The Changing Economics of the Supreme Court

• DOI: 10.1177/000271623014700108
• Author: Emerson P. Schmidt
• Published date: 01 January 1930
• Date: 01 January 1930
• Subject Matter: Articles

61

The

Changing

Economics

of

the

Supreme

Court

By

EMERSON

P.

SCHMIDT

Assistant

Professor

of

Public

Utilities

and

Labor,

University

of

Oregon,

Eugene,

Oregon

OUR

anti-trust

legislation

and

the

court

decisions

based

thereon

have

been

accused

of

thwarting

eco-

nomic

development.

At

the

same

time,

economic

forces

have

had

a

profound

effect

on

the

law

and

its

judicial

inter-

pretation.

The

relation

between

law

and

economics

is

reciprocal.

Eco-

nomic

doctrines

can

be

read

into

the

Supreme

Court

decisions,

but

it

would

be

precarious

to

claim

that

the

Court

has

followed

any

theories

consistently.

Though

it

has

certain

predilections

for

logic,

precedent

and

consistency,

the

Supreme

Court

is

essentially

prag-

matic,

making

our

government,

after

all,

one

of

men

rather

than

laws.

Re-

cently

the

Federal

Supreme

Court

has

well-nigh

nullified

the

Sherman

Anti-

Trust

Law

recognizing

the

efficiency

of

combines

and

even

monopolies.

The

period

before

the

Industrial

Revolution

has

been

described

as

one

of

undersupply

and

starvation,

the

nineteenth

century

as

a

period

of

over-

supply

and

uncodrdinated

production,

while

in

the

twentieth

century

the

lim-

ited

markets

and

excess

productive

capacity

are

becoming

pressing

prob-

lems.

Attempts

are

being

made

to

co6rdinate

supply

and

demand,

to

eliminate

the

ruthless

competition

be-

tween

businesses,

in

short,

to

stabilized

Congress

has

recognized

this

trend

by

the

exemptions

from

the

anti-trust

laws

which

it

has

given

in

whole

or

in

part

to

banks,

railroads,

farmers,

horticulture,

foreign

trade

associa-

tions,

and

so

forth.

In

fields

not

touched

by

this

legislation

the

Su-

preme

Court

has

by

a

process

of

inclu-

sion

and

exclusion

changed

the

original

rigid

interpretation

of

the

Sherman

Law

so

that

today

mergers,

combines

and

perhaps

even

monopolies

are

per-

mitted

and

welcomed.

This

reversal

is

due

to

the

Court’s

knowledge

and

understanding

of

the

efficiency

in

pro-

duction

and

distribution

of

large

scale

organizations

as

well

as

their

stabilizing

effects.

In

the

early

history

of

the

Sherman

Law

the

Supreme

Court

was

given

to

the

laissez

faire

doctrine

which,

driven

to

its

logical

conclusion,

assumed

that

the

smaller

the

business

units

the

more

satisfactory

the

social

result.

Any

combination,

by

elimi-

nating

some

competition,

was

outside

the

public

interest.

This

extreme

in-

dividualism

of

the

Court

is

partially

explainable

by

the

wording

of

the

Sher-

man

Law,

namely,

that

every

contract

and

combination

in

restraint

of

trade

and

every

monopoly

were

to

be

illegal,

even

though

before

1890

under

the

common

law

only

unreasonable

re-

straints

were

illegal

or

non-enforceable.

But,

as

Justice

Brandeis

has

said,

&dquo;Every

agreement

concerning

trade,

every

regulation

of

trade,

restrains.

To

bind,

to

restrain

is

of

their

very

essence.&dquo;2

When

the

attorneys

for

the

Missouri

Freight

Association

claimed

that

the

Sherman

Law

merely

aimed

to

cover

unreasonable

restraints

of

trade,

the

Supreme

Court

replied:

When ...

the

body

of

an

act

pro-

nounces

as

illegal

every

contract

or

com-

bination

in

restraint

of

trade

or

commerce

among

the

several

states ...

the

plain

and

ordinary

meaning

of

such

language

is

1

Commons,

John

R.,

"Marx

Today:

Capital-

ism

and

Socialism,"

Atlantic

Monthly,

November,

1925.

2

Chicago

Board

of

Trade

v.

U.

S.,

246

U.

S.

231

(1917).