Antitrust Enforcement During National Crises: An Unhappy History

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Daniel Crane, Dec 15, 2008

In 1940, while head of the Justice Department’s Antitrust Division (“DOJ”), Thurman Arnold published The Bottlenecks of Business, a book that defended reinvigorated antitrust enforcement. He entitled Chapter IV A Free Market in Times of National Emergency or War. Arnold wrote that “[t]he antitrust laws must constantly defend the ideal of industrial democracy against all sorts of pressures.” With the prospect of war on his horizon, Arnold observed that “these pressures increase when the government is suddenly forced to buy huge quantities of defense materials from closely controlled sources of supply.” He further noted that “[t]he temptation to exploit consumers and the government through domination of a suddenly expanding market is almost irresistible, and usually prevails unless it is curbed.”

Arnold turned out to be writing his own political obituary. As Spencer Waller has detailed in his excellent biography, Arnold began to face the “wholesale repeal or practical nullification of antitrust in the face of the war planning and production leading up to the U.S. entry into World War II.” Consistent with the themes laid out in Bottlenecks, Arnold continued to push aggressive antitrust enforcement as an aid rather than obstacle to the war effort. But the handwriting was on the wall. In 1942, when Arnold tried to indict political luminary Averell Harriman, the chairman of the Union Pacifi…

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