Within days of the 1912 election rumors abounded that Woodrow Wilson would name Louis Brandeis as a member of his cabinet, to head either the Justice or the Commerce department. Even the thought of Brandeis in a position where he could determine antitrust policy sent a spasm of terror through the business community, and a wave of protests against the Boston lawyer poured in on Wilson headquarters. Henry Lee Higginson, once a friend of the younger Brandeis and now a bitter enemy, had written a virulent letter to Wilson in the middle of October warning him against relying on Brandeis, for whom “no reputable lawyer here has a good word.” Higginson did not care to censure Brandeis and would not have done so “if the newspaper reports did not indicate that he is looking for political position, and if he did not continually pose as a friend of the people, a man who helped the underdog, etc.”
Immediately after his election Wilson received another salvo from the Brahmins in a letter from the president of Harvard, Abbott Lawrence Lowell. If he were to take a Massachusetts man for the cabinet, it should not be Brandeis, and Lowell wanted Wilson to understand that no one of any standing in Boston trusted Brandeis. Lowell’s comments on Brandeis surprised him, Wilson responded, because “I had formed a very high opinion of him, and many of his ideas have made a deep impression on me.” But he would certainly examine carefully the credentials of any man he considered for public office.
Both the Brandeis and the Wilson papers are devoid of even the slightest intimation that Brandeis at any time sought political reward from Wilson for his work, and in fact when reporters occasionally asked him what role he saw for himself in a Wilson administration, Brandeis made it clear that he had no ambition for politics. The fact that many of his friends believed he should be in the cabinet may have pleased him, but considering how he valued his independence, it would have been out of character for him in effect to become an aide, even an aide to the president of the United States.
The first evidence of Wilson’s considering Brandeis for the cabinet comes from an entry in Colonel Edward M. House’s diary for 16 November 1912, when he noted that after a discussion of who should be attorney general, “we practically eliminated Brandeis for this position (because he was not thought to be entirely above suspicion and it would not do to put him in such a place).” Yet less than a week later House had lunch with Brandeis in New York, and the two men seemed impressed by each other. Louis told Alice that House appeared to be “a very good fellow & influential.” House in turn reported to Wilson that Brandeis’s “mind and mine are in accord concerning most of the questions that are now to the fore.” While a large number of reputable people apparently distrusted him, “I doubt whether the distrust is well founded and it would perhaps attach itself to any man who held his advanced views.” But although he now said that he “liked him personally,” House still advised against putting him in the cabinet, because, among other reasons, Brandeis had been a Republican and had supported Taft in 1908. He began to push Wilson to name James C. McReynolds, the Texas lawyer who had prosecuted the tobacco trust, for the attorney general position.
But if House opposed Brandeis, Wilson found some of his other advisers highly enthusiastic about him. William Jennings Bryan, who still had a large following in the Democratic Party and to whom Wilson owed his nomination, declared that he shared Wilson’s high opinion of Brandeis and thought no better man could be found to head the Justice Department. Other favorable reports also came to Wilson, but every time Wilson brought up Brandeis’s name, either for attorney general or for solicitor general, House argued against it, claiming that business interests did not trust Brandeis in any position involving legal authority.
Wilson, however, wanted Brandeis in his government and asked Norman Hapgood to look into the charges brought against Brandeis. Hapgood reported back that he had found no basis for any of them. Wilson also recognized that progressive senators and representatives, whose help he would need in passing his program, thought Brandeis should get an appointment. Charles Crane, a friend and client of Brandeis’s, wrote Wilson that he had spoken with Senator La Follette, who seemed eager to cooperate with Wilson in securing reform legislation. “He is, however, like all other progressives,” Crane noted, “most anxious to have Brandeis to work with” as a representative of the administration. La Follette believed that Brandeis more than anyone else would be able to win over insurgent support for a Wilson program. Progressives also urged the president-elect to name him because he had been a Republican, and his appointment would show that Wilson wanted to reach out to all progressives—Democrats, Republicans, and independents. According to Wilson’s biographer, “No man mentioned for appointment, not even Bryan, had such wide support from all elements of the progressive movement.” At a lengthy meeting between Wilson and his advisers on 13 February, Wilson declared that he had investigated Brandeis’s record and could not bring himself to believe he had done anything to cause the kind of virulent criticism directed against him. House argued that it did not matter if the accusations were true or false, since so many people believed them, and as a result his value to the administration would be diminished. Wilson nonetheless insisted, but gave in to House’s urging that Brandeis not be in the Justice Department. At the end of the meeting a tentative cabinet list included Brandeis in the Commerce Department, and he stayed on that list until less than a week before Wilson’s inauguration.
