schumpeter draws between “price competition” and the more meaningful “entrepreneurial competition.” Kirzner suggests that “the process of price competition is as entrepreneurial and dynamic as that represented by the new commodity, new technique, or new type of organization.” See Kirzner, Competition and Entrepreneurship (Chicago: University of Chicago Press, 1973), 129.

10. Taken from Ralph C. Epstein, The Automobile Industry (Chicago, 1928), 164ff., and other sources cited in Donald A. Moore, “The Automobile Industry,” in The Structure of American Industry, ed. Walter Adams, rev. 2d ed. (New York: Macmillan, 1954), 274ff.

11. Walter Adams, “The Military-Industrial Complex and The New Industrial State,” American Economic Review 65 (May 1968), reprinted in Superconcentration/Supercorporation, ed. Ralph Andreano (Andover, Mass.: Warner Modular Publications, 1973), R337–2-3.

12. Robert H. Wiebe, Businessmen and Reform: A Study of the Progressive Movement (Cambridge: Harvard University Press, 1962), 69ff.

13. Ibid., 82–84.

14. Ibid., 100.

15. Ibid.,221ff.

CHAPTER 1. MAKING THE WORLD SAFE FROM COMPETITION

1. William Leuchtenberg, The Perils of Prosperity, 1914–1932 (Chicago: University of Chicago Press, 1958), 42–43.

2. Wiebe, Search for Order, 293.

3. For some excellent accounts of the War Industries Board, see: Cuff, WIB; Urofsky, Big Steel; Grosvenor Clarkson, Industrial America in the World War (Boston: Houghton Mifflin, 1923); Bernard Baruch, American Industry in the War (New York: Prentice-Hall, 1941); and Robert Himmelberg, “The War Industries Board and the Antitrust Question in November, 1918,” Journal of American History 52 (June 1965): 59–74.

4. Arthur Schlesinger Jr., The Crisis of the Old Order, 1919–1933 (Boston: Houghton Mifflin, 1957): 37.

5. Frederick Lewis Allen, The Lords of Creation (Chicago: Quadrangle Books, 1966), 206.

6. Baruch, American Industry, 21.

7. Clarkson, Industrial America, 154.

8. Cuff, WIB, 169ff.

9. Clarkson, Industrial America, 303.

10. Ibid., 299, 309.

11. Ibid., 308.

12. See Ferdinand Lundberg, America’s Sixty Families (New York: Citadel Press, 1946), 144ff.; Cuff, WIB, 15ff.; Clarkson, Industrial America, 501ff.

13. Clarkson, Industrial America, 313.

14. Baruch, American Industry, 105.

15. Ibid.

16.Addresses, Papers and Interviews by Walter S. Gifford: From April 13,1913 to July 1,1928 (New York: Information Dept. of American Telephone & Telegraph Company, 1928), 57.

17.New York Times, 21 September 1917, 7.

18.Electrical Review 74 (1919): 149–50.

19. Himmelberg, “The War Industries Board.”

20. Ibid., 69; Urofsky, Big Steel, 295ff.

21. Baruch, American Industry, 7.

22. Ibid., 104.

23. Clarkson, Industrial America, 486.

24. Cuff, WIB, 149.

25. Gilbert, Designing, 16.

26. Weinstein, Corporate Ideal, xiii.

27. Quoted in Gilbert, Designing, 45.

28. The following example illustrates this point. Let us suppose that the federal government raises milk prices by ten cents per gallon. Let us further assume that a family of four would consume two gallons of milk per week. For this family, the price increase would amount to $10.40 per year, hardly enough to justify their hiring a lobbyist or a lawyer to represent them in their efforts to oppose the price hike. But for the dairy industry, the economic consequences are compelling. If there were fifty million of such families purchasing milk, this $10.40 figure would mean increased industry revenues of some $500 million per year, an amount that would afford the industry adequate incentives to seek such a policy.

29. John Kenneth Galbraith, American Capitalism: The Concept of Countervailing Power (Boston: Houghton Mifflin, 1952). Galbraith’s thesis reflects another factor in the expansion of governmental power: the fear that a system of unrestrained competition will inevitably produce increased concentration (i.e., both fewer and larger firms) within most industries and that such a development could produce adverse social consequences that it would not be profitable for business firms to address. Such consequences include the failure of firms to internalize all the costs of their doing business (the “social costs” problem), which would include such practices as the disposal of industrial wastes into the atmosphere or waterways. The protection of employees, investors, and customers of such firms from the inconstancies of the business cycle (such as cyclical unemployment) and alleged “inequalities of bargaining power” are further rationales for expanded governmental authority. Another factor is the so-called public goods problem—that there are various services, such as national defense or police protection, for which nonpaying users cannot be excluded from enjoying the benefits. Within the context of this book, and as I shall explore more fully in chapter 2, the refusal of individual members of an industry to support higher prices by restricting production would qualify for such a “public goods” analysis. While it is not my purpose to address these various concerns herein, they do represent a significant source of popular support for government regulation. That many of these concerns represent the failure not of the marketplace, but of the legal system (consider the historic refusal of courts to enjoin industrial pollution as a trespass) or the attempt of various groups to elevate their social or political biases into the realm of accepted public policies should be considered. See Butler Shaffer, “The Social Responsibility of Business: A Dissent,” Business and Society 17 (Spring 1977): 11–18; and idem, “The Social Responsibility of Business: A Flawed Dissent Response,” Business and Society 18 (Spring 1978): 41–42. Neither is it my purpose, at this point, to assess the extent to which leading business interests were able to co-opt such policy concerns and employ them as additional rationales for a greater political enforcement of industry-desired restraints on competition.

30. The point being made here will be developed more fully later in this chapter and in chapter 3. At this point, suffice it to say that, to the extent any organization develops into a large and structured institution, it will have a tendency to lose its resilient capacities and, in order to protect its interests, may endeavor to insulate itself from having to respond to the kinds of changes in its environment that are most threatening to it. In an unrestrained marketplace, such threats will come from other persons and firms, and if their self-seeking interests are to be repressed on behalf of such large institutions, a coercive agency (namely, the state) must be empowered to impose such restrictions.

31. William Letwin, Law and Economic Policy in America: The Evolution of the Sherman Antitrust Act (Westport, Conn.: Greenwood Press, 1980), 72–74.

32. Hans B. Thorelli, The Federal Antitrust Policy (Baltimore: Johns Hopkins University Press, 1955), 71.

33. Thomas K. McCraw, ed., The Essential Alfred Chandler: Essays Toward a Historical Theory of Big Business (Boston: Harvard Business School Press, 1988), 259.

34. Ibid., 69.

35. Ibid., 263.

36. Oliver E. Williamson, Markets and Hierarchies: Analysis and Antitrust Implications (New York: Free Press, 1975), 133.

37. Oliver E. Williamson, Antitrust Economics: Mergers, Contracting, and Strategic Behavior (Cambridge: Basil Blackwell, 1987), 138,142.

38. Chandler, in McCraw, Essential Chandler, 69–70.

39. Ibid., 71.

40. Alfred D. Chandler Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge: Belknap Press of Harvard University Press, 1977), 6.

41. Ibid., 13.

42. Ibid., 7.

43. Ibid., 48–49.

44. Ibid., 95.

45. Ibid., 130–32,188. Such voluntary efforts to regularize competition within the railroad industry have also been explored in Kolko’s Railroads and Regulation.

46. Chandler, Visible Hand, 6,12.

47. See, generally, Alfred D. Chandler Jr., Strategy and Structure: Chapters in the History of the American Industrial Enterprise (Cambridge: MIT Press, 1962).

48. Chandler, Visible Hand, 10.

49. Thorstein Veblen, Absentee Ownership and Business Enterprise in Recent Times (New York: B. W. Huebsch, 1923), 4; Thorstein Veblen, The Instinct of Workmanship and the State of the Industrial Arts (1914; reprint, New York: W. W. Norton, 1964), 232ff., 281–82, 344, 349.

50. Veblen, Absentee Ownership, 84, 208–9.

51. Ibid., 78 (emphasis added).

52. Ibid., 4, 76.

53. Thorstein Veblen, The Theory of Business Enterprise (1904; reprint, New York: Augustus M. Kelley, 1965), 66.

54. Ibid., 66–67.

55. Ibid., 293.

56. Ibid.

57. Thorelli, Federal Antitrust, 63ff.

58. Letwin, Law and Economic Policy, 75–76.

59. See Martin J. Sklar, The Corporate Reconstruction of American Capitalism, 1890–1916 (Cambridge: Cambridge University Press, 1988), 187ff.

60. Thurman Arnold, The Folklore of Capitalism (New Haven: Yale University Press, 1937), 187. There is another explanation for the creation of the legal fiction of the corporation as a “person.” In the common law, only “persons” could own property. This fiction became necessary in order to allow the corporation to own property in its own name, rather than in the name of its stockholder owners. The problems that have been associated with the legal manipulation of this sense of “personhood” need not concern us here. That the legal status of “slaves,” “American Indians,” “married women,” “minors,” the “mentally incompetent,” and, more recently, “fetuses” has been inextricably tied up with the question of who is and who is not a “person” should afford some indication of how much philosophical, political, legal, and social conflict has been generated by this fiction.

61. Ibid., 211–21.

62. Ibid., 227.

63. John R. Munkirs, The Transformation of American Capitalism: From Competitive Market Structures to Centralized Private Sector Planning (Armonk, N.Y.: M. E. Sharpe, 1985), 18–21.

64. Schumpeter, Capitalism, 156.

65. Ibid., 134.

66. Adolf A. Berle Jr. and Gardiner C. Means, The Modern Corporation and Private Property (New York: Macmillan, 1932), 69.

67. Chandler, Visible Hand, 10.

68. See The Structure of the American Economy; Part I, A Report Prepared Under the Direction of Gardiner C. Means, June, 1939 (New York: Augustus M. Kelley, 1966), 156ff.; see also Berle and Means, Modem Corporation.

69. Chandler, Visible Hand, 10.

70. Ibid.

71.Gifford, Addresses, 173–76.

72. Ilya Prigogine and Isabelle Stengers, Order Out of Chaos: Man’s New Dialogue with Nature (New York: Bantam Books, 1984), 12.

73. Ibid., 177ff.

74. William Irwin Thompson, Evil and World Order (New York: Harper & Row, 1977), 83.

75. One sees this principle most vividly in living organisms. Unless living beings are able to consume energy from outside themselves in the form of food, water, and air, their orderly systems will begin to break down, and they will decay and die. The dynamical nature of life has been well stated by one observer: “As life expanded, Nature also instructed Life to continually invent new ways to grow.” George T.L. Land, Grow or Die: The Unifying Principle of Transformation (New York: Random House, 1973), 73. “Life,” in other words, “is the expression of a creative disequilibrium” (Thompson, Evil and World Order, 83) in which, as biologist Edmund Sinnott has expressed it, “[c]onstancy and conservatism are qualities of the lifeless, not the living.” Edmund W. Sinnott, The Biology of the Spirit (New York: Viking, 1955), 61.

76. See, e.g., studies cited in note 3 of the introduction.

77. Prigogine and Stengers, Order, 188.

78. A. D. H. Kaplan study, cited in William Baldwin, Market Power, Competition, and Antitrust Policy (Homewood, Ill: Irwin, 1987), 161. At this point, one might wish to explore the extent to which turnover among firms (as opposed to stability) reflects the intensity of competition within a given industry. It has been argued that a high degree of turnover reflects a vigorous competitive environment and that there is a positive correlation between industrial concentration and the stability of positions within a given industry. It has also been suggested, however, that instability can generate greater concentration within an industry. See, for example, Baldwin, Market Power, 161–63; F. M. Scherer and David Ross, Industrial Market Structure and Economic Performance, 3d ed. (Boston: Houghton Mifflin, 1990), 89–90; and William Lazonick, Business Organization and the Myth of the Market Economy (Cambridge: Cambridge University Press, 1991), 155ff.

79. Butler Shaffer, Calculated Chaos: Institutional Threats to Peace and Human Survival (San Francisco: Alchemy Books, 1985), 9. I am employing the word to refer to formal organizational entities, not to those more abstract belief systems (such as Judeo-Christian ethics) or social practices (such as marriage, the marketplace, or Western civilization) that we use to encompass a broad range of social customs. See Walter C. Neale, “Institutions,” Journal of Economic Issues 21 (September 1987): 1177–206.

