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Antitrust and the Formation of the Postwar World
Wyatt Wells
New York: Columbia University Press 2002
276 pages.
Professor Wyatt Wells of Auburn University traces the hard fought evolution of the current anticartel norm in his interesting and informative history of antitrust. He focuses in particular on
how events in the United States leading up to World War II, and immediately thereafter, had a
profound impact on how competition was viewed in the United States and then translated into
law in occupied Germany and Japan.
Wells begins with the effect of World War I on international markets and how cartels evolved in
Europe to deal with the effects of the economic, geographic, and political changes wrought by the
War, the uneven prosperity of the 1920s and finally the Great Depression. Despite the formal
ban on price fixing and cartels in the United States, United States firms participated in the
resulting international cartels sometimes directly, sometimes only with respect to their foreign
operations, and sometimes through thinly veiled licenses and exchanges of technologies. Up
until the late 1930s, U.S. firms relied on the uneven status and enforcement of the United States
antitrust domestically and a lack of enforcement against international cartels in particular (4-26).
He then briefly details the erratic antitrust policy of the United States in the first 50 years
following the passage of the Sherman Act and how the rhetoric of the United States only
occasionally matched its actions in the competition field. (27-42).
Wells focuses in greatest detail on the revival of antitrust under the direction of Thurman Arnold,
the head of the Antitrust Division during the second half of President Franklin Roosevelt’s
Administration, and in the immediate post-war era, where Arnold’s policies were continued
(often with greater nuance and sophistication) by the men who had worked for him.
As Wells correctly states:
Thurman Arnold and his followers made the difference. With a few important exceptions,
antitrust did not form a central part of the New Deal until the late 1930s. Even then interest did
not guarantee action, .... But Arnold after taking over the Antitrust Division of the Justice
Department in 1938, expanded and energized it, giving the bureau a clear mission: to defend and
encourage competition. Aggressive prosecutions forced business to pay attention. For perhaps
the first time in U.S. history, the effort devoted to enforcing the antitrust laws matched the
rhetorical and ideological importance attached to them. Despite some setbacks, these changes
endured into the postwar era. (207).
Wells emphasizes how this transformation primarily came through the effects of sub-Cabinet
officials and civil servants, rather than any fundamental direction from the President or any top
officials in the United States. During the early years of World War II, it was Arnold who fought
valiantly, but unsuccessfully, for a broader role for antitrust. In so doing Arnold illustrated to
the public (only partially correctly in Wells’s view) that key U.S. firms had harmed U.S. war
preparedness and production through their participation in international cartels, often with
German firms closely allied with the Nazi government. While a handful of these cases were
dismissed, or never brought because of the U.S. needs during the war time, most were simply
deferred until the closing days of the War or immediately thereafter. Most importantly, these
cases caused price fixing and cartels be viewed as un-American and created a strong bi-partisan
anti-cartel competition policy.
After the war Arnold’s policies were continued and expanded by his successors.1 First, the
Antitrust Division brought a slew of new and old cases, almost all successful, against the U.S.
and European participants of international cartels (90-136). In addition, key officials from the
Antitrust Division played a critical role in formulating United States economic and competition
policy for the occupation of Germany and Japan, as well as general international trade and
investment for the postwar world (137-86). Wells correctly points out that in both arenas anticartel efforts were generally more successful than deconcentration efforts, as antitrust would
periodically be subordinated to broader economic and political goals and because U.S. officials
were not willing to impose on Germany or Japan legal rules significantly tougher than those in
force in the United States.
Wells ends with two relatively brief case studies of antitrust in the postwar world. First, he
discusses the failure of United States antitrust to have any significant impact on the structure of
world petroleum markets and, in comparison, the greater success of European competition efforts
in the coal and steel industries. (187-205).
Wells is not a lawyer by training, which both helps and hurts his story in different ways. His
non-legal perspective allows him to thoughtfully compare the value of antitrust law in general,
and in particular cases, to broader societal goals of national security and economic development.2
It hurts him at other times, such as missing much of the significance of the famous Alcoa
decision3 and the effects doctrine (63) which provided the legal foundation for U.S. attacks on
the international cartels which are the focus of the book.
Overall, this is an excellent book and a good read. It is also a counterpoint to the current fashion
in the United States which portrays the present U.S. antitrust policy as having achieved near
1
Arnold left the Justice Department in 1943 for a brief judgship and then entered private
practice. See Spencer Weber Waller, The Short Unhappy Judgship of Thurman Arnold, 3 Wyo.
L. Rev. 233 (2003).
2
Om the legal side, these issues were explored in KINGMAN BREWSTER,
ANTITRUST AND AMERICAN BUSINESS ABROAD (1958). For more modern examples of
these themes, consider that the United States Microsoft case was settled on favorable terms to the
defendant shortly after the terrorist attacks of September 11, 2001 and there has never been no
serious antitrust challenge to OPEC in any national system of competition law.
3
148 F.2d 416 (2d Cir. 1945).
2
perfection and thus, the end of serious debate over its future or past. It is good to be reminded
that the pendulum of antitrust has swung widely, and that once upon a time even cartels were
hailed as modern tools of peace and prosperity, and how and why we no longer view them in this
light.
Spencer Weber Waller
Loyola University Chicago
3