Alan J. Meese: “The Constitutional Moment That Wasn’t: 1912-1914 and the Meaning of the Sherman Act”

Dear readers, the Network Law Review is delighted to present you with this month’s guest article by Alan J. Meese, Ball Professor of Law and Dean’s Faculty Fellow and Director at the William & Mary Center for the Study of Law and Markets.


The Curse of Bigness sketches Tim Wu’s NeoBrandeisian vision.1TIM WU, THE CURSE OF BIGNESS: ANTITRUST IN THE NEW GILDED AGE (2018). Wu invokes Learned Hand’s assertion that Congress preferred, “because of its indirect social or moral effect”, a “system of small producers, each dependent for his success upon his own skill and character” to one where nearly all “must accept the direction of a few.2See United States v. Aluminum Co. of America, 148 F.2d 416, 427 (2d Cir. 1945) (quoted in WU, BIGNESS, at 89-90). Such a regime would treat concentration (Bigness) as a distinct antitrust harm, regardless of whether such concentration reduces or increases prices.3See WU, BIGNESS, at 83 (praising 1960s ‘anti-concentration mandate’); id. at 88-89 (criticizing price-based standard as ahistorical). Of course, modern law rejects Wu’s approach. Wu blames Robert Bork, who convinced courts that antitrust should only combat “one very narrow type of harm: higher prices to consumers.4WU, BIGNESS, at 17; id. at 88 (describing Bork as requiring certainty that conduct raised prices for consumers) (emphasis in original); id. at 136-137 (apparently equating Bork’s approach with allocative efficiency, wealth transfer, and consumer welfare). Of course, Bork’s thesis was about total welfare (allocative efficiency), not prices or wealth transfers. See D. Daniel Sokol, Antitrust’s Curse of Bigness Problem, 118 MICH. L. REV. 1259, 1271 (2020) (“[T]he consumer welfare standard that Wu attacks is not the actual consumer welfare standard articulated by Bork”); Alan J. Meese, Debunking the Purchaser Welfare Account of Section 2 of the Sherman Act: How Harvard Brought us a Total Welfare Standard and Why We Should Keep It, 85 N.Y.U. L. REV. 659, 668-672 (2010) (comparing total welfare and purchaser welfare approaches and describing Harvard School origins of the former). This essay treats the modern consumer-focused standard as the alternative to Wu’s vision.

However, significant evidence suggests that the Sherman Act mandates a consumer-focused approach. Robert Lande’s review of the legislative history concluded that Congress “subordinate[d] all other concerns to the basic purpose of preventing firms with market power from directly harming consumers.5See Robert H. Lande, Wealth Transfers as the Original and Primary Concern of Antirust: The Efficiency Interpretation Challenged, 34 HAST. L. J. 65, 68-69 (1982). Of course, Lande also challenged Bork’s total welfare thesis. Lande’s conclusion echoed Standard Oil v. United States,6221 U.S. 1 (1911). where the Court concluded that ‘in restraint of trade’ was a term of art referencing practices producing monopoly or its consequences.7Id. at 55-57. The Court identified three such consequences: higher prices, reduced production, and reduced quality.8Id. at 52 (describing three evils that produced “the [English] public outcry against monopolies”). Congress thereby authorized courts to use reason to discern whether practices offended the ‘public policy of the Act’ by producing such evils.9Id. at 64 (explaining how Rule of Reason assessment implemented “public policy embodied in the statute”); id. at 58 (treating “evils, such as enhancement of prices” as “against public policy.”); id. at 59 (“[W]here words […] had at the time a well-known meaning at common law […] they are presumed to have been used in that sense unless the context compels to the contrary.”); Alan J. Meese, Price Theory, Competition and the Rule of Reason, 2003 ILL. L. REV. 77, 84-89. Applying this standard, the Court distinguished between normal methods of industrial development and new means of combination with the purpose of excluding others from the trade.10Standard Oil, 221 U.S. at 75. Absent the latter, i.e., unreasonable restraints, no firm could maintain a lasting monopoly, because others could also adopt reasonable restraints (i.e., normal methods) and thus compete on equal footing with the putative monopolist.11Id. at 62. One implication is that firms would pass efficiencies along to consumers. William Howard Taft contended as much. See nn. 32, 36-37 and accompanying text.

