Northern Securities Research Articles

Antitrust and the Corporate Tax, 1909–1928

Between the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914, the question of what to do about “trusts” dominated American political life. Before 1889, the dominant form of amalgamating competing businesses was the trust, because corporations could not hold shares in other corporations, and instead the shareholders would exchange their shares for trust certificates. But in 1889 New Jersey (the “traitor state”, according to muckraking journalist Lincoln Steffens) changed its corporate law to allow for holding company structures, setting of a great wave of amalgamations in areas like oil, tobacco, sugar and steel. This paper will focus on one attempt to address the “trust problem” by means other than the Sherman Act (which faced some resistance in the courts, as the government lost the E.C. Knight case in the Supreme Court in 1895 and barely won the Northern Securities case in 1905). This was the corporate tax act of 1909, which as will be seen below, was primarily intended as an antitrust measure. However, after the enactment of the Clayton Act and the creation of the FTC in 1914, the corporate tax was less needed as an antitrust measure, and between 1919 and 1928 its antitrust features were largely eliminated.

A Falling Out: The Relationship Between Oliver Wendell Holmes and Theodore Roosevelt

Theodore Roosevelt is often credited with founding and shaping the modern American presidency. With his appointment of Oliver Wendell Holmes to the Supreme Court of the United States, Roosevelt also set in motion a force that would transform the judiciary. However, it did not go as Roosevelt had planned. Holmes' refusal to conform to Roosevelt's desires in Northern Securities Co. v. United States demonstrated that Holmes was his own man and not Roosevelt's instrument. The decision brought an abrupt halt to what had been becoming a close friendship between the two men. Over the years the rift deepened. The bitterness that grew between them reflected more than a difference of opinion over law and economic principles; it reflected the type of disillusionment that comes only when a friend fails to live up to expectations.

A Falling Out: The Relationship Between Oliver Wendell Holmes and Theodore Roosevelt

Theodore Roosevelt is often credited with founding and shaping the modern American presidency.1 With his appointment of Oliver Wendell Holmes to the Supreme Court of the United States, Roosevelt also set in motion a force that would transform the judiciary. However, it did not go as Roosevelt had planned. Holmes’ refusal to conform to Roosevelt’s desires in Northern Securities Co. v. United States2 demonstrated that Holmes was his own man and not Roosevelt’s instrument. The decision brought an abrupt halt to what had been becoming a close friendship between the two men. Over the years the rift deepened. The bitterness that grew between them reflected more than a difference of opinion over law and economic principles; it reflected the type of disillusionment that comes only when a friend fails to live up to expectations.

Introduction

Introduction Melvin I. Urofsky In the past few years those of us associ­ ated with the Journal ofSupreme Court His­ tory have been pleased not only with the re­ sponse of our members, but also with reactions from the academic community. Legal scholars in law schools and history and political science departments now see the Journal as a legitimate venue in which to pub­ lish their research, and they appreciate the fact that their work will reach a wider and more di­ verse audience than if published in a law re­ view or more technical scholarly journal. This, of course, is exactly what we have been striving for over the past decade: to make the Journal not only welcome reading in the homes of our members, but also an attractive place for scholars to display their work. Very often when I am asked what style I am looking for in pieces submitted to us for review, I re­ spond that we would like to be an American Heritage devoted to the history of the Su­ preme Court—well-written, well-conceived articles on important and interesting issues, adequately annotated, and then presented in an attractive manner. Comments to us indicate that we are well on the way toward achieving that ideal. This issue is a good example of the vari­ ety we like to see on the contents page. Robert Karachuk’s article concerns how, in the 1790s, the Supreme Court’s decisions on technical points of law—perhaps as much as those on substantive issues—provided the Court with opportunities to shape the charac­ ter of the government in the young republic and thereby contributed to the Court’s emer­ gence as a potent voice in the life of the new nation. Karachuk examines several admiralty cases and shows how the Justices split into two camps in determining the process by which such cases could secure review, either by writ or by appeal. In the 1790s, as today, a legal technicality could bear on the very es­ sence of constitutional government, as this split reflected very different understandings of the balance of power between Congress and the Court. Nearly every historian I know tells the story about how upset Theodore Roosevelt was with Oliver Wendell Holmes, Jr.’s dis­ v vi JOURNAL OF SUPREME COURT HISTORY sent in the Northern Securities case, and how Roosevelt fumed and muttered that he could carve ajudge with more backbone out of a ba­ nana. Yet the relationship between the two men was far more complex than that, and in the end Holmes remained Roosevelt’s great­ est appointment to the federal bench. Like many of us, Richard H. Wagner was intrigued by their relationship, and here he spells it out for us in greater detail than one will find any­ place else. Norman Dorsen is an old friend, and those of us who know him also know that he cherishes the year he spent as a law clerk to Justice John Marshall Harlan II. Norman has been involved in several conferences regard­ ing Justice Harlan’s work, and a year or so ago he and some others conceived the idea of privately printing a small book of reminis­ cences by Harlan’s clerks. After he and his co-editor, Amelia Ames Newcomb, saw what material they had gathered, they realized that while the private, limited edition would meet the original purposes of the group, many of the stories would appeal to a wider audience. We are delighted that they came to us to see if we would be interested. The per curiam opinion often confuses students—and nonstudents as well—in that it represents the opinion of the Court, but it is not an opinion. Moreover, it sometimes has dissents, thus making the idea of a consensus agreement even more confusing. Laura Krugman Ray’s original research and highly technical findings regarding the per curiam opinion were initially published in a law jour­ nal, an appropriate venue for the article as it existed. However, several of us who saw that piece realized that underneath the technical analysis lay a good historical report. At our re­ quest, Professor Ray wrote a second article...