Attorney General James C. McReynolds, 1913
Finally, Wilson relented, not because he believed that Brandeis had acted unethically, but because he did not want to disturb the business community. The president-elect faced an uncertain economic situation, with the country experiencing a mild recession. Since much of the legislation he wanted to enact would be perceived by big business as hostile to their interests, it seemed easier to give in to House’s argument. Moreover, it would not do for the new administration to face a bruising confirmation battle in the Senate, where Democrats enjoyed only a thin majority. The Boston American and many progressives condemned Wilson for giving in to the business interests, which they saw as an abandonment of reform hopes. The paper ran a boxed editorial on the front page that began, “The AMERICAN Congratulates the Corporation Enemies of Mr. Brandeis, Who Have Kept Massachusetts from Representation in the Cabinet.” La Follette and others despaired that Wilson had taken “the easy way,” while Norman Hapgood lamented that “the interests everywhere … and the country will think W[ilson] showed the white feather.”
Did anti-Semitism play a part in keeping Louis out of the cabinet? The historian Allon Gal believes that prejudice “in Brahmin circles clearly affected Brandeis’s political prospects,” and a recent biographer of House’s claims that Brandeis thought so as well, relying on his comment to Norman Hapgood that “the Massachusetts opposition to my going into the cabinet was not in its essence political.” In looking at Brandeis as a member of his cabinet, Wilson clearly took religion into account, but not in a negative way—Wilson and House wanted a Jew in the cabinet. Jewish voters had traditionally been Republican in national politics. Wilson had made a great effort to reach out to the Jewish community and had been rewarded by the largest percentage of Jewish votes that any Democratic candidate had polled to that time. While the leaders of the German-Jewish community such as Jacob Schiff and Louis Marshall would remain Republican, Wilson hoped to attract the larger number of recent immigrants from eastern Europe who had already attached themselves to local Democratic machines. Just as Theodore Roosevelt had named Oscar Straus to his cabinet to shore up his Jewish supporters, so Wilson hoped naming Brandeis would do the same for him.
House himself, according to Godfrey Hodgson, was not anti-Semitic, although after their first meeting House wrote to Wilson of Brandeis, “There comes to the surface, now and then, one of those curious Hebrew traits of mind that makes one hold something in reserve.” The problem, at least from House’s point of view, was that the Jews he consulted with about Brandeis had little good to say about him. The banker Jacob Schiff, for example, thought that while not a representative Jew, Brandeis could be considered a representative American, knowing full well that House sought the imprimatur of the community’s leaders and refusing to give it. Charles Crane, on the other hand, thought that because Brandeis valued his Americanism so highly, this made him an ideal Jewish candidate. “Brandeis is the only important Jew who is first American and then Jew,” Crane told Wilson. “All of the other important Jews are first Jews and then Americans and do not hesitate to sacrifice real American interests at any time for what they conceive to be Jewish ones. Brandeis has grown up and developed as an American and, now that he has become a man of importance, the other Jews are trying hard to control him but they will not succeed.”
Brandeis, of course, knew a great deal about the debate going on about him, and he resented the idea of being appointed to the cabinet for no other reason than his religion. Between the election and Wilson’s inauguration, he practically cut off what few ties he had to the Boston Jewish community and consistently turned down invitations from Jewish and Zionist groups to speak in New York and Chicago. The lawyer Edward Goulston tried in vain to get Brandeis to address the Elysium Club, the elite Jewish club in Boston, where he could present himself as “a representative Jew.” Similarly, he turned down an invitation from Edward Bromberg to speak at the New Century Club in New York. Brandeis did not accept invitations from Jewish groups until after the announcement of Wilson’s cabinet.
