Robert H. Jackson at the antitrust division.

• Author: Pate, R. Hewitt

Robert H. Jackson served as the Assistant Attorney General in charge of the Antitrust Division of the U.S. Department of Justice from January 1937 until March 1938. Although Jackson was head of the Division for only fourteen months, he held that position during an important period for the development of antitrust law and industrial policy in the United States. This brief chapter in his legal career reveals many facets of Jackson's character, both as a person and a lawyer. It also provides an insight into the development of the Antitrust Division and of the antitrust laws more generally.

JACKSON'S ANTITRUST EXPERIENCE

Jackson began his extraordinary career as a "country lawyer" in upstate New York. Although he had only one antitrust case in private practice, that experience informed his views about the antitrust laws years later when he was Assistant Attorney General. (1) In his draft autobiography, Jackson explains that he represented a number of furniture manufacturers from upstate New York and Pennsylvania who had been indicted in Chicago for conspiring to maintain furniture prices:

It was pretty clear to me that they had so conspired, in spite of the fact that the conspiracy had not succeeded, so far as I was able to determine, in maintaining or visibly affecting prices. It had been seriously suggested by one of the counsel for some of the interests that the furniture men defend upon the ground that while they had agreed to maintain prices they had not kept their agreements. This did not seem to me a very credible or creditable performance, and I had advised my clients to buy their peace by pleading their corporations guilty and paying the fines, which in no case amounted to more than $4,000. Other counsel advised some other defendants differently and after a long mass trial and a very expensive one the jury disagreed and they later pleaded guilty and paid their fines. I was impressed then, as I have been ever since, that the antitrust laws are so vaguely expressed that the average business man has no idea when he is and when he is not violating them. (2) This concern that businesses need clear antitrust standards to guide their conduct later figured prominently in Jackson's work as Assistant Attorney General.

While Jackson built his successful private practice, he developed a relationship with Franklin Delano Roosevelt that would forever change the course of his career. Jackson described his nearly twenty-year relationship with FDR in this way: "For almost a score of years before Franklin Delano Roosevelt came to the Presidency, I had some acquaintance, but not intimacy, with him. It grew out of dealings with him on affairs of politics." (3) Although Jackson "had no thought of asking or being offered a position in the government after [FDR] was elected," Jackson went on a political speaking tour with FDR's Postmaster General and Democratic Party Chair James Farley in the New York state election in 1933. This led Farley to ask Jackson to come to Washington. In February, 1934, Jackson succumbed to Treasury Secretary Henry T. Morgenthau Jr.'s offer to be the General Counsel at the Bureau of Internal Revenue. Jackson then became "one of the most famous lawyers in the country" after his widely-noted work on the Andrew Mellon tax fraud prosecution. (4) FDR subsequently moved Jackson from Treasury to a brief assignment at the Securities and Exchange Commission, then to the Tax Division at the Department of Justice, and then to the Antitrust Division.

JACKSON COMES TO THE ANTITRUST DIVISION

Jackson took charge of the Antitrust Division on January 18, 1937. He was not interested in the position at first because he had planned to return to the private practice of law after completing his service as the Assistant Attorney General of the Tax Division. Attorney General Homer Cummings nonetheless persuaded him to accept the job because "the Antitrust Division had many matters of policy to consider" and the Attorney General assured him that the experience would be valuable.

Although Jackson found the Division in a "somewhat moribund" condition, he did not attribute this to a lack of intelligence or hard work on the part of his predecessors. Rather, Jackson believed it was a consequence of the Roosevelt Administration's industrial policy as exemplified in the National Recovery Administration ("NRA"). In Jackson's view, the NRA "was based on the philosophy almost exactly opposite to that of the antitrust laws" and, as a result, "during the N.R.A experiment, there had been a pretty general suspension of antitrust law activity. Businessmen were encouraged to meet and cooperate and particularly in the oil industry they were encouraged to enter into agreements which might have been considered as violative of the antitrust laws." (5)

The NRA thus signified a return to an industrial policy that Jackson associated with Theodore Roosevelt--a policy under which "business should be allowed to become big and ... business men should be allowed to get together and agree as to industrial policies, but ... the Government should have [a] regulatory hand over all business." (6) Jackson contrasted that with the antitrust policy he attributed to Woodrow Wilson--and was much closer to his own--which was "based generally on the belief that business would be self-regulating and would not need extensive Government regulation if the processes of competition could be maintained." (7) In his draft autobiography, Jackson explained that, under his predecessors, the Antitrust Division "itself was confused as to what the policy was to be.... It was not until I came into the Department that the N.R.A philosophy was definitely abandoned and we reverted to the Woodrow Wilson doctrine that free competition is the wisest and most liberal measure of business regulation." (8)

Jackson found that the lack of a clear policy on antitrust enforcement was not the only challenge confronting the Division in 1937. He also found that there were certain "inherent limitations of antitrust prosecution" under the law as it then stood, which made it "impossible to prosecute or even to investigate all of the alleged violations of the antitrust laws." (9) Among these limitations, Jackson was especially critical of judicial interpretations of the antitrust laws that resulted in vague standards of liability that failed to focus on economic effects:

[T]he courts have ... refused to determine the validity of price policies in terms of the only possible standard which can be practically enforced, i.e., results. Instead of that they have made "intention" to restrain trade the test and qualified monopoly by the term "reasonable." Such a standard is not only vague but it does not permit consideration of the real factors involved. It does not face the issue whether a combination is in fact one which will tend to produce economies of scale or whether it will in actual operation tend to give an opportunity for monopoly profits. The important factor is taken to be the "intent" or "state of mind" of a fictitious corporate individual. Practical results of combinations, which are the only real criteria for effective, as distinguished from sentimental, administration of a policy to encourage competition, are brushed aside. (10) Jackson also believed that these vague...