Hostname: page-component-cd9895bd7-fscjk Total loading time: 0 Render date: 2024-12-26T21:08:11.325Z Has data issue: false hasContentIssue false
  • English
  • Français

Personnel is Policy: Regulatory Capture at the Federal Trade Commission, 1914–1929

Published online by Cambridge University Press:  28 June 2019

Patrick Newman
Patrick Newman*
Affiliation:
Florida Southern College Lakeland, United States
*
*Corresponding author. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper uses the concept of “Personnel is Policy” to extend the theory of regulatory capture to the political appointment of agency commissioners. The “Personnel is Policy” theory provides three important insights. First, it shows that whether or not an interest group benefits from a regulatory agency depends on the particular individuals appointed to run it. Second, the president plays an important role in regulatory capture by nominating individuals to be appointed to the commission. Third, regulatory capture does not follow a pre-determined path because the commissioners continually change. The theory is then used to explain the early years of a prominent regulatory agency created during the Progressive Era: the Federal Trade Commission. From the perspective of the big business “trust” interest group, their success at capturing the FTC to achieve their goals of controlling competition and blocking hostile antitrust actions was largely a result of who was appointed to the commission. The trusts were the most successful during the years of 1915–1916 and 1925–1929.

Keywords

Federal Trade Commissionregulatory captureProgressive EraGabriel KolkoGeorge Stigler
Type
Research Article
Information
Journal of Institutional Economics , Volume 15 , Issue 6 , December 2019 , pp. 1037 - 1053
Copyright
Copyright © Millennium Economics Ltd 2019 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Armentano, D. (1990), Antitrust and Monopoly, Oakland, CA: The Independent Institute.Google Scholar
Becker, G. (1983), “A Theory of Competition among Pressure Groups for Political Influence,” Quarterly Journal of Economics, 98(3): 371–400.Google Scholar
Bradley, R., and Donway, R. (2013), “Reconsidering Gabriel Kolko,” Independent Review, 17(4): 561–76.Google Scholar
Burch, P. (1981), Elites in American History, Volume II, New York: Holmes & Meier Publishers.Google Scholar
Calvert, R., McCubbins, M., and Weingast, B. (1989), “A Theory of Political Control and Agency Discretion,” American Journal of Political Science, 33(3): 588–611.Google Scholar
Chernow, R. (1990), The House of Morgan, Simon & Schuster Inc.: New York.Google Scholar
Cohen, J. (1986), “The Dynamics of the ‘Revolving Door’ on the FCC,” American Journal of Political Science, 30(4): 689–708.Google Scholar
Cyphers, C. (2002), The National Civic Federation and the Making of a New Liberalism, 1900–1915, Westport, CT: Praeger.Google Scholar
Davis, G. C. (1962), “The Transformation of the Federal Trade Commission, 1914–1929,” The Mississippi Valley Historical Review, 49(3): 437–455.Google Scholar
Davis, G. C. (1969), The Federal Trade Commission, Urbana, IL: diss., University of Illinois.Google Scholar
Diggins, J. (1972), Mussolini and Fascism, Princeton, NJ: Princeton University Press.Google Scholar
Eckert, R. (1981), “The Life Cycle of Regulatory Commissioners,” The Journal of Law and Economics, 24(1): 113–120.Google Scholar
Ekelund, R., McDonald, M., and Tollison, R. (1995), “Business Restraints and the Clayton Act of 1914,” in McChesney, F., and Shughart, W. (Eds.), The Causes and Consequences of Antitrust, Chicago: University of Chicago Press, pp. 271–86.Google Scholar
Faulkner, S. (2016), Personnel is Policy, Washington Examiner, February 2.Google Scholar