In early 1913, Brandeis in fact would not have been seen as a “representative Jew,” although what that meant to Wilson or House is difficult to tell. Perhaps they meant someone connected to the important Jewish organizations such as the American Jewish Committee and B’nai B’rith, the leading Jewish men’s fraternal organization. But the committee, led by Jacob Schiff and Louis Marshall, consisted of men tied to the business establishment who, for the most part, would have opposed Brandeis as an economic radical, even if he had had strong Jewish connections. When Brandeis told Norman Hapgood that the opposition to his going into the cabinet “was not in its essence political,” he meant that it grew out of opposition to his reform work and economic positions, and not from traditional “political” values, such as party affiliation, work for the party, or patronage connections. After the announcement of the final list, one banker wrote to Colonel House, “You little know how much gratification is felt about the ‘street’ over the success of eliminating Brandeis from the Cabinet.”
During this period Brandeis remained almost completely silent on the question of a cabinet appointment. He had to go to Chicago in early January to take care of some matters for Charles Crane and wrote to Alice, “There is so much Brandeis Cabinet talk that I think it just as well to be absent.” When a reporter and friend wrote to him about the Commerce position, he replied, “It cannot be necessary to tell an old newspaper man not to believe all he hears.” There is not a written word, however, to Alice, to Alfred, or to any of his friends that indicates any interest in an appointment, although had the president offered him a cabinet position, it is hard to imagine his saying no.
We do know that he discussed the matter with his wife and brother, because there is a genuine tone of relief in his voice when Wilson announced his cabinet on 2 March. “As you know,” he told Alfred, “I had great doubts as for its being desirable for me; so I concluded to literally let nature take its course and do nothing either to get called or to stop the talk, although some of my friends were quite active. State Street, Wall Street and the local Democratic bosses did six months’ unremitting work; but seemed not to have prevailed until the last moment.” He found it amusing “how much they fear me, attributing to me power and influence which I in no respect possess.” To Alice he said, “No office for me. Me for the simple life.”
What is clearly missing from this letter is any mention of anti-Semitism, and while Louis might have hidden that consideration from others, he would not have glossed over it in conversations with his wife or brother. Brandeis’s religion played a role in the decision, but not anti-Semitism, and Wilson’s most thorough biographer has found no evidence of it in the decision process. Wilson, still determined to reward Louis in some way, did offer him the chairmanship of the Commission on Industrial Relations in April, but by then Brandeis knew he would wield considerably more influence by remaining independent.
BRANDEIS HAD NOT BEEN IDLE during these months, and even before the announcement of the cabinet list knew that he would have an important role in the new administration, as well as the president’s ear. Between November and March, Brandeis, among other things, worked to help Harvard Law School create a criminal law library and suggested some material to be included in a course on the subject, advised the Senate Commerce Committee on antitrust legislation, caught up with the latest figures showing the New Haven’s decline, consulted with the Interstate Commerce Commission on railroad rate increases, and continued his work on the arbitration board for the New York garment industry. Near the top of his agenda, however, stood the problem of helping Norman Hapgood, who had been fired from his position as editor of Collier’s for backing Wilson.
Brandeis felt personally responsible, and he set about trying not only to make peace with Robert Collier but also to find another outlet for Hapgood. Collier, while insistent that Hapgood had to go, nonetheless wanted to stay on good terms with Brandeis and had wired him that he wanted an opportunity to discuss the matter with him, since he considered it “rather important that we should understand each other.” Brandeis met with the publisher, and to show that he had no ill feelings toward his former counsel, Collier invited him to write a piece on Wilson for the magazine. He remained adamant, however, that he would not rehire Hapgood. Brandeis did, however, manage to smooth things over. He got Norman to stop declaring to one and all that he had been stabbed in the back, and Collier agreed to consider the incident with his former editor closed.