When Holmes Borrowed from Langdell: The "Ultra Legal" Formalism and Public Policy of Northern Securities (1904)

When Holmes Borrowed from Langdell: The "Ultra Legal" Formalism and Public Policy of Northern Securities (1904)

Dennis v. United States: Great Case Or Cold War Relic?

Dennis v. United States: Great Case Or Cold War Relic? Michal R. Belknap “Great cases like hard cases make bad law. For great cases are called great, not by reason oftheir real impor­ tance in shaping the law of the future, but because of some accident of im­ mediate overwhelming interest which appeals to the feelings and distorts the judgment.” Justice Holmes dissenting in Northern Securities Co. v. United States, 193 U.S. 197, 400 (1904). “[T]he most important reconciliation of lib­ erty and security in our time,” the Washington Post called the decision when the Supreme Court rendered it in 1951.1 Forty-two years laterDermis v. UnitedStates2 continues to occupy aprominent place in constitutional law casebooks.3 Butshould it? When the Courtdecided Dennis, the Cold War was at its most frigid, and the anticommunist hysteriaknownas McCarthyism grippedthe coun­ try. The decision reflected well the frenzied temper of those times, and it is certainly among the mostprominentlegalproductsofthe McCarthy era. The Cold Warhas ended, however, and today the doctrinal significance of Dennis v. United States is minimal. Far from the “big case” it once seemed to be, Dennis now looks like little more than a legal relic of a bygone era. The time has come to ask whether it is just a twentieth century Dred Scott decision,4 truly important only to historians and those fascinated by the Supreme Court. Whatever its current significance, the Dennis decision clearlywas, as Thomas I. Emerson noted in 1970, “one ofthe most influential in the post­ warperiod.”5 “Everything,” as Harry Kalven, Jr., has observed, “conspired to make Dennis a great moment.”6 Reaching the Supreme Court at the height of the country’s preoccupation with do­ mestic communism, the case “involved the crimi­ nal prosecution ofeleven leaders ofthe Commu­ nist Party,” and was an outgrowth ofwhat Kalven called, withouttoo much exaggeration, “the great American political trial.”7 Thattrialwas in turn, as PeterL. Steinbergand I have demonstrated, the product of a blatantly political prosecution.8 When the World War II alliance between the United States and the Soviet Union deteriorated into a postwar confrontation over the future of Central and Eastern Europe, President Harry S. Truman sought to rally the on the campaign trail in Fargo, North Dakota in 1948. 42 JOURNAL 1993 American people behind costly international ini­ tiatives designed to check Soviet expansionism by characterizing what was essentially a conflict of interest between two powerful nation states as a struggle between communism and democracy. Capitalizing on the traditional American ten­ dency to define international issues in moral terms and playing on traditional American fears ofradicalism, Truman managed to enlist biparti­ san support for his anti-Soviet foreign policy, but at ahigh politicalprice. In 1944 some Republican conservativeshadattemptedto discreditTruman’s Democratic party by linking it to communism. Votershad displayed little interest in such charges then, but by 1948, with the aid ofsome spectacu­ lar revelations of Communist espionage during the 1930s and early 1940s, a threatening interna­ tional situation and the president’s inflated rheto­ ric had made what was once a non-issue into a compelling concern. Itwas not a worry ofTruman and his advisers, who considered communism an international problem, not a domestic one. The president dismissed the Communist Party of the United J. Edgar Hoover (left) with Justice Hugo Black in 1965. As Director of the FBI, Hoover suggested that the Justice Department use the Smith Act against the CPUSA. States of America (CPUSA), which had only 60,000 members in 1948, as a “contemptible minority in a land offreedom.” Many Americans did not find his position persuasive, for if what menaced America was communism, then surely Republicans were right in claiming that Reds in New York City, and especially in the federal government in Washington, were a threat to national security. By April 1947, sixty-one per­ centofAmericansfavoredoutlawingthe CPUSA, a percentage thatrose in succeeding months. Led by the House Committee on Un-American Ac­ tivities (HUAC), Republicans hammered away at the Truman administration for not doing more to combatthis Red menace. Endeavoring to protect itself against GOP charges that it was soft on subversion, the administration initiated a loyaltysecurity program for federal employees. But Republicans and conservative Democrats...