Fligstein, N. (1990), The Transformation of Corporate Control, Cambridge, MA: Harvard University Press.Google Scholar
FTC. (2013), Commmissioners and Chairmen of the Federal Trade Commission, retrieved from www.ftc.gov.Google Scholar
Gilligan, T., Weingast, B., and William, M. (1989), “Regulation and the Theory of Legislative Choice,” The Journal of Law and Economics, 32(1): 35–61.Google Scholar
Gordon, C. (1994), New Deals, Cambridge: Cambridge University Press.Google Scholar
Helferich, G. (2018), An Unlikely Trust, Guilford, CT: Lyons Press.Google Scholar
Higgs, R. (2012 [1987]), Crisis and Leviathan, Oakland, CA: The Independent Institute.Google Scholar
Higgs, R. (2017), “Crisis without Leviathan?” in Balch, S., and Powell, B. (Eds.), Economic and Political Change after Crisis, New York: Routledge, pp. 13–25.Google Scholar
High, J. (1991), “Introduction,” in High, J. (Ed.), Regulation, Ann Arbor: University of Michigan Press, pp. 1–18.Google Scholar
Himmelberg, R. (1976), The Origins of the National Recovery Administration, New York: Fordham University Press.Google Scholar
Holcombe, R. (2018), Political Capitalism, New York: Cambridge University Press.Google Scholar
Johnson, R., and Libecap, G. (1994), The Federal Civil Service System and the Problem of Bureaucracy, Chicago: University of Chicago Press.Google Scholar
Joseph, R. (2010), “John Lord O'Brian, Hoover's Antitrust Chief, Gives the FTC an Antitrust Lesson,” Antitrust, 25(1): 68–94.Google Scholar
Kolasky, W. (2011a), “George Rublee and the Origins of the Federal Trade Commission,” Antitrust, 26(1): 106–112.Google Scholar
Kolasky, W. (2011b), “The Election of 1912,” Antitrust, 25(3): 82–88.Google Scholar
Kolasky, W. (2011c), “Theodore Roosevelt and William Howard Taft,” Antitrust, 25(2): 97–104.Google Scholar
Kolko, G. (1963), The Triumph of Conservatism, Glencoe, IL: Free Press.Google Scholar
Kolko, G. (1965), Railroads and Regulation, 1877–1916, Princeton, NJ: Princeton University Press.Google Scholar
Laffont, J.-J., and Tirole, J. (1991), “The Politics of Government Decision Making,” Quarterly Journal of Economics, 106(4): 1089–127.Google Scholar
Lamoreaux, N. (1985), The Great Merger Movement in American Business, 1895–1904, Cambridge: Cambridge University Press.Google Scholar
Martimort, D. (1999), “The Life Cycle of Regulatory Agencies,” Review of Economic Studies, 66(4): 929–947.Google Scholar
Martin, A. (1971), Enterprise Denied, New York: Columbia University Press.Google Scholar
McChesney, F. (1997), Money for Nothing, Cambridge, MA: Harvard University Press.Google Scholar
McCraw, T. (1975), “Regulation in America,” Business History Review, 49(2): 159–183.Google Scholar
McCraw, T. (1984), Prophets of Regulation, Cambridge, MA: The Belknap Press of Harvard University Press.Google Scholar
Moffitt, R. (2001), “Personnel is Policy,” The Heritage Foundation, January 8.Google Scholar
Moore, T. (1980), The Establishment of a “New Freedom” Policy, Birmingham, AL: diss., University of Alabama.Google Scholar
Newman, P. (2018), “Revenge: John Sherman, Russell Alger, and the Origins of the Sherman Act,” Public Choice, 174(3–4): 257–275.Google Scholar
Novak, W. (2014), “A Revisionist History of Regulatory Capture,” in Carpenter, D., and Moss, D. (Eds.), Preventing Regulatory Capture, New York: Cambridge University Press, pp. 25–48.Google Scholar
Peltzman, S. (1976), “Toward a More General Theory of Regulation,” The Journal of Law and Economics, 19(2): 211–40.Google Scholar
Peltzman, S. (1989), “The Economic Theory of Regulation after a Decade of Deregulation,” in Brookings Papers on Economic Activity, Washington, D.C.: Brookings Institution, pp. 1–41.Google Scholar
