The William Humphrey and Abram Myers years: The FTC from 1925 to 1929

Antitrust Law Journal

Volumn 77, Issue 3, 2011, Pages 701-747

  Winerman, Marc ^a   Kovacic, William E ^b  

^a Office of International Affairs at the FTC   (United States)

^b GEORGE WASHINGTON UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

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EID: 84857224475     PISSN: 00036056     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (122)

1. Franklin Roosevelt fired Humphrey without citing cause, and Humphrey sued, successfully, for lost pay. The case established the independent commission as a foundation of the federal regulatory state. Humphrey's Executor v. United States, 295 U.S. 602 (1935).
2. See also William E. Leuchtenburg, The Case of the Contentious Commissioner, Humphrey's Executor v. U.S., in FREEDOM AND REFORM 276 (Harold M. Hyman & Leonard W. Levy eds., 1967) [hereinafter Contentious Commissioner].
3. See ELLIS W. HAWLEY, THE NEW DEAL AND THE PROBLEM OF MONOPOLY: A STUDY IN ECONOMIC AMBIVALENCE (1966) [hereinafter NEW DEAL] (multiple approaches to antitrust). For significant works that virtually ignore Myers,
4. see GERALD BERK, LOUIS D. BRANDEIS AND THE MAKING OF REGULATED COMPETITION, 1900-1932(2009).
5. THOMAS BLAISDELL, THE FEDERAL TRADE COMMISSION: A STUDY IN THE CONTROL OF BUSINESS 82 (1932) (placing his departure in 1927).
6. ROBERT F. HIMMELBERG, THE ORIGINS OF THE NATIONAL RECOVERY ADMINISTRATION 64, 97 (1976) (noting Myers's role in passing).
7. George Cullom Davis, Jr., The Transformation of the Federal Trade Commission, 1914-1929, 49 Miss. VALLEY HIST. REV. 437 (1962).
8. See Marc Winerman & William Kovacic, Outpost Years for a Start-up Agency: The FTC from 1921-1925, 77 ANTITRUST L.J. 145 (2010).
9. Marc Winerman, History Through Headlines, 72 ANTITRUST L.J. 871, 874 (2005).
10. Marc Winerman, The Origins of the Federal Trade Commission: Concentration, Cooperation, Control, and Competition, 71 ANTITRUST L.J. 1, 15-27 (2003) [hereinafter Origins].
11. William E. Kovacic, The Federal Trade Commission and Congressional Oversight of Antitrust Enforcement, 17 TULSA L.J. 587, 600-01 (1982).
12. William E. Kovacic & Marc Winerman, Competition Policy and the Application of Section 5 of the FTC Act, 76 ANTITRUST L.J. 9 2 9 (2010) .
13. RICHARD HOFSTADTER, What Happened to the Antitrust Movement?, in THE PARANOID STYLE IN AMERICAN POLITICS AND OTHER ESSAYS 107 (1965) (adding that antitrust prosecutions throughout the decade "were almost minimal").
14. AMERICAN BAR ASS'N, COMMISSION TO STUDY THE FTC, REPORT OF THE A B A COMMISSION TO STUDY THE FEDERAL TRADE COMMISSION 4, 9 (Sept. 1969) (finding substantial trivia in the FTC's portfolio and attributing this view to past studies as well).
15. FTC v. Winsted Hosiery Co., 258 U.S. 483 (1922) (deception).
16. FTC v. Beech-Nut Packing Co., 257 U.S. 441 (1922) (RPM).
17. FTC v. Eastman Kodak Co., 274 U.S. 619 (1927).
18. See, e.g., A. Neil Campbell & J. William Rowley, The Internationalization of Unilateral Conduct Laws-Conflict, Comity, Cooperation, and/or Convergence, 75 ANTITRUST L.J. 267, 277-81 (2008) (discussing historical context of the competition laws of the United States, the European Union, Canada, Australia, and South Africa).
19. Standard Oil Co. v. United States, 221 U.S. 1 (1911).
20. Marc Winerman, Antitrust and the Crisis of '07, ANTITRUST SOURCE, Dec. 2008, at 1, http://www.americanbar.org/content/dam/aba/publishing/antitrust- source/Dec08-FullSource12-22f.authcheckdam.pdf.