The Effects of Horizontal Mergers on Competition: The Case of the Northern Securities Company

Several recent articles have studied the competitive effects of horizontal mergers by examining rival firms' stock price reactions to the merger announcement and subsequent antitrust challenge. These articles have consistently failed to find any evidence of anticompetitive effects. This article considers two alternative explanations for the previous findings, and it sheds some new light on the issue by presenting a case study of the merger that resulted in the formation of the Northern Securities Company in 1901.

The House of Morgan and the Executive, 1905-1913

EARLY in 1902, when Theodore Roosevelt's administration began antitrust proceedings against the Northern Securities Company, John Pierpont Morgan, its organizer, reputedly complained to Roosevelt, If we have done anything wrong . . . send your man to my man and they can fix it up.' Several years later, in the midst of the Panic of 1907, Elbert H. Gary and Henry Clay Frick hurried to Washington to ask Roosevelt's advice. The two men, who represented Morgan interests in the United States Steel Corporation, told Roosevelt about a plan to purchase for United States Steel a controlling interest in the Tennessee Coal and Iron Company. Presenting the proposal as a bit of altruism designed to save a hard-pressed brokerage firm that owned the stock, they requested assurances that the purchase would not bring antitrust prosecution against the Steel Corporation. Roosevelt gave vague blessings, and the House of Morgan completed the transaction.2 Such familiar anecdotes are the material used to describe Wall StreetWashington relations during the progressive era. Contemporary reformers popularized these stories as illustrations of big business incorrigibility and unscrupulousness. Historians, denied access to most businessmen's records and primarily concerned with the course of liberal reform, have accepted them as anecdotes. Back of these stories lay a consistent pattern, unified by Wall Street's view of the federal government. According to an official biographer, Roosevelt, after listening to Morgan's ideas on corporation control, commented, Mr. Morgan could not help regarding me as a big rival operator, who either intended to ruin all his interests, or else could be induced to come to an agree-

The Present Status of the Northern Securities Decision

The Present Status of the Northern Securities Decision

A History of the Northern Securities Case. Balthasar Henry Meyer

<i>A History of the Northern Securities Case</i>. Balthasar Henry Meyer

Injunctions. Interlocutory. Review on Appeal. Northern Securities Co. v. Harriman et al., 134 Fed. 331

Injunctions. Interlocutory. Review on Appeal. Northern Securities Co. v. Harriman et al., 134 Fed. 331

The Northern Securities Case

The Northern Securities Case

The Northern Securities Decision. A Review

The Northern Securities Decision. A Review

The Northern Securities Decision and the Sherman Anti-Trust Act

The Northern Securities Decision and the Sherman Anti-Trust Act

The Northern Securities Decision

The Northern Securities Decision

The Northern Securities Case

The Northern Securities Case

A Review of the Decision of the United States Circuit Court at St. Paul in the Case of United States v. Northern Securities Company

A Review of the Decision of the United States Circuit Court at St. Paul in the Case of United States v. Northern Securities Company

The Northern Securities Case

The Northern Securities Case

The Northern Securities Company Case; A Reply to Professor Langdell

The Northern Securities Company Case; A Reply to Professor Langdell

The Northern Securities Case under a New Aspect

The Northern Securities Case under a New Aspect