The Supreme Court and the Trusts: Antitrust and the Foundations of Modern American Business Regulation from Knight to Swift


The period from 1870-1920 was a turning point in modern history. It was during this time that the contours of the modern industrial state were formed. A “Great Merger Movement” occurred right in the middle of this period across most of the industrialized nations of the world. The trend toward industrial concentration, which was known at the time as the “trust problem,” generated considerable public alarm. Some have argued that it was caused by antitrust policy and the Supreme Court’s early antitrust decisions. Indeed, the idea has become the conventional wisdom among some antitrust scholars, especially those connected with the law and economics movement, and it has contributed to a growing skepticism about the efficacy of antitrust law more generally. This article analyzes the development of the Supreme Court’s antitrust jurisprudence from E.C. Knight through Swift and attempts to offer a more balanced overview of the interplay between the economic transformation that occurred around the turn of the twentieth century and the formative developments in American antirust law. From this perspective, both the merger movement and the Supreme Court’s early antitrust decisions were responses to the same underlying economic forces. There is little, if any, reason to believe that the Supreme Court’s decisions actually caused the Great Merger Movement. In fact, the Court’s decisions were considerably more coherent than some scholars have recognized. One of the unfortunate consequences of all the attention that has been devoted to the effect of the Supreme Court’s decisions on industrial concentration is that it has distracted attention from the role that the decisions played in the development of constitutional doctrine. The economic forces that created the trust problem also compelled the Supreme Court to extend the scope of federal commerce powers and bring a wide range of new business activities within the reach of federal regulations. Ironically, the same Court that handed down Lochner also laid the foundations of the modern American system of business regulation.


Business Organizations Law | Constitutional Law | Law and Economics | Legal History

Date of this Version

March 2005