With a promise of financial support from Charles Crane, Brandeis and Hapgood began to look around for a journal to purchase. For a while it looked as if McClure’s Magazine might be available, but aside from other problems it would have had to be converted from a monthly into a weekly. Then Hapgood lunched with Thomas W. Lamont, the Wall Street financier who owned Harper’s Weekly, and he offered to sell it—essentially the name and goodwill—for $100,000. Brandeis immediately opened negotiations; by late spring Hapgood had become editor of Harper’s, and Brandeis set about doing everything he could to ensure its success.
He hit upon the idea of providing copies to all the public libraries in New England that did not already subscribe, and paid for the subscriptions himself. He then got other people to pay for the middle Atlantic states, Ohio, Illinois, and the Northwest. He wrote to Alfred in January 1914 that he had tentative sponsors for North Carolina, Georgia, and Florida, and hoped Al would take care of Kentucky, at the very modest cost of $3 per subscription. It then turned out that Kentucky had only twelve libraries that did not take the magazine, and Tennessee eleven, so Louis sent his brother lists of libraries in other southern states.
For the next few years nearly all of the articles he wrote on social and economic issues, including the series that became Other People’s Money, appeared in Harper’s, and he refused to accept any money for them. In July 1914 he returned a check for $100 to Hapgood, telling him he did not want to be paid for anything he did for the magazine until it had reached the stage of earning dividends on the common stock. He also turned over to the journal revenue from the publication of Other People’s Money as a book.
How highly Brandeis valued Hapgood, both as a friend and as a progressive, can be seen from the way he answered an inquiry he received during the publication of the banking series. Professor Joseph Smith considered the articles of such consequence that he thought they should have been published in a journal with a wider circulation, such as Collier’s or the Saturday Evening Post. That might have been true, Brandeis replied, “but I regard Mr. Hapgood as so important a factor in the American advance movement that if I have been of any service in helping Harper’s Weekly, as his instrument, I shall feel well content with the decision made.”
BRANDEIS WENT DOWN to Washington shortly after the inaugural, primarily on Interstate Commerce Commission business, and almost immediately entered the whirlpool that would be his life for the next few years. “Have had a busy day,” he wrote to Alice on 8 March. “Saw Jud Welliver, Gilson Gardner, Henry Beach Needham, Senators Clapp, Bourne, James, etc., etc. Had long talk with Prouty and Marble [ICC] … and am to have this evening with La Follette.” The next day he had a “satisfactory” meeting with Secretary of the Interior Franklin K. Lane and reported, “The way is open to me to help run the Interior [Dept.] and (via Marble) the Interstate Commerce Commission.” The following evening he spent over an hour at the White House with Wilson, after conferences during the day with Secretary of State Bryan, Commerce Secretary William C. Redfield, and Attorney General McReynolds. In going to the cabinet members’ offices, he noted hordes of office seekers besieging them for jobs and, as he told Alice, thought himself better off for not having to deal with such problems. “Me for the simple life.”
Even though he told people he had nothing to do with patronage, Brandeis in fact became a key figure in the administration’s distribution of political appointments in Massachusetts, as well as in some of the Washington agencies. As the first Democratic president in sixteen years, Wilson faced a barrage of demands from Democrats for federal jobs, as did his department heads. With the exception of William Jennings Bryan, who saw the State Department as a vehicle for rewarding deserving Democrats, and Postmaster General Albert Burleson, whose department had always been staffed by patronage, the other members of Wilson’s cabinet wanted competent people who could be relied upon for their judgment and to do a good job, and they did not want to have the state and city machines sending them hacks. McAdoo, McReynolds, Redfield, and Lane wrote to Brandeis often, either seeking suggestions for particular positions or wanting his evaluation of someone they had under consideration. Over the previous decade Brandeis had gotten to know many people in different reform movements, and he willingly shared this information when requested. On the other hand, he rarely tried to push anyone unless asked; the sole exception seems to have been his determination to get David Ives appointed to the Interstate Commerce Commission. Wilson also consulted him from time to time, although usually when they met rather than through letters, and continued to do so even after Brandeis went on the Court.
