The “Rule of Reason” and an Unnatural Monopoly

United States V. Terminal Railroad

Bibliographic Data

ID21099397
AuthorsJohn K Brown (corresponding author)
Year2022
Volume43
Issue2
Pages145-172
Publication date2022-12-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueThe Tocqueville Review/La revue Tocqueville (JOURNAL)
Journal identifiersISSN: 0730-479X • E-ISSN: 1918-6649
PublisherUniversity of Toronto Press Inc. (UTPress) (PUBLISHER)
DOI10.3138/ttr.43.2.145
OpenAlexW4313210418
LanguageEN
References cited10

The Sherman Act (1890) inaugurated the commitment of the American federal government to block the horizontal combinations or “trusts” then beginning to dominate many industries. But the statute’s sweeping language nearly demanded interpretation by the executive branch and the judiciary. Two decisions by the U.S. Supreme Court in 1911, Standard Oil and American Tobacco, promulgated a “rule of reason” that sent American antitrust law in a new direction, grounded in economic analysis. In its next antitrust case, the court used the rule to uphold a monopoly for the first time. To date, historians have overlooked that case, United States v. Terminal Railroad Association of St. Louis (1912). This article reviews the events that led to this prosecution under the Sherman At, and it explores a fallacy at the heart of the justices’ unanimous opinion. Contrary to their analysis, the Terminal Railroad of St. Louis lacked any legitimate claim to being a natural monopoly. In turn, their egregious misreading of fact and theory suggests that the justices were ill-equipped to wield economic analysis in shaping antitrust law

Economics · Fallacy · Law and economics · Monopoly · Political science · Rule of reason · Statute · Supreme court · American History and Culture · History of Computing Technologies · Law · Philosophy · Twentieth Century Scientific Developments

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