80. Anthony Downs, Inside Bureaucracy (Boston: Little, Brown, 1967), 20 (emphasis in original).

81. Ibid., 97, 99.

82. Ibid., 18.

83. Ibid., 18–19.

84. Ibid., 147,196.

85. Ibid., 143 (emphasis in original).

86. Ibid., 197.

87. Carroll Quigley, The Evolution of Civilizations (Indianapolis, Ind.: Liberty Press, 1979).

88. Ibid., 101ff.

89. Arnold Toynbee, A Study of History (New York: Oxford University Press, 1958).

90. Will Durant and Ariel Durant, The Lessons of History (New York: Simon & Schuster, 1968).

91. Toynbee, A Study, 241.

92. Ibid., 245, 555.

93. Durant and Durant, Lessons, 91.

94. Ibid., 90, 92.

95. Lazonick, Business Organization, 155.

96. Quigley, Evolution, 127ff.

97. Arthur Dewing, Corporate Promotions and Reorganizations (Cambridge: Harvard University Press, 1930), 558.

98. Ibid., 546–47.

99. Ibid., 558.

100. Kolko, Triumph, 37.

101. Ibid., 46.

102. Ibid., 38. The very successes that many large businesses—such as U.S. Steel—had in becoming the predominant firms in their industries also attracted antitrust investigations and prosecutions. Indeed, U.S. Steel was undergoing a major antitrust prosecution during the time period covered by Kolko’s study. Because aggressive competitive practices would have exacerbated its antitrust problems, this may have contributed to less-aggressive behavior that, in turn, could have led to a decline in market share. Such an explanation finds some support in the fact that U.S. Steel’s attitude toward independent producers had “never been characterized by any attempt at what is called ‘destructive competition’” and, indeed, reflected “a certain far-sighted magnanimity toward competitors.” See Louis Galambos, “The American Economy and the Reorganization of the Sources of Knowledge,” in The Organization of Knowledge in Modern America, 1860–1920, ed. Alexandra Oleson and John Voss (Baltimore: Johns Hopkins University Press, 1979), 273; also, Abraham Berglund, “The United States Steel Corporation and Price Stabilization,” Quarterly Journal of Economics 38 (November 1923): 1–30, at 29.)

103. Temporary National Economic Committee, Competition and Monopoly in American Industry, monograph no. 21 (Washington, D.C.: Government Printing Office, 1940), 311.

104. Ibid.

105. See Chandler’s works, generally.

106. Leopold Kohr, The Breakdown of Nations (New York: E. P. Dutton, 1978), xviii.

107. Ibid., 26 (emphasis in original).

108. Ibid., 82.

109. Ibid., 84 (emphasis in original).

110. Holmes’s comment was that “[t]he life of the law has not been logic: it has been experience.” Oliver Wendell Holmes, The Common Law (Boston: Little, Brown, 1881), 1.

111. Wiebe, Search for Order, 294–97.

112. Allen, Lords of Creation, 195.

113. Gilbert, Designing, 16.

114. Ibid.

CHAPTER 2. TRADE ASSOCIATIONS AND CODES OF ETHICS

1. Robert Brady, Business as a System of Power, 6th ed. (New York: Columbia University Press, 1951), 195.

2.Nation’s Business, 5 June 1924,7–8; Automotive Industries 50 (1924): 1060; Commercial and Financial Chronicle 118 (17 May 1924): 2389–90 (emphasis added).

3.Commercial and Financial Chronicle 118(17 May 1924): 2390.

4. Theodore Lowi, The Politics of Disorder (New York: Basic Books, 1971), 69.

5. Arthur Jerome Eddy, The New Competition (Chicago: A. C. McClurg & Co., 1916).

6. Ibid., 131.

7. Ibid., 150.

8. Ibid., 348.

9. Ibid., 353.

10. Ibid., 354–55.

11. Ibid., 356.

12.United States v. Trans-Missouri Freight Association, 166 U.S. 290 (1897).

13.New York Times, 15 January 1917, 13; 3 February 1919, 10; 5 April 1919, 19.

14. Himmelberg, Origins, 9ff.

15.American Column & Lumber Company et al. v. United States, 257 U.S. 377 (1921).

16.United States v. American Linseed Oil Company et al, 262 U.S. 371 (1923).

17. 257 U.S. 377, 411(1921).

18. 262 U.S. 371, 388 (1923).

19.New York Times, 17 November 1924, 1; Commercial and Financial Chronicle 118 (31 May 1924): 2664 at 2665.

20.Maple Flooring Manufacturers Association et al. v. United States, 268 U.S. 563(1925).

21.Cement Manufacturers Protective Association et al. v. United States, 268 U.S. 588 (1925).

22. 268 U.S. 563, 583–84 (1925). The efforts of the lumber industry to stabilize conditions continued throughout the 1920s. The Western Pine Manufacturers’ Association had once told its members that the condition of the market “rests entirely with the manufacturers,” adding that a “[r]easonable restraint in production” would be beneficial, while “[a]ny disposition to greatly extend production” would be detrimental to industry interests. One manufacturer wrote another, “It is absolutely essential that there should be a general curtailment commensurate with the demand,” while correspondence from other industry members alluded to various “cooperative” agreements between manufacturers to divide and allocate business, an approach that was found attractive as a means of keeping firms from “openly competing to force the market down.” In addition, different lumber trade associations sent “barometers” of business activity out to their members, urging them to regulate their production therewith. Meanwhile, the National American Wholesale Lumber Association joined other industries, in 1925, in requesting a relaxation of federal laws in order to permit lumber manufacturers to enter into agreements to regulate production in order to prevent what the lumber industry felt was an “absolutely uncontrolled” condition leading to overproduction. See Report of the Federal Trade Commission on Lumber Manufacturers’ Trade Associations (Washington, D.C.: Government Printing Office, 1922), 46ff., 116–17, 142; New York Times, 20 March 1925, 9.

23. Wilson Compton, cited in Lincoln Filene, Unfair Trade Practices: How to Remove Them (New York: Harper & Bros., 1934), 82.

24. Leverett Lyon and Victor Abramson, The Economics of Open Price Systems (Washington, D.C.: Brookings Institution, 1936), 19. The Federal Trade Commission did state, however, that as of 1929 there were about ninety open price associations in operation throughout the United States.

25. Charles Chapman, The Development of American Business and Banking Thought, 1913–1936 (London: Longmans, Green and Co., 1936), 67–68; Survey 52 (1 June 1924): 313; Nation’s Business, September 1924, 68 (emphasis in original).

26.Nation’s Business, 5 June 1924, 16–18.

27.Nation’s Business, 5 June 1928, 15ff.

28. F. M. Feiker, “The Profession of Commerce in the Making,” Annals of the American Academy of Political and Social Science 101 (May 1922): 203 at 205. The suggestion that unrestricted competition led to “waste to the consumer” involves a strange twist of reasoning. Business objections to this so-called cutthroat competition were based principally upon the resulting lower prices. The implication that consumers were being victimized by lower prices and required the protection afforded by government regulation in order to end such “waste” taxes either one’s credulity or sense of humor.

29. “Trade Associations and Business Combinations,” Proceedings of the Academy of Political Science 11 (January 1926): 590–91.

30.Nation’s Business, May 1927, 28.

31.Iron Age 119 (26 May 1927): 1524.

32. Brady, Business as a System, 204.

33.Nation’s Business, July 1927, 32ff. The importance of intraindustrial control of trade practices was reinforced by Parker, who declared his support for the idea of voluntary agreements by members of an industry to abolish unfair competitive practices. Parker was of the opinion that government regulation of industry would not be necessary if business was successful in developing a strong sense of group consciousness and formulating its own trade practice standards. See New York Times, 18 October 1927, 31; Wall Street Journal, 18 October 1927, 19.

34. The Chamber resolution called for the “elimination of all wasteful practices and trade abuses” through joint trade relations committees within each trade working in cooperation with the Federal Trade Commission. See Nation’s Business, 20 May 1927, 28.

35. Chapman, Development, 69–70. In a letter to President Coolidge, Pierson also praised the attitudes of the Federal Trade Commission, the Department of Justice, and the Department of Commerce in helping to elevate trade practice standards. See New York Times, 29 October 1927, 8.

36. Barnes maintained that the federal government should “in cooperation with business itself, preserve fair play between industries and individuals.” See Julius Barnes, “Self-Government in Business,” Nation’s Business, 5 June 1926, 18.

37.New York Times, 29 January 1928, sec. 2, 17; 23 December 1928, sec. 2, 10.

38. Hugh Baker, “Trade Associations and Business Combinations,” Proceedings of the Academy of Political Science 11 (1926): 634.

39.Automotive Industries 54 (1926): 843–45.

40. Albert Ritchie, “Business Can and Must Rule Itself,” Nation’s Business, 5 June 1926, 19–20.

41. Chapman, Development, 69.

42. Scoville Hamlin, The Menace of Overproduction (1930; reprint, Freeport, N.Y.: Books for Libraries Press, 1969), 178–80.

43. Ibid., 48–50.

44. Berglund, “United States Steel Corporation and Price Stabilization,” 2–13; Kolko, Triumph, 30–56.

45.New York Times, 21 March 1926, sec. 9, 5.

46.Outlook, 1 September 1926, 6–7.

47.New York Times, 12 October 1924, sec. 11, 1.

48.Nation’s Business, 20 May 1927, 15.

49. National Industrial Conference Board, Trade Associations: Their Economic Significance and Legal Status (New York: National Industrial Conference Board, 1925), 193, 304.

50.New York Times, 22 April 1923, sec. 2, 10. This same language was contained in a code of the American Specialty Manufacturers’ Association, developed in 1922 in collaboration with the National Wholesale Grocers’ Association, the American Wholesale Grocers’ Association, and the National Association of Retail Grocers. See Edgar Heermance, Codes of Ethics: A Handbook (Burlington, Vt.: Free Press Printing Co., 1924), 209.

51. Code of the American Walnut Manufacturers’ Association (1924), in Heermance, Codes, 308–9.

52. Code of the American Face Brick Association (1913), in ibid., 60.

53. Code of the International Association of Electrotypers of America (1921), in ibid., 159.

54. Code of the National Food Brokers Association (1904), in ibid., 212.

55. The code of the American Face Brick Association, for example, urged its members to “[d]iscountenance the tendency to extravagant selling methods” and to “[a]void scrupulously all overstatements or misrepresentations of any kind in your own behalf.” It went on to state that a member should “[h]old firmly the ideal… of co-operation with your competitors” (Heermance, Codes, 60). The International Association of Electrotypers of America beseeched its members “[t]o not degrade or demoralize our business. To remember that destructive competition is most injurious to those practicing it” (ibid., 159). The National Publishers Association pledged itself, in 1923, to the “[c]ourage to condemn every fraudulent, tricky or questionable practice” (ibid., 444), while the National Retail Hardware Association code embraced the sentiment of “avoiding any unfair or questionable act or practice,” whether to gain the favor of a manufacturer, wholesaler, or the public (ibid., 225). The National Boot and Shoe Manufacturers code implored its members “[t]o always stand for fair dealing … avoiding and discouraging unfair competition” and “[t]o do our best to promote uniformity and certainty in the customs and usages of business, using every effort to reform any abuses now existing in our trade” (ibid., 475).

The attitude of conciliation that codes sought found expression in provisions such as that of the National Food Brokers Association, which urged its members to “respect the rights of competitors and never attempt by unfair means to interfere with their [i.e., competitors] business” (ibid., 212). The code of the Associated Office Furniture Manufacturers declared, “[O]ur mutual interest can be best conserved through co-operation with one another, and that through it is the life of trade rather than through competitive strife,” adding that since “every man is entitled to a reward from his own efforts, it is our aim to … avoid any acts that may tend to injure them in their honest pursuit” (ibid., 188–89).

Some other representative code statements reflecting business attitudes toward “cooperation” were those of the National Association of Automotive Mutual Insurance Companies, urging members to “demonstrate a full measure of consideration toward our mutual competitors” (ibid., 253–54), or of the International Association of Garment Manufacturers, seeking to “establish and maintain intimate, cordial, friendly relations with other manufacturers,” and to “practice clean and honorable competition” (ibid., 84, 86). The Western Retail Implement and Hardware Association code advised firms, “Be fair to your competitor, make him your friend. There is a sense of fairness in every man, which if unselfishly appealed to will be reciprocated” (ibid., 183).

The National Machine Tool Builder’s Association adopted a specific prohibition against the “[f]ailure to maintain a friendly attitude toward competitors” (Iron Age 115 [May 1925]: 1359), while the Gas Products Association code declared, “Our mutual interests can be best served through co-operation with one another.” It suggested that “[i]ntensive competition for business established by a competitor should be discouraged, as it has a tendency to tear down what another has built up, but competition in developing new business is to be commended and should be encouraged” (Heermance, Codes, 198–201).

