History 44
Regulating Industry

rev. for 2/11/98
*the following is a brief outline of topics to be covered, including reference to readings to be summarized/discussed in class 11 February.
**overview of regulation. See chart "Regulating Industry" [to be handed out]. Also see appendix "Antitrust"

I. Changing Interpretations of "regulatory-welfare" state [briefly and then in detail below]
A. Progressives see in terms of (1) pioneering initiatives in 1870's-1890; (2) reaction, led especially by Court in the 1890s; (3) revival under T.R. culminating in Wilson's presidency
B. Corporatism (with reference to Kolko, Triumph of Conservatism), but also history of concept as discussed in *E. Hawley, "The Discovery and Study of 'Corporate Liberalism,'"
Business History Review 52 (1978), 309-20. (Discuss in report below)
C. "State building" detailed analysis of argument of Stephen Skowronek,
Building a New American State [Honors: American Political History] chs. 1, pp. 165-76, Epilogue
 D. Progressives and interest groups: analysis of Gillman, Howard,"The Constitution Besieged: T.R., Taft, and Wilson on the Virtue and Efficacy of a Faction-Free Republic," 179-201
Pres. Studies Q. 19 (w 89): 159-77. RECOMMENDED READING.

*interpretations in greater detail
a. Progressives/New Dealers see in terms of (1) pioneering initiatives in 1870's-1890; (2) reaction, led especially by Court in the 1890s; (3) revival under T.R. culminating in Wilson presidency; (4) development under New Deal. Much of scholarship through the 1950s was bent on establishing a tradition for the New Deal to counter the argument that regulation was not in American tradition of reform. Began to break down in William Letwin,
Law and Economic Policy. (do thesis briefly).
b. Corporatism (with reference to Kolko, Triumph of Conservatism), but also history of concept as discussed in *E. Hawley, "The Discovery and Study of 'Corporate Liberalism,'"
Business History Review 52 (1978), 309-20. Note three meanings, none adequate to explain: organized business attempts to co-opt state; theory of s government coordination; post-hoc explanation of what occurs. [Report Jon Pyle]
c. Stephen Skowronek,
Building a New American State [Honors: American Political History] chs. 1, pp. 165-76, Epilogue
note: 1998, This reading was not assigned. The argument will be explicated in class with reference to these questions]
1. what is political context underlying his book? could it have been written in the 1950s or 1960s?
2 what is meant by the "functionalist" interpretation? (p. viii)? How does he move beyond it? (p. 12)
3. New Political interpretations : what "schools" does Skowronek draw upon? examples?
 a. neo-Marxist "ongoing struggle to reconcile political democracy with support for the private economy." He cites Alan Wolfe, The Limits of Legitimacy (1977) as example
b. crisis sequence school. Stress high level of political participation right before development of controls Hollingsworth, "The U.S. in R. Grew,
Crises of Political Development (1978)
c. Critical elections theory. Periodical electoral realignments are sporadic. Burnham, C
ritical Elections
4. what does he mean by " no sense of sense of a the state in the U.S." How relate to debates over American "exceptionalism"? (ch 1) Does development of modern state mean end of exceptionalism" and "Europeanization" of U.S?
5. in the absence of a state what were the major organs of rule in the 19th century? (p 15)
6. how does the "state building approach" compare with "progressive" and "corporatist" noted above? (pp. 16 ff.) Does it contradict of r complement?
7. what is mean by "the bureaucratic solution" (. pp. 165, also p. 287) Was it successful? what is meant by "an amorphous new institutional politics" (p. 287) ) Specific problems?
a. failed to construct "vital role" for judiciary
b. no vital role for party?
* CF how "weak springs" of government differed in 1870s and 1920? (p. 288)
8. how has progressive legacy played out since then (pp. 288 ff.)?
9. what is Skowronek's solution? do you agree? (pp. 290-91)
B. Case Studies [further comparison of Corporatist (Kolko) view in light of Skowronek
1. Railroads [chapter 8 of Skowronek deals with this in light of his theory)

a. Origins of the ICA (see Kolko,
Railroads and Regulation)
b. Railroad policy from Elkins anti-rebate through Transportation Act of 1920, with special reference to theory of Albro Martin.
2. Banking :Federal Reserve Act