Senators, congressmen, government officials, and others also clamored for his advice on the substantive issues facing the Wilson administration, such as antitrust legislation and banking reform. During these weeks and months Louis wrote regularly to Alice, except during those times when she joined him, and of course to Alfred, and one can get a sense of his activity and involvement in the government by sampling a few of those letters:
To Alice, 9 March 1913: At 10:30 I am to see MacFarland…. At 1:30 I lunch with the Pinchots & at 7 dine with the Frankfurter contingent…. Had a quiet talk a deux with La Follette last evening. He is pretty grim. WW will not be taken on faith by him. Talk with Lane was very satisfactory.
To Alfred, 10 March 1913: I have been engaged largely in promoting the entente cordiale with the Administration. Had a good private talk with the President this evening for an hour—and with Lane, Redfield, Bryan, and McReynolds today … & spent this morning at the I.C.C. on New Haven matters. There is no lack of occupation.
To Alice, 10 June 1913: Made good progress yesterday on One price Article campaign, first with Redfield who is thoroughly with me. He made appointment for us to see the President together which we did from 4:30 to 5:15. President was converted from dense ignorance to the light, wants me to make the educational campaign, & to have the Administration come out with a bill in Dec. Redfield & I are to see the Atty Gen’l at 10:45 today to try to get him to be quiescent on prosecution, a harder task. Had long talk with Corporation Com’er Davies who will probably take up the investigation into facts I proposed. On New Haven matters—saw Prouty, Marble & Meyer, & some others at I.C.C…. Had satisfactory talk with Gregory who I am to spend hours with today.
Was at La Follettes after dinner. Am to dine there & spend the evening in more serious talk today.
After a while, exciting as the politics may have been, Louis yearned for a little peace and quiet. “Think I shall have to abandon the Cosmos Club soon,” he told Alice, “too much ‘talkie’ at breakfast. It is pretty hard finding a place where reading light is good and man is absent.”
WILSON BEGAN HIS ADMINISTRATION by fulfilling a longtime Democratic pledge to reduce the tariff, and he succeeded brilliantly, providing one of the finest examples of presidential leadership since Lincoln. Although Brandeis had first written to Wilson on the tariff and was pleased by the new law, he had nothing to do with passage of the Underwood Tariff Act. But on the other major parts of the New Freedom—banking and currency reform and antitrust—Brandeis played a key role.
Wilson had called the concentration of fiscal power in Wall Street “the most pernicious of all trusts,” and between 1910 and 1914 he developed two basic premises. First, a money trust of monopoly proportions existed, and to restore competition, it had to be destroyed. Brandeis’s articles on other people’s money, which he sent to the president in draft form, confirmed Wilson’s belief in a money trust; he read the articles carefully, making notes in the margins. Early in 1913 the presidentelect argued, “You must put the credit of this country at the disposal of everybody upon equal terms. Now, I am not entering into an indictment against the banking methods of this country. The banking system of this country does not need to be indicted. It is convicted.” Second, Wilson believed banking too important a business to be left to bankers, and reform had to make banks what they should be—the servants and not the masters of business. Not only did one have to destroy the monopoly; but to protect the public interest, some form of government supervision was necessary.
In the spring of 1913, Representative Carter Glass of Virginia and the economist H. Parker Willis, with Wilson’s blessing, worked up a plan for a decentralized, privately controlled reserve system of not more than twenty independent reserve banks. Wilson tentatively agreed, but insisted on one additional feature, an “altruistic Federal Reserve Board in Washington to supervise the proposed system,” a sort of “capstone” to it. Although Glass did not like the idea, he thought it harmless and acquiesced. In general, the Glass-Willis plan represented the views of the banking and business communities, with control of the system as well as the issuance of currency remaining in private hands.
Once details of the plan became known, it aroused the antagonism of the populist wing of the Democratic Party. William Jennings Bryan and his followers, who carried great weight in the party, had two main objections. First, the Glass proposal allowed banks to elect the members of the Federal Reserve Board, thus ensuring an agency friendly to their interests; second, currency issue remained in bank control. Bryan wanted the board composed solely of government-appointed officials, and money issue to be strictly a government function. Bryan and the progressive wing of the party realized that if the currency power remained in banker control and banker representatives dominated the Federal Reserve Board, then the money trust would not be broken. In fact it would merely be reorganized with more power than ever. Bryan could not support the Glass-Willis bill in its current form, nor could he ask his followers to do so.