Describing competition in the rubber industry as “vicious,” J. C. Weston, retiring president of the Rubber Association of America, urged a more reasonable approach to merchandising practices in the industry (Rubber Age 22 [1928]: 409). As a result of such sentiments, some of the leading rubber manufacturers formed, in 1928, the Rubber Institute with a purpose of establishing, in consultation with the FTC, a workable code of ethics. The institute’s director declared that industry members were united on such objectives as eliminating “unfair discrimination between customers” and providing for a system of open pricing for rubber products. Hope was expressed that the formation of the institute would permit companies “to do business at a fair profit and on a basis of wholesome competition.” Noting that members of the industry have had to endure “ignorant and often ruthless competition” that was “destructive of stability … and an opportunity to do business with an adequate financial return,” the institute sought to take advantage of the “cooperation” that had made competition more “wholesome” in other industries. Announced prices would not be subject to any secret price concessions, a practice considered “wasteful, unbusinesslike and damaging to wholesome competition” (Rubber Age 23 [1928]: 253; New York Times, 24 May 1928, 31).

Members of the sugar-refining industry organized the Sugar Institute to reform trade practices, develop an effective code of business ethics, and serve as a clearing house for statistics and business practices. A member of the industry, W. S. Pardonner of the Savannah Sugar Refining Company, stated that the refining capacity in the industry was approximately 50 percent in excess of the annual consumption, which had “inevitably resulted in abnormally keen competition and the development and growth of harmful trade practices.” Pardonner expressed hope that the Sugar Institute would prove effective in eliminating such conditions (New York Times, 12 January 1928, 46; 26 February 1928, sec. 2, 17).

56.Eastern States Retail Lumber Dealers Association v. United States, 234 U.S. 600 (1914).

57. Code adopted in 1923, in Heermance, Codes, 135.

58. Code of the American Walnut Manufacturers’ Association (1924), in Heermance, Codes, 308–9; Code of the National Machine Tool Builders’ Association, Iron Age 115 (May 1925): 1358–59; Code of the National Association of Ice Cream Manufacturers (1922), System 43 (March 1923): 342 at 376.

59. Code adopted in 1923, in Heermance, Codes, 58. A similar provision can be found in the codes of the Gas Products Association, the American PhotoEngravers Association, and the National Slate Association (198–201, 428–29, 480).

60. Code of the National Knitted Outerwear Association (1923), in ibid., 270.

61. Code of the American Warehousemen’s Association (Cold Storage Division) (1924), in ibid., 95–96.

62. Codes of the International Association of Milk Dealers (1923) and the National Association of Ice Cream Manufacturers (1922), in ibid., 135, 246.

63. Code of the National Commercial Fixture Manufacturers’ Association (1916), in ibid., 108.

64. Code of the American National Retail Jewelers Association (1922), in ibid., 255–56.

65. Code adopted in 1920, amended 1921, in ibid., 92. Similar provisions were contained in the codes of the National Association of Upholstered Furniture Manufacturers (1924), and the National Machine Tool Builders’ Association (in ibid., 190; Iron Age 115 [May 1925]: 1358–59).

66. Code adopted in 1923, in Heermance, Codes, 215–17.

67. Codes of the Gas Products Association; the Plywood Manufacturers Association; the National Association of Retail Grocers; the International Association of Garment Manufacturers; the National Association of Oxy-Chloride Cement Manufacturers; and the National Machine Tool Builders’ Association (in ibid., 198–201, 310, 215–17, 84–87, 73–74; and Iron Age 115 [May 1925]: 1358–59).

68. Roland Koller Jr., offers just such an explanation for the classic example of American Tobacco selling cigarettes, for a short period of time, below their actual cost. See Koller, “The Myth of Predatory Pricing: An Empirical Study,” Antitrust Law and Economics Review 4 (1971): 105–23.

69. See, e.g., Richard A. Givens, Antitrust: An Economic Approach (New York: Law Journal Seminars-Press, 1995), 3–15.

70. Phillip Areeda and Donald F. Turner, “Predatory Pricing and Related Practices Under Section 2 of the Sherman Act,” Harvard Law Review 88 (February 1975): 697 at 733.

71. A number of interesting studies and debates regarding predatory price cutting can be found, including ibid; John McGee, “Predatory Price Cutting: The Standard Oil (N.J.) Case,” Journal of Law and Economics 1 (1958): 137–69; Wayne Leeman, “The Limitations of Local Price-Cutting as a Barrier to Entry,” Journal of Political Economy 64 (1956): 329–34; Walter Adams and James W. Brock, Antitrust Economics on Trial: A Dialogue on the New Laissez-Faire (Princeton: Princeton University Press, 1991), 30–37; Kenneth G. Elzinga, “Collusive Predation: Matsushita v. Zenith” in The Antitrust Revolution, ed. John E. Kwoka Jr. and Lawrence J. White (Glenview, I11.: Scott, Foresman, 1989): 241–62; Kenneth G. Elzinga, “Unmasking Monopoly: Four Types of Economic Evidence,” in Economics and Antitrust Policy, ed. Robert J. Larner and James W. Meehan Jr. (New York: Quorum Books, 1989), 11–38; Charles A. Holt and David T. Scheffman, “Strategic Business Behavior and Antitrust,” in Larner and Meehan, Economics and Antitrust Policy, 39–82; Joseph F. Brodley and George A. Hay, “Predatory Pricing: Competing Economic Theories and the Evolution of Legal Standards,” Cornell Law Review 66 (April 1981): 738–803; Wesley J. Liebeler, “Whither Predatory Pricing? From Areeda and Turner to Matsushita,” Notre Dame Law Review 61 (1986): 1052–98; Paul L. Joskow and Alvin K. Klevorick, “A Framework for Analyzing Predatory Pricing Policy,” Yale Law Journal 89 (December 1979): 213–70; Peter C. Carstensen, “Predatory Pricing in the Courts: Reflection on Two Decisions,” Notre Dame Law Review 61 (1986): 928–71; Phillip Areeda, “Antitrust Law as Industrial Policy: Should Judges and Juries Make It?” in Antitrust, Innovation, and Competitiveness, ed. Thomas M. Jorde and David J. Teece (New York: Oxford University Press, 1992), 29–46; William J. Baumöl and Janusz A. Ordover, “Antitrust: Source of Dynamic and Static Inefficiencies?” in Jorde and Teece, Antitrust, Innovation, and Competitiveness, 82–97; and Koller, “The Myth.” It may well be that the fear of predatory price cutting has been fostered, in part, by the self-serving rhetoric directed against low prices and incorporated into public policy discussions.

72. Koller has identified ninety-five antitrust cases in which parties had been found to have engaged in predatory practices. Of these cases, only twenty-six generated a factual record from which one could determine an evidentiary basis for such allegations. Of these twenty-six cases, Koller concludes that there was no evidence of predation in sixteen, and inconclusive evidence for predation in three others. Of the remaining seven cases, Koller finds predation to have been attempted, but it was successful in only five cases. Furthermore, in four of these seven cases in which predation was attempted, Koller finds the presence of governmental activity (such as tariff policies, licensing, and an excise tax) that contributed significantly to the pricing policies of the firms. As Koller concludes, “The major thrust of our findings, however, is not simply that predatory pricing does not occur very often but that, when it does occur, it produces little or no harm to competition” (Koller, “The Myth,” 110–13, 121).

73. Code adopted in 1924, in Heermance, Codes, 320–21. A similar provision was contained in the code of the International Association of Garment Manufacturers (1924) (ibid., 85). A provision against lowering one’s bid in order to be awarded a contract was also included in the code of the International Monumental Granite Producers’ Association (National Industrial Conference Board, Trade Associations, 199).

74. Codes of the Western Retail Implement and Hardware Association (1924); the American Walnut Manufacturers’ Association (1924); and the National Machine Tool Builders’ Association, in Heermance, Codes, 183, 308–9; Iron Age 115 (May 1925): 1358–59.

75.Printers’ Ink Monthly, September 1927, 87.

76. Code of the American Bottlers of Carbonated Beverages, in Heermance, Codes, 58.

77. Code of the International Association of Milk Dealers (ibid., 135–36). See also the code of the National Association of Ice-Cream Manufacturers (ibid., 246; System 43 [1923]: 342 at 376).

78. Codes of the National Basket and Fruit Package Manufacturers Association (1923), and the International Association of Garment Manufacturers, in Heermance, Codes, 53–54, 84–87.

79. Those who attack “discrimination” on the part of sellers have tended to ignore the discrimination practiced by buyers. Buyers are highly selective in deciding with whom to do business, seeking to purchase goods and services at the lowest possible prices. In the course of bargaining, buyers will discriminate among sellers, at times agreeing to pay one seller more for his product or service than he has already paid another. The suggestion that buyers should be prohibited from so discriminating would (properly) be met with outrage, yet it is popularly accepted that sellers should not have the same and equal right. Perhaps this seeming paradox is no more than a reflection of the fact that there are fewer manufacturers and distributors than there are buyers.

80. National Industrial Conference Board, Public Regulation of Competitive Practices (New York: National Industrial Conference Board, 1925), 67.

81. 38 Stat. 730 (Comp. St. §8835b) (1914).

82.George Van Camp & Sons Company v. American Can Company et al, 278 U.S. 245 (1929).

83. See, e.g., Mennen Company v. Federal Trade Commission, 288 F. 774, cert. den. 262 U.S. 759 (1923); National Biscuit Company v. Federal Trade Commission, 299 F. 733, cert. den. 266 U.S. 613 (1924).

84. National Industrial Conference Board, Public Regulation, 144.

85. Williams Haynes, “Better Ethical Standards for Business,” Annals of the American Academy of Political and Social Science 101 (May 1922): 221–23.

86. Codes of the National Commercial Fixture Manufacturers’ Association; the American Photo-Engravers Association; the National Association of Oxy-Chloride Cement Manufacturers; the Gas Products Association; the International Association of Garment Manufacturers; and the American Walnut Manufacturers’ Association, in Heermance, Codes, at 109, 428–29, 73–74, 200, 86, 308–9.

87. See, e.g., the code of the National Association of Ice-Cream Manufacturers (1922), in ibid., 246; System 43 (1923): 342.

88.New York Times, 18 March 1927, 36.

89. Rexford Tugwell, Industry’s Coming of Age (New York: Harcourt, Brace, 1927), 113.

90. Mergers, pools, and cartels have generally failed to provide the order and stability desired by members of an industry. This has been due, mainly, to the resiliency of market processes to resist their own subversion. The competitive self-interest motivations, coupled with an inability to enforce restrictive arrangements, have made such methods unsatisfactory for business purposes. See, e.g., Kolko, Triumph, 26ff.; Kolko, Railroads, generally; Ida Tarbell, The Nationalizing of Business, 1878–1898 (New York: Macmillan, 1936), 62ff.; and Dewing, Corporate Promotion, 557ff. Although Alfred Chandler Jr. has identified the benefits associated with vertically integrated enterprises, he has acknowledged that mergers—which expressed “the strategy of horizontal combination”—were less effective. In his words, “horizontal combination rarely proved to be a viable long-term business strategy. The firms that first grew large by taking the merger route remained profitable only if after consolidating, they then adopted a strategy of vertical integration.” See Chandler, Visible Hand, 315.

91. Edgar Heermance, Can Business Govern Itself? A Study in Industrial Planning (New York: Harper & Bros., 1933), 18–19. Some trade associations had experienced the problems of enforcing their policies even prior to this century. In the early 1870s, for example, local associations of food canners began to develop in an effort to stabilize prices. Later, the National Association of Canned Food Packers was founded, the stated purpose of which was “to reform abuses in trade;… to produce uniformity and certainty in the customs and usages of trade;… [and] to encourage legislation looking to the protection and fostering of the packing interests of the United States.” In 1897, this association formed a committee to draft proposed legislation to regulate the canning and labeling of canned goods. The dissolution of the association the following year was due, in the opinion of one industry observer, to the fact that it “was powerless to enforce its rulings because the members of the industry had not progressed to a point in the conduct of their business where they could recognize the great benefit it might have been to them.” See Edward Hampe Jr. and Merle Wittenberg, The Lifeline of America: Development of the Food Industry (New York: McGraw-Hill, 1964), 123–24.

