Conscious Commitment: The New Deal and a New Start

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NewDealheader.jpgPart 4 of 5 in a series, "The History of Antitrust"

Nearly all historians agree that the crash that took place on October 29th, 1929, was inevitable. The noninterference of the Harding, Coolidge and Hoover administrations, combined with a trend of reckless investing choices, formed an environment in which national prosperity was unprecedented but not sustainable. However, it was not speculation itself that led to the Great Depression - it was the rampant consolidation in the market. Investors poured their resources into companies such as U.S. Steel, General Electric, the Union Pacific, and other organizations which did not face substantial competition; if the one of these corporations wavered, as they began to do in September of 1929, the market was not balanced out by gains in the value of others in the same industry. This lack of choice increased the risk to stockholders and was a major catalyst of the economic collapse.

When President Roosevelt began his revolutionary New Deal program upon assuming office, however, his focus was primarily upon raising prices and wages. He accomplished this goal partially by federal subsidies and large government purchases of commodities from grain to gold, and partially by enabling and encouraging businesses to promulgate agreements of "fair practices," which artificially inflated prices, limited manufacturing, and operatively curtailed competition. For a time these programs proved effective, but when the government began to scale back its spending in 1937 the economy slumped again. By the following year two million laborers had lost their jobs, production had come to a virtual standstill, and the stock market had precipitously declined, undoing much of the progress of the past four years. Clearly, despite the appearance of progress that the first phase of reforms had generated, some important ingredient was missing in the "alphabet soup" of the New Deal agencies.

On April 29th, 1938, Roosevelt delivered his fifty-ninth message to Congress. This time, he recognized that stringent regulation and massive spending could only serve as temporary fixes for the underlying economic problem; in order for a free economy to begin supporting itself again, it would have to be a truly free economy. In his address he announced a renewed commitment to the core principles of antitrust, suggested revision of the relevant statutes, authorized a massive study of current conditions, and declared that anticompetitive conduct would no longer be tolerated: 

"It is a program to preserve private enterprise for profit by keeping it free enough to be able to utilize all our resources of capital and labor at a profit... It is a program whose basic thesis is not that the system of free private enterprise for profit has failed in this generation, but that it has not yet been tried. Once it is realized that business monopoly in America paralyzes the system of free enterprise on which it is grafter, and is as fatal to those who manipulate it as to the people who suffer beneath its impositions, action by the government to eliminate these artificial restraints will be welcomed by industry throughout the nation."

TArnold.jpgThe main writers of the speech were also the men tasked with honoring this pledge over the next months. Thurman Arnold, a plainspoken professor from Wyoming whose approach to the antitrust laws focused almost solely on the interests of the consumer, and Robert Jackson, a former prosecutor who had recently concluded the celebrated tax evasion case against multimillionaire Andrew Mellon, quickly began acting to enforce the Sherman Act. They established an unprecedented pattern of instituting criminal proceedings, procuring indictments against both companies and individuals, and settling the majority of cases with nolo contendere pleas and stringent but fair consent decrees. In May a suit was commenced against Ford, Chrysler, and General Motors: a grand jury investigation into the coercive practices of these three titans returned eighty-six indictments, and while the other two companies quickly consented to cease their unlawful conduct, General Motors was criminally convicted. The dairy industry, which for years had kept milk off the shelves of retail stores and hiked the price of door-to-door deliveries by over two-fifths in the preceding years, came under scrutiny the following month: this investigation broadened until collusion was demonstrated between farm cooperatives, suppliers and jobbers, labor unions, and even local government officials. The construction conglomerate came next, and a massive effort ensued to ensure competition at all levels and lower both the cost of labor and the prices of commodities such as lumber, windows, gravel, sand, roofing, pipes, and even paint - by Arnold's estimate, this flurry of litigation saved individual Americans a total of $300,000,000. Chemical companies DuPont and Monsanto were accused of inflating the prices of various compounds sold to industries, researchers, and the government. The American Medical Association was sued for illicitly attempting to curb the availability of group health plans, duly convicted and fined, and defeated unanimously upon appeal to the Supreme Court. Under Jackson's direction, the primary players in the energy industry were indicted for a conspiracy to buy up all oil entering the market and reselling it at prohibitive rates to any companies attempting to compete with this cartel; the case made its way to the Court and resulted in another resounding antitrust decision. Several major pharmaceutical companies were prosecuted for restraining sales of antitrustradio.jpggeneric medicines. Prioritizing free competition above the possibility of negative publicity, the DOJ under the leadership of Arnold and Jackson filed complaints and criminal charges against major Hollywood producers for unfairly restricting showings of movies. The Associated Press was accused of geographical market division, and though it responded by denouncing Arnold as, among other things, an "idiot in a powder mill" (a term of opprobrium he proudly repeated at every opportunity for the next thirty years), on final appeal this case was also decided unequivocally in favor of the government. The record of this administration reflects an attempt to protect competition in industries receiving little public attention as well as those impacting nearly all Americans - tobacco cartels, meatpackers, tire makers, clothing fabricators, owners of petroleum pipelines, cheese companies, nearly every major railroad, optical equipment patent holders, produce distributors, shoe manufacturers, trucking conglomerates, gas station chains, glassware manufacturers, the radio broadcasting oligopoly, and even a popsicle stick monopoly were among the defendants in antitrust suits brought by Jackson and Arnold. Additionally, the renowned Alcoa prosecution was ongoing throughout these years.

Initially brought in 1937, the Alcoa case had been undertaken by Jackson to test whether "a 100 percent monopoly with the absolute power to exclude others constitutes an illegal monopoly per se under Section 2 of the Sherman Act." Although Roosevelt was dubious at the time, suggesting that a case of this magnitude could shift focus away from the central programs of the New Deal and hinting that a solution could be worked out in other ways, the Division persisted, and the following year the aluminum giant was brought to trial. The trial was the longest in American history at the time, lasting from June 1st of 1938 to August 14, 1940, and though heavily covered by the press in its first days, quickly dropped out of the public's eye. Over these twenty-five months, the government introduced over five thousand pages of exhibits and successfully proved that Alcoa had unlawfully restrained trade by entirely monopolizing commerce in pure aluminum ingot; slowly gaining control over the supply of raw ore until competition became impossible; entering into a conspiracy with a shady entity known only as "Limited" to restrict imports of raw aluminum and bauxite; selling selectively to two manufacturing companies in which it owned a large stake; and unlawfully pooling patents until it owned the rights to every automobile piston design in the nation. During the course of the case the DOJ not only presented the factual basis of their case, but also the  social and political importance of unhindered competition. As Jackson declared in December of 1937:

"The trend toward concentration is also a very real threat against the individual competitive system. This private socialism, this private regimentation of industry, finance and commerce, if not stopped, is the forerunner of political socialism. Our democratic forms of government offer a periodical chance at election time to check and change political administrations. But there is no practical way on earth to regulate the economic oligarchy of autocratic, self-constituted and self-perpetuating groups. With all their resources of interlocking directors,... with all their power to giver or withhold millions of dollars worth of business, with their power to contribute to campaign funds, they are as dangerous a menace to political as they are to economic freedom."

The government's vision of economic freedom was eventually rewarded. Though the federal district judge before whom the case was tried rejected their arguments and the Supreme Court could not muster a quorum to hear a direct appeal, the Second Circuit Court of Appeals reversed the lower decision and enjoined Alcoa from any future anticompetitive practices in an enduring decision authored by Judge Learned Hand. United States v. Aluminum Co. of America, 148 F. 2d 416. One seemingly unexceptional case had redefined our body of antitrust law to read not only that "unreasonable" trusts were illicit, but that any deliberate attempt, action, or conspiracy to restrain trade was impermissible. For the first time since the beginning of the antitrust movement, more than sixty years before, the goal of a truly free market seemed within reach.

Then, in 1941, the United States entered World War II. Almost all the products and commodities in which the Division had finally ensured fair trade practices were suddenly in short supply, and the need for a constant flow of manufactures to aid the Allied powers was prioritized above the economic rights of citizens and small businesses. As Arnold observed in 1943, "the war is being used as an excuse to soften provisions of the antitrust laws to pave the way for domination of industry after the war." The same year Roosevelt offered him a judgeship on the D.C. Circuit, and though many suspected this maneuver was less to reward Arnold for his work at the Division than to remove him from his post when rigorous implementation of the Sherman Act was no longer politically exigent, he did accept. His judicial career lasted only three years before he left to form a partnership with his trusted friend (and future Justice) Abe Fortas. Together, Arnold and Fortas pioneered the private civil suit as a tool of antitrust enforcement, as well as taking on several important civil liberties cases such as Gideon v. Wainwright, 372 U.S. 335 (1963). Jackson had long since left the DOJ for a seat on the Supreme Court, where he served for eleven years. Though the blueprint of successful prosecution which the pair had pioneered is still followed to this day, Arnold's departure still marked the end of any serious attempt to prevent unhealthy consolidation and coercion in American industry. The temporary suspension of free competition beginning with the war would not be fully lifted until the Eisenhower administration ended our involvement in Korea; and by then, politicians and the public had all but forgotten about the existence and importance of the Sherman Act.

Read the last part of the series, "The Golden Age of Antitrust"

Conscious Commitment: The Golden Age of Antitrust

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Part 3 of 5 in a series, "The History of Antitrust"

No mollycoddling.jpgFor the first ten years of its legal life, the Sherman Antitrust Act did not receive much attention from regulators or from the public. The two presidents of the 1890s, Grover Cleveland and William McKinley, emphasized sound tariff policy as a means of lowering prices and promoting competition and did not attempt to utilize the Sherman Act as a major tool to attain those same goals. However, their efforts proved highly ineffective, and at the turn of the century the country was conscious of the need for antitrust enforcement as it has never been before or since.

The activists of the day, commonly known as the Progressives, espoused an economic reform plan fundamentally dissimilar to the liberalism of today in several important respects. For example, though the Socialist party did gain some traction in these turbulent years under the leadership of dynamic, persuasive labor organizer Eugene Debs, the core of the movement sought to protect rather than overthrow the system of free market capitalism. Most prominent agitators of the day emphasized the responsibilities of corporations to offer fair wages to employees and fair choices to consumers, but did not contend that government ought to assume those responsibilities. As a result, attention centered on monopolization and its injurious effects. Reform magazines such as McClure's and LaFollette's stirred public sentiment against the trusts by highlighting individual cases of wrongdoing and by bringing complex economic debates directly to the public forum. Though this "muckraking" journalistic genre could include factually inaccurate or overly sensational serials, it also comprised works as enduring as Ida Tarbell's History of the Standard Oil Company, a meticulously detailed study of the methods used to restrain trade, and Louis Brandeis' Other People's Money, a scathing look at the banking industry that demonstrated how "The fetters that bind the people are forged of the people's own gold." The literary sphere contributed pioneering novels such as Upton Sinclair's The Jungle, the tale of an immigrant laborer who experiences firsthand the duplicitous practices of the meatpacking industry, and Frank Norris' The Octopus, a scathing indictment of the Central Pacific Railroad. The ringing words of Theodore Roosevelt's first State of the Union recognized this tide of public sentiment and epitomized the principles underlying it:

"There are real and grave evils, one of the chief being over-capitalization because of its many baleful consequences; and a resolute and practical effort must be made to correct these evils. There is a widespread conviction in the minds of the American people that the great corporations known as trusts are in certain of their features and tendencies hurtful to the general welfare... It should be as much the aim of those who seek social betterment to rid the business world of crimes of cunning as to rid the entire body politic of crimes of violence. Great corporations exist only because they are created and safeguarded by our institutions; and it is therefore our right and our duty to see that they work in harmony with these institutions."

The central tenets of antitrust policy were as much a part of popular culture as of law; and this, in turn, spurred the authorities to take further action at almost every level. The federal Department of Commerce and Labor, Interstate Commerce Commission, and Federal Trade Commission were all creatures of this period, as was the Antitrust Division of the Justice Department. In 1904, the Supreme Court declared that the Sherman Act was a lawful measure designed to preserve and not encumber freedom of contract, in a landmark decision that compelled the Northern Securities railway conglomerate to dissolve: "If, in the judgment of Congress, the public convenience or the general welfare will be best subserved when the natural laws of competition are left undisturbed by those engaged in interstate commerce, that must be, for all, the end of the matter if this is to remain a government of laws, and not of men." Northern Securities v. United States, 193 U.S. 197 (1904). Additionally, the lawmakers of the several states repeatedly endeavored to address the problem of interstate monopolies affecting commerce within their borders. One commission report from the New York state legislature succinctly summarizes the importance of maintaining free commerce:

"1. Competition between buyers of the raw material enhances the price to the producer.
2. Competition between sellers of the manufactured article reduces its price to the consumer.
3. Reduction of price multiplies the number of consumers.
4. Increase of consumption stimulates production to supply the increased demand.
5. Increase of production implies an increase in the employment of labour.
6. Competition between the employers of labour enhances the wages of labour.
7. Enhancement of the wages of labour involves the material and moral amelioration of the condition of the labouring class.
8. Competition to sell stimulates to improvements in the quality of the article offered.
9. Competition to sell urging reduction in the cost of the article, ingenuity is quickened to the invention of expense-saving and labour-saving machinery, and so a stimulus is applied to the progress of the useful arts and sciences. In short, competition ministers to the welfare of all classes of the community, and augments the resources and power of the state." 


Roosevelt Taft.jpgThe first decade of the twentieth century was the zenith of antitrust enforcement in the United States. Citizens' mounting discontent with untrammeled oligopoly had finally found its voice in the progressivism of the Roosevelt administration, and the rare harmony between official policy and public beliefs led to real change in many cases. Yet these conditions could not last indefinitely. The special interests had been unable to maintain their hold over the popular presses and had even suffered major defeats in the courts such as that in Northern Securities - yet they did not quietly acquiesce to the societal shifts threatening their prominence. In 1912, they succeeded in wresting the Republican nomination away from Roosevelt, who had a majority of the popular vote, and instead supporting William H. Taft, whose record showed only unsuccessful, indifferent attempts to enforce the Sherman Act - and the resulting schism in the Republican party caused the election of little-known New Jersey governor Woodrow Wilson. He had made vague promises about economic liberty during the campaign, but did not actively protect that right once in office and failed to effectively enforce the Clayton Act of 1914. As Roosevelt complained from the stump, "The chapter describing what Mr. Wilson has done about trusts... would read precisely like a chapter describing snakes in Ireland, which ran: 'There are no snakes in Ireland.' Mr. Wilson has done precisely and exactly nothing about the trusts." 

The so-called golden age of the free market had clearly ended. Three years later America entered World War I, and the resulting shortages of many commodities enabled corporations to justify all manner of monopolistic actions in the name of the war effort. A decade of laissez-faire tolerance of the trusts followed, when the lack of competition was justified by an unsustainable illusion of prosperity. As subsequent events would prove, nothing short of complete economic collapse could reawaken the United States to the importance of antitrust enforcement.

Read the second part of this series, "Against Public Policy, Unlawful and Void"
Buccaneers.jpgPart 2 of 5 in a series of posts, "The History of Antitrust"

Much of the social and economic landscape of our modern nation was shaped during the latter half of the nineteenth century. The Civil War had ended, and sectional interests and prejudices gave way to a growing consciousness of the United States as a unified world power. The continent grew progressively smaller as the East and West were linked by rail and by telegraph wire, enabling news, ideas and commerce to flow unhindered through established metropolises and territorial outposts alike. All these factors led to the centralization of industry: changes which initially increased national efficiency and opportunity, but which quickly resulted in monopolization and oppression. By 1888, this unprecedented trend of consolidation had led to widespread calls for drastic reform and governmental regulation of American business.

Ohio icicle.jpgThat same year, U.S. Senator John Sherman introduced a bill that addressed these worsening conditions. Reserved and diffident to the extent that he was commonly referred to as the "Ohio Icicle," moderate in most of his policies - the perfect antithesis to his gregarious, aggressive brother William Tecumseh Sherman (of the notorious March to the Sea) - Sherman was an unlikely trustbuster. However, twenty-three years before members of the Senate were even elected by the popular vote of their constituents, he was one of the few politicians with both the willingness and the authority to attempt to rectify the situation. The bill itself, with its clear wording and unequivocal prohibition of all forms of oligarchy, met with determined resistance from conservatives claiming by turns that Congress had no constitutional authority to prohibit monopoly, that protective tariffs and not corporate wrongdoing was culpable for the lack of healthy competition, that no such problem currently existed, and that the proposed legislation would infringe upon and not help to secure the civil liberties enumerated in the Bill of Rights. After lengthy debates on the issue, Sherman's opponents succeeded in postponing any action on his bill for two full sessions. When the merits of the measure finally reached the floor in 1890, the Senator offered an eloquent exposition on the evils of monopolization: "The sole object of such a combination is to make competition impossible... If anything is wrong this is wrong. If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade, with power to prevent competition." This appeal proved ineffective, however, and the bill was referred to the Senate Judiciary Committee for revision.

When it came back to the floor, both its text and its meaning had been eviscerated. The original text of the proposed legislation, designed to protect farmers' cooperatives and labor unions while specifically and unmistakeably banning corporate restraint of trade, read:

"That all arrangements, contracts, agreements, trusts, or combinations between two or more citizens or corporations, or both, of different Sates, or between two or more citizens, or corporations, or both, of the United States and foreign states or citizens or corporations thereof, made with a view or which tend to prevent full and free competition in articles of growth, production, or manufacture of any State or Territory of the United States with similar articles of the growth, production, or manufacture of other State or Territory, or in the transportation or sale of like articles, the production of any State or Territory of the United States, into or within any other State or Territory of the United States: and all arrangements, trusts, or combinations between such citizens or corporations, made with a view or which tend to advance the cost to the consumer of any such article, are hereby declared to be against public policy, unlawful, and void."

When directly contrasted with the forceful, unambiguous terms of the original statute, the impact of the familiar first section of the revised version, commonly known now as the Sherman Antitrust Act - "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal" - is considerably lessened. Sherman himself was acutely aware that his landmark legislation had survived two long years of inaction and conflict only to be entirely vitiated a week before its passage. Perhaps he foresaw the disputes that would arise over the meaning of this vague sentence and the numerous court decisions that would deprive the law of much of its remaining force of the law in coming years; for, when a reporter asked him about the legislation bearing his name, he deprecated it as "totally ineffective in dealing with combinations and Trusts. All corporations can ride through it or over it without fear of punishment or detection." The first prosecutions brought under it illustrated the accuracy of his misgivings.

However, even though it was far from ideal, the Sherman Act was the law of the land and would now have to be enforced. The effort to do so would permanently transform American industry and do much to shape politics and law as the twentieth century approached.

Read the first part of this series, "The Trusts Take Control"

Conscious Commitment: The Trusts Take Control

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Grange Awakening the Sleepers.jpgPart 1 of 5 in a series of posts, "The History of Antitrust"

Economic liberty - the unfettered ability to maintain one's own property and earn one's own living by pursuing any lawful calling - has always been a vital part of American political tradition. It can be argued that the Revolutionary War itself was waged primarily to preserve this freedom, and the Fifth and Fourteenth Amendments to our Constitution inextricably wove it into our legal framework. However, although property rights are mostly safe from governmental despotism in this nation, we continue to face the complex problems arising when a private individual or corporation infringes on the rights of another. The history of antitrust legislation and litigation is the story of countless attempts to solve these problems.

Long before the populist movement of the late nineteenth century galvanized public sentiment in favor of regulating commerce to promote competition, the common law recognized monopolization as inherently illegal and immoral. Contracts "in restraint of trade," such as those in which parties agreed not to engage in a certain industry within a certain area or pledged not to directly compete with each other for customers while both remaining in business, have traditionally been held to be against public policy and therefore void. In England in 1689, it was concisely declared: "The law now is, that total restraints of trade are absolutely bad, and that all restraints, though only partial... are presumed to be bad: therefore if there be simply a stipulation, though in an instrument under seal, that a trade or profession shall not be carried on in a particular place, without any averments shewing circumstances which rendered such a contract reasonable, the instrument is void." Hunlocke v. Blacklowe, 2 Wm. Saund. 156. American courts also consistently enforced this rule well into the nineteenth century: in Jerome v. Bigelow, 66 Ill. 452 (1872), an acquisition deal between two physicians was voided as an unreasonable impediment to free competition; in Callahan v. Donnolly, 45 Cal. 152, a contract providing that a yeast manufacturer refrain from entering the yeast market for eight years was struck down; and in Harkinson's Appeal, 78 Penn. 196 (1875), a mother who sold a bakery and promised as part of the transaction not to "engage in the same business directly or indirectly" - and thereafter opened another bakery with her son in the same area - was not liable to the second owners of the establishment because the clause in question was unconscionable. This principle effectively protected consumers and small businessmen as long as trade was conducted on a largely local scale, but as nationwide and eventually worldwide commerce burgeoned, stronger prohibitions of anticompetitive conduct would clearly be needed.

The transcontinental railroads were probably more responsible for these societal shifts than any other industry. Built using millions of dollars of government subsidies and land cessions instead of private financing, the newly laid tracks were almost immediately profitable, as rail shipping between opposite coasts quickly proved far more efficient than previously used ocean routes. However, not content with the highly lucrative traffic that naturally fell to them, the railway corporations resorted to various forms of oligarchy and chicanery in the attempt to extract every last cent from the nation their lines now spanned. Partisanship and discrimination became rampant. In order to ensure that all direct and incidental profit was collected directly by railroad executives, freight and passenger rates to "company towns" was often drastically cheaper than to independent settlements, even when the latter were fifty miles nearer to a given starting point. Ticket costs plummeted whenever a new competitor emerged and rose again when the threat to the large roads' monopoly was either acquired or bankrupted. In some instances, packages were routed to major rail terminals such as St. Louis, San Francisco, or Omaha, and then sent on to their true destinations - which were often the same stations the incoming train had already stopped at. The public was understandably umbrageous, and several attempts to regulate this untrammeled extortion, including the repeated introduction of antitrust bills in federal and state legislatures, were mounted over the next decades. As one reformer, inveighing against the unjust practices of the Central Pacific, proclaimed twelve years before the passage of the Sherman Act: "I assert that discrimination against one place and in favor of another, or against one man and in favor of another, or against one corporation and in favor of another, is unjust upon the face of it, and not to be justified under any possible contingency." Countless editorials, orations, and exposes reiterated these sentiments, but while the railroad corporations continued to profit they were impervious to common opinion.

Similarly heedless of the rising clamor against monopolization, other companies were quick to follow its example. One of the most flagrant instances of such monopolization occurred in Nevada during the heyday of the Comstock Lode, when an enterprising engineer named Adolph Sutro proposed to construct a tunnel under the lode to adequately ventilate the mines and extract ore in a manner that would be both safer and cheaper than the current method hauling it up the shafts to the surface. Due to its obvious benefits, Sutro's plan initially enjoyed the backing of both the workers themselves and many of the mines. Yet he lost this support when prominent businessman and U.S. Senator William Sharon, who controlled virtually all of the region's ore mills and was an important shareholder in many of the mines, realized that the completed tunnel would allow new mills to spring up at the mouth of the tunnel and compete with his current cartel. Almost immediately the funding that had been promised to Sutro was withdrawn, he was denounced in local newspapers heavily influenced by Sharon, the state legislature even came close to revoking his easement, and he was bankrupted in his efforts to push ahead with construction in the face of these obstacles. Senator Sharon's monopoly continued unchallenged and it looked as though the tunnel project was defeated - until the early morning hours of an uneventful spring day four years later, when a wholly preventable tragedy occurred. The first shift of the day had just descended into the Yellow Jacket mine when it suddenly erupted in uncontrollable flames, killing forty-eight men and injuring hundreds who breathed the toxic smoke. It later emerged that the inferno could have been forestalled simply by providing better airflow in the subterranean passages, precisely what Sutro's tunnel would have done. Though Sharon continued his opposition to the undertaking, many recognized his partial responsibility for the fire, and excavation of the tunnel slowly but steadily continued. In 1878 it was finally completed.

By then, the antitrust movement was gaining traction in the political arena. Just one year before the completion of the tunnel, the Supreme Court decided in Munn v. Illinois, that corporations possessing a "virtual monopoly" over their given markets were subject to more stringent regulation than other businesses. By depriving consumers of other options, reasoned the Court, the owner of such a company "devotes his property to a use in which the public has an interest, [and] he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good." 94 U.S. 113 (1877). Organized labor was becoming a major national force, and Terence Powderly, president of the Knights of Labor, defended Americans' right to a free market both by defending his position in speeches and debates and by pressuring the legislature to act on the matter before democracy itself was irreparably injured. In Congress, the Interstate Commerce Act was introduced, debated at length, and finally passed: the first significant national attempt to restrict railroads' discretion in setting fares and freight charges. On the lecturing circuit, renowned populist Mary Elizabeth Lease was declaring: "Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street. The great common people of this country are slaves, and monopoly is the master." Across the U.S., citizens were beginning to realize that oligopoly had palpable and highly harmful consequences to them personally and collectively, and it was apparent that the present economic oppression could not continue for much longer. The only question remaining was precisely how it would be curtailed.
Gerrymander.jpgYesterday, the Supreme Court affirmed the Middle District of North Carolina in Cooper v. Harris, 15-1262, deciding that the 1st Congressional District and controversial 12th District were impermissibly drawn for the purposes of political and racial gerrymandering. The 1st District encapsulates a comparatively contiguous expanse of territory in the northeast of the state, but also includes several highly irregular strips of land designed to contain predominantly Democratic and minority communities. The other zone before the Court in Cooper is the N.C. 12th, a chronically contorted district that is, according to the majority opinion, "making its fifth(!) appearance before this Court" (emphasis in original). The 12th is an extraordinarily narrow corridor one hundred and twenty miles in length, though no more than twenty miles wide at its broadest point in the vicinity of the city of Charlotte - its singular design has been varyingly described during its long career in the courts as "questionable" (Easley v. Cromartie, 532 U.S. 234 (2001)), "serpentine" (as it was in Shaw v. Hunt, 517 U.S. 899 (1996)),"snakelike" with "knobs" (the new and improved version before the Court today), "tortured," (appellees' brief in Cooper), and simply "bizarre" (Hunt v. Cromartie, 526 U.S. 541 (1999)).


In declaring the deliberate dilution of minority votes evinced in Districts 1 and 12 unconstitutional, the Court may be returning to its long history of protecting voters' right to cast a meaningful ballot. Prior to 1962, the judiciary was inclined to view such inequities as political and not legal problems, but as Justice Brennan expostulated in Baker v. Carr: "Of course the mere fact that the suit seeks protection of a political right does not mean it presents a political question." 369 U.S. 186. Two years later, the Court per Chief Justice Warren conclusively established that "Legislators represent people, not trees or acres. Legislators are elected by voters, not farms or cities or economic interests. As long as ours is a representative form of government, the right to elect legislators in a free and unimpaired fashion is a bedrock of our political system." Reynolds v. Sims, 377 U.S. 533 (1964), see also Miller v. Johnson, 515 U.S. 900 (1995). The Court has also long maintained that the Constitution was designed to "withdraw certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials, and to establish them as legal principles." West Virginia v. Barnette, 319 U.S. 624 (1943). In 2013, the Court notoriously departed from this tradition of protecting the integrity of Americans' voting rights in Shelby County v. Holder, in which it invalidated a key section of the Voting Rights Act. However, its holding yesterday may signal a restoration of its prior jurisprudence.


In a meticulously detailed, lively decision authored by Justice Elena Kagan, the Court unilaterally rejects the North Carolina redistricting system as unjustifiably discriminatory. The opinion begins with a clear standard by which the plan is to be judged: "The Constitution entrusts States with the job of designing congressional districts. But it also imposes an important constraint: A State may not use race as the predominant factor in drawing lines unless it has a compelling reason." It goes on to eliminate the State's contention that the plaintiffs, local voters David Harris and Christine Bowser, lack standing due to an earlier lawsuit in state court by the local NAACP. The merits of the case were then clearly dealt with. In striking down the new lines of District 1, Justice Kagan denounced North Carolina's unlawful scheme and unequivocally held that the Court will not "approve a racial gerrymander whose necessity is supported by no evidence and whose raison d'etre is a legal mistake." The final portion of the opinion clarifies the meaning of Easley v. Cromartie, which the State interpreted as requiring plaintiffs in redistricting cases not only to prove that a contested plan dilutes the votes of minority citizens, but also to propose an alternative plan achieving greater balance. Cooper concisely debunks that notion: "The reasoning of Cromartie II belies that reading. The Court's opinion nowhere attempts to explicate or justify the categorical rule that the State seems to find there... And given the strangeness of that rule - which would treat a mere form of evidence as the very substance of a constitutional claim... - we cannot think that the Court adopted it without any explanation. Still more, the entire thrust of Cromartie II runs counter to an inflexible counter-map requirement." By renewing the Court's commitment to ensuring the preservation of fundamental voting rights and clearly expounding the elements of a gerrymandering claim, Cooper appears to mark a return to the tradition of Reynolds and its progeny.

Octopus.jpgFour days ago, the Senate Judiciary committee held a confirmation hearing for Makan Delrahim, President Trump's nominee to head the DOJ Antitrust Division. The varying policies of each incoming administration can profoundly impact both the livelihoods of thousands of American workers and the prices of hundreds of commodities nationwide - and regardless of prevailing political ideology, it remains a vital responsibility of the Justice Department to ensure that the Sherman and Clayton Acts are stringently and equitably enforced.

Despite his earlier work as a Division prosecutor, Delrahim's complete record on the subject is deeply troubling, as he has helped to orchestrate and obtain regulatory approval for several major mergers. Though he has promised to recuse himself from participation in any action on the merger between Anthem and Cigna due to his earlier representation of Anthem, his involvement with many other conglomerates - Blue Cross and Blue Shield, Google, Merck, U.S. Airways, Johnson & Johnson, Pfizer, and Comcast, to name a few - presents a myriad of other conflicts of interest. Furthermore, his comparatively laissez-faire approach to preserving the free market makes him a questionable choice to be charged with that very task. In the past he has criticized European regulators' rigorous enforcement of their antitrust laws and successful prosecution of foreign-based trusts as "protectionist" abuses of power, comments which suggest that he may not be willing to protect the American free market from the threat posed by alien monopolies engaged in widespread commercial activity here. He has also expressed his belief in virtual immunity for the holders of patents, trademarks, and other intellectual property rights, even when such companies are clearly marketing their products in violation of the Sherman Act. In a climate where increasing oligopoly in the pharmaceutical industry restricts the availability of potentially life-saving medications and raises health insurance premiums even further, and where agribusiness mergers such as Bayer's ill-advised acquisition of Monsanto and ChemChina's notorious purchase of Syngenta could further monopolize the seed industry, it is crucial that regulators remain prepared to challenge these deleterious consolidations. Delrahim has shown no proof that he will adequately do so, and therefore Conscious Commitment cannot endorse his nomination.

Monsanto Executives Sell Off Company Stock

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moneyandrun.jpgSomething is evidently astir inside renowned manufacturer of chemical herbicides and purveyor of unconscionable seed contracts Monsanto, judging by the massive sales of company securities by several prominent executives.

Recently, Monsanto CEO Hugh Grant disclosed in an SEC filing that he has sold 149,230 shares of stock at an average price of $116.15 each, raking in a total of 17.3 million dollars from the transaction and lowering his stake in the corporation by roughly twenty-eight percent. Others at Monsanto have also attempted to divest somewhat: vice president Steven Mizell sold off twenty-one percent of his shares for approximately 1.6 million dollars last April, and sales of Monsanto stock by other company officials and employees, in the past three months alone, have exceeded ten million dollars.

Monsanto's financial prospects have been shaky over the course of the past year. Just this week, it was compelled to withdraw from a deal with John Deere providing for the sale of its Precision Planting assets after the Justice Department challenged the acquisition on antitrust grounds. Even before these latest stock sales, the prices of Monsanto securities had fallen considerably since Bayer AG agreed to pay $128 per share in September. There is currently a multi-district class action litigation pending, alleging that Monsanto knowingly falsified scientific data to conceal the cancer-causing properties of its popular herbicide Roundup. Since the filing of this lawsuit, initial steps have been taken by the State of California to label Roundup as a possible human carcinogen. In addition to all these recent developments, Monsanto has engaged for decades in a pattern and practice of deliberate deception as to the extent of its patents on genetically modified agricultural seeds, and the public is slowly becoming aware of this cozenage. It is unknown whether one or all of these factors influenced the extraordinary actions of Grant, Mizell, and other Monsanto employees with detailed knowledge of the corporation's internal affairs. However, their anxiousness to lessen the connection between their personal finances and the fortunes of the company largely speaks for itself.

Another Broken Promise: The Repeal of NAFTA

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Assembly line.jpgWhen I voiced my support for President Trump shortly before the election back in November, I did so because of his stance on one crucial issue: trade. During the campaign, he unconditionally pledged to repeal NAFTA and work to bring manufacturing jobs back to the United States. However, since then, he morphed this obligation into an effort to "renegotiate" the baneful deal to protect U.S. interests to a greater extent, and only scrap it entirely if that proved impossible; and just this week, he removed even that possibility, promising only to renegotiate NAFTA in a limited way that would be unlikely to materially improve this country's economy.

Trump's renegotiation program is no longer expected to address the wider problem of American corporations outsourcing jobs to foreign factories - rather, it will merely further the chimerical goal of "fair competition" between domestic factories subject to stringent environmental regulations, labor laws, and taxes, and foreign sweatshops in which workers currently earn as little as $3.94 per day. Also, it is unlikely that anything will be done to curb Mexico's deleterious pattern of re-exporting goods, such as clothing or furniture, that originated in the United States as raw materials, such as cotton or timber.

Any changes to the trade deal are likely to affect only a few industries, without any significant impact on the attrition of domestic manufacturing or the availability of American-made products. The renegotiation may lead to the abatement of unfair trade policies placing tariffs upon U.S. dairy products but allowing the untrammeled duty-free flow of Canadian soft lumber into this country; and, possibly, the percentage of North American content required in untaxed auto parts could be raised. However, as time passes and the commitments of the campaign transform into conciliation and compromise, actual reform or repeal of the North American Free Trade Agreement - and actual performance of the promise that got Donald Trump into the White House - seems increasingly improbable.

A Funny Thing Happened on My Way Through Title 42

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Title 42.jpgThis week, on President Trump's precise hundredth day in office, the federal government is (yet again) set to go broke unless an appropriations bill can be approved. The main conflicts preventing a funding compromise are the White House's insistence that federal subsidizing of sanctuary cities come to an end, the Democrats' refusal to block bailouts to the insurance industry written into the text of the Affordable Care Act, and the attempts to reconcile the President's $30 billion defense spending request with the mounting national debt. However, while the debate over these controversies continues in Congress, a much larger question is also implicated - how much should the United States of America actually cost?


The issue shouldn't actually be that complex. We don't need to analyze Gross National Product and skyrocketing income disparity and our current trade balance: one look at the United States Code should be enough to convince anyone that some serious spring cleaning is in order.


The U.S.C., which contains almost all federal Congressional enactments, is currently 5,759 Constitutions, 74,870 pages and fifty-two titles long. The first of these is deceptively straightforward, at twenty-seven pages which mostly define words used throughout the Code. This one is the place to go if you've ever wondered what the phrase "products of American fisheries" or the word "person" means (respectively. Seafood comes at §6, and humans will just have to wait until §8). The shortest of these is Title 9, which covers Arbitration in eleven pages and is probably one of the briefest documents pertaining to arbitration ever published (say what you will about mandatory ADR, but you've got to love any statute more straightforward and concise than the subject with which it deals). The longest, by far, is #42, which comes in at 13,385 pages and contains some things worthwhile, like the Civil Rights Act of 1964. And some things of more questionable merit, to say the least, like §12705c., "Grants for Regulatory Barrier Removal Strategies and Implementation." You read that right - they've apparently taken to spending money on plans to regulate overregulation1. Making matters worse, this behemoth comes with no index, just a four-page list of its one hundred and fifty-nine chapters.


Personally, I don't trust anything with a table of contents that long2. Even the overview is a little staggering - it does tell you where to find the things you might expect, like Social Security and the Clean Air Act, but it also contains chapters with intriguingly irrelevant laws defining the mathematical term "average" (42 U.S.C. §2992c) and providing for space exploration (somehow, Congress thought this item fit better here than in Title 51, which is devoted exclusively to outer space). When there are this many individual ideas and policies thrown pell-mell into one document, it's inevitable that some will be forgotten about and enforcement will be a complete nightmare.


Don't believe me? Well, let's hunt up something everyone knows about, that should be fairly easily accessible. You might suppose that Obamacare, for example, would be a frequently referenced and therefore clearly marked section. Half of it is indeed filed under the identifiable if somewhat specious heading "Quality, Affordable Health Care for All Americans" - that is, the second half. The notorious Act actually begins at 42 U.S.C. §300gg 3, which I assure you is an actual component of Title 42 and not just a random letter-number combination generated by a hyperactive squirrel scampering across my keyboard. 42 U.S.C. §300 is eight hundred and thirteen pages long, and deals mostly with health services and partly with drinking water4. However, just when it starts resembling a cohesive, orderly piece of legislation, it disappears like a subterranean river under mountains of vitally important documents such as those defining the word "governor" or dedicated to "Soil Information Assistance for Community Planning and Resource Development," then magically reappears at §18011, where it finally gets a proper label. If you do manage to get Congress' copy - which, despite its manifold faults, can at least be perused in one piece - the entire title really can to seem like a jigsaw puzzle someone put together wrong.


Also complicating matters is the sheer number of laws dealing with precisely the same problems under slightly different headings, and funded out of completely different sections of this country's coffers. There are chapters 25 and 50, "Federal Flood Insurance" and "National Flood Insurance," respectively (admittedly, the former has been all but repealed - all but the part that costs money, which is still going strong and still has up to five hundred million dollars at its disposal). There are chapters 98 and 99, "Ocean Energy Thermal Conversion Research and Development" and its successor "Ocean Energy Thermal Conversion," both of which deal with precisely the same subject, except one of them covers its territory in nine fairly straightforward sections while the other verbosely provides desperately needed clarification on the subject through such enlightening enactments as yet another definition of "governor" (over the course of the Title, we are educated as to the meaning of this word a grand total of eleven times). And then, of course, there are "Intergovernmental Personnel Program," the closely related "Advisory Commission on Intergovernmental Relations," and "Intergovernmental Cooperation" - these are much more difficult to ascertain the merits of, however. On the one hand, the most cursory examination of the Code reveals the redundancy of a significant number of statutes, and it seems impossible to believe that this many federally funded programs could possibly be simultaneously necessary. On the other, though, the most cursory examination of the Code reveals that Congress barely keeps tabs on the laws it passes itself, and probably needs all the intergovernmental cooperation it can get.


I'll admit, this confusion can partially be attributed to the fact that half the contents of Title 42 have nothing to do with its stated purpose. There are things such as "School Lunch Programs" and some scholarship opportunities that should probably be located in Title 20, "Education;" there are "Criminal Justice Identification, Information and Communication" guidelines, "Community Safety Recidivism Protection," and legislation pertaining to just about every crime in the calendar5, which might be more appropriately moved to Title 18, the federal criminal code - and all this gives one the strange sense that this title would be more appropriately captioned "Congress' Grand Article I, Section 8 Grab Bag" than "Public Health and Welfare," like it is now. But the problems with the United States Code are too significant to be solved by mere rearranging or streamlining. Every line in our law that is not absolutely essential to the fulfillment of federal Constitutional obligations could be costing taxpayers, and diverting scarce funds that could otherwise be allocated to necessary and productive programs.


1 Before long, we'll hear of the establishment of the Overregulation Elimination Agency, vested with the power to enforce their conclusions through appropriate rule-making, and when we do it will doubtless be located in Title 42. You heard it here first.


2 Neither does Adobe Reader, apparently, which took a brave stand against governmental overreach by "Not Responding" every time I tried to locate any particular thing inside this Brobdingnagian document. So I tried to see what methods the government itself had come up with to speed the research process along a little, but apparently they've got problems of their own:


USCtimeout.jpg


3 Don't believe everything you hear on the news: this right here is the real reason why Congress didn't repeal the "Affordable" Care Act when it got the chance. Once you've managed to find a place for the darned thing and fit it snugly into what has to be the most complicated single law ever promulgated, who would have the heart to take it out again and re-number everything that comes after it?


4 Even though it deals with some of the same subject matter, it is definitely not to be confused with "Water Resources Planning," "Water Resources Research," "Secure Water," or Title 33, which deals mainly with "Navigable Waterways." I wasn't actually even looking for our nation's policy on H2O, but suddenly I'm drowning in a veritable sea of surplusage - I suppose next time I need something from the Code, I'll just wait until the clouds roll back and the waters part.


5 This expression is truly quite baffling, if you think about it too hard. I mean, we've all seen planners adorned with pictures of tropical beaches or flower-themed date books, but have you ever encountered a fifty-two week Gregorian crime calendar? I didn't think so.


Balanced Budget Amendment Introduced

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Ickes bandwagon.jpgOn April 8th of this year, H.J. Res. 48 was introduced by Congressman John Ratcliffe and referred to the House Judiciary Committee, officially introducing a proposed twenty-eighth amendment to the Constitution which would limit allocable federal funding to actual government revenue. This measure would effectively prohibit Congress from adding to our existing spending deficit of nearly $20 trillion dollars, curtailing the extravagant and extraneous expenditures currently rampant throughout federal agencies and departments. The amendment reads in full:

"1. Total outlays for any fiscal year shall not exceed total receipts for that fiscal year, unless two-thirds of the whole number of each House of Congress shall provide by law for a specific excess of outlays over receipts by a rollcall vote.
2. Total outlays for any fiscal year shall not exceed 18 percent of economic output of the United States, unless two-thirds of each House of Congress shall provide for a specific increase of outlays above this amount.
3. The limit on the debt of the United States held by the public shall not be increased unless three-fourths of the whole number of each House shall provide by law for such an increase by a rollcall vote.
4. Prior to each fiscal year, by not later than such date as Congress may by law require, the President shall transmit to Congress a proposed budget for the United States Government for that fiscal year in which total outlays do not exceed total receipts. If the President fails to transmit to Congress a proposed budget which meets the requirements of the previous sentence by the date required by Congress, the President may not receive any compensation for his services for any month which follows that date until the President transmits to Congress a proposed budget which meets such requirements.
5. For each fiscal year, by not later than such date as Congress may by law require, Congress shall consider and approve a budget for the United States Government which meets the requirements of section 4 of this article. If Congress fails to approve a budget which meets such requirements by the date required by Congress, Members of Congress may not receive any compensation for their services for any month which follows that date until Congress approves a budget which meets such requirements.
6. A bill to increase revenue shall not become law unless two-thirds of the whole number of each House shall provide by law for such an increase by a rollcall vote.
7. The Congress may waive the provisions of this article for any fiscal year in which a declaration of war is in effect. The provisions of this article may be waived for any fiscal year in which the United States is engaged in military conflict which causes an imminent and serious military threat to national security and is so declared by a joint resolution, adopted by a majority of the whole number of each House, which becomes law. Any such waiver must identify and be limited to the specific excess or increase for that fiscal year made necessary by the identified military conflict.
8. The Congress shall enforce and implement this article by appropriate legislation, which may rely on estimates of outlays and receipts.
9. A court may not enter an order in any action, including for purposes of enforcing this article, that results in an increase in the collection of revenue.
10. Total receipts shall include all receipts of the United States Government except those derived from borrowing. Total outlays shall include all outlays of the United States Government except for those for repayment of debt principal.
11. This article shall take effect beginning with the seventh fiscal year beginning after its ratification."


Harrison debt.jpgOver the past decades and centuries, those concerned with Washington's culture of wastefulness have repeatedly endeavored to enact similar legislation. When confronted with the massive deficits created by the Revolutionary War and subsequent inflation, Thomas Jefferson hoped that contemporary lawmakers would "render the immortal service of introducing this practice not that it is expected that Congress should formally declare such a principle. They wisely enough avoid deciding on abstract questions but they may be induced to keep themselves within its limits." In 1982, the Senate achieved the required two-thirds majority but the amendment was voted down in the House, and in 1995, it passed the House but failed to garner a single vote in the Senate. However, as our nation finds itself approximately $19,900,000,000,000 in debt and American citizens grow increasingly frustrated with the corruption and inefficiency of their government, any concerns about the effects of widespread budget cuts must give way to the imperative of ending our insouciant spending patterns. Perhaps the recognition that the present situation simply cannot continue will provide the impetus necessary to navigate the amendment through the Committee to the House and Senate floors and then the states, finally writing fiscal responsibility into our Constitution.

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