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Antitrust and the Formation of the Postwar World

Antitrust and the Formation of the Postwar World

Wyatt Wells
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    Antitrust and the Formation of the Postwar World
    Book Description:

    Today antitrust law shapes the policy of almost every large company, no matter where headquartered. But this wasn't always the case. Before World War II, the laws of most industrial countries tolerated and even encouraged cartels, whereas American statutes banned them. In the wake of World War II, the United States devoted considerable resources to building a liberal economic order, which Washington believed was necessary to preserving not only prosperity but also peace after the war. Antitrust was a cornerstone of that policy. This fascinating book shows how the United States sought to impose -- and with what results -- its antitrust policy on other nations, especially in Europe and Japan.

    Wyatt Wells chronicles how the attack on cartels and monopoly abroad affected everything from energy policy and trade negotiations to the occupation of Germany and Japan. He shows how a small group of zealots led by Thurman Arnold, who became head of the Justice Department's Antitrust Division in 1938, targeted cartels and large companies throughout the world: IG Farben of Germany, Mitsui and Mitsubishi of Japan, Imperial Chemical Industries of Britain, Philips of the Netherlands, DuPont and General Electric of the United States, and more. Wells brilliantly shows how subsequently, the architects of the postwar economy -- notably Lucius Clay, John McCloy, William Clayton, Jean Monnet, and Ludwig Erhard -- uncoupled political ideology from antitrust policy, transforming Arnold's effort into a means to promote business efficiency and encourage competition.

    eISBN: 978-0-231-50273-3
    Subjects: Law, Political Science, History

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Preface
    (pp. ix-xii)
    Wyatt Wells
  4. Introduction
    (pp. 1-3)

    In the wake of World War II, the United States sought to impose its antitrust tradition on the rest of the world. Before the war, businesses operating across national borders had lived with a basic contradiction: the laws of most industrial countries tolerated and even encouraged cartels, whereas the statutes of the United States, the world’s largest economy, banned them. Most cartels finessed the issue, making arrangements with U.S. companies that ventured abroad, agreements that exploited loopholes in the American antitrust statutes. Still, the potential for conflict always existed.

    Antitrust, which Supreme Court Justice Abe Fortas once described as a...

  5. 1 The Cartel Ideal
    (pp. 4-26)

    In the fifty years before WorldWar II, the world backed away from the idea that economic competition necessarily promoted the common good. The retreat, although gradual at first, became headlong with the outbreak of World War I in 1914. Among the chief manifestations of this trend was the expansion of cartels, which played an ever-growing role in domestic and international trade and by 1939 had become a major factor in the world economy.

    Between the world wars, business executives, government officials, and intellectuals increasingly argued that competing firms ought to work together in cartels, cooperating to stabilize markets and plan...

  6. 2 The Context of Antitrust
    (pp. 27-42)

    Alone among industrial nations, the United States rejected cartels—at least in theory. Americans had been ambivalent toward big business ever since it emerged in the late nineteenth century, respecting its efficiency but fearing its economic and political power. These concerns led Washington to regulate the activities of large firms, outlawing cartels and imposing other restrictions on these companies. A few cartels did exist in the United States, but they were exceptions that participants usually justified by reference to special conditions. As a whole, Americans placed great confidence in economic competition as a check on the power of big business...

  7. 3 Reform versus Mobilization
    (pp. 43-89)

    The outbreak of war in Europe in 1939 created difficulties both for American firms participating in international cartels and for the antitrust drive. War automatically suspended cartel agreements between firms in the countries involved. Because the United States did not formally enter the conflict until December 1941, however, cartel accords still bound American firms, often to German ones. Because the United States was, despite its legal neutrality, supporting Germany’s foes, this at best was embarrassing and at worst interfered with mobilization, which was under way well before the Japanese attack on Pearl Harbor. At the same time, the Antitrust Division...

  8. 4 Making the World Safe for Competition
    (pp. 90-136)

    Despite the retreat from antitrust prosecution during the war, the U.S. government did not abandon the fight against international cartels. Once Allied victories in 1942 and 1943 made total victory seem probable, Washington began to think seriously about the shape of the peace settlement, a process that involved economic as well as political issues. Among other matters, Washington sought to prohibit or at least limit international cartels, negotiating with other governments for restrictions on these organizations even while petitioning American courts to outlaw them unilaterally.

    Although the cartel issue failed to excite the public as a whole, vigorous debate on...

  9. 5 Among Unbelievers: Antitrust in Germany and Japan
    (pp. 137-186)

    Allied victory in World War II inaugurated perhaps the most ambitious social science experiment in world history: the reconstruction of Germany and Japan. After war, the losers usually cede territory and pay reparations to the winners, which sometimes occupy the defeated powers to enforce these obligations. But after 1945, the Allies occupied Germany and Japan not only to extract land and wealth but also to reorganize their societies, eliminating the authoritarian and militaristic tendencies that had made both countries a threat to world peace. For Americans these reforms involved first and foremost promoting political democracy, but economic reorganization also received...

  10. 6 The New Order in Practice: The Cases of Oil and Steel
    (pp. 187-205)

    In the early 1950s, as the western nations achieved a measure of prosperity and stability, cartel policy too achieved a certain equilibrium. On one hand, radical decartelization had failed in Germany and Japan, whereas on the other court decisions in the United States had struck serious blows against international cartels. Germany and the European Coal and Steel Community had adopted measures strictly limiting cartels. The result was a sort of implicit compromise in the international sphere roughly comparable to that which had existed in the United States since the Progressive Era. Although monopoly was suspect and cartels largely forbidden, big...

  11. Conclusions
    (pp. 206-216)

    American antitrust policy abroad, despite its inconsistencies, developed within a broad economic and political context that gave it a certain coherence and that explains both its successes and failures. At the same time, the evolution of antitrust policy shaped this context, reinforcing certain tendencies and retarding others.

    Washington’s drive against international cartels coincided with the transformation of the United States from an inward-looking nation into the world’s leading power. In the 1930s, most Americans sought to isolate themselves from troubles abroad. The Roosevelt administration’s much-heralded “good neighbor” policy eschewed direct intervention in Latin America—long a staple of U.S. foreign...

  12. Notes
    (pp. 217-256)
  13. Essay on Sources
    (pp. 257-266)
  14. Index
    (pp. 267-276)