92. Mancur Olson, The Logic of Collective Action (Cambridge: Harvard University Press, 1965).

93. Ibid., 9.

94. Ibid., 48.

95. Ibid., 9.

96. Ibid., 9–10.

97. Ibid., at 2, 36 (emphasis in original). An assessment consistent with Olson’s declares:

The first problem of organization that presents itself to the trade association is the nonco-operator, the individualist, the entrepreneur, who, for any of widely differing reasons—low capital costs, higher efficiency, financial necessities, or mere ignorance—insists on playing the game his own way. Such competitors, even though a tiny minority, may nullify co-operative efforts toward market control. They raise the question of whether to give a majority group, by number or output, the right of imposing their standards on the obstreperous few or perhaps the right of making the minority become members of the majority association. (Avery Leiserson, Administrative Regulation: A Study in Representation of Interests [Chicago: University of Chicago Press, 1942], 23–24)

98. Robert Himmelberg, Origins, 116ff.

99. See, e.g., Outlook, 1 September 1926, 6–7.

CHAPTER 3. POLITICAL ALTERNATIVES

1. John T.Flynn, “Business and the Government,” Harpers 156 (March 1928): 409 at 413–14. Flynn also stated:

If Congress and the legislatures do not enact more laws, however, it is not the fault of business. There are, to be sure, laws which regulate business and interfere with some of its plans. But most of the laws that control or hamper business have been passed—surprising as it may seem to those who clamor for “less government in business”—at the demand of business itself…. Innumerable bills are introduced into Congress and the legislatures every year to force business in some new direction or close up certain avenues to it altogether. But few of these proposals originate in the minds of legislators. They come from the legislative program committees of trade associations or from the special counsel of trade groups, and they come backed often by resolutions from trade conventions and chambers of commerce. (Ibid., 409)

Flynn, who described the trade association convention as “a perfect hothouse of proposals for government regulation,” has provided a vivid account of a number of business-conceived legislative programs to resolve trade and employment problems, including the fatuous effort of one trade group to enact legislation requiring the posting of the “Lord’s Prayer” in places of employment as an antidote to the menace of bolshevism among workers. Ibid., 411.

Flynn’s observations had support from Samuel O. Dunn, editor of the Railway Age, who stated that “practically every increase in taxes and in government interference with business is due more to our business men than to our politicians.” Dunn went on to quote a Kansas farmer: “Paternalistic schemes of government are agitated, not at farmers’ meetings, but in business men’s organizations. I have heard more socialism preached at meetings of commercial bodies than in socialistic gatherings.” Nation’s Business, November 1928, 15.

2. Baruch, American Industry, 107.

3. Flynn, “Business and the Government,” 413.

4.New York Times, 21 September 1925, 21.

5.Nation’s Business, October 1927, 15.

6. National Industrial Conference Board, Trade Associations, 309, 315–16.

7. Ludwig von Mises, Human Action (New Haven: Yale University Press, 1963), 818.

8.Nation’s Business, 5 June 1924, 10.

9. For an excellent investigation of American support for Mussolini’s policies during this period, see John Diggins, Mussolini and Fascism: The View From America (Princeton: Princeton University Press, 1972); Herman Krooss, Executive Opinion: What Business Leaders Said and Thought on Economic Issues, 1920s-1960s (New York: Doubleday, 1970), 122–23; and Harvey O’Connor, Mellon’s Millions: The Life and Times of Andrew W. Mellon (New York: John Day, 1933), 338.

10.Nation’s Business, S June 1928, 15ff. One immediately notes, in Parker’s proposal for a government agency to approve business codes, a similarity not only to the trade practice conference procedures but to the code procedures adopted under the National Industrial Recovery Act.

11. Francis H. Sisson, “The World-Wide Trend Toward Cooperation,” Annals of the American Academy of Political and Social Science 82 (1919): 148.

12.Business Week, 7 May 1930, 14.

13. Chapman, Development, 70.

14. Ibid., 92–95. A new division was established within the FTC in 1926 to supervise trade practice conferences. The annual number of conferences rose from six in 1927 to fifteen in 1928, and to fifty in 1929. See Himmelberg, Origins, 62.

15. Quoted in Gerard Henderson, The Federal Trade Commission (1924; reprinted, New York: Agathon Press, 1968), 79.

16. Ibid., 80.

17. Act of 26 September 1914, c. 311, 38 Stat. 717, as amended.

18. From an address by Abram F. Myers, National Petroleum News 21 (16 January 1929), 29.

19. Watkins, Public Regulation, 244.

20.National Petroleum News 21 (16 January 1929): 29.

21. Heermance, Codes, 417–19.

22. Sumner Kittelle and Elmer Mostow, “A Review of the Trade Practice Conferences of the Federal Trade Commission,” George Washington Law Review 8 (1939–40): 427, at 436–37.

23. Chapman, Development, 90–91.

24. Taeusch, Policy and Ethics, 326–27.

25. Kittelle and Mostow, “A Review,” 436, 438.

26. Himmelberg, Origins, 63.

27.Iron Age 122 (1928): 1373.

28.Nation’s Business, July 1927, 32ff.

29.Nation’s Business, October 1927, 16–17. Cheney opposed the idea of allowing the government itself to initiate regulatory programs, preferring to “[l]et business deal honestly and fearlessly with its own offenses and offenders.” At the same time, he advocated the use of the federal government to provide enforcement for self-regulatory efforts should they fail: “It is the duty of business to clean its own house and it has the right to expect the utmost in cooperation from the public and the Government. But it is the duty of the Government, when business fails in its duty, to devise sound economic measures for regulation and to enforce them without fear or favor.” O. H. Cheney, “Facing the New Competition,” Nation’s Business, 5 June 1928, 28 at 65.

30. Filene, Unfair Trade, 38–39.

31.New York Times, 12 November 1924, 25.

32. Rush Butler, “The Sherman Anti-Trust Law and Readjustment,” Annals of the American Academy of Political and Social Science 82 (1919): 226.

33. Quoted in Hugh Johnson, The Blue Eagle From Egg to Earth (New York: Doubleday, Doran, 1935), 156; Business Week, 14 May 1930, 22.

34. Quoted in Johnson, Blue Eagle, 156–57.

35. Joseph Appel, The Business Biography of John Wanamaker, Founder and Builder (New York: Macmillan, 1930), 198; Business Week, 12 March 1930, 5–6.

36. Tugwell, Industry’s Coming, 224.

37. Ibid., 231.

38. Ibid., 233.

39. Statement of Oliver Sheldon, quoted by H. S. Person in “Management and Overproduction,” in Hamlin, Menace of Overproduction, 143 at 151.

40. Ibid., 152–53.

41. Milton Friedman and Anna J. Schwartz, A Monetary History of the United States, 1867–1960 (Princeton: Princeton University Press, 1963), 299ff.

42. Peter Temin, Did Monetary Forces Cause the Great Depression? (New York: W. W. Norton, 1976), 171.

43. Henry Simons, Economic Policy for a Free Society (Chicago: University of Chicago Press, 1948), 45–46, 54.

44. Charles P. Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises (New York: Basic Books, 1989), 57ff., 149–51.

45. Herbert Hoover, The Memoirs of Herbert Hoover, vol. 3, The Great Depression, 1929–1941 (New York: Macmillan, 1952), 2, 61–62.

46. John Kenneth Galbraith, The Great Crash, 1929 (Boston: Houghton Mifflin, 1955), 173–93.

47. John J. B. Morgan, “Manic-Depressive Psychoses of Business,” Psychological Review 42 (January 1935): 91–107; reprinted in Himmelberg, Origins, 8ff.

48. Rothbard, Great Depression.

49. A review of some of the principal theories as to the origins of the Great Depression can be found in Kindleberger, Manias, 77ff.

50. See, e.g., Rothbard, Great Depression, 182–90, 236–39.

51. Wallace Donham, “Business Ethics—A General Survey,” Harvard Business Review 7 (July 1929): 385 at 390.

52.Iron Age 124 (24 October 1929): 1108.

53.Iron Age 124 (28 November 1929): 1443–45.

54.Nation’s Business, April 1929, 123–26.

55. Henry Dennison, “Social Self-Control,” Annals of the American Academy of Political and Social Science 149 (May 1930): 1–2.

56. Watkins, Public Regulation, 245–46.

57. Gerard Swope, The Swope Plan, ed. J. George Frederick (New York: Business Bourse, 1931), 25.

58. Ibid., 18 (emphasis added).

59. Ibid., 160–61.

60. Ibid., 165.

61. Krooss, Executive, 42; Swope, Swope Plan, 159. Swope was later to declare that legislation could be employed to deal with “recalcitrant minorities,” again confirming his belief in the propriety of coercion to enforce industry-wide restraints on competition. See the Wall Street Journal, 24 May 1933, 5.

62. Swope, Swope Plan, 49–55, 62–69; Charles Beard and Mary Beard, America in Midpassage, 3 vols. (New York: Macmillan, 1939), 1:104.

63. Krooss, Executive, 152.

64. Swope, Swope Plan, 59–60.

65. Krooss, Executive, 165–66.

66. Swope, Swope Plan, 58.

67. Ibid., 60.

68. Ida Tarbeil, Owen D. Young: A New Type of Industrial Leader (New York: Macmillan, 1932), 221.

69. Henry Dennison, Ethics and Modern Business (Boston: Houghton, Mifflin, 1932), 58–59.

70.Annals of the American Academy of Political and Social Science 165(1933): 83; Independent Petroleum Association of America Monthly 3 (December 1932): 7; Beard and Beard, America in Midpassage, 107–8.

71. Quoted in James Magee, Collapse and Recovery (New York: Harper & Row, 1934), 21; Schlesinger, Crisis, 182; John Flynn, “Whose Child Is the NRA?” Harpers Magazine 169 (September 1934): 388.

72. Magee, Collapse and Recovery, 22–27.

73. See Annals of the American Academy of Political and Social Science 165 (1933): 83.

74. Francis Sisson, “The Growth of Industrial and Financial Units,” in Hamlin, Menace of Overproduction, 115 at 127–28.

75. Ibid., 129.

76. Swope, Swope Plan, 73–74.

77. J. Harvey Williams, “How the Anti-Trust Laws Should Be Modified,” Annals of the American Academy of Political and Social Science 165 (January 1933): 74–81.

78. W. A. Vincent, “Shall We Legislate Our Profits?” Nation’s Business, April 1929, 126.

79. Schlesinger, Crisis, 182–83. The coercive implications in Harriman’s remark are rather apparent. Other statements made by him, however, appear to propose only the legalization of voluntary stabilization agreements among industry members. Speaking to a meeting of the American Petroleum Institute in late 1932, Harriman suggested that agreements dealing with production, markets, and prices be permitted among producers. These agreements would be filed with an agency of the federal government and, if the attorney general did not bring an action before the agency within sixty days after it was filed, the agreement would take effect unless the attorney general or “some person showing interest” brought a formal complaint against it. At about the same time, however, Harriman’s inclination for involuntary political solutions was reiterated in a speech to the annual convention of the Association of Life Insurance Presidents. Harriman again urged that business seek to regulate itself through trade associations, adding: “In sports, we have established rules that have taken much of the brutality out of the game. Will competition be less effective and business less profitable if rules are established, binding upon all in a given trade or industry, which insure a fair deal for the laborer, for the investor and for the members of the industry, be they large or small?” New York Times, 10 December 1932, 23, 29; Independent Petroleum Association of America Monthly 3 (December 1932): 7 (emphasis added).

80. See, e.g., Radosh and Rothbard, A New History, 111ff.; Rothbard, Great Depression.

81. See, e.g., Paul K. Conkin, The New Deal, 2d ed. (Arlington Heights, I11.: A H M Publishing Corp., 1975), 75. Lundberg has listed some of the major contributors—including businessmen—to Roosevelt’s campaigns in both 1932 and 1936. Lundberg, Sixty Families, 454–55, 480–81.

82. Otis Graham Jr., Toward a Planned Society (New York: Oxford University Press, 1976), 13ff.; Hoover, Memoirs, 3:334–35; New York Times, 18 May 1933, 1, 10.

83. Flynn, “Whose Child?,” 388.

84.Wall Street Journal, 28 April 1933, 6.

85.Wall Street Journal, 20 May 1933, 1.

86. For a more detailed account, see Hawley, New Deal, 19ff.; Arthur Schlesinger Jr., The Coming of the New Deal (Boston: Houghton Mifflin, 1959), 87ff.; Business Week, 24 May 1933, 3–4.

87.New York Times, 14 May 1933, sec. 2, 15.

88.Iron Age 131 (4 May 1933): 716.

89. Quoted in Gerald Nash, United States Oil Policy, 1890–1964 (Pittsburgh, Pa.: University of Pittsburgh Press, 1968), 134–35.