III. "Antitrust"
*History of antitrust" and "regulation" suggest two paradoxes
1. Extremely durable
(a) folklore, which has stirred passions of supporters.
(b) But as recent analysis says also: (i) no evidence has effected overall wealth of country; (ii) distribution of wealth; or (iii). Fortunes of any special interests who lobbied for it. ("a policy without a constituency" (Dewey, pp. 1-)
2. Other is that
(a) antitrust is strong by standards of European societies,"suggesting strong "antibusiness" aspect to culture
(b) regulation overall is much less severe. Typically, the gas, electric-power, telephone, and railroad industries and at least one of the major television networks are publicly owned. Some countries, such as Sweden and Germany, have regulations requiring that labor representatives participate formally in corporate policy-making. In Japan, the Ministry of Trade and Industry (MITI) plays a large role in planning industrial development.
 **note source of term "trust" as by-product of U.S,. federalism and demands of national industry. Brief review of formation of S.O.
***"anti-trust" as example of American "exceptionalism"? Hofstadter, most typically American . But is also one which has several elements: (1) economic: alleged efficiency; (2) political: anti-concentrated power; (3) social moral "competition" good for the soul.
 ****interpretations vary accordingly
(1) genuine attempt to break up for one of several valid reasons
(2) symbolic/cathartic
(3) some but very limited effect, but not because "merely" cathartic but because of circumstances which produced and implemented it.
A. Sherman Act to
1. Sherman Act (explicated)
2. Court action in the 1890s. E.C. Knight case revisted
*together illustrate again Skowronek theory about incapacity of courts and parties to deal with new industrial order.
3. TRs policy defended: Bureau of Corporations and the "rule of reason" .
4. Clayton
(a) New Freedom v. New Nationalism
(b) "teeth" or "toothless"?
*Case study: Standard Oil (cf. recent action against Microsoft)
B..Epilogue: Since the progressive era
1. effectiveness of antitrust policy through the 1920s.
2. New Deal: From production to Consumption
*based on Brinkley,
End of Reform. ch. 6
3. Antitrust in 1960s and beyond: end of a tradition? (Case of MA Bell )

IV. The American "Welfare State" .
Discussion of thesis of Skocpol, Theda, " State Formation and Social Policy in the United States,"
in Social Policy in the United States (1995), pp. 11-36 [Binder Secondary]. Also her Protecting Soldiers and Mothers (1992)
Challenging a popular perception that the U.S.historically has resisted spending for social welfare, Skocpol cites the massive 19th century investment in public education and the federal Civil War pension program that by 1910 delivered benefits to more than a third of elderly men in the North, and to many widows and orphans. From 1900 through the 1920s, federal and state governments also enacted an array of protective legislation for women and children, creating a "maternalist welfare state" often overlooked in histories of social welfare. These measures, in turn, led to the burst of social legislation during the New Deal.
Rather than being a "laggard" in welfare creation, the U.S. was "exceptional" when compared with Europe, although prevailing interpretations fail to explain this exceptionalism adequately. Skocpol dismisses arguments that a "logic of industrialism" produces social welfare measures automatically as a population moves from an agrarian to an urban wage economy; that "national values" account for differences (Bismarckian "patriarchalism" versus U.S. laissez-faire individualism, for example); or that business itself pioneered a uniquely American "welfare capitalism."
Rather, the key lies in the distinctive pattern of U.S. "state formation." In contrast to Europe, the U.S. lacked the elements of a premodern polity (monarchy, a standing army and bureaucracy, and recurring mobilization for military action against relative equals). The American "state" in the 19th century consisted of the courts, political parties, and locally-oriented politicians. Early democratization brought support for public schooling, while a political patronage system fostered the Civil War benefits. When government at last began to professionalize and bureaucratize after 1900, reformers dismantled these benefits in their battle against "corruption," assuring that any future U.S. welfare state would not be built upon these early initiatives. The courts meanwhile shot down most regulations benefiting working men, the exception being the protective legislation won largely by women for women.
*Discussion of strengths and problems with interpretation.


ANTITRUST Shows 5 phases (from Dewey, Antitrust experiment]
1. Origins Sherman Act (1890)
; One of the great landmarks in the development of the U.S. government-business relationship, the Sherman Anti-Trust Act of 1890 was enacted by Congress to prohibit trusts and combinations in restraint of trade or commerce among states or with foreign nations. The act, named for Senator John Sherman, was the first federal law designed to deal with what was perceived as a growing centralization of economic power by monopolistic corporations. The Department of Justice enforces the act, although private parties also may bring actions under the act. Numbered among the act's
Addyston Pipe v U.S. . Court held cartel agreements to divide mkts and set prices illegal
per se, although per se not totally unambiguous until 1940.
CREATION (1903) of the Antitrust Division in the Department of Justice,
Breakup of Northern Securities upheld in
No. Securities v U.S (1904)
Note: nothing of benefit to consumers.
2. Most spectacular results 1906-20.
MAJOR ACHIEVEMENTS were the dissolution of
Northern Securities Company (1904),
Standard Oil Trust (1911), and the American Tobacco Company (1911).
(Note: also in this period beginning of long, frustrating attempts to use against labor violence and secondary boycotts, held illegal in Lawlor v. Lowe (Danbury hatters)
3. Transformation of antitrust in New Deal
*nothing much happened 1920-38
NATIONAL RECOVERY ACT virtually suspended
ROBINSON-PATMAN ACT (1936) revived and expanded the Sherman ACT
4. 1938-80
1940-49. BRINGS 382, WINS 304
5. FINAL PHASE BEGAN WITH REAGAN, JANUARY 1981. Cut back government action to harassment of price-fixing agreements and filing against blatant horizontal mergers.

*for detailed bibliography see
Dewey, Donald, The Antitrust Experiment in America (1990)
Hofstadter, Richard, "What Happened to the Antitrust Movement," in Cheit, Earl F.
The Business Establishment (1964); also Paranoid Style in American Politics
Richard Hofstadter,
The Age of Reform , chs. 4-6
Letwin, W.
Law and Economic Policy
Sklar, Martin J., 1935,
The corporate reconstruction of American capitalism, 1890-1916 : the market, the law, and politics
(Cambridge [Cambridgeshire] ; New York : Cambridge Press, 1988
Thorelli, Hans B.,
Federal Antitrust Policy (1955)
Hawley, E. "The Discovery and Study of 'Corporate Liberalism,'"
Business History Review 52 (1978), 309-20.
The Triumph of Conservatism
Lustig, R. Jeffrey,
Corporate Liberalism (1982).
Panitch, Leo, "The Development of Corporatism in Liberal Democracies,"
Comparative Political Studies 10 (1977), 61-90.
Seltzer, Alan, "Woodrow Wilson as a 'Corporate-Liberal'"
Western Political Quarterly 30 (1977), 183-212.
Sklar, Martin J., "Woodrow Wilson and the Political Economy of Modern United States Liberalism,"
Studies on the Left
Skowronek, Stephen,
Building a New American State
James Weinstein,
The Corporate Ideal in the Liberal State, chs 1,3, 4
Hays, Samuel P. "The New Organizational Society," in Jerry Israel, ed.
Building the Organizational Society (1972)

Written by Robert Bannister, for classroom use in History 44, Swarthmore College. May be reproduced in whole or part for educational purposes, but not copied or distributed for profit.