Crime and Punishment in American History - Lawrence M. Friedman [181]
Anti-Trust
Naturally, there are vast differences among regulatory crimes in their moral status within society. There is a huge gulf between what people feel about a corporation that pours tons of poison into a river and how they feel about someone who pulls the tag off a mattress. Yet many regulatory rules are so technical, so hard to understand, so legalistic—or on the contrary, so enmeshed in microeconomic theory—that it seems wildly inappropriate to use criminal law to enforce them.
Yet exactly this choice was made when the Sherman Act was passed in 1890 (see chapter 5). The Sherman Act was, in some ways, a special case; it created no federal agency, leaving enforcement to the tender mercies of the attorney general and his staff—and, of course, to the courts. In the twentieth century, the federal courts built up a substantial body of antitrust law putting meat on the bones of the statutes (or, in some cases, sucking out the marrow).
There was precious little “trust-busting” in the early years of this century. Indeed, government seemed more interested in harassing labor leaders for Sherman Act violations than big businessmen—the sort of irony that warms the heart of the corporate giant and leads radicals to say, “I told you so.” Apparently, not a single violator of the Sherman Act actually went to jail until 1921, when jail was the fate of some men in the wall-tile business found guilty of price-fixing. This was more than thirty years after passage of the act. Enforcement ebbed and flowed (mostly ebbed), until the New Deal ushered in a period of relative vigor, in the thirties. Thurman Arnold, head of the Antitrust Division, filed fifty-eight criminal cases in 1940 alone.35 Later administrations were less zealous, to say the least.
The Sherman Act was the only major federal law on the subject of antitrust for twenty-four years. In 1914, Congress passed the Clayton Act and the Federal Trade Commission Act; these did not push the Sherman Act aside; rather, they supplemented it. They represented, on the whole, a turn toward administrative law, instead of criminal law, in dealing with problems of unfair competition. In later years, too, other federal (and state) laws were passed regulating competition, competitive and anticompetitive practices, and such topics as resale price maintenance. 36
Antitrust law has been controversial from the start; economists, lawyers, and regulators do not agree on what the Sherman Act originally meant, what it ought to mean, of what use it is, or what it accomplishes. National competition policy is plagued by ambiguity and doubt. The doubts surround economic questions, moral questions (how shall we punish violators?), and even the most basic goals. For every strong law promoting competition and the free market, there is an equally strong law intended to protect some industry or type of business from competition—small stores versus chain stores, big versus little, product versus product.
The policy issues are not our concern here, except for the policy of using criminal justice. The case of U.S. v. Hilton Hotels Corp. (1972) illustrates one of the basic dilemmas.37 The manager of Hilton’s hotel in Portland, Oregon, made deals with other hotels, restaurants, and supply companies; all agreed to kick in money to attract convention business. They also agreed to give “preferential treatment to suppliers who paid their assessments.” This was a clear violation of the Sherman Act.
Hilton’s defense was that the manager had acted entirely on his own; in fact, what he did was “contrary to the policy of the corporation,” according to management.38 But the court held that this was no defense. There was nothing wrong with making a business criminally liable for something its “agents” did “within the scope of their employment.” The Sherman Act, said the court, was not concerned with “intent” to commit crimes; it “aimed at consequences.” Otherwise, top management could give a secret wink or signal, preserve its