90. Schlesinger, Coming of the New Deal, 89–99; New York Times, 3 June 1933, 17; 8 June 1933, 4. In an attempt to secure a broader base of support for the bill, Henry Harriman declared that the immediate beneficiaries of its enactment would be labor, with at least ten million workers receiving wage increases within six months after the new law went into effect. Harriman had testified before a congressional committee that, in his opinion, the first codes to be set up would cover only wages and hours. He went on to declare that “the refinements of the codes can be developed later,” with the “refinements” presumably consisting of such matters as “a fair price,” “fair wages,” and “a fair dividend,” all of which Harriman considered to be the basic objectives of the bill. J. R. Tritle, vice-president of Westinghouse Electric, anticipated much the same provisions as Harriman, suggesting that industrial recovery might be promoted by fixing prices (to wholesalers, retailers, and consumers), by controlling production, and by the establishment of minimum wages. See Leverett Lyon et al., The National Recovery Administration: An Analysis and Appraisal (Washington, D.C.: Brookings Institution, 1935), 23–24; New York Times, 21 May 1933, 2; Wall Street Journal, 24 May 1933, 5.

91.Business Week, 10 May 1933, 32.

92. Schlesinger, Coming of the New Deal, 95.

93.Wall Street Journal, 23 May 1933, 3.

94.Iron Age 131 (25 May 1933): 832; New York Times, 14 June 1933, 1.

95.New York Times, 18 May 1933, 11; 29 May 1933, 27; 30 May 1933, 3; 31 May 1933, 11; 1 June 1933, 35; 4 June 1933, 2.

96.Business Week, 10 May 1933, 3–4.

97.Wall Street Journal, 6 May 1933, 5.

98. Krooss, Executive, 169.

99. Ibid., 153.

100.New York Times, 5 May 1933, 1–2.

101.New York Times, 6 May 1933, 1; Wall Street Journal, 6 May 1933, 1.

102.Steel, 8 May 1933, 20.

103.New York Times, 9 May 1933, 3, 6, 11.

104.Wall Street Journal, 5 May 1933, 2.

CHAPTER 4. UNDER THE BLUE EAGLE AND BEYOND

1. James Walker, The Epic of American Industry (New York: Harper & Bros., 1949), 405–6.

2.Rotarian, July 1936, 14. Johnson even managed to change the name of his agency. Originally denominated the NIRA, the I was removed from the abbreviation after a Business Week article referred to the NIRA as “Neera, My God, to Thee,” a remark Johnson apparently considered too demeaning for so “holy” an agency.

3.New York Times, 20 May 1933, 1, 4; 8 June 1933, 29; Business Week, 15 July 1933, 3; Margaret Coit, Mr. Baruch (Boston: Houghton Mifflin, 1957), 441.

4. Marshall Dimock, Business and Government (New York: Henry Holt, 1949), 183.

5. Ibid.

6. Paul Conkin, FDR and the Origins of the Welfare State (New York: Thomas Y. Crowell, 1967), 35.

7.Business Week, 7 June 1933, 3.

8.Steel, 19 June 1933, 15.

9.New York Times, 28 April 1933, 14.

10.New York Times, 17 June 1933, 2. Harriman was to add, some five months after the NRA’s enactment, that “it is inconceivable that [the NRA] should ever be entirely abandoned” (Business Week, 25 November 1933, 6).

11. David Loth, Swope of G.E. (New York: Simon & Schuster, 1958), 224.

12.New York Times, 23 May 1933, 16.

13.New York Times, 1 June 1933, 35.

14.Wall Street Journal, 6 June 1933, 14.

15.Business Week, 10 May 1933, 32.

16. William Rodgers, Think: A Biography of the Watsons and IBM (New York: Stein and Day, 1969), 110.

17. Krooss, Executive, 172.

18.New York Times, 15 June 1933, 33.

19. Lyon et al., National Recovery, 568–77; Filene, Unfair Trade, 133–34.

20. Dudley Cates, “A Current Appraisal of the National Recovery Administration,” Annals of the American Academy of Political and Social Science 172 (March 1934): 133–34.

21. Alfred Lief, The Firestone Story (New York: McGraw-Hill, 1951), 198–203; New York Times, 8 June 1933, 29; Wall Street Journal, 9 June 1933, 13.

22. Rothbard, Great Depression, 26.

23. Ibid.

24. Lyon et al., National Recovery, 625.

25. Ibid., 629–31.

26. Ibid., 629–37.

27.New York Times, 15 November 1936, sec. 3, 9. A survey of some six thousand smaller manufacturers indicated that, while 34.2 percent of those responding favored a modification of the NRA and another 22.4 percent supported the NRA in its present form, 43.4 percent of the respondents favored total abolition of the agency. Those favoring modification of the NRA largely desired a greater degree of flexibility in the matter of wages and hours, as well as a better administration of the codes themselves. In the words of John E. Edgerton, president of the Southern States Industrial Council, the smaller firms were unable “to protect themselves against majorities” and were especially disadvantaged by price fixing and control of production (New York Times, 29 December 1934, 3).

28.New York Times, 28 December 1934, 30; Publishers Weekly, 5 January 1935, 50. Likewise, a survey of small-, medium-, and large-sized business firms in New England resulted in the following demonstrations of support for the NRA codes in 1934 and 1935:

		1934	1935
	In favor of the codes	76%	53%
	Opposed to the codes	20	40
	Not voting	4	7
		100%	100%

Business Week, 25 May 1935, 18.

29.Literary Digest, 3 February 1934, 8; George Sokolsky, “America Drifts Toward Fascism,” American Mercury 32 (July 1934): 263.

30.New York Times, 13 March 1935, 5; 9 June 1935, 1, 28; Business Week, 25 May 1935, 18.

31. Quoted in Stanley Baron, Brewed in America: A History of Beer and Ale in the United States (Boston: Little, Brown, 1962), 325.

32. Ibid.

33.New York Times, 3 January 1933, 45.

34. William Saroyan, “Aspirin is a Member of the N.R.A.,” American Mercury 32 (May 1934): 87–90. One might extend Saroyan’s remarks by noting that the brewing industry, whose products have the capacity to dull the senses and distort reality, and the aspirin industry, whose product is often used as a remedy for the pains of overindulgence, were fitting NRA team members.

35.New York Times, 26 May 1935, sec. 4, 10.

36.New York Times, 7 December 1934, 1, 10.

37.Publishers Weekly, 25 May 1935, 1979. For further discussion of these measures see Hawley, New Deal, 111ff.

38.New York Times, 23 May 1935, 1.

39.New York Times, 18 January 1935, 4; 20 January 1935, sec. 2, 17; 14 March 1935, 1, 6; 15 March 1935, 40; 20 March 1935, 43; 21 March 1935, 41; 22 March 1935, 15; 26 March 1935, 37; 28 March 1935, 6, 39; 14 April 1935, sec. 2, 8; 18 April 1935, 33; 2 May 1935, 38; 4 May 1935, 26; 7 May 1935, 15, 41; 16 May 1935, 2, 42; 18 May 1935, 2; 24 May 1935, 40; 27 May 1935, 13; Business Week, 3 November 1934, 14; 25 May 1935, 18; Publishers Weekly, 25 May 1935, 1975–76, 1979.

40.New York Times, 16 June 1935, sec. 3, 9.

41.New York Times, 10 March 1935, sec. 2, 19.

42.New York Times, 1 May 1935, 2; 3 May 1935, 4.

43. Richard Hodgson, ed., In Quiet Ways: George H. Mead—The Man and the Company (Dayton, Ohio: Mead Corp., 1970), 266.

44.A.L.A. Schechter Poultry Corp. et al. v. United States, 295 U.S. 495 (1935). It should be noted that the Supreme Court did not invalidate the concept of industrial self-regulation through enforceable “codes of fair competition.” The unconstitutionality of the program related to the method by which the codes came into being and the scope of their application. Had the code-making process been channeled through Congress rather than the executive branch, had the Recovery Act provided more specific standards for determining the content of codes, and had the codes themselves been less pervasive and more confined to the regulation of practices with more direct national significance, a different conclusion might have been reached. The decision, in other words, can scarcely be interpreted as an attack upon economic interventionism. As the Court declared:

The power of Congress extends not only to the regulation of transactions which are part of interstate commerce, but to the protection of that commerce from injury. It matters not that the injury may be due to the conduct of those en gaged in intrastate operations.… Congress may protect the safety of those employed in interstate transportation “no matter what may be the source of the dangers which threaten it.…” (295 U.S. 495, 544)

45.Panama Refining Company et al. v. Ryan et al, 293 U.S. 388 (1935).

46. Lowi, Politics, 75.

47.New York Times, 29 May 1935, 1, 11; 2 June 1935, sec. 4, 7.

48.New York Times, 5 June 1935, 11; 9 June 1935, sec. 3, 9.

49.New York Times, 29 May 1935, 10; 22 November 1936, 31. This proposition, coming after the Schechter case, also attempted to answer what was felt to be some of the Supreme Court’s objections to federal control. Arguing that each state could act upon those subjects of particular interest to it and without imposing such regulations upon other states, the Chamber directors concluded that the courts would more likely apply a broad interpretation to such legislation as being an exercise of the reserved police powers of the states than they would for federal legislation, which must find its justification in express grants of constitutional authority. The alternative offered by the Chamber sought only to establish a regulatory system that would satisfy the Supreme Court. No objection was expressed by the Chamber officials to the content of the NRA system of regulation.

50.New York Times, 3 June 1935, 1–2.

51.New York Times, 29 May 1935, 14; 2 June 1935, 29; 4 June 1935, 1, 6; 5 June 1935, 11; 6 June 1935, 39; 7 June 1935, 39; 9 June 1935, 1, 28; Business Week, 8 June 1935, 3, 7; 15 June 1935, 11; Publishers Weekly, 1 June 1935, 2133–34.

52.New York Times, 29 May 1935, 1, 13, 15; 30 May 1935, 12; 2 June 1935, sec. 3, 1; 5 June 1935, 11; Business Week, 15 June 1935, 11.

53.Wall Street Journal, 1 June 1935, 5. This study has not focused on the investment banking industry; it prefers to leave the reader to Parrish’s Securities Regulation and Vincent Carosso’s Investment Banking in America (Cambridge: Harvard University Press, 1970). Beginning at least as early as the World War I era and continuing through the post-Schechter period, the Investment Bankers Association (IBA) and other securities trade leaders had advocated increased political supervision in order to promote industry objectives. Legislation proposed in March 1933 to allow the federal government to supervise securities transactions received the endorsement not only of FDR but of the Wall Street Journal and the Financial Age as well (Parrish, Securities Regulation, 47). While industry members generally rejected proposals requiring the registration and disclosure of securities prior to issuance, they were active in promoting other political alternatives. Officials of the IBA, for example, advocated legislation that would punish those who engaged in fraudulent practices (see ibid., 53ff.). This is not to deny that other forces from outside the industry were actively pursuing legislative proposals hostile to industry interests, nor is it to suggest that Congress was only doing the bidding of Wall Street. It does, however, demonstrate a willingness on the part of members of the investment banking industry to employ political means when it suited their purposes to do so.

54.Business Week, 1 June 1935, 48.

55.Business Week, 8 June 1935, 40. Support for the continuation of NRA principles also came from less credible sources. The Council for Industrial Progress, a comic-opera concoction of the former labor leader Major George L. Berry, claimed to be representative of all segments of society, including business. It called for congressional enactment of a fair-competition law. The law would have been administered by a federal agency and called for the establishment of an industrial court to hear cases involving alleged violations. Owing to the nature of this organization, it would be unsafe to generalize its views as being representative of much more than Major Berry himself. See New York Times, 12 December 1936, 1, 11; Hawley, New Deal, 161–63.

56.New York Times, 14 January 1937, 46.

57.New York Times, 2 June 1935, sec. 3, 9; Kittelle and Mostow, “A Review,” 431–33.

58.New York Times, 13 January 1926, 38.

59. For an excellent background on the sugar industry, see Richard Zerbe, “The American Sugar Refinery Company, 1887–1914: The Story of a Monopoly,” Journal of Law and Economics 12 (October 1969): 339–75.

60. Hampe and Wittenberg, Lifeline, 132–34.

61. Leverett Lyon, Myron Watkins, and Victor Abramson, Government and Economic Life, 2 vols. (Washington, D.C.: Brookings Institution, 1939), 2:909–10.

62. Marver Bernstein, Regulating Business by Independent Commission (Princeton: Princeton University Press, 1955), 90–91; New York Times, 1 February 1935, 40; 21 February 1935, 31.

63. James Nelson, “The Motor Carrier Act of 1935,” Journal of Political Economy 44 (August 1936): 464–65.

64. Nor was the ATA alone in its activity on behalf of such legislation. It was joined by the American Highway Freight Association, American Short Line Railroad Association, American Transit Association, Association of Railway Executives, National Highway Freight Association, Railway Business Association, Association of Regulated Lake Lines, and the Canal Carriers Association. The water carriers’ attraction to federal regulation was well stated by one of its members, who envisioned the “stability of rates and all that goes along with it.” Ibid., 470; New York Times, 22 February 1935, 43; 27 February 1935, 27; 3 May 1935, 1, 4.

