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The Supreme Court and American Trade Associations, 1921–1925

Published online by Cambridge University Press:  11 June 2012

M. Browning Carrott
M. Browning Carrott
Affiliation:
Assistant Professor of History, Southern Illinois University
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Abstract

In the 1920's, the Supreme Court reversed its previously hostile position on the legality of many activities of trade associations. Professor Carrott finds that the primary cause of the court's shift lay in the changing social milieu of the decade, as the older insistence on rigorous competition was supplanted by an emphasis on the value of cooperation in business.

Type
Research Article
Information
Business History Review , Volume 44 , Issue 3 , Autumn 1970 , pp. 320 - 338
Copyright
Copyright © The President and Fellows of Harvard College 1970

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References

1 For a general analysis of trade associations, see Bradley, Joseph F., The Role of Trade Associations and Professional Business Societies (University Park, 1965)Google Scholar; Foth, Joseph, Trade Associations: Their Service to Industry (New York, 1930)Google Scholar; Kirsch, Benjamin, Trade Associations: Their Legal Aspect (New York, 1928)Google Scholar; and National Industrial Conference Board, Trade Associations: Their Economic Significance and Legal Status (New York, 1925).Google Scholar None of these works satisfactorily explains the changing position of the Supreme Court.

2 Haber, Samuel, Efficiency and Uplift: Scientific Management in the Progressive Era, 1890–1920 (Chicago, 1964), 72.Google Scholar

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5 National Industrial Conference Board, Trade Associations: Their Economic Significance and Legal Status, 16.

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7 Ibid.

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9 197 U.S. 244; 221 U.S. 106; 221 U.S. 1.

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13 Ibid., 6, 11, 12, 16.

14 Silver, “Hardwood Producers Come of Age,” 429, 430, 434–37.

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16 Silver, “The Hardwood Producers Come of Age,” 438.

17 263 F. 156. Considerable information about the Hardwood Association can be found in the transcript of record, American Column and Lumber Company v. United States, Records and Briefs of the United States Supreme Court, 257 U.S. 377, especially on the data which were exchanged by the members of the association.

18 C. B. Ames to W. D. Kyser, April 21, 1920, file 60/160/14, Record Group 60, General Records of the Department of Justice, Classified Subject File (National Archives, Washington, D.C.). Hereafter cited as RG 60.

19 “Supreme Court Hears Hardwood Case,” Southern Lumberman, XCVIII (October, 1920), 39.

20 “Argument of Hardwood Case Heard,” Southern Lumberman, CIV (October, 1921), 39.

21 257 U.S. 377. A man of generally liberal sentiments, Clarke served on the Supreme Court from 1914 to 1922. See Warner, Hoyt, The Life of Mr. Justice Clarke (Cleveland, 1959).Google Scholar

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28 250 U.S. 616.

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32 Holmes to Laski, March 5, 1925, Correspondence of Mr. Justice Holmes and Harold J. Laski, I, 719.

33 See his dissent in Dupleix Printing Company v. Deering, 254 U.S. 443 (1921); Brandeis to Paul Kellogg, November 7, 1920, in Bickel, Alexander (ed.), The Unpublished Opinions of Mr. Justice Brandeis (Cambridge, 1957), 119–120.Google Scholar For a similar point of view, see Brandeis to Alfred Brandeis, February 18, 1925, the Papers of Felix Frankfurter (Library of Congress, Washington, D.C.).

34 Brandeis wrote strong dissenting opinions upholding freedom of expression in Pierce v. United States, 252 U.S. 239 (1920), and in Schaefer v. United States, 251 U.S. 466 (1920).

35 Warford, I. E. and May, Richard A., Trade Association Activities (Washington, 1923), 28.Google Scholar See also Brandes, Joseph, Herbert Hoover and Economic Diplomacy: Department of Commerce Policy, 1921–1928 (Pittsburgh, 1962).Google Scholar

36 Hoover to Daugherty, February 3, 1922, the Papers of Herbert Hoover (Hoover Library, West Branch, Iowa).

37 “Report of the Committee on Trade Associations,” Chamber of Commerce, Referendum 41 (February, 1923), 1; Bell, Landon C., “Trade Associations and Statistics,” American Industries, XXIV (August, 1923), 10.Google Scholar

38 “Trade Association Activities,” American Fertilizer, LVI (February 25, 1922), 41; Shidle, Norman G., “Hoover and the Trade Associations,” Automotive Industries, XLVI (April 20, 1922), 847.Google Scholar See also: “Association Workers Express Views on Decision,” American Lumbermen (December 24, 1921), 52; “A Guiding Hand for Trade Associations,” American Machinist, LVI (April 27, 1922), 640; “We Want More Effective Trade Associations,” Brick and Clay Record, LX (April 18, 1922), 611; “Limiting the Activities of Trade Associations,” Chemical and Metallurgical Journal (December 28, 1921), 1166; “Open Price Associations Declared in Violation of Antitrust Laws by Supreme Court,” Coal Age, XX (December 22, 1921), 1021; Towne, O. B., “Bones and Sinews of Association Work,” Concrete, XXII (September, 1922), 48Google Scholar; “Open Price Decision Needed,” Iron Age, CIX (March 30, 1922), 874; Hiess, A. E., “Open Price Associations Condemned by the Supreme Court,” National Petroleum News, CXXXIV (December 14, 1921), 23Google Scholar; and “Open Price Advice Awaited,” Textile World, LXI (January 7, 1922), 54.

39 Report of the Federal Trade Commission on the Lumber Manufacturers Trade Association (Washington, 1922), 62–65, 70, 92, 93, 130–31.

