Anti-Monopoly U.S. History

Ida Tarbell

Early Roots of Monopolies/Cartels

  • Founding fathers (Jefferson is more populist, Hamilton more Technocratic)
  • Slave owners concentrated power in a few’s hands
  • Teddy Roosevelt publicly was known as a trust buster for his anti-trust suits, breaking up Standard Oil and Northern Alliance Railway company, a J.P. Morgan backed venture
    • However, Roosevelt ended up in a secret alliance with J.P. Morgan who financed his campaign and U.S. Steel who financed his trip to Africa1.
  • Louis Brandeis, “the people’s lawyer”, envisioned a system of regulated competition where concentrations of power are broken up and monopolies suppressed. This view was transferred to Woodrow Wilson who ran against Roosevelt in the 1912 campaign1.

Mellon and Patman

In the context of the Great Depression, Wright Patman was entering the U.S. House of Representatives in 1929. He connected the anti-monopolistic practice that hurt individuals and small businesses with the larger economic trends around him. A corporate monopoly, a chain store, and a powerful banker were organized around the same goal, stripping the purchasing power from the small businessman and farmer. Wright Patman began targeting Andrew Mellon, finding strong footing on the Bonus Bill. This was an effort to make WWI veteran’s bonuses available to them immediately (rather than in 1945). Mellon, and the larger establishment did not support this bill. However, as the deepened depended it became more and more of an attractive way to put money in the hands of people and push up inflation. Patman began impeachment against Mellon in Jan 1932 focusing on his self-dealings as secretary. A parallel investigation in the senate related to oil helped in forcing his resignation1.

Wilson Era

  • Wilson ran on trusts being broken up, Roosevelt ran on trusts being regulated.
  • Wilson established the federal reserve to move power from Walls Street to the people. As well as the FTC.
  • Wilson’s efforts to disrupt trusts and monopolies were derailed by WWI and his own failing health.

20s - Harding, Hoover, Speculation, and the Crash

  • In 1919-1920, the Federal Reserve miss-stepped and over corrected against inflation, causing deflation, and ushering in Harding, a relative incompetent republican.
  • Harding, appointed Andrew Mellon to Treasury Secretary, ushering in an era of fusion between corporate and political interests.
  • Mellon was a wide ranging financier controlling a large amounts of companies and industries, notably Aluminum via tariffs and his control of Alcoa.
  • The fusion of corporate and political interests also proliferated abroad in Weimar Germany and Mussolini’s Italy.
  • The 1920s were a period of prosperity in America and abroad, but it was uneven. Much of the prosperity was concentrated in the North. Wages stagnated, worker’s rights eroded, and racial divisions deepened.
  • Speculations in the late 20s came to crashing halt towards the end of 1929 as stock prices collapsed.
  • The stock market crash lead to deflation and a collapse in wages and prices. This busted banks, freezing banks which caused credit to collapse, money would be taken out of circulation, this caused less spending on goods and services. This resulted in less taxes, defaulting on loans, hiring less. Farmers were particularly injured by falling prices as they had often borrowed assuming prices similar to what they borrowed at. As more farmers defaulted on mortgages, more banks collapsed in a spiral.
  • Hoover was ineffective and aloof in the face of the depression crisis
  • Veterans marched on Washington in 1932, known as the Bonus Army. Hoover sent in troops, including Patton and MacArthur to disperse their shantytown. This was a political catastrophe and ushered in the area of FDR.

FDR and the New Deal

  • Over FDRs objections, congress passed a version of the bonus bill in early 1936 spurring strong economic growth.
  • FDR attacked power utility monopolies as governor of NY, along with pursuing J.P. Morgan and Andrew Mellon’s Alcoa.
  • At the convention of 1932, wealth inequality was largely seen as a slippery slope towards fascism. FDR defeated a field of Al Smith and John Garner, largely through the late support of Hearst. FDR went on to defeat Hoover in a landslide.
  • The lame-duck period for Hoover was marked by bank failures and bank runs. Autocratic ideas began finding advocates, as people sought security from the ravages of the depression.
  • Ferdinand Percora, chairman of the Senate Banking Committee and a progressive republican formed a Percora committee began looking at the roots of the financial system and assign blame for the Depression. He was successful in naming names and discrediting the banking elites.
    • He showed that National City bank was self-dealing by selling unreliable securities it created to it’s depositors.
    • Percora exposed the “preferred list” at J.P. Morgan that counted military, political, and financial elites among its members. This list gave access to below-cost stocks to a privileged few.
  • FDR restored faith in the banking system in his first 100 days by temporarily shutting down the system and then injecting cash into banks via an emergency banking bill. His “fireside chats” built confidence, and the stock market began to turn around.
  • The re-stabilization of the banking system allowed democrats to organize the New deal. FDR’s administration passed fifteen key pieces of legislation in the first 100 days.
  • FDR’s DOJ went on to file a criminal complaint against Mellon in March of 1934, but Mellon was quickly acquitted. After failing that, Buearu of Internal Revenue and Mellon went to the Board of Tax Appeals to hear a case that Mellon owed backed taxes.
  • Robert Jackson led the case against Mellon whereas Mellon was represented by Frank Hogan. While the case and board initial leaned towards Mellon, Jackson won a political victory after exposing how Mellon was using art purchases to avoid taxes to the newspapers.
  • The 1936 saw FDR win again, and Mellon ended up settling shortly thereafter by donating for a new museum, the National Gallery.
  • Alcoa’s stranglehold on the aluminum industry pre-WWII, tied national security to a monopoly interests.

Roosevelt’s Recession

  • “Until the late 1930s, Roosevelt was torn between “the Theodore Roosevelt theory of regulated business and the Wilsonian-Brandeis theory of free competition and retention of the smaller units”
  • The “Roosevelt recession”, a downturn that occurred during the depression, put New Dealers on their heels as conservatives / and industrialists said that the administrations attitudes were preventing recovery.
  • Roosevelt, Jackson, and Harold Ickes tied the rise of fascism abroad (anti-democracy) to control by a few technocrats (monopolists). Indeed, Germany itself was using cartels to control outputs outside of Germany for key materials.
  • A similar problem occurred state side, where key materials were under the control of materials and in order to fight a war of production, the monopolies would have to be broken.
  • Monopolies were more than just a single company dominating a branch of trade. Monopolists banded together in a political system, the center of which was finance and Wall Street.
  • Rather than try to undermine or attack Wall Street’s, government needed to provide an alternative channel of financing
  • The government filed an anti-trust suit against the Aluminum Company of America (Alcoa). This suit was waylaid by Army interests, the judiciary (through “Lochnerism” and straight corruption).
    • The case was also difficult because the DOJ was pursuing a novel legal theory: monopolies themselves were illegal. The Sherman Act to that point had been interpreted to mean that abusive monopoly behavior was illegal, not the monopoly itself. Further, Alcoa withheld documents.
    • This case was settled in March 1945, at that point being a monopoly was proved to be illegal.
  • Alcoa lost public favor as it failed to produce enough Aluminum to meet the needs of WWII.
  • Marriner Eccles was a millionaire who argued against economic theory orthodoxy of balanced budgets. He argued for distribution of money through deficit spending and social programs. He was hired as a treasury deputy in FDRs administration.
  • Marriner Eccles restructured how the business cycle itself flowed. Eccles asserted that it was the sovereign right of government to print money, to run deficits, to organize whether the economy would boom or ebb. There would be no more talk of natural boom and bust cycles due to greed and fear, or needless deflation. If there was a lack of money in the economy, the government could provide more of it
  • Eccles pushed for returning the FDR to the hands of democratically elected officials, transforming it into a public entity.
  • Eccles was instrumental in reversing FDRs fiscal conservatism during the recession, and returned him to social programs and spending.


  • WWII exposed Alcoas insufficient production capacity for aluminum, Richard Reynolds, founded his own aluminum company. This was largely thanks the Defense Plant Corporation, a government sponsor advocated for by Clifford Durr.
  • Congress began doggedly pursuing monopolists that effected the war effort (Standard Oil and Aluminum Company of America (Alcoa).
  • The government spending for the war effort throughout the Army, Navy, Defense Plant Corporation and DOJ structured the markets during the war. Congressional oversight further cowed monopolists.
  • Thurman Arnold brought many anti-trusts suits during the war period, and scared many monopolists into cooperation with the government.
  • The war mobilized society and vastly enlarged the middle class, setting up global prosperity post-war

Farmers and Chain Stores

  • Farming and Shopkeeping changed dramatically during the New Deal area
    • Land and Credit are key inputs to farming. Credit is needed to grow crops which can later be repaid on their sale.
    • Over production by large industrial farms can cause commodities to collapse, The Agricultural Adjustment act uses taxes to regulate over production.
    • The Homestead act of 1862 and emancipation were together the most radical redistributionist policy in America History. A quarter of all U.S. adults alive in 2000 were descendants of Homestead recipients.
  • In the mid century, Small business owners, shop keepers, were pitted against the large chain store corporation A&P. A&P was a pre-cursor to mammoths like Walmart. A&P bludgeoned suppliers by buying in bulk, or growing it’s own. It also shipped so much it dictated shipping rates.The thread of chan stores was recognized in the 30s, but the first attack came from the Truman anti trust division in the late 40s.
    • A&P was declared a monopoly in 1915 when Cream of Wheat did not sell to it at a lower cost.
  • The supreme court decision Dr. Miles Medical Co v. John D. Park & Sons Co in 1911 allowed retailers to set the price. This removal of price controls allowed larger entities to sell below cost to attack smaller independent retailers. It also hurt the brand value. This moved control from the producer to the financial middleman that ran chain stores.
    • Chain stores could use purchasing volume to demand lower prices and in turn use lower prices to drive out their competition
  • A&P became a Monopsony in the food market, it bullied farmers, workers, and suppliers while providing lower prices to consumers.
  • A&P also sought advertising kickbacks from producers wherein they got bulk discounts in the form of advertising allowances, this was outlawed in 1936 with the Robinson-Patman act.
  • States began introducing anti-chain stores taxes and fair trade (pricing control) laws during the 30s.
  • A&P staved off a HR. 1 (a chain store tax bill) in 1938, through an alliance with Unions which gave labor more power. This allowed A&P to re-group, along with a PR campaign, and chain stores survived, now with new stakeholders in labor.
  • A&P lost the anti-trust law suits of of 40s under truman and agreed to stop price bullying suppliers and dismantle it’s fruit and vegetable wholesale operations.

New Deal changes

  • Banking changed during the New Deal, it became boring (non-speculative) and borrowing was largely controlled during the war by the government (both in terms of bonds and what citizens could borrow for). Banking’s conservatism continued post-war. Organizing mergers were difficult, the Celler Kefauver Act of 1950 barred anti-competitive mergers. Stock holding was diffuse and small (as opposed to large block buying by large investors).
  • Regulation Q, and the Banking Act of 1933, allowed the Federal Reserve to control flows of deposits within the banking system. It controlled how much interest could be paid by banks on deposits, and therefore stopped money from competing with each other and therefore centralizing.
    • The speculation an crash of the later 20s, was caused by money centralizing and being loaned out for speculation the more “hot money” you could acquire the more loans you could make. Regulation Q inverted the power dynamic, money center banks couldn’t buy from small country and regional banks, so they needed to gather deposits from local areas and from corporate customers.
  • Government regulation prevented concentrations of power in network industries such as electricity, rails, telephones.
  • In semi-networked industries (rail, trucking, airlines), regulations were placed to ensure universal service and reasonable rates.
  • Science and Technology industries (e.g. aluminum), the government sought at least 3-4 competitors
  • In non-capital intensive industries fair-trade pricing allowed decentralized production
  • The government could control downturns through farm supports and the construction / mortgage market. Boom and bust cycles concentrated power in the hands of the powerful. SS payments, unemployment insurance, farm subsidies, and a strong federal reserve stopped the dynamic.


  • The red scare and communism were used by reactionaries to cow New Deal populism
    • Inflation and strikes helped stoke the fears of communism and unrest
    • Keynesian economics came under attack
  • Eisenhower’s administration continued to solidify New Deal antimonopolism, concurrent to that, republicans attacked the left with anti-communist rhetoric. Additionally, a wing of corporatists in academia, progressive big business and Henry Luce’s Media sought to redefine liberalism

Redefining liberalism

  • Moderate big business leaders coalesced around the Committee for Economic Development.
  • Adolf Berle, a corporate lawyer, who was deeply technocratic and elitist, was a member of FDR’s brain trust, but lost the fight on National Industrial Recovery Act and central planning
  • Liberalism to FDR meant moral leadership and a willingness to address a civilizational crisis by updating the machinery of governance.

A liberal broke from the past, but not too quickly to provoke violence. - FDR

  • Adolf Berle campaigned to move the term “liberal” to mean soft corporatism. This was done by using the Red Scare to move policy and planning toward a few elites. There became an acceptance among liberals for embracing bigness and monopoly.
    • Based his work out of the Twentieth Century Fund, which used a quasi-scientific approach and melded corporate, government officials, with academics.
  • Richard Hofstadter, developed “consensus history” of America which argued 1) there was an absence of deep, persistent, and consistent class conflict 2) All Americans shared “common, bourgeois, entrepreneurial assumptions” about the value of capitalism. In short, Hofstadter’s view re-cast class conflict as white men struggling with modernity. This whitewashed out the role of the conflict between democracy and monopoly in American history.
    • historian
    • studied right-wing extremism
    • Wrote The American Political Tradition and the Men who made it (1948)
      • Recast populist movements as oppressive cultural reactions to modernization
  • Kenneth Galbraith
    • The Affluent Society (1958)

The right’s reaction

  • The Free Market Study Project was centered around the University of Chicago
    • Frederich Hayek
  • Robert Bork was instrumental in breaking down the liberal orthodoxy around antitrust. He did this by building a constituency of:
    • The legal establishment, through his time stint in corporate law
    • Corporate leaders, through business favorable legal briefs
    • New conservative grass roots, i.e. Barry Goldwater, through his ‘63 piece Civil Rights - A Challenge. In This piece Bork argued against Title II of Civil Rights Act which prohibited racial discrimination in privately owned hotels and restraunts. This went against the “common carriage” doctrine. It also endeared him to anti-civil rights conservatives who found a legal rationale for arguing against the CRA.
  • Bork argued in ‘63 in The Crisis in Antitrust, that antitrust was incoherent, seeking to promote competition but denying larger more efficient businesses from competing against smaller rivals. It was also populistic and anti-freemarket.
  • Barry Goldwater brought Bork in as he argued for a laissez-faire Mellon style of economics.
    • William Baroody’s American Enterprise Institue (AEI) conservative think tank, dominated Goldwater policy. Along with Baroody, Bork, Milton Friedman, and Yale Brozen joined, solidifying the Chicago School’s footprint in the campaign.
  • AEI funded Bork’s study to rewrite the history of antitrust. Bork did, arguing that the intent of of the Sherman Act the intent was to promote consumer welfare. In Bork’s view, the act was intended to get consumers more stuff more efficiently rather than protect democracy from monopolists.

The Capture of the Left

  • While, figures like Galbraith were supposed to on opposites sides of the spectrum, they were actually ideological close:
    • Galbraith’s Affluence frame shared the same elitism as the Chicago school. The concentration of capital and the deployment of capital should be managed by a technical elite. They only differed on who that elite should be.
    • Both sides thought that history unspooled along knowable scientific rules.
  • Bork’s turning of Donald Turner, a liberal economist and lawyer was the great coup of the conservative movement of this time.
    • Turner ran the DOJ Antitrust division during LBJ’s administration. He believed strongly in the danger of big companies, and argued as so through out the 50s.
      • Under Turner the antitrust division became moribund and ineffectual. He personally was caught up in scandals around kickbacks with companies he was investigating.
    • Galbraith also assailed Turner for being too aggressive while populists attacked him for being too captured by big business.
    • Turner reversed himself in the mid-1970s on the concentration of power and judicial intervention when he wrote a loosen of rules around predatory pricing with a Bork friendly, Philip Areeda.
      • This study was financed by IBM
      • Turner and Areeda went on to write the “Antitrust Law: An Analysis of Antitrust Principles and Their Application, the most cited text on antitrust.

The rebirth of wall street

Walter Wriston began the rebirth of Wall Street’s power from National Bank (later Citibank) when he began working with Aristotle Onasis in 1950. Wriston produced financing for Onasis based on future potential earnings of a given asset (in this case ships) rather than the replacement value of the asset. This financing model pushed businesses to make bolder bets and decisions, but it focused leaders on shorter term horizons. Citibank also chipped away at the interstate banking restriction (meant to block large banking power) by forming a syndicate to provide funding for UPS’s expansion in 1953. The Waterman Shipping acquisition in 1955, facilitated by Wriston, was a watershed moment because the acquirer Malcolm McLean, borrowed against the company’s assets to acquire it, and then used those assets (stockpiled cash) to pay back the loan1.

  • The late fifties were marked by the rise of the Eurodollar market where foreign banks were providing funding to onshore corporations because banking restrictions did not allow enough onshore credit.
  • In 1951 the Federal Reserve broke from Truman, and no longer took orders from the White House.
  • The 50s also saw a rise in interest rates making funding harder to come by both privately and in government.
  • In 1956 Congress passed the Bank Holding Company Act which restricted banks from engaging in non-banking activities and interstate banking from holding companies.
    • It’s important to note how important localizing banking is in keeping deposits and funding in local communities.
  • Simon Kunzents developed an economic theory called “convergence theory” that stated that economic equality just happened as the economy produced more. This paired nicely with Galbraith’s theory of affluence.
  • In 1961, Wriston announced the creation of Certificates of Deposit (CDs). At the time “Money center” banks were threatened because their life blood, deposits, was restricted to their local area by Regulation Q.
    • Certificate of Deposits allowed Citibank to get around the local banking requirements of Regulation Q.
    • In order for that to work, CDs had to be negotiable and therefore needed a market. Wriston and John Exter, turned to Herbert Repp of the Discount Corporation to create a market.
    • It worked, the market grew to 90 billion by 1974 with much of this capital flowing to big banks. All of it outside the purvey of regulators.
  • The reemergence of banking power with CDs allowed banks to enter riskier endeavors such as credit cards, leasing and mortgage services.


Stoller, M. Goliath: The 100-Year War Between Monopoly Power and Democracy. (Simon & Schuster, New York, 2019).