65. The U.S. Chamber of Commerce, American Bankers Association, NAM, NICB, American Iron and Steel Institute, Institute of American Meat Packers, Grain and Feed Dealers National Association, Security Owners Association, and the National Association of Mutual Savings Banks joined the parade to Washington to support such an extension of regulation. New York Times, 27 February 1935, 27; 3 May 1935, 1, 4.

66. Bernard Schwartz, ed. The Economic Regulation of Business and Industry:A Legislative History of U.S. Regulatory Agencies, 5 vols. (New York: Chelsea House, in association with R. R. Bowker Company, 1973), 4:3064–65; New York Times, 7 April 1938, 33.

67. Emmette Redford, The Regulatory Process (Austin: University of Texas Press, 1969), 28.

68.Rotarian, July 1936, 14.

69. Gardiner C. Means, The Corporate Revolution in America (New York: Crowell-Collier Press, 1962), 33–37.

70. Arnold, Folklore, 227.

71. See, e.g., Hawley, New Deal, 420ff.

72. Arnold, in a speech before the American Bar Association in San Francisco, in Brady, Business, 190.

CHAPTER 5. THE STEEL INDUSTRY

1. Chapman, Development, 69 (emphasis in original).

2.Year Book of the American Iron and Steel Institute, 1913, 18.

3.Year Book of the American Iron and Steel Institute, 1914, 284.

4.New York Times, 18 June 1922, sec. 2, 1.

5.Iron Age 108 (14 July 1921): 90; 109 (5 January 1922): 59ff.; 114 (28 August 1924): 523; 125 (2 January 1930): 125ff.

6. Kolko, Triumph, 37, 46. See also United States v. United States Steel Corporation, 251 U.S. 417 (1920); United States v. International Harvester Corporation, 274 U.S. 693 (1927).

7. See Richard Posner, Economic Analysis of Law (Boston: Little, Brown, 1972), 118 (n.11), citing an analysis of the United States Steel Corporation case by George Stigler.

8.Year Book of the American Iron and Steel Institute, 1914, 297; 1925, 220; Iron Age 119 (26 May 1927): 1513 at 1514.

9.Year Book of the American Iron and Steel Institute, 1925, 16–17.

10.Year Book of the American Iron and Steel Institute, 1914, 298.

11.Year Book of the American Iron and Steel Institute, 1925, 222–23.

12.Iron Age 113 (29 May 1924): 1558.

13. Ida Tarbell, The Life of Elbert H. Gary: The Story of Steel (New York: D. Appleton, 1925), 206 (emphasis in original). One of the initial purposes in the creation of U.S. Steel was the stabilization of prices in the industry by reducing sharp fluctuations. Indeed, it appears that a general moderation in prices took place in the industry during the years following the appearance of this corporation and up to the start of World War I. In spite of this fact, however, fluctuations in iron and steel production were greater in the years after 1901 (up into the early 1920s) than they were before U.S. Steel’s creation. See Berglund, “United States Steel Corporation and Price Stabilization,” 3ff.; also, Abraham Berglund, “The United States Steel Corporation and Industrial Stabilization,” Quarterly Journal of Economics 38 (August 1924): 607–30.

14.Iron Age 116 (29 October 1925): 1196–97.

15.Iron Age 119 (26 May 1927): 1513 at 1514.

16.Iron Age 118 (28 October 1926): 1191.

17.Iron Age 111 (1 February 1923): 345.

18.New York Times, 29 October 1927, 3; Iron Age 120 (3 November 1927): 1230 (emphasis added).

19.Year Book of the American Iron and Steel Institute, 1928, 280.

20. Schwab and others had recommended that the antitrust laws be modified to permit firms in the steel industry to enter into agreements, possibly under government supervision, to eliminate uneconomic practices such as cross-hauling. For example, he thought that a manufacturer in Chicago who was going to ship to a buyer in Pittsburgh, and a manufacturer in Pittsburgh who was going to ship to a buyer in Chicago, should be able to work out an arrangement, perhaps through trading orders, to avoid unnecessary shipping costs. As a voluntary measure, such a proposal is entirely consistent with a system of free competition and would tend to greater efficiencies in the industry. See New York Times, 26 May 1928, 22; 27 October 1928, 1, 12; Iron Age 122 (1 November 1928): 1085–86; Year Book of the American Iron and Steel Institute, 1928, 276–77.

21.Iron Age 117 (27 May 1926): 1502; 120 (3 November 1927): 1230–31.

22.Year Book of the American Iron and Steel Institute, 1921, 236.

23.Iron Age 122 (1 November 1928): 1087.

24. Ibid., 635–36.

25.Year Book of the American Iron and Steel Institute, 1928, 283–84.

26.Iron Age 119 (27 January 1927): 287–88.

27.Iron Age 122 (29 November 1928): 1364.

28.Iron Age 124 (24 October 1929): 1107.

29.Iron Age 122 (29 November 1928): 1364–65.

30. Ibid., 1180–81.

31. Ibid.

32. Ibid.

33.Iron Age 123 (30 May 1929): 1484.

34.Iron Age 121 (26 April 1928): 1148.

35.Iron Age 117 (13 May 1926): 1347; 121 (10 May 1928): 1323.

36.New York Times, 23 March 1933, 6; 28 May 1933, sec. 4, 4.

37. George Perkins, “The Modern Corporation,” reprinted in The Currency Problem and the Present Financial Situation: A Series of Addresses Delivered at Columbia University, 1907–1908 (New York: Columbia University Press, 1908), 164; Chapman, Development, 111–12.

38. Watkins, Public Regulation, 38n.

39. John Garraty, Right-Hand Man: The Life of George W. Perkins (New York: Harper & Bros., 1957), 253.

40. Perkins, “The Modern Corporation,” 166.

41.New York Times, 3 October 1919, 2.

42. Tarbell, Elbert Gary, 231–32.

43.Iron Age 107 (2 June 1921): 1457.

44.Year Book of the American Iron and Steel Institute, 1922, 21–22; System, January 1925, 28.

45. Julius Kahn, “A Plea for More Government Regulation,” Nation’s Business, February 1928, 20, 22.

46.Scribner’s Magazine 66 (1919): 101.

47.Iron Age 107 (21 April 1921): 1043.

48.Iron Age 123 (7 February 1929): 426.

49.Business Week, 7 May 1930, 14.

50. Charles Abbott, “Balanced Prosperity,” in Hamlin, Menace of Overproduction, 74, 77–78. It should be noted that, in a market economy, “value” is determined solely by exchange and fluctuates as the preferences of buyers and sellers and the supply of the product fluctuates. No commodity can, therefore, be said to have any “intrinsic value.” The objection being offered by Abbott was that supply and/or demand factors had changed to such an extent that prices had fallen below a level minimally acceptable to many producers.

51. Swope, Swope Plan, 106.

52. Ibid., 104.

53.New York Times, 5 August 1932, 1, 3; 6 August 1932, 2.

54.Wall Street Journal, 26 May 1933, 10; Steel, 29 May 1933, 11.

55.Steel, 29 May 1933, 12.

56.Wall Street Journal, 26 May 1933, 10; Iron Age 131 (1 June 1933): 852.

57.Iron Age 131 (25 May 1933): 835. Copyright permission granted by Chilton Company, Capital Cities/ABC Inc.

58.Steel, 15 May 1933, 20.

59.Steel, 8 May 1933, 20.

60.Steel, 5 June 1933, 12.

61.New York Times, 16 May 1933, 23.

62. W. H. Daney, president of Canton Tin Plate Corp.; G. R. Hauks, president of Taylor-Wharton Iron & Steel Company; and A. M. Oppenheimer, president of Apollo Steel Company, in Iron Age 131 (1 June 1933): 872–73.

63. Ibid., 871.

64. Ibid.

65.Wall Street Journal, 26 May 1933, 10.

66. Remarks by G. H. Chisholm, F. J. Moore (president of E. Keeler Company), Roy C. McKenna (president of Vanadium-Alloys Steel Company), W. Nelson Mayhew (president of Montgomery Iron & Steel Company), and H. E. Hughes (president of Continental Bridge Company), in Iron Age 131 (1 June 1933): 871–75.

67. H. C. Thomas of Alan Wood Steel Company, in ibid., 871.

68.Steel, 19 June 1933, 10.

69.Iron Age 131 (23 March 1933): 484.

70.Iron Age 131 (8 June 1933): 907.

71. Remarks by George J. Meyer (president of George J. Meyer Manufacturing Company), Leroy Brooks Jr. (president of Tool Steel Gear & Pinion Company), E. S. Sawtelle (president of Sawbrook Steel Castings Company), E. Haupt (president of Strobel Construction Company), C. H. Henkel (receiver, Empire Steel Corporation), John T. Llewellyn (president of Chicago Malleable Castings Company; Allied Steel Castings Company), in ibid., 906–9. As we saw earlier, business leaders often defined selling “below cost” not just as subvariable cost pricing, but selling products at prices that did not return all fixed and variable costs plus a “reasonable profit.” One steel company official defined selling “at a profit” to include “fair labor scale, full overhead, fair prices for raw materials plus a reasonable profit.” H. A. Burkhardt, president of E. Burkhardt & Sons Steel and Iron Works, in ibid., 906. By use of such phrases as “fair” and “reasonable"—clearly subjective in nature—it is evident that pricing policies were being considered not on the basis of the actual costs experienced by a given producer, but on the basis of representative or average costs for the entire industry.

72.Wall Street Journal, 29 May 1933, 1, 2.

73.Iron Age 131 (29 June 1933): 1038-A; Steel, 22 May 1933, 10.

74.Wall Street Journal, 26 May 1933, 10.

75. Ibid.

76.Wall Street Journal, 19 May 1933, 6; Steel, 22 May 1933, 10.

77.Steel, 15 May 1933, 11; Iron Age 132 (20 July 1933): 26-H.

78.Iron Age 132 (10 August 1933): 30–31.

79. Eugene Grace, “Industry and the Recovery Act,” Scribner’s Magazine 95 (February 1934): 96–98.

80. Ibid., 97.

81. Ibid., 100.

82.New York Times, 28 May 1935, 21.

83.New York Times, 30 May 1935, 12.

84.New York Times, 28 May 1935, 21; 30 May 1935, 12; 4 June 1935, 1; 7 June 1935, 16; Wall Street Journal, 31 May 1935, 5; Business Week, 25 May 1935, 18; 15 June 1935, 11.

CHAPTER 6. THE NATURAL-RESOURCE INDUSTRIES

1. The railroads were active in promoting national parks, in order to promote tourism, while many eastern businessmen supported conservation in the Adirondacks as a way of helping to preserve inland waterways and, hence, prevent the railroads from monopolizing transportation. See, e.g., Frank Graham Jr., Man’s Dominion: The Story of Conservation in America (New York: M. Evans and Co., 1971), 87, 159. Other industries made ample use of the conservation issue. One frequently runs across a statement by a manufacturer about the virtue of seeking to “conserve” such resources as capital and the value of labor from the “waste” of unrestrained competition. The steel industry’s Charles E Abbott, as has been noted, argued that “iron and steel products should command prices more in keeping with their intrinsic values” in order to insure the future development of remaining ore deposits. The rhetoric of “conservation” blended in very well with the purpose of preserving the positions of business firms from the risks associated with free competition. See Abbott, “Balanced Prosperity,” 74, 77.

2.New York Times, 15 January 1917, 13.

3. The lumber industry was one of the earliest champions of conservation measures as a means of stabilizing trade conditions. An FTC report on lumber trade associations, issued in 1922, declared that members of the National Lumber Manufacturers’ Association “have advocated for many years that they should be permitted to concertedly regulate the production of lumber for the expressed purpose of conserving the national resources.” The Bureau of Corporations had previously announced that the lumber companies, in past years, had cooperated with one another in order to restrict lumber production whenever an oversupply threatened to decrease the price. The FTC then concluded, “[I]t appears to be the aim and purpose of the manufacturers not only to eliminate price competition within their respective associations but to eliminate, as far as possible, price competition among the competing kinds of lumber.” See Report of the Federal Trade Commission, 2, 44–45.

