In a series of letters published by the Wall Street Journal (Rockefeller, July 10; Boudreaux, July 14, and Libert, July 19), the authors discuss the original intent of the Sherman Act and contemporary policy.  In his brilliant polemic, The Antirust Religion, Edwin Rockefeller correctly questions the arrogance of mainstream economic “science” that undergirds modern antirust enforcement.  Boudreaux speaks to late 19^th Century Congressional hostility to emerging large scale industrial enterprises and their efficiencies. Libert notes Senator Sherman’s concern about high prices to consumers. 

Senator Sherman’s original bill sought to prohibit “all arrangements, contracts, agreements, trusts, or combinations which tend to prevent full and free competition … or which tend to advance the cost to the consumer.”  That bill, reported out from Senator Sherman’s Finance Committee, was plainly intended to be “positive” law.  The actual Sherman Act, however, was drafted and reported out by the Senate Judiciary Committee and was intended to be a federalized version of the common law.  Agreements and combinations were unlawful to the extent that they were unreasonable under common law principles.

Although in the early years, the Supreme Court struggled to find its bearings on this point, the 1911 Standard Oil and American Tobacco decisions ultimately articulated the common law rule of reason.  It was short lived, however.  The sea change (which none of the authors above mentions) that brought about modern judicial interpretation of the Sherman Act was the Supreme Court’s 1918 decision in U.S. v. Chicago Board of Trade.  In that case, Louis Brandeis, writing for the Court, abandoned the common law and created a new instrumentalist rule of reason that sought to weigh pro- and anti-competitive effects.  Throughout most of the rest of the 20^th Century, economists were ready, willing, and eager to ply their asserted science, with all of its assumptions and abstractions, to help enforcers and courts divine the truth about the competitive effects of business conduct.  Whether or not this development was positive or negative remains an open question.