The Corporation and the Twentieth Century

199. “In this light, it is not material that the price of an article may be lowered. It is in the power of the combination to raise it, and the result in any event is unfortunate for the country, by depriv- ing it of the services of a large number of small but independent dealers who were familiar with the business and who had spent their lives in it, and who supported themselves and their families from the small profits realized therein. Whether they be able to find other avenues to earn their livelihood is not so material, because it is not for the real prosperity of any country that such changes should occur which result in transferring an independent businessman, the head of his establishment, small though it might be, into a mere servant or agent of a corporation for selling the commodities which he once manufactured or dealt in, having no voice in shaping the busi- ness policy of the company and bound to obey orders issued by others. Nor is it for the substan- tial interests of the country that any one commodity should be within the sole power and subject to the sole will of one powerful combination of capital” (166 U.S. 290 [1897], at 324).

200. 166 U.S. 290 (1897), at 355.

201. United States v. Joint Traffic Ass’n, 171 U.S. 505 (1898), at 568.

202. Letwin (1965, p. 174).

203. Sklar (1988, p. 140).

204. Johnson (1959).

205. Kramer (1964); Carstensen (1980).

206. Kramer (1964, p. 291). As Stetson told the Clapp Committee in 1911: “I do not recall

that I have advised the formation of any combination since the decision in the Northern

Notes to Chapter 3 573

Securities case. I do not know what to advise as lawful. I should not advise the formation of any corporation until that is settled. That is one of the things that has unsettled business. Men are stopping; they are not going on. The reason is that they could not get from their trusted counsel advice that it is wise or prudent to go on” (US Senate 1913, p. 960).

207. “To avoid possible trouble with the antitrust laws the new corporation bought the properties rather than the stocks” (Garraty 1960, p. 138).

208. By 1908, the company was being traded on the New York Stock Exchange (Garraty 1960, p. 145).

209. One of the company’s principal defenses in the Taft administration antitrust suit ten years later was that the combination was designed to facilitate the development of foreign mar- kets. Exports of farm machinery totaled $11.2 million in 1900 but declined to $9.9 million in 1901 and to 8.8 million in 1902 (Carstensen 1984, pp. 118 and 253).

210. Yeager (1981); Gordon (1984).

211. The injunction was affirmed by the Supreme Court (Swift & Co. v. United States, 196 U.S. 375 [1905]) in a decision important primarily for defining virtually all significant economic activ- ity as interstate commerce. Writing for the majority, Oliver Wendell Holmes held that any activity that is part of an interstate chain of production is subject to federal jurisdiction even if the activity itself (like slaughtering) takes place only within the boundaries of a state (Gordon 1984).

212. Yeager (1981, p. 152). Yeager argues that the government’s victory in Swift was a pyrrhic one, as the judge who issued the injunction explicitly exempted from the list of collusive behav- iors any coordination of quantities intended in good faith to prevent the “overaccumulation” of perishable commodities (p. 184). National Packing was voluntary dissolved during the Taft administration to forestall expected antitrust prosecution (pp. 226–27).

213. Johnson (1959, pp. 580–81).

214. Johnson (1959, pp. 584–88).

215. Garraty (1960).

216. Johnson (1959, pp. 588–89).

217. Wiebe (1959); Kolko (1963, pp. 74–81); Morris (2001, p. 478). 218. Sklar (1988, p. 204).

219. Perkins (1908, p. 156).

220. “The highly developed competitive system gave ruinously low prices at one time and unwarrantedly high prices at another time.” By contrast, an administered average price would be one on which the consumer “can depend in calculating his living expenses or making his business plans” (Perkins 1908, pp. 167–68). It was of course a famous policy of U.S. Steel to try not to vary prices according to short-run supply and demand, a policy with which Perkins was intimately familiar and which contributed to the company’s poor performance in the early twen- tieth century (McCraw and Reinhardt 1989).

221. Perkins (1908, p. 166).

222. Kolko (1963, p. 133); Sklar (1988, p. 198).

223. Johnson (1961); Sklar (1988, pp. 204 ff.); Weinstein (1968, chapter 1).

224. National Civic Federation (1908, p. 195).

225. Weinstein (1968, p. 87).

226. This account follows Sklar (1988), which is the definitive history of the Hepburn

Amendments.

574 Notes to Chapter 3

227. Loewe v. Lawlor, 208 U.S. 274 (1908). The Court found that the hatters union had violated the Sherman Act by organizing a product boycott. When the legal dust settled in 1915, the union ended up paying substantial treble damages.

228. Wiebe (1962, p. 81).