4. The breakdown of figures on this graph is as follows (millions of barrels):

Year	Mid-Cont. Prod, (a)	U.S. Prod. (b)	Imports (b)	U.S. Prod. + Imports (b)	Demand (b)	Ave. Price Mid-Cont. Crude (c)
1920	250.1	442.9	106.2	549.1	531.2	$3.42
1921	258.5	472.2	125.4	597.6	529.7	1.65
1922	311.0	557.5	127.3	684.8	595.4	1.68
1923	348.5	732.4	82.0	814.4	733.5	1.56
1924	375.5	713.9	77.8	791.7	770.7	1.64
1925	425.1	763.7	61.8	825.5	842.2	1.87
1926	424.9	770.9	60.4	831.3	862.1	2.13
1927	547.6	901.1	58.4	959.5	894.9	1.38
1928	553.5	901.5	79.8	981.2	969.0	1.31
1929	584.3	1007.3	78.9	1086.3	1050.4	1.37

(a) from Harold Williamson et al., The American Petroleum Industry (Evanston, Ill.: Northwestern University Press, 1963), 302.

(b) from Nash, United States Oil Policy, 260.

(c) from Ralph Cassady Jr., Price Making and Price Behavior in the Petroleum Industry, Petroleum Monograph Series, vol. 1 (New Haven: Yale University Press, 1954), 137.

5. From Williamson et al., American Petroleum, 302–3; J. Stanley Clark, The Oil Century (Norman: University of Oklahoma Press, 1958), 177–79; Erich Zimmermann, Conservation in the Production of Petroleum: A Study in Industrial Control (New Haven: Yale University Press, 1957), 115.

6.Oil and Gas Journal 26 (2 February 1928): 36. Copyright permission granted by Oil and Gas Journal.

7. Quoted in Nash, United States Oil Policy, 83.

8. Ibid., 84–85.

9. Henrietta Larson and Kenneth Porter, History of Humble Oil & Refining Company (New York: Arno Press, 1959), 254–55.

10.New York Times, 10 December 1926, 23; Zimmermann, Conservation, 126–29; Nash, United States Oil Policy, 86–91.

11. Among the more important discoveries in 1926 were the Seal Beach field (California); Bowlegs and Seminole fields (Oklahoma); and the Hendrick, Howard-Glasscock, McElroy, and Yates fields (West Texas). The 1927 finds included the Little River and St. Louis fields (Oklahoma). The 1928 discoveries included the Kettleman North Dome field (California); the Oklahoma City field (Oklahoma); and the Eunice-Monument and Hobbs fields (New Mexico). The year 1929 saw the discovery of the Van field (East Texas), while 1930 witnessed the discovery of the most prolific of all, the East Texas field. In 1931, the Conroe field (Texas Gulf Coast) was found. See John McLean and Robert Haigh, The Growth of Integrated Oil Companies (Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1954), 87.

12.New York Times, 7 May 1927, 26; Williamson et al., American Petroleum Industry, 302–3; Clark, Oil Century, 177–79.

13.New York Times, 13 May; 1927, 1, 7.

14. Zimmermann, Conservation, 116.

15. Henrietta Larson, Evelyn Knowlton, and Charles Popple, History of Standard Oil Company (New Jersey): New Horizons, 1927–1950 (New York: Harper & Row, 1971), 63.

16.New York Times, 2 September 1926, 1; Larson, Knowlton, and Popple, Standard Oil, 87–88; Nash, United States Oil Policy, 86–91; Larson and Porter, Humble Oil, 313–14; Oil and Gas Journal 28 (3 October 1929): 100.

17.New York Times, 12 May 1927, 10.

18. Oklahoma Comp. Stat. 1921, sees. 7954–63.

19. W. P. Z. German, “Legal History of Oil and Gas in Oklahoma,” in Legal History of Conservation of Oil and Gas, symposium by the Mineral Law Section of the American Bar Association (Chicago: Section of Mineral Law of the American Bar Association, 1938), 152.

20.New York Times, 13 May 1927, 1, 7; 25 May 1927, 32; 26 May 1927, 5; Clark, Oil Century, 178–81; Williamson et al., American Petroleum Industry, 322ff.

21. Clark, Oil Century, 177–78.

22.New York Times, 7 May 1927, 26; 12 May 1927, 10. See also William Farish, “A New Concept of the Oil Industry,” Lamp, February 1934, 6.

23.New York Times, 22 May 1927, sec. 2, 17; 25 May 1927, 32.

24.New York Times, 25 May 1927, 32.

25. Nash, United States Oil Policy, 96.

26.Wall Street Journal, 20 October 1927, 16.

27. See, for example, D. T. Armentano, The Myths of Antitrust (New Rochelle, N.Y.: Arlington House, 1972); Harold Fleming, Ten Thousand Commandments: A Story of the Antitrust Laws (New York: Prentice-Hall, 1951); Lowell Mason, The Language of Dissent (New Canaan, Conn.: Long House, 1959); Isabel Paterson, The God of the Machine (New York: G. P. Putnam’s Sons, 1943); Rothbard, Power.

28. Lester Uren, “What California’s Gas Conservation Law Means to Our Industry,” National Petroleum News 21 (26 June 1929): 55–56.

29. Ibid., 56–57.

30. O'Connor, Melton’s, 193–94.

31. From “Petroleum Investigation,” Hearings on H. Res. 441 (Washington, D.C.: Government Printing Office, 1934), pt. 1, 485, reported in William Kemnitzer, Rebirth of Monopoly (New York: Harper & Bros., 1938), 119.

32. “Petroleum Investigation,” pt. 1, 493; Kemnitzer, Rebirth, 118.

33. See, e.g., references in note 3 of the introduction, supra.

34. Fritz Machlup, The Political Economy of Monopoly (Baltimore: Johns Hopkins University Press, 1952), 302–3.

35. An account of this argument is offered in Roger Miller, The Economics of Energy: What Went Wrong (New York: William Morrow, 1974), 17–18.

36.National Petroleum News 21 (25 September 1929): 139.

37. Larson and Porter, Humble Oil, 301.

38. Sir Henri Deterding, “Conservation of Oil National and International Problem,” in Hamlin, Menace of Overproduction, 105–6. The board of directors of Standard Oil (N.J.) expressed similar sentiments, praising the FOCB, which, it said, “recognizes the need for cooperative effort not only among the units of the industry but between the industry and the government as well.” Quoted in Kemnitzer, Rebirth, 212n.

39.Oil and Gas Journal 26 (12 April 1928): 36.

40.Oil and Gas Journal 26 (5 January 1928): 36.

41. E. P. Salisbury, “Overproduction in the Oil Industry,” in Hamlin, Menace of Overproduction, 21.

42. Simon Whitney, Antitrust Policies: American Experience in Twenty Industries, 2 vols. (New York: Twentieth Century Fund, 1958), 1: 113.

43.New York Times, 5 December 1928, 18.

44. Quoted in Larson and Porter, Humble Oil, 319, 325.

45.New York Times, 5 December 1928, 18.

46.New York Times, 26 February 1928, sec. 2, 11.

47.New York Times, 5 April 1928, 40.

48. Deterding, “Conservation of Oil,” 102 (emphasis added).

49. Ibid., 105 (emphasis added).

50.Independent Petroleum Association of America Monthly 1 (March 1931): 14.

51. Nash, United States Oil Policy, 94.

52. O'Connor, Mellon’s, 313–14.

53.Petroleum Age 21 (1 June 1928): 20–21.

54.National Petroleum News 21 (24 July 1929): 19–21.

55.National Petroleum News 21 (13 March 1929): 83ff.

56. Nash, United States Oil Policy, 115ff.; Williamson et al., American Petroleum Industry, 540ff.; Whitney, Antitrust, 1:114–15.

57.New York Times, 19 May 1933, 4; Nash, United States Oil Policy, 115, 262.

58. Chapter 26, Vernon’s Anno. Civ. Stat. (Texas), arts. 6008, 6014, 6029, 6032, 6036, 6049c.

59.Cbamplin Refining Company v. Corporation Commission of Oklahoma et al., 286 U.S. 210 (1932).

60. Ibid., 233.

61.R. S. Sterling et al. v. E. Constantin et al., 287 U.S. 378 (1932).

62.New York Times, 19 February 1932, 33; 18 May 1933, 27; Wall Street Journal, 1 April 1933, 9; 4 April 1933, 2, 10; Paul Giddens, Standard Oil Company (Indiana) (New York: Appleton-Century-Crofts, 1955), 460–61.

63.New York Times, 31 January 1932, sec. 2, 9, 16.

64.New York Times, 22 May 1932, sec. 2, 7, 10.

65. Quoted in Larson and Porter, Humble Oil, 467.

66. Hines H. Baker, quoted in ibid., 473.

67.New York Times, 3 April 1933, 26; 5 April 1933, 32; Business Week, 25 January 1933, 10; 19 April 1933, 7; 3 May 1933, 13–14.

68. Frederick Mills, Prices in Recession and Recovery (New York: National Bureau of Economic Research, 1936), 545.

69.New York Times, 15 May 1933, 3; 20 May 1933, 19; Clark, Oil Century, 194–95.

70.Wall Street Journal, 9 May 1933, 3.

71.New York Times, 18 May 1933, 27.

72.New York Times, 19 May 1933, 4; 21 May 1933, sec. 2, 7; 27 May 1933, 19; 9 June 1933, 25; Wall Street Journal, 20 May 1933, 1, 5; 22 May 1933, 1; 24 May 1933, 5.

73.New York Times, 7 May 1933, sec; 2, 7; Wall Street Journal, 20 May 1933, 5; 30 May 1933, 5.

74.New York Times, 5 April 1933, 32; 16 June 1933, 25; 18 June 1933, 9; Business Week, 22 July 1933, 6; Larson, Knowlton, and Popple, Standard Oil, 66–67.

75. Section 9(c).

76.Business Week, 31 May 1933, 5.

77. Quoted in Magee, Collapse, 52.

78. Ibid., 51.

79. Krooss, Executive, 173; Nash, United States Oil Policy, 135.

80. For an excellent account of the oil industry’s experiences with the NRA, see Nash, United States Oil Policy, 128–56. See also Williamson et al., American Petroleum Industry, 548–51, 689–96.

81. Clark, Oil Century, 195; Lyon et al., National Recovery, 629ff.

82. Quoted in Larson and Porter, Humble Oil, 480.

83. Sokolsky, “America Drifts,” 263.

84. See chapter 4, n. 45, supra.

85.Business Week, 15 June 1935, 11.

86. Machlup, Political Economy, 303.

87. Samuel Pettengill, Hot Oil: The Problem of Petroleum (New York: Economic Forum, 1936), 241–43.

88. Ibid., 243; Williamson et al., American Petroleum Industry, 550.

89. 49 Stat. 30, 15 USCA Sect. 715 et seq. (1940).

90.New York Times, 28 May 1935, 1, 21; Wall Street Journal, 29 May 1935, 1, 2; 5 June 1935, 1, 5.

91.Bituminous Coal Data, 1963 (Washington, D.C.: National Coal Association), 110.

92.Bituminous Coal Data, 1962 (Washington, D.C.: National Coal Association), 8–9.

93. J. Schmookler, “The Bituminous Coal Industry,” in Adams, Structure, 76 at 82ff.

94.Bituminous Coal Data, 1962, 8.

95. Edward Devine, Coal (Bloomington, Ill.: American Review Service Press, 1925), 271.

96. Schmookler, “Bituminous,” 85.

97. Schmookler also notes that “[w]hereas, in 1919, at the peak of unionization in the industry, about 72 per cent of all bituminous coal came from union mines, by 1925, the percentage was down to 40.” Ibid., 87.

98. Ibid., 89 (emphasis added).

99. National Industrial Conference Board, The Competitive Position of Coal in the United States (New York: National Industrial Conference Board, 1931), 267.

100.Bituminous Coal Data, 1962, 8.

101.Coal Age 23 (28 June 1923): 1062–63.

102.Coal Age 33 (December 1928): 732.

103. Ibid., 733; Coal Age 29 (17 June 1926): 858, 862.

104. Machlup, Political Economy, 304.

105. C. E. Bockus, “The Cost of Overproduction in the Bituminous Mining Industry,” in Hamlin, Menace of Overproduction, 1, at 14.

106.Coal Age 34 (November 1929): 667–68.

107. Bockus, “The Cost,” 13–14.

108.United States v. Trenton Potteries Company et al., 273 U.S. 392 (1927).

109.Appalachian Coals, Inc., et al. v. United States, 288 U.S. 344 (1933).

110. 288 U.S. 344, at 372, 374.

111. Glen Parker, The Coal Industry: A Study in Social Control (Washington, D.C.: American Council on Public Affairs, 1940), 109ff.

112.New York Times, 26 May 1935, sec. 4, 10; Business Week, 3 November 1934, 14; Parker, Coal Industry, 138.

113.Carter v. Carter Coal Company et al., 298 U.S. 238 (1936); Sunshine Anthracite Coal Company v. Adkins, 310 U.S. 381 (1940). See also William Leuchtenberg, Franklin D. Roosevelt and the New Deal, 1932–1940 (New York: Harper & Row, 1963), 161–62; Chapman, Development, 152–53; Machlup, Political Economy, 304; Business Week, 8 June 1935, 17.

114. The economic arguments against government conservation programs, demonstrating the superiority of the market in maximizing the efficient use of resources, have been developed elsewhere. See, e.g., Rothbard, Power, 63–70.

115. It is always assumed, without explanation, that future generations have a claim to the consumption of a given resource superior to that of the present generation, an assumption that has given rise to the humorous retort, “What has posterity done for us?” But if one considers the principal attraction for conservation measures to be the transfer of decision-making over resources from private to collective hands, the purpose for making this assumption becomes more clear.

CHAPTER 7. RETAILING AND TEXTILES

1. Chandler, in McÇraw, Essential, 428.

2. Godfrey Lebhar, Chain Stores in America, 3d ed. (New York: Chain Store Publishing Corporation, 1963), 125. One cannot discuss the competition-restraining tendencies of many retailing interests without mentioning that local device known as the “Green River ordinance.” Directed against retailers from outside the community who would go from door to door selling their products or services, the Green River ordinances ordinarily required itinerant salesmen to register with the local police and to have prior approval of a homeowner before soliciting a sale. Such restrictions, needless to say, tended to discourage the out-of-town competitors.

An interesting anecdote: in a Wisconsin city a traveling photographer was prosecuted, at the urging of the resident photographers, for violating that city’s Green River ordinance. The town’s photographers came to court to witness the prosecution of this interloper, only to find themselves the target of the judge’s ire. The judge told them: “Here is a man with ambition enough to go out and try to get business. You ask me to fine him for it. You want the law to protect you while you sit around waiting for business to come your way. If I had the power, I would fine every one of you instead,” See Business Week, 11 December 1929, 33.

3. Lebhar, Chain Stores, 125ff.

4. Ibid., 162–65.

5. Taeusch, Policy and Ethics, 326–27, 364.

6. Edward Filene, “A Simple Code of Business Ethics,” Annals of the American Academy of Political and Social Science 101 (1922): 224.

7. Edward Filene, The Way Out (New York: Doubleday, Page, 1924), 125.

8.New York Times, 9 November 1925, 21.

9.New York Times, 30 June 1926, 41.

10. Filene, Unfair Trade, 55–57.

11. Ibid., 68, 74–75.

12. A program with more teeth in it was begun by the Associated Fur Manufacturers, Inc. It provided for a binding contractual arrangement between the members to observe its provisions. Those who violated the contract could have future violations enjoined by a court of equity (or so it was contemplated) or, in the alternative, pay an agreed-upon rate as liquidated damages. The agreement sought to eliminate various “unethical” trade practices, such as the selling of any merchandise “on memorandum or consignment,” as well as to require signatories to report all sales, including terms, and all payments received by them, and to adhere to a fixed schedule of discount rates. The enforceability of such a contract in a court of law was questionable, however, given the reluctance of courts to enforce agreements in restraint of trade or penalty provisions in contracts. See New York Times, 4 March 1928, sec. 2, 8.

13. Filene, Unfair Trade, 76.

14.New York Times, 25 February 1933, 28; 26 February 1933, sec. 2, 15; 26 March 1933, sec. 2, 15.

15.Business Week, 8 July 1933, 7–8.

16.New York Times, 8 June 1933, 3.

17. Krooss, Executive, 173.

18.New York Times, 1 June 1933, 37; 2 June 1933, 35; 3 June 1933, 5; 4 June 1933, sec. 2, 14.

19.New York Times, 18 June 1933, 10; Business Week, 1 June 1935, 8.

20.Wall Street Journal, 29 May 1933, 9; Herschel Deutsch, “The New Deal at the Drug Store Counter,” Advertising and Selling 21 (3 August 1933): 15.

21.Advertising and Selling 21 (6 July 1933): 17ff.

22. Cates, “Current Appraisal,” 135.

23. Edward Filene, “The New Relations Between Business and Government,” Annals of the American Academy of Political and Social Science 172 (March 1934): 37–38.

24. Filene, Unfair Trade, 90.

25. Ibid., 90–96.

26.New York Times, 18 November 1934, 27; Business Week, 3 November 1934, 14.

27.New York Times, 28 May 1935, 18; 29 May 1935, 13, 15; 2 June 1935, 29; 3 June 1935, 1–2; 5 June 1935, 11; Wall Street Journal, 29 May 1935, 3.

28.New York Times, 28 May 1935, 14.

29. Ibid.

30.Business Week, 1 June 1935, 8.

31.New York Times, 29 May 1935, 15; 19 May 1936, 19; 2 December 1936, 9; Business Week, 15 June 1935, 11.

32. Murray Rothbard, Man, Economy and State, 2 vols. (Princeton, N.J.: D. Van Nostrand, 1962) 2:493.

33. Lebhar, Chain Stores, 56, 74.

34. Robinson-Patman Act, 1936, 49 Stat., 1526, 15 U.S. Code 13.

35.New York Times, 2 March 1936, 29; 5 March 1936, 32; 13 March 1936, 32; 22 March 1936, sec. 3, 9; 26 May 1936, 39; 23 June 1936, 34; 4 August 1936, 37; 18 August 1936, 26; 25 January 1937, 5; 26 January 1937, 28.

36.New York Times, 23 June 1936, 34.

37.New York Times, 27 February 1937, 30; B. S. Yamey, ed., Resale Price Maintenance (Chicago: Aldine, 1966), 68–69; Clair Wilcox, Public Policies Toward Business, 3d ed. (Homewood, Ill.: Richard D. Irwin, 1966), 706–7.

38. See Yamey, Resale Price, 69.

39.New York Times, 27 February 1937, 30; F. Marion Fletcher, Market Restraints in the Retail Drug Industry (Philadelphia: University of Pennsylvania Press, 1967), 54ff.; Lebhar, Chain Stores, 107ff.

40.Old Dearborn Distributing Company v. Seagram-Distillers Corporation, 299 U.S. 183 (1936).

41. Yamey, Resale Price, 73–75.

42.New York Times, 22 January 1937, 37; 15 June 1937, 32. The retailers’ willingness to support minimum-wage laws was based largely upon the fact that legislation of that sort generally exempted members of the immediate family from coverage, an exemption conducive to the interests of the independent, family-owned retail establishments and detrimental to the interests of corporate-owned chain and discount stores.

43. Lebhar, Chain Stores, 113–14.

44. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776; reprint, edited by Edwin Cannan, New York: Modern Library, 1937), 219–20.

45. This table is taken from appendix B, “Keep Market Street Open,” a brief filed by chains opposing the Patman bill, and appears in the record of the hearing at page 652. It is reproduced in Lebhar, Chain Stores, 257.

46. Lewis Kimmel, Federal Budget and Fiscal Policy, 1789–1958 (Washington, D.C.: Brookings Institution, 1959), 187.

47. Lebhar, Chain Stores, 272.

48.Automotive Industries 54 (20 May 1926): 843.

49.Textile World 73 (26 May 1928): 93–94.

50. Ibid., 96.

51. Louis Galambos, Competition and Cooperation (Baltimore: Johns Hopkins University Press, 1966), 89ff.

52. A. D. Whiteside in Hamlin, Menace of Overproduction, 27.

53. Galambos, Competition, 95–96.

54.Textile World 71 (21 May 1927): 147ff.

55.Textile World 73 (26 May 1928): 80.

56. Whitney, Anti-Trust Policies, l:531ff.; 2:413ff.; C. T. Murchison, “Requisites of Stabilization in the Cotton Textile Industry,” American Economic Review 23 (Supplement, 1933): 71–80; Textile World 71 (21 May 1927): 147ff.; 73 (26 May 1928): 96–97.

57. Archibald Mclsaac, “The Cotton Textile Industry,” in Adams, Structure (rev. ed. 1954), 47 at 48. See also Hawley, New Deal, 220–21.

58. U.S. Department of Commerce, Commerce Yearbook, 1930 (Washington, D.C.: Government Printing Office, 1930), 468.

59.New York Times, 11 January 1928, 48; Business Week, 12 March 1930, 5–6; Textile World 71 (21 May 1927): 147ff.; 73 (26 May 1928): 80; Henry Kendall, “Factors in Restoring Equilibrium to the Cotton Textile Industry,” in Hamlin, Menace of Overproduction, 22 at 24–25; Alexander Whiteside, “A Plan for Organizing Specific Industry,” in Hamlin, Menace of Overproduction, 27 at 32; John Bassill, “The Rayon Industry,” in Hamlin, Menace of Overproduction, 40 at 49. Kendall was president of The Kendall Company, Whiteside was president of the Wool Institute, and Bassill was vice-president of the Tubize Chatillon Corporation.

60. Statement of J. W. Cone, quoted in Krooss, Executive, 152; Hines quoted in Galambos, Competition, 179.

61.New York Times, 14 January 1923, sec. 2, 13.

62.New York Times, 22 April 1923, sec. 2, 10.

63. John T. Flynn, “Business,” 411.

64. Quoted in Galambos, Competition, 177.

65.New York Times, 11 May 1933, 7; Textile World 83 (May 1933): 901–2.

66. Krooss, Executive, 171–72.

67.New York Times, 10 June 1933, 24.

68.New York Times, 19 May 1933, 4.

69. Quoted in Galambos, Competition, 197.

70.Textile World 83 (May 1933): 904–5.

71. Ibid., 912–13.

72.Business Week, 15 March 1933, 9.

73. See Hawley, New Deal, 221; Mclsaac, “Cotton Textile,” 69–71.

74.New York Times, 2 May 1935, 2.

75.New York Times, 29 May 1935, 8; 31 May 1935, 9; 1 June 1935, 8; 2 June 1935, 29; 4 June 1935, 6; 5 June 1935, 11; 6 June 1935, 39; 7June 1935, 39; 9 June 1935, 1; Wall Street Journal, 1 June 1935, 3.

76.New York Times, 2 June 1935, sec. 3, 9.

77.New York Times, 6 June 1935, 39.

78.Business Week, 15 June 1935, 11.

79.Wall Street Journal, 5 June 1935, 11.

80.New York Times, 29 May 1935, 13.

81. Edward Banfield, The Unbeavenly City Revisited (Boston: Little, Brown, 1974), 108.

82. That minimum-wage laws have served to increase unemployment—especially among the young and the poor—can no longer be denied. See, e.g., Yale Brozen, “The Effect of Statutory Minimum Wage Increases on Teen-Age Unemployment,” Journal of Law and Economics 12 (1969): 109–22; M. C. Benewitz and R. E. Weintraub, “Employment Effects of a Local Minimum Wage,” Industrialand Labor Relations Review 17 (January 1964): 276–88; Harry Douty, “Some Effects of the $1.00 Minimum Wage in the United States,” Economica, n.s., 27 (May 1960): 137–47; John Peterson, “Employment Effects of State Minimum Wages for Women: Three Historical Cases Re-Examined,” Industrial and Labor Relations Review 12 (April 1959): 406–22; Industrialand Labor Relations Review 13 (January 1960): 264–73; John Peterson, “Employment Effects of Minimum Wages, 1938–1950,” Journal of Political Economy 65 (October 1957): 412–30; George Stigler, “The Economics of Minimum Wage Legislation,” American Economic Review 36 (June 1946): 358–65.

CHAPTER 8. IN RETROSPECT

1. Kolko, Triumph.

2. Himmelberg, Origins, 219.

3. Chandler, Visible Hand, 6ff.

4. A firm employing such a strategy might still face an antitrust conviction if its superior efficiencies were such that would-be competitors could not profitably compete at prevailing prices. In the Alcoa case, for example, the defendant was found to have violated the Sherman Act even though it had engaged in no abusive practices and enjoyed a virtual monopoly in the production of virgin aluminum ingot only by virtue of its acknowledged efficiencies and refusal to take advantage of its position by trying to charge monopolistic prices. In the words of the Court:

It was not inevitable that it [Alcoa] should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel. (United States v. Aluminum Company of America, 148 F2d 416, at 431 [1945])

5. See, e.g., the work of Niles Eldredge and Stephen Jay Gould, “Punctuated Equilibria: An Alternative to Phyletic Gradualism,” in Models in Paleobiology, ed. T. J. M. Schopf (San Francisco: Freeman, Cooper and Company, 1972), 82–115.

6. Adams, “Military-Industrial,” R-337–2.

7. Robert Dahl and Charles Lindblom, Politics, Economics, and Welfare (New York: Harper & Row, 1953), 200.

8. Smith, Wealth of Nations, 137 (emphasis added).