40 262 U.S. 371.

41 Mitchell to Guy Goff, April 8, 1921, file 60/333/1, RG 60.

42 275 F. 939.

43 C. Stanley Thompson to Goff, May 22, 1922, and Beck to Mitchell, August 23, 1922, file 60/333/1, RG 60.

44 McReynolds had been appointed to the Court by Woodrow Wilson in 1914 after service as Attorney General.

45 Sutherland, George, “Principle or Expedient,” Report of New Yorfc State Bar Association, XLIV (1921), 280.Google Scholar

46 “Questions Relating to Trade Associations,” Iron Age, CXI (June 14, 1923), 1713; “Address of President John W. McClune,” American Lumberman (June 16, 1923), 52; “The Linseed Oil Decision Further Clarifies the Sherman Act,” American Machinist, LVTII (June 28, 1923), 950.

47 268 U.S. 563; 268 U.S. 588.

48 R. Colton Lewis and Roger Shale to Goff, March 28, 1921; see also Fowler to Daugherty, November 23, 1921, file 60/10/2; Fowler to Thompson, May 16, 1922, all in file 60/333/1, RG 60. Fowler to William Hayward, October 14, 1922, 60/160/9, RG 60.

49 294 F. 390.

50 Frank K. Nebeker to G. W. Earle, February 4, 1921; Mitchell to Goff, August 24, 1921; Thompson to Fowler, June 1, 1923; Thompson to C. W. Hughes, October 13, 1923; and Thompson to Horace A. Lewis, October 25, 1923, all in file 60/160/9, RG 60.

51 This opinion was never published in the Federal Reporter. However, it can be found in the transcript of the record of the case, Maple Flooring Manufacturers Association v. United States in Records and Briefs of the United States Supreme Court, 268 U.S. 563.

52 Motion by United States to advance, p. 3, Ibid. Beck to Davis, December 15, 1924, file 60/10/2, RG 60.

53 Brief for the appellants, pp. 145–46; oral argument of John W. Davis, p. 3, Cement Manufacturers Protective Association v. United States in Records and Briefs, 268 U.S. 588.

54 For background information on Stone, see Mason, Alpheus, Harlan Fiske Stone: Pillar of the Law (New York, 1956).Google Scholar Taft was appointed Chief Justice in July, 1921. See Mason, Alpheus, William Howard Taft: Chief Justice (New York, 1965).Google Scholar

55 Hoover to Stone, April 3, 1925 and Hoover to Stone, June 3, 1925, in Mason, Harlan Fiske Stone, 218. A copy of this second letter can also be found in the personal file of Hoover, Hoover Library.

56 Mason, Harlan Fiske Stone, 219.

57 268 U.S. 586.

58 Taft to Charles D. Hilles, June 9, 1925, the Papers of William Howard Taft (Library of Congress, Washington, D.C.).

59 Link, Wilson: The New Freedom, 116–17, 417–18, 419.

60 “Trade Association Statistics Lawful,” Nation's Business, XIII (July, 1925), 52; and John W. O'Leary, “Forward March to Business,” Nation's Business, XIV, June 5, 1926), 15.

61 Emery, James A., “The Trade Association Decision,” American Industries, XXV (July, 1925), 17Google Scholar; and Williams, Nathan B., “A Charter for Associations,” American Industries, XXVI (December, 1925), 44–45.Google Scholar

62 Jones, Franklin D., “Trade Statistics and Public Policy,” American Fertilizer, LXIII (August 22, 1925), 36Google Scholar; “Statistical Activities Receive United States Supreme Court's Sanction,” American Lumberman (June 6, 1925), 37; Wooten, Paul, “Legal Status of Trade Associations Cleared up by the Supreme Court Ruling in Maple Flooring and Cement Cases,” Coal Age, XXVII (June 11, 1925), 879Google Scholar; Foes, I. D., “U.S. Supreme Court Upholds Cement Trade Association Activities” Concrete, XXVII (July, 1925), 6Google Scholar; “Trade Associations Receive Court Sanction,” Engineering and Mining Journal, CXIX (June 20, 1925), 993; “Supreme Court Says Association May Gather and Publish Trade Statistics,” National Petroleum News, XVII (June 10, 1925), 44; “Trade Association Decision Interests Textile Men,” Textile World, LXVII (June 6, 1925), 59.

63 Attorney General of the United States, Annual Report (1923), 23; (1924), 15–16; (1925), 20; (1926), 33; (1927), 29; (1928), 30–32.

64 William J. Donovan, “Trade Associations: Their Origins, History, and Their Legality,” Proceedings of the Sixteenth Annual Meeting of the National Association of Attorneys-General, 43–44. See also Donovan, William J., “The Cycle of Government,” California: The State Bar Journal (December, 1927), 132Google Scholar; and Donovan, William J. and Webster, Bethuel, “Rationalization: The Basis of Economic Rapprochement,” Harvard Business Review, VI (January, 1928), 174.Google Scholar

65 Federal Trade Commission, Report on Open Price Associations (1929), xix, 2, 10, 11, 102, 289.

66 Schlesinger, Arthur M. Jr., The Coming of the New Deal (Boston, 1959), 89Google Scholar; for information on the N.R.A., see chs. 6–10. Memorandum by Frankfurter, December 28, 1935, in Freedman, Max (ed.), Roosevelt and Frankfurter, Their Correspondence, 1928–1945 (Boston, 1967), 297Google Scholar; Harold M. Stephens to William McClanahan, December 8, 1933, file 60/160/14, RG 60.