Phillips Sawyer, L. (2018), American Fair Trade, Cambridge: Cambridge University Press.Google Scholar
Posner, R. (1970), “A Statistical Study of Antitrust Enforcement,” The Journal of Law and Economics, 13(2): 365–419.Google Scholar
Posner, R. (1974), “Theories of Economic Regulation,” Bell Journal of Economics and Management Science, 5(2): 335–58.Google Scholar
Posner, R. (2014), “The Concept of Regulatory Capture,” in Carpenter, D., and Moss, D. (Eds.), Preventing Regulatory Capture, New York: Cambridge University Press, pp. 49–56.Google Scholar
Rothbard, M. (2017a [1972]), “Herbert Hoover and the Myth of Laissez Faire,” in Newman, P. (Ed.), The Progressive Era, Auburn, AL: Mises Institute, pp. 513–39.Google Scholar
Rothbard, M. (2017b), The Progressive Era, Newman, P., (Ed.), Auburn, AL: Mises Institute.Google Scholar
Rothbard, M. (2017c [1972]), “War Collectivism in World War I,” in Newman, P. (Ed.), The Progressive Era, Auburn, AL: Mises Institute, pp. 361–96.Google Scholar
Sanders, E. (1999), Roots of Reform, Chicago: University of Chicago Press.Google Scholar
Scott, J. (2000), Presidents, Parities, and the State, Cambridge, MA: Cambridge University Press.Google Scholar
Shaffer, B. (1997), In Restraint of Trade, Lewisburg, VA: Bucknell University Press.Google Scholar
Shughart, W., and Tollison, R. (1987), “Antitrust Recidivism in Federal Trade Commission data, 1914–1982,” in Mackay, R., Miller, J., and Yandle, B. (Eds.), Public Choice and Regulation, Stanford: Hoover Institute Press, pp. 255–80.Google Scholar
Sklar, M. (1972 [1960]), “Woodrow Wilson and the Political Economy of Modern United States Liberalism,” in Rothbard, M., and Radosh, R. (Eds.), A New History of Leviathan, New York: E.P. Dutton & Co, pp. 7–65.Google Scholar
Sklar, M. (1988), The Corporate Reconstruction of American Capitalism, 1890–1916. Cambridge, MA: Cambridge University Press.Google Scholar
Spiller, P. (1990), “Politicians, Interest Groups, and Regulators,” The Journal of Law and Economics, 33(1): 65–101.Google Scholar
Stigler, G. (1971), “The Theory of Economic Regulation,” Bell Journal of Economics and Management Science, 2(1): 3–21.Google Scholar
Stone, A. (1977), Economic Regulation and the Public Interest, London: Cornell University Press.Google Scholar
Tullock, G. (1967), “The Welfare Costs of Tariffs, Monopolies, and Theft,” Western Economic Journal, 5: 224–232.Google Scholar
U.S. Department of Commerce (1960), Historical Statistics of the United States, Colonial Times to 1957, Washington D.C.: Government Printing Office.Google Scholar
U.S. Senate (various dates), Congressional Record, Washington DC: U.S. Government Printing Office.Google Scholar
Urofsky, M. (1969), Big Steel and the Wilson Administration, Columbus, OH: Ohio State University Press.Google Scholar
Vietor, R. H. (1977), “Businessmen and the Political Economy,” The Journal of American History, 64(1): 47–66.Google Scholar
Webbink, P. (1928), Presidential Appointments and the Senate, Washington DC: Editorial Research Reports.Google Scholar
Weingast, B., and Moran, M. (1983), “Bureaucratic Discretion or Congressional Control?” Journal of Political Economy, 91(5): 765–800.Google Scholar
Weinstein, J. (1968), The Corporate Ideal in the Liberal State, 1900–1918, Boston: Beacon Press.Google Scholar
Wiebe, R. (1962), Businessmen and Reform, Cambridge, MA: Harvard University Press.Google Scholar
Winerman, M. (2003), “The Origins of the FTC,” Antitrust Law Journal, 71(2): 1–97.Google Scholar
Winerman, M., and Kovacic, W. (2010), “Outpost Years for a Start-Up Agency,” Antitrust Law Journal, 77(1): 145–203.Google Scholar
Winerman, M., and Kovacic, W. (2011), “The William Humphrey and Abram Myers Years,” Antitrust Law Journal, 77(3): 701–747.Google Scholar