By June, with the issue raging in both Congress and the press, Wilson had to decide between the conservative Glass-Willis measure, which had banker support, and the main points of the Bryan wing, endorsed by Samuel Untermyer, counsel to the Pujo Committee, and Secretary of the Treasury William Gibbs McAdoo. He called in one of the few men whose economic views he trusted. Brandeis, however, could hardly be termed a neutral observer. The Boston lawyer distrusted the big banking houses almost to the point of obsession.
Brandeis came down from Boston to the White House on 11 June, and he and the president spent several hours going over the conflicting plans. He convinced Wilson not only of the justness of Bryan’s arguments in the light of historic Democratic platform promises but also of their rightness. Even if the backing of the Federal Reserve notes should be commercial paper, currency ought to be an exclusive function of the government. “The American people will not be content to have the discretion necessarily involved vested in a board composed wholly or in part of bankers,” he argued, “for their judgment may be biased by private interest or affiliation. The function of the bankers should be limited strictly to that of an advisory council.” While public opinion and Congress would accept banker representation on the boards of the regional banks, there would be a public outcry if bankers controlled the issue of currency and the federal board, and there would be no chance at enacting a necessary and long overdue reform.
He also urged Wilson not to take too much stock in the banker arguments that enactment of a proper currency bill, namely, one they controlled, would allay financial disturbances. The effect of the “best conceivable currency bill will be relatively slight,” unless the government could also curb the money trust and remove the uneasiness it caused the business community. Nothing would do as much to establish confidence among businessmen “as the assurance that the Government will control the currency issue and the conviction that whatever money is available, will be available for business generally, and not be subject to the control of a favored few.” He exhorted Wilson to recognize that a conflict existed between the policies of the administration and the desires of the financiers and of big business, a conflict he deemed “irreconcilable.” The president should not be tempted by offers of cooperation; careful consideration should, of course, be given to banker views and their expert knowledge, always keeping in mind that their interests would be hostile to those of reform.
A few days later Wilson called together McAdoo, Glass, Senator Robert L. Owen of Oklahoma, and Bryan to inform them that he had decided on exclusive government control of the reserve system and on making its notes government obligations. An ecstatic Bryan issued a public letter declaring that the new bill was “written from the standpoint of the people rather than from the standpoint of financiers,” and that government issue of currency fulfilled Democratic campaign promises. Glass gracefully gave in, and Wilson proposed the new bill to Congress on 23 June. Despite strong attacks from the banking community, he engineered it through Congress and signed it into law before the year ended. It remains the single most constructive piece of legislation enacted by the Wilson administration and one of the most important in the country’s history.
Imperfect in many details (it would be revised during the 1930s), it struck a balance between private power and control on the one hand and public supervision on the other, a balance that both Brandeis and Wilson cared greatly about. In a short time it won the support of the banking community, especially the smaller country banks released from the hold of Wall Street. The more radical progressives, however, condemned it. La Follette denounced it as a “big bankers’ bill” that legalized the money trust, a charge echoed by Senator Joseph Bristow of Kansas and Representative Charles A. Lindbergh of Minnesota. They failed to understand the nature of Wilsonian reform and, by extension, of Brandeis’s views as well.
The New Freedom, basically conservative, did not seek to reform and redo society in a new mode, and neither did Brandeis. He and Wilson hoped to restore an older, more idyllic, and probably semi-mythical past in which there had been a balance among the country’s various political and economic groups. Their progressivism lay in their desire to favor popular democracy against wealthy elites, but they wanted to do so with minimal governmental interference and regulation. This explains Wilson’s dilemma in 1912 before meeting Brandeis—how to combat big business without resorting to big government. Brandeis proposed and Wilson accepted the notion that one could regulate competition—the market—with less governmental intrusion than if one tried to regulate business. Neither Brandeis nor Wilson wanted the government to go too far; both feared big government as much as big business, and considered both subversive of freedom. The Glass proposal left too much power in the hands of the bankers, while the Bryanites wanted to have a government-owned banking system. Neither plan struck the balance that Brandeis and Wilson sought, and in December 1913, looking over their handiwork, both men could take satisfaction that they had achieved the proper equilibrium. Brandeis recognized that defects existed—such as the lack of a ban on interlocking directorates—but believed these could be remedied in antitrust legislation.
WHEN IT BECAME CLEAR that the banking bill would pass, Wilson turned to the third leg of the New Freedom, antitrust legislation. Several members of the cabinet urged the president to stop and to give the business community a chance to adjust to the tariff and banking measures. Secretary of Agriculture David Houston advised Wilson “to make haste slowly,” while Postmaster General Albert Burleson, Secretary of War Lindley Garrison, and Attorney General McReynolds, conservatives all, argued against any new business legislation. Business leaders feared any trust measure drafted by Brandeis, and pleaded with Wilson to do nothing to affect industry and commerce.
William Jennings Bryan, however, urged the president to go forward. Wilson had successfully secured both a lower tariff and currency reform; the time could not be better to fulfill campaign promises. Louis Brandeis also wanted the president to move ahead. Franklin Lane, an old friend from ICC days and now secretary of the interior, had asked Brandeis what he thought the administration should do. In a long letter in mid-December, Brandeis suggested that Wilson remember that the hostility between the banking and big business interests and the forces of reform embodied in the New Freedom could never be resolved. Most businessmen, in fact, would benefit from a reduced tariff and currency reform, and they would also gain from antitrust legislation, since it would remove the threat of dishonest competition.
To gain their understanding, the administration needed to establish a trade commission that would serve as a resource for business and that would identify anticompetitive practices. The commission should distinguish between monopolistic practices and those arrangements among competitors that were in fact legitimate forms of regulation of competition. The government should also aid business as it did agriculture, establishing industrial experiment stations and bureaus of research, which could disseminate important information such as scientific management. The Sherman law had to be strengthened to include, among other things, a strict prohibition against interlocking directorates and barriers against railroads engaging in any business but transportation.
Brandeis believed enacting such laws to be essential to carrying out the New Freedom but also, and just as important, “politically necessary to satisfy the demands of the very large number of progressive Democrats and near Democrats who are already beginning to express some doubt whether the administration will have the courage … to carry out the policy which it has hitherto declared.” Talk about a possible business depression meant little, because nothing the administration did or did not do would affect the business cycle. “The fearless course [is] the wise one.”
Wilson mulled the issue over during his Christmas vacation, and part of the problem lay in his naïvetá. Unlike Brandeis, Wilson had not really thought through the trust problem beyond the fact that he believed monopoly inimical to democracy. Since monopolistic business practices constituted the economic equivalent of sin, men should be punished for their sins and their acts exposed to public condemnation. The simple—and simplistic—answer lay in a stricter enforcement of the Sherman Act’s criminal provisions. Wilson had on several occasions stated his belief, very similar to that of Theodore Roosevelt, that big business was here to stay, and yet had also argued “that real dissolution in the case of the trusts is the only thing we can rest satisfied with.” Wilson feared big business, and also feared Roosevelt’s solution of big government to control the trusts.
Brandeis also saw the trust problem in moral terms, but not those of Wilson’s Presbyterian notion of sin. Brandeis feared trusts because they throttled opportunity and deprived men of the chance to prove themselves in the market. Testifying during congressional hearings, Brandeis had maintained that antitrust measures could never effectively be enforced through criminal provisions alone. Exposure and even threat of prosecution would not sear the “alleged consciences” of the monopolists. The proper way to proceed would be to decide on the goals and then frame just laws that reasonable men could follow. Over two decades earlier he had argued that “no regulation can be enforced which is not reasonable.”
As Wilson contemplated the problem, it is almost certain that his thoughts returned to the original memorandum Brandeis had prepared for him in 1912. There, and in articles that Brandeis had sent to him from time to time, the People’s Attorney had spelled out a specific program: remove the uncertainties and vagaries of the Sherman Act; make enforcement of the law easier in the courts; create a board or commission to aid in administering the law; and allow trade agreements to stand if the commission did not find them in violation of competitive rules. Wilson had some concerns about a regulatory board, since it sounded too much like Roosevelt’s notion of a powerful federal agency to control business, and preferred instead to put as much as possible into statutory language.
On 20 January 1914, Wilson went up to Capitol Hill to deliver a special message on the “great question” of trusts and monopolies. Adopting a moderate tone, he suggested that “the antagonism between business and government is over” and the time ripe to proceed with a sensible program, one that represented “the best business judgment in America.” He proposed outlawing interlocking directorates, giving the Interstate Commerce Commission power to supervise capital financing and securities issues by the railroads, strengthening penalties for individuals guilty of malpractices, and providing that any facts or judgments decided upon in government suits would not have to be re-proven by private individuals to recover damages for monopolistic practices. He also wanted to create a federal agency to give businessmen “the advice, the definite guidance, and information” they needed to conduct their enterprises properly, but one that did not have the power to “make terms with monopoly or … assume control of business.”
Reading over Wilson’s message, Brandeis thought that the president had somewhat overdone the sweetness in manner, but he admitted that it had its uses and “makes it possible for the big interests to swallow his pills somewhat more easily.” To his brother he commented with satisfaction that the president “has paved the way for about all I have asked for and some of the provisions specifically are what I got into his mind at my first interview.”
In practical detail the administration proposed three bills. First, a measure drawn up by Henry D. Clayton, chair of the House Judiciary Committee, that would amend the Sherman Act and include particular provisions such as the ban on interlocking directorates. The second bill would create an interstate trade commission to interpret the law and give businessmen guidance and information. Known as the Covington bill, in its original form it did little more than expand the Bureau of Corporations. Finally, the Rayburn bill, which Brandeis helped to draft and which directly reflected his experience with the New Haven, gave the ICC power over railroad securities.
Immediately following the president’s message, calls went out from members of the cabinet as well as of Congress for Brandeis to help shape the legislation. Already in Washington for the advance rate case, he found his days and his evenings tied up with meetings with the Interstate Commerce Commission, administration officials, reporters, and congressmen. As he told Alice, there was “no leisure class life” for him amid this turmoil, although whenever possible he tried to find time for a quiet dinner with friends and even managed to go to the theater with the Cranes one evening.
Progressives welcomed the fact that Wilson had decided to go ahead with antitrust legislation, but many felt he had not gone far enough. Brandeis saw Bob La Follette the evening of the president’s message, and while the senator approved of Wilson’s ideas, he opposed the ICC’s passing on railroad securities in any way. Samuel Untermyer complained to Colonel House, called the proposed measures “lamentably weak and ineffective,” and begged House to get Brandeis in to redraw the plan. House apparently agreed, and he forwarded Untermyer’s letter to Wilson with the suggestion to “put Gregory and Brandeis on this job with the Attorney-General to act as advisor.” Wilson acted with alacrity, writing to Congressman William C. Adamson that since Brandeis was already in Washington, he should testify before the House Committee holding hearings on the bills. Brandeis reluctantly agreed; he would have preferred concentrating on the intricate and complicated work of the ICC hearings and, as he told Alfred, “greatly begrudge the time which trust & kindred legislation are taking.”
Brandeis himself, while approving the president’s message, did not fully approve of the details in the Clayton bill. He had, it will be recalled, already drafted one antitrust measure that incorporated most of his ideas for Senator La Follette, and the Clayton bill seemed far weaker in comparison. McReynolds, urged by Wilson, contacted Brandeis and asked him for ideas as to how to strengthen the bill, and on 22 February, Brandeis sent him a long letter not only detailing general ideas, especially strengthening the ban on interlocking directorates, but also looking at specific clauses and such details as to how one would define a “bank,” what sort of information corporations would have to file with the federal agency, the type of legal machinery to be used to enforce the law, how patents could be used, third-party redress, and the like.
Work on the Clayton bill constituted Brandeis’s first extensive contact with James C. McReynolds, with whom he would serve on the Supreme Court throughout his twenty-three-year tenure. He had met McReynolds shortly after the new administration came to power, and had on several occasions responded to requests from him or