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As an introduction to this Symposium, I offer an overview of the history of U.S. antitrust enforcement during economic crises. Having previously written an essay about the history of antitrust enforcement during wars and economic downturns,1 1 will keep this historical narrative brief, and add some modest observations about how things have gone this time around.
I. HISTORY'S LESSONS
During both economic crises and wars, times of severe national anxiety, antitrust has taken a back seat to other political and regulatory objectives. Antitrust enforcement has often been a political luxury good, consumed only during periods of relative peace and prosperity.
In 1890, the Sherman Act's adoption kicked off the era of national antitrust enforcement. Barely three years later, the panic of 1893 provided the first major test to the national appetite for antitrust enforcement. Speculative overexpansion in the railroad industry was to blame for the crisis - a steep recession - and the Robber Barons quickly rose to fix the problem. Financier J. P. Morgan and his chief rival, the Kuhn, Loeb finance house, snapped up bankrupt railroads out of receivership.2 By the turn of the century, the nation's railroads had been consolidated into six large systems, primarily controlled by the houses of Morgan and Kuhn, Loeb.3
Perhaps 1893 should not be included in the story: antitrust was still young, and it was not even clear that the Sherman Act applied to mergers. However, by Teddy Roosevelt's "trustbusting" days in the first decade of the 20th century, the reach of the Sherman Act to exactly the kind of railroad mergers the 1893 crisis enabled had become clear.4 So the panic of 1907 - the bursting of another financial bubble - would provide a fair test case for antitrust's mettle in the face of political pressures to allow consolidation.5 There was no central bank yet - except at the House of Morgan - and J. P. used the crisis to extend his influence over the banking system. Roosevelt watched impotently as Morgan consolidated the banks, but was forced to a point of decision when Morgan proposed to rescue the Moore & Schley brokerage house by having U.S. Steel buy up a large interest in Tennessee Coal and Iron.6 Now Morgan would extend his already substantial...