Wu does not discuss Lande’s widely-cited work, except as ‘Further Reading’ critiquing Bork’s approach.12See WU, BIGNESS, at 144. Wu’s informative discussion of Standard Oil does not mention the price/output/quality standard or the Court’s interpretive methodology.13Id. at 58-68. Instead, Wu suggests an interpretive approach that bypasses Lande and Standard Oil. Wu concludes that “trying to find the true original meaning of the Sherman Act” is “an impossible task.”14Id. at 32. See Lina Khan, The End of Antitrust History Revisited, 133 HARV. L. REV. 1655, 1659, n. 14 (2020) (characterizing Wu’s assertion as “[s]omewhat perplexing[.]”). Instead, Wu finds that meaning in a Constitutional Moment, beginning with the 1912 Presidential campaign and culminating with the 1914 Clayton Act and FTC Act.15WU, BIGNESS, at 74-77. This moment ostensibly clarified the Sherman Act’s Brandeisian essence.

The 1930s purportedly produced one such moment.16See BRUCE A. ACKERMAN, WE THE PEOPLE: TRANSFORMATIONS, Chs. 9-12 (1998). The Supreme Court invalidated some measures that nominally counteracted the Depression.17See e.g. New State Ice Co. v. Liebmann, 285 U.S. 262 (1932). Some advocated formal constitutional amendments contravening these decisions. Simultaneously, states, Congress, and FDR reiterated an alternative constitutional vision. The 1936 elections vindicated this vision, and the Court acquiesced, 5-4.18West Coast Hotel v. Parrish, 300 U.S. 379 (1937). This acquiescence became unanimous.19See e.g. Ferguson v. Skrupa, 372 U.S. 726 (1963) (refusing to assess state regulation of debt adjustment under the Due Process Clause); Williamson v. Lee Optical, 348 U.S. 483 (1955) (finding a rational basis for regulating optometry). The Constitution changed.

What about 1912-1914? The 1912 presidential race presented starkly different visions. Eugene Debs and Theodore Roosevelt rejected antitrust and competition, advocating state-supervised monopolies.20WU, BIGNESS, at 74-76. President Taft and Woodrow Wilson “promised to restore a competitive economy by fighting the trusts with the antitrust law and new regulations.”21Id. at 75. Thus, “the public was clearly engaged with and voting on what kind of economic order they wished to live in.22Id. Wilson prevailed “based on economic and antitrust policies directly taken from Louis Brandeis[.]23Id. at 76. Congress passed the ‘stronger’ 1914 Clayton and FTC Acts; the latter banned unfair methods of competition.24Id. at 76-77. But see Lande, Wealth Transfers, 34 HAST. L. J. at 126 (FTC Act’s “ultimate goals were identical to those of the Sherman Act.”); id. at 121 (“Congress did not intend to protect small businesses if higher prices for consumers resulted.”).

These electoral debates and enactments produced a Brandeisian Sherman Act, Wu says.

The importance of these new laws lies not just in their specific provisions, but instead in their democratic resolution of the uncertainty surrounding the purpose of the Sherman Act. […] When we add up the popular vote for President and the subsequent passage of stronger antitrust laws in 1914, it becomes clear that the Wilson-Brandeis economic program enjoyed a powerful democratic validation, one arguably of constitutional significance.25WU, BIGNESS, at 77 & n. † (invoking BRUCE A. ACKERMAN, WE THE PEOPLE: FOUNDATIONS (1991)). Despite the qualification (arguably), the heading introducing pages 74-77 is entitled: ‘Antitrust’s Constitutional Moment.’

This (constitutional) change, Wu says, “ratified and toughened the Sherman Act” without changing its text.26Id. at 77. If accurate, Wu’s account renders the legislative history assessed by Lande and Standard Oil’s statutory exegesis irrelevant indicia of post-1914 meaning and implies a rejection of the consumer-focused Rule of Reason.

Wu offers a creative and thought-provoking interpretation of the events of 1912-1914. However, three distinct historical facts deprive these events of the sort of Constitutional status Wu proposes.

  1. Candidate Taft embraced Standard Oil and rejected anti-Bigness

Assume arguendo that Wilson promised a Brandeisian regime. Wilson won 42 percent of the popular vote. Taft earned 23 percent, cementing the powerful democratic validation Wu invokes.27Id. Taft embraced Standard Oil and rejected anti-Bigness.

Taft addressed antitrust throughout his presidency. After the election, he published a monograph.28WILLIAM HOWARD TAFT, THE ANTI-TRUST ACT AND THE SUPREME COURT (1914). This book collected essays Taft had published in the New York Times during 1914. See Marc Winerman, Origins of the FTC, 71 ANTITRUST L. J. 1, 31 & n. 178 (2003). These writings delivered a coherent antitrust vision that anticipated and then embraced Standard Oil’s consumer-focused standard and safe harbor for normal conduct. In particular, Taft concluded that:

  1. The Sherman Act banned “combinations […] which through restraint of trade . . . should suppress competition, establish monopoly, and control prices.29See William Howard Taft, Remarks Accepting the Republican Presidential Nomination (August 1, 1912); TAFT, ANTITRUST, at 2 (Sherman Act banned “combinations between many […] in a branch of trade, industry, or transportation to obtain control of it, regulate prices and make unlimited profit.”) (emphasis added); William Howard Taft, Third Annual Message to Congress (December 5, 1911) (Act condemned combinations that reduced competition “to secure control of, and enhance, prices and create a monopoly”); William Howard Taft, Address Accepting The Republican Presidential Nomination (July 28, 1908) (government should prohibit acts done with “purpose of controlling the market, to maintain or raise prices, restrict output and drive out competitors”).
  2. Large “aggregations of capital,” when “legitimate” and “properly controlled”, were “natural results of modern enterprise and […] beneficial to the public.30Taft, 1908 Acceptance Speech; Taft, 1912 Acceptance Speech (“progress in modern business is by effective combination of the means of production to the point of greatest economy.”). Like Wu, Taft recognized that firms sometimes grew beyond the efficient scale. See Taft, Economic Legislation (such growth “shows intent to monopolize and not to economize”); WU, BIGNESS at 70-71.
  3. Antitrust and “the proper operation of competition” could “properly control” these aggregations, such that “the public will soon share with the manufacturer the advantage in economy of operation and lower prices.31Taft, 1908 Acceptance Speech; id. (such aggregations should be “[c]ontrolled so that the public may have the advantage of reasonable prices and that the avenues of enterprise may be kept open to the individual and the smaller corporation[.]”).
  4. The Sherman Act properly banned firms from using “great size” to “coerce” customers or rivals via unprofitable pricing or exclusive agreements.32William Howard Taft, Message Regarding Economic Legislation (January 7, 1910) (condemning “methods akin to duress to stifle competition”); Taft, 1908 Acceptance Speech; id. (“low and unprofitable price” is evidence of monopolization).
  5. [E]conomies […] due to the concentration under one control of large capital and many plants” and using “low price […] and good quality” were lawful if “the business is a profitable one.33Taft, Economic Legislation; TAFT, ANTITRUST, at 127 (Act does not “interfere with a great volume of capital which, concentrated under one organization, reduced the costs of production and made its profits thereby and took no advantage of its size, by methods akin to duress to stifle competition[.]”); Taft, Third Annual Message (Act did not ban “accumulation of large capital in business enterprises [to] secure reduced cost of production[.]”).
  6. Standard Oil gave the Sherman Act “an authoritative construction which is workable and intelligible.34Taft, 1912 Acceptance Speech (endorsing Standard Oil); TAFT, ANTITRUST, at 85-95 (same); Taft, Third Annual Message to Congress (same); Alan J. Meese, Standard Oil as Lochner’s Trojan Horse, 85 S. CAL. L. REV. 783, 797 (2012) (discussing Taft’s response to Standard Oil).
  7. Aggregation of many existing plants under one company” would only impact competition if: (1) “the company thereby effects great economy, the benefits of which it shares with the public” or (2) “takes some illegal method to avoid competition and to perpetuate a hold on the business.35Taft, 1908 Acceptance Speech; Taft, Economic Legislation (combinations can achieve “complete control of prices or rates” by adopting “certain methods in the treatment of competitors and customers”).

Despite differing terminology, this vision replicated Standard Oil. Coercive conduct excluding rivals was unreasonable, while efficiencies and above-cost pricing were not. Banning the former would prevent firms from excluding rivals, and entry or potential entry would ensure low prices, sharing efficiencies with the public.36Taft, 1908 Acceptance Speech (contending that prospect of entry, usually in less than a year, ensured “potential competition”). “[T]he evil aimed at was not the mere bigness of the enterprise.37Taft, Economic Legislation; Taft, Third Annual Message (statute does not prohibit “mere bigness of plant organized to secure economy in production and a reduction of its cost”). Instead, Bigness was sometimes necessary for “progress” and the “greatest economy[.]38Taft, 1912 Acceptance Speech. Presumably Taft’s voters — who supplied decisive support for an antitrust-based regime — rejected anti-bigness in favor of a consumer-focused standard, thereby depriving Wilson’s approach of any “powerful democratic validation.39Cf. Marks v. United States, 430 U.S. 188 (1977) (absent majority opinion, opinion resolving the case on narrowest grounds constitutes decision’s rationale).

  1. Candidate Wilson did not invariably mimic Brandeis.

Wu implies that Wilson embraced Brandeis’s anti-Bigness views. One historian, however, “wonder[ed] to what extent [Wilson] was ever a convert to Brandeis’ [anti-bigness] philosophy.40See Joseph P. Mahoney, Backsliding Convert: Woodrow Wilson and the Seven Sisters, 18 AMERICAN QUARTERLY 71, 80 (1966) (emphasis in original); id. (“The Boston lawyer’s fear of bigness as itself evil did not inspire Wilson.”). This scholar highlights Wilson’s campaign statement that:

Big business is no doubt to a large extent necessary and natural. The development of business upon a great scale, upon a great scale of co-operation, is inevitable, and, let me add, is probably desirable.41Id. (quoting WOODROW WILSON, THE NEW FREEDOM, ed. William E. Leuchtenburg (Englewood Cliffs, N. J., 1961), p 102.)

Wilson also asserted: “I am for big business; I am against the trusts.42Id. (quoting WILSON, NEW FREEDOM, at 109). The distinction, this author concludes:

[R]ested upon the means by which growth took place. Big business, in his view, grew by economy and efficiency of operation, i.e., by normal interplay in a free market; but ‘a trust does not bring efficiency to the aid of business; it buys efficiency out of business.’”43Id. See also Winerman, Origins, 71 ANTITRUST L. J. at 45 (“unlike Brandeis, Wilson declared himself ‘for big business, and […] against the trusts’”) (citation omitted); id. at 44 (describing Wilson’s “very un-Brandeis-like” refusal to condemn “business done on a grand scale”) (quoting Woodrow Wilson, Speech of Acceptance (August 7, 1912)).

Other campaign speeches also suggest that Wilson’s views on efficiency and Bigness overlapped significantly with Taft’s. About six weeks before the election, Wilson opined:

There is a world of difference between the big business that grows by enterprise and economy, by efficiency, by working capital, every dollar of which is real and is used, and that which is artificially built up by agreements arrived at by gentlemen sitting in rooms where they put together units of every kind, good plants with bad plants, efficient businesses with inefficient business, and then pay those who get up the scheme […] a large bonus [of] stocks and bonds.44Speech at Fall River Massachusetts (September 26, 1912) reproduced in A CROSSROADS OF FREEDOM: 1912 CAMPAIGN SPEECHES OF WOODROW WILSON, 281-282 (Yale Press 1956).

The next day Wilson said:

I admit that anything that is built up by the legitimate process of business, by working capital, by economy, by efficiency, by growth, is natural; and I am not afraid of it, no matter how big it gets, because it can stay big only by doing its work more thoroughly than anybody else.45Speech at Tremont Temple, Boston (September 27, 1912), in CROSSROADS, at 291.


I am not jealous of the size of any business that has grown to that size. I am not jealous of any process of growth, no matter how huge the result, provided the result was indeed obtained by the processes of wholesome development, which are the processes of efficiency, of economy, of intelligence, and of invention.46See WOODROW WILSON, THE NEW FREEDOM 114-115 (1913) (second emphasis added).

These are hardly the thoughts of a candidate opposed to Bigness as such.47Wilson was apparently less confident than Taft that large mergers would sometimes produce efficiencies. See Winerman, Origins, 71 ANTITRUST L. J. at 45. Such views could not support any wholesale “democratic validation” of Brandeis’s views.

  1. The Supreme Court did not acquiesce in displacing Standard Oil’s Rule of Reason.

Unlike the 1937 Court, the 1920s Court did not acquiesce in Wu’s purported change.48See n. 19 supra and accompanying text. In FTC v. Gratz49253 U.S. 421 (1920). and FTC v. Sinclair Refining,50261 U.S. 463 (1923). the Court read Section 5 of the FTC Act narrowly and not as ‘stronger’ than the Sherman Act, as Wu suggests.51See FTC v. Brown Shoe, 384 U.S. 316, 320 (1966) (criticizing Gratz “as giving the Commission very little power to declare any trade practice unfair.“); WU, BIGNESS at 77 (describing the passage of ‘stronger antitrust laws in 1914’). Gratz noted the lack of “monopoly or combination” and the absence of evidence that the “public suffered injury.”52253 U.S. at 428. The Court opined that “[i]f real competition is to continue, the right of the individual to exercise reasonable discretion in respect of his own business methods must be preserved.53Id. at 428-29. See also FTC v. Curtis Publishing Co., 260 U.S 568, 582 (1923) (“Effective competition requires that traders have large freedom of action when conducting their own affairs. Success alone does not show reprehensible methods, although it may increase or render insuperable the difficulties which rivals must face.”). Sinclair unanimously held that Section 5 did not “interfere with ordinary business methods.54261 U.S. at 475. Instead, “those who adventure their time, skill and capital should have large freedom of action in the conduct of their own affairs.55Id. at 476.

Shortly thereafter, in American Linseed Oil v. United States, a Section 1 decision, the Court quoted American Tobacco — which had reiterated Standard Oil — for the proposition that Section 1 did not prohibit “normal and useful contracts to further trade by resorting to all normal methods.” The Court cited Sinclair — a Section 5 case — for the same proposition and invoked Sinclair’s definition of ‘competition’, namely, “the play of contending forces ordinarily engendered by an honest desire for gain.

If anything, the Court assimilated Section 5 into Standard Oil’s Rule of Reason and not vice versa.56See William E. Kovacic and Marc Winerman, Outpost Years for a Startup Agency: The FTC from 1921-1925, 77 Antitrust L. J. 145, 179 (2010) (concluding that, according to Gratz and Curtis Publishing, “Section 5 added nothing to other antitrust laws”); id. at 179-180 (discussing Sinclair). Four years later the Court, per Chief Justice Taft, reiterated that Standard Oil had properly construed the Sherman Act.57Cline v. Frink Dairy, 274 U.S. 445, 461 (1927). The Court’s post-1914 Sherman Act jurisprudence showed no sign of any legal change, constitutional or otherwise.

Wu commendably concedes that the original meaning of the Sherman Act may not support his NeoBrandeisian vision. However, the Constitutional Moment he proposed did not occur. Proponents of the NeoBrandeisian Sherman Act must look elsewhere for legal authority to implement their vision.

Alan J. Meese


Citation: Alan J. Meese, The Constitutional Moment That Wasn’t: 1912-1914 and the Meaning of the Sherman Act, Fall 2022.

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