21. JOHN MILTON COOPER, WOODROW WILSON: A BIOGRAPHY 176-77, 226-34 (2009). Brandeis's more aggressive approach called for stronger antitrust laws, but he also included an associationalist concern with trade association activity and sought to reverse the per se prohibition on resale price maintenance of Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911).
22. see also MELVIN I. UROFSKY, LOUIS D. BRANDEIS: A LIFE 300-326 (2009).
23. Party Division in the Senate, U.S. Senate, http://www.senate.gov/ pagelayout/history/one-item-and-teasers/partydiv.htm.
24. House History, Office of the Clerk, U.S House of Representatives, http://artandhistory.house.gov/house-history/index.aspx.
25. MICHAEL E. PARRISH, ANXIOUS DECADES: AMERICA IN PROSPERITY AND DEPRESSION, 1920-1941, at 66-70 (1992).
26. ELLIS W. HAWLEY, THE GREAT WAR AND THE SEARCH FOR A MODERN ORDER 64-65 (2d ed. 1992).
27. ROBERT SOBEL, COOLIDGE, AN AMERICAN ENIGMA 320-325, 330-34 (1998) (relations with Congress).
28. La Follette Group Favors Democrat for Vice-President, CHRISTIAN SCI. MON., July 5, 1924, at 1.
29. Majority Senators Advance "Rebels," N.Y. TIMES, Dec. 15, 1926, at 2.
30. DAVID A. HOROWITZ: BEYOND LEFT AND RIGHT: INSURGENCY AND THE ESTABLISHMENT 60 (1996).
31. See generally GARLAND S. TUCKER III, THE HIGH TIDE OF AMERICAN CONSERVATIVISM: DAVIS, COOLIDGE, AND THE 1924 ELECTION (2010).
32. MARTIN L. FAUSOLD, THE PRESIDENCY OF HERBERT HOOVER 1-19 (1985) (noting "undersecretary.
33. KENDRICK A. CLEMENTS, THE LIFE OF HERBERT HOOVER: IMPERFECT VISIONARY, 1918-1928, at xi (2010).
34. Am. Column & Lumber Co. v. United States, 257 U.S. 377 (1921);.
35. Maple Flooring Mfrs. Ass'n v. United States 268 U.S. 563 (1925). Justice Brandeis, an advocate for trade association activities dissented in the former case and joined the six-Justice majority in the latter.
36. HERBERT HOOVER, THE MEMOIRS OF HERBERT HOOVER, THE CABINET AND THE PRESIDENCY, 1920-1933, 301-302 (1952).
37. ELLIS W. Hawley, Herbert Hoover and the Sherman Act, 1921-1933: An Early Phase of A Continuing Issue, 74 IOWA L. REV. 1067 (1989) [hereinafter Sherman Act] (noting, at 1095, that Hoover, like Brandeis, sometimes depicted cooperation as a way to protect smaller business units, although another strain of his thought saw an alternative to preventing the evils of monopoly in "managerialization" of big business).
38. Ellis W. Hawley, Herbert Hoover, the Commerce Secretariat, and the Vision of an "Associative State," 1921-1928, 61 J. AM. HIST. 116 (1974).
39. Robert T. Joseph, John Lord O'Brian, Hoover's Antitrust Chief, Gives the FTC an Antitrust Lesson, ANTITRUST, Fall 2010, at 88.
40. W.E. Humphrey, Evidence, Not Suspicion, to Govern, NATION'S BUS., June 5, 1925, at 17.
41. See generally CHAR MILLER, GIFFORD PINCHOT AND THE MAKING OF MODERN ENVIRONMENTALEM (2001).
42. William Humphrey, Fraudulent Advertising, Remarks to Nat'l Broad. Co. 1 (May 22, 1930), in WILLIAM E. HUMPHREY SPEECHES (unpublished collection) (on file in FTC Library, Washington, D.C.).
43. Huston Thompson, Headed FTC Under Two Presidents, WASH. POST, Feb. 18, 1966, at B3 (giving Thompson' age).
44. Nugent, John Frost, Biographical Directory of the United States Congress, http://bioguide.congress.gov/scripts/biodisplay.pl?index=N000169.
45. See FED. TRADE COMM'N, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDING JUNE 30, 1930, at 118-119.
46. FED. TRADE COMM'N, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDING JUNE 3 0 , 1926, at 46-48 [hereinafter 1926 ANNUAL REPORT).
47. State of the Union Addresses and Messages, The American Presidency Project, http://www.presidency.ucsb.edu/sou.php#axzz1L4vEePZv.
48. New Rules Split Trade Commission, N.Y. TIMES, May 18, 1925, at 1.
49. Minority Attacks Trade Board Rule, N.Y. TIMES, Mar. 19, 1925, at 2 (threats of criminal prosecution). One disclosure occurred in a particularly controversial merger of a series of mergers in the baking industry.
50. See Huge Bakery Merger Alleged to Be Trust, WASH. POST, Oct. 6, 1925, at 1.
51. FED. TRADE COMM'N, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDING JUNE 3 0 , 1935, at 51 [hereinafter 1935 ANNUAL REPORT] (noting 1934 change and 391 settlements that year).
52. FED. TRADE COMM'N, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDING JUNE 3 0 , 1961, at 7 (noting continued use of settlements without orders). The concern about avoiding essentially private disputes was echoed by Justice Louis Brandeis, for a unanimous Court, in 1929. FTC v. Klesner, 280 U.S. 19 (1929).
53. Attorney General's Opinion and the Powers and Duties of the Federal Trade Commission in the Conduct of Investigations Under Resolutions of the United States Senate (Oct. 24, 1925).
54. ALPHEUS THOMAS MASON, HARLAN FISKE STONE: PILLAR OF THE LAW 182-85 (1968); 9 FTC Min. 635-36 (Feb. 11, 1925); id. 686-87 (Feb.25, 1925).
55. See NOAH FELDMAN, SCORPIONS: THE BATTLES AND TRIALS OF F D R ' s GREAT SUPREME COURT JUSTICES 9 4 - 1 0 1 (2010) (discussing unsuccessful effort to indict Mellon for criminal tax fraud and subsequent civil prosecution, led by Robert Jackson, before the Board of Tax Appeals).
56. Sargent, His Aide, and Trade Board Targets at Inquiry, N.Y. TIMES, Jan. 10, 1926, at 1.
57. Sargent Throws out Aluminum Charges, N.Y. TIMES, Feb 20, 1926, at 1.
58. FRANCIS RUSSELL, THE SHADOW OF BLOOMING GROVE: WARREN G. HARDING IN HIS TIMES 608-618 (1968) (Walsh and Teapot Dome).
59. J. LEONARD BATES, SENATOR THOMAS J. WALSH OF MONTANA: LAW AND PUBLIC AFFAIRS, FROM TR TO FDR 212-229 (1999) .
60. Commissioners and Chairmen of the Federal Trade Commission, Oct. 2010, http://www.ftc.gov/ftc/history/commisionerchartlegal2010.pdf.
61. Senate Approves Hunt on Federal Trade Board, CHI. DAILY TRIB. Mar. 11, 1926, at 8.
62. Leaves Trade Commission, N.Y. TIMES, July 18, 1926, at E8 (Van Fleet).
63. Nugent Out, McCarl Rules, N.Y. TIMES, NOV. 6, 1927, at N16. Nugent argued that he was entitled to serve seven years from the day he took office. The Comptroller General ruled that Nugent's seat traced back to a Commissioner whose initial term could have run through September 26, 1920, so his term ended seven years later. (A later amendment allows Commissioners to stay until a successor is prepared to take office. Act of Mar. 21, 1938, ch. 49, § 1, 52 Stat. 111.)
64. Abram F. Myers, Federal Regulation of Corporations Under the Commerce Clause, ANNALS AM. ACAD. POL. Soc. SCI. 143, 146-147 (1927).
65. Abram F. Myers, Anti-Trust Laws or Socialism, ASS'N MGMT., May 1927, at 8-9 [hereinafter Anti-Trust Laws] (describing effects of mergers).
66. Abram F. Myers, The Federal Trade Commission: A Constructive Force in American Business 1 (Nov. 9, 1927)
67. Abram F. Myers, Legitimate Trade Association Activities 4 (May 17, 1928).
68. Warren C. Piatt, How Federal Trade Commission Would "Make Law": The American Petroleum Institute Code of Ethics, NAT'L PETROLEUM NEWS, Jan. 16, 1929, at 28, 30 (all quotes in paragraph excerpted from a November 1929 Myers Speech reprinted in National Petroleum News).
69. Senate to Accept Coolidge Nominees, N.Y. TIMES, Jan. 3, 1927, at 2. Robinson's name would later attach to the Robinson-Patman Act.
70. HENRY MILLER, STATUTES AND DECISIONS PERTAINING TO THE FEDERAL TRADE COMMISSION, iv (1930) [hereinafter STAT, AND DEC.] (biography).
71. RICHARD LOWITT, GEORGE W. NORRIS, THE PERSISTENCE OF A PROGRESSIVE, 1913-1933, at 361-362 (1971).
72. M'Culloch, Federal Commissioner, Dies, WASH. POST, Jan. 24, 1933, at 3.
73. FED. TRADE COMM'N, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDING JUNE 30, 1928, at 199-202 [hereinafter 1928 ANNUAL REPORT].
74. FED. TRADE COMM'N, REPORT ON RESALE PRICE MAINTENANCE (PART 2), at 1-6 (1931) (rejecting as unworkable proposals to allow RPM subject to government oversight of prices; Humphrey distancing himself from the report).
75. FED. TRADE COMM'N, REPORT OF THE FEDERAL TRADE COMMISSION ON PRICES BASIS INQUIRY, THE BASING-POINT FORMULA AND CEMENT PRICES (1932).
76. FED. TRADE COMM'N, REPORT OF THE FEDERAL TRADE COMMISSION ON BLUESKY SECURITIES (1929) (typewritten manuscript, designated "Confidential. For office use only."). (The last report was not mentioned in subsequent listings of investigations in FTC annual reports. E.g., FED. TRADE COMM'N, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDING JUNE 30, 1935, at 147 [hereinafter 1935 ANNUAL REPORT]).
77. REPORT OF THE FEDERAL TRADE COMMISSION ON DU PONT INVESTMENTS UNDERTAKEN BY A RESOLUTION OF THE COMMISSION DATED JULY 29, 1927 (1929) (noting, at 5, "complete control") [hereinafter Du PONT REPORT]
78. Publishers of Periodicals ( N o v . 12, 1928), FED. TRADE COMM'N, TRADE PRACTICE CONFERENCES 169 (1929) [hereinafter TPC].
79. William Humphrey, Publishers and False Advertising (Sept. 17, 1927)
80. See generally Edward J. Balleisen, Private Cops on the Fraud Beat: The Limits of American Business Self-Regulation, 1895-1932, 83 Bus. HIST. REV. 113 (2009) (detailing both the extent of such self-regulation and its limits).
81. Abram R. Myers, Fair Methods of Competition in the Motion Picture Industry, Opening Address, in MYERS SPEECHES.
82. Film Men to Meet to Plan Ethics Code, N.Y. TIMES, Oct. 9, 1927, at El.
83. A.F. Myers Tells Conference of Industry Failure to Correct Evils May Mean "Regulation," N.Y. TIMES, Oct. 11, 1927, at 21.
84. Film Groups Clash over Trade Reform, N.Y. TIMES, Oct. 13, 1927, at 22.
85. Film Men Silent on "Block Booking," N.Y. TIMES, Oct. 14, 1927, at 14.
86. Film Conference Still Widely Split, N.Y. TIMES, Oct. 15, 1927, at 22.
87. FED. TRADE COMM'N, TRADE PRACTICE CONFERENCE FOR THE MOTION PICTURE INDUSTRY 85 (1928) (advertising provision).
88. Myers Letter Changed, Judge Soper Testifies, WASH. POST, Feb. 18, 1928, at 1.
89. Woman Lawyer Marries, N.Y. TIMES, NOV. 14, 1929, at 30.
90. Republicans Here Ask Coolidge to Name Him, N.Y. TIMES, Dec. 24 1928, at 1 (attributing Myers resignation to opposition by Walsh and Borah to his confirmation)
91. MILTON HANDLER, ED., THE FEDERAL ANTITRUST LAWS, A SYMPOSIUM 124-138 (1932) (remarks by Myers; symposium was held in 1931 at Columbia University).
92. New Trade Board Is Urged by Myers, N.Y. TIMES, Dec. 11, 1931, at 27.
93. W.H.S. Stevens, The Federal Trade Commission's Contribution to Industrial and Economic Analysis: The Work of the Economics Division, 8 GEO. WASH. L. REV. 545, 552 (1940) (utilities and chain store investigations absorbed most economic resources).
94. Senate Committee Approves Walsh Utilities Inquiry, WASH. POST, Feb. 2, 1928, at 13.
95. Trade Commission Inquiry on Utilities Is Voted by Senate, WASH. POST, Feb. 16, 1928, at 1.
96. Charles H. March of the FTC, Was 74, N.Y. TIMES, Aug. 29, 1945, at 23.
97. Rebuff to Hoover Backers Charged, BALT. SUN, Jan. 25, 1929, at 2 (discussing March and other nominees).
98. See CARL H. CHRISLOCK, WATCHDOG OF LOYALTY: THE MINNESOTA COMMISSION OF PUBLIC SAFETY DURING WORLD WAR I 68 (1991).
99. President and Advisers Off for Bay Island Outing Today, WASH. POST, July 13, 1935, at 1.
100. Trade Commissioner Hits Whiteley Trip, WASH. POST, May 18, 1927, at 3.
101. Additional Memorandum from Richard P. Whiteley & E.J. Hornibrook to Board of Review (Oct. 11, 1928)
102. George Stigler, Monopoly and Oligopoly by Merger, 40 AM. ECON. REV. 432 (1950).
103. FTC v. Western Meat Co., 272 U.S. 554 (1926) (Chief Justice Taft and Justices Brandeis, Holmes and Stone, dissenting in part).
104. Arrow-Hart and Hegeman Elec., Co. v. FTC, 291 U.S. 587 (1934) (Chief Justice Hughes and Justices Brandeis, Cardozo, and Stone, dissenting).
105. Application for issuance of a complaint against Arrow-Hart and Hegeman Electric Co., Report-Board of Review (May 17, 1928).
106. In the Matter of Consolidated Cigar Corp, D-1451, Memoranda by Commissioner Myers on respondent's motion to dismiss at the completion of the Commission's evidence, Jan. 16, 1928, in Confidential Memoranda File, Docket Section, Aux. Case Files, 1915-1936, Box 750, RG-122, National Archives, College Park, MD.
107. See Fisk Rubber Co., 10 F.T.C. 433 (1926) (dismissing complaint that relied exclusively on the first clause of Section 7, and printing Van Fleet's pre-complaint dissent, objecting, essentially, that there was no evidence of market power).
108. Int'l Shoe Co., 9 F.T.C. at 463. Humphrey accepted the failing-firm defense; found (in a matter that was not pressed before the Supreme Court) that post-acquisition prices did not increase and in some cases fell; and questioned whether pre-merger competition between the firms was "material."
109. Int'l Shoe Co. v. FTC, 280 U.S. 291, 304 (1930).
110. V. Vivaudou, Inc. v. FTC, 54 F.2d 273, 275 (2d Cir. 1931).
111. Temple Anthracite Coal Co. v. FTC, 51 F. 2d 656 ,660 (3d Cir.1931).
112. FED. TRADE COMM'N, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDING JUNE 30 , 1932, at 114 (discussing Commission vote and Solicitor General response on certiorari in Temple Anthracite).
113. See FTC v. Western Meat Co., 5 F.T.C. 417 (1923), ajfd, 1 F.2d 95 (9th Cir. 1924)
114. See MILTON HANDLER, CASES AND OTHER MATERIALS ON TRADE REGULATION 265, 271-273 (1937).
115. Sugar Inst., Inc. v. United States, 297 U.S. 553 (1936).
116. FED. TRADE COMM'N, REPORT ON OPEN-PRICE TRADE ASSOCIATIONS xxi (1929) [hereinafter OPEN-PRICE REPORT] (increased powers for Census Bureau).
117. see David Genesove & Wallace P. Mullin, Rules, Communication, and Collusion: Narrative Evidence from the Sugar Institute Case, 91 AM. ECON. REV. 379 (2001).
118. Margaret C. Levenstein & Valerie Suslow, What Determines Cartel Success?, 44 J. ECON. LIT. 43 (2006).
119. George J. Stigler, A Theory of Oligopoly, 72 J. POL. ECON. 44 (1964).
120. See FED. TRADE COMM'N, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1927, at 12 (attributing certain cases to a conference rule).
121. Creamery Industry (1919), TRADE PRACTICE SUBMITTALS 4 (1926) (the relevant text was deleted from the 1929 volume)
122. Re: Oil Institute Proposed Code of Ethics, Jan. 4, 1929, D.J. Central Files, Classified Subject Files, Correspondence, 60-57-32, Box 356, R.G. 60, National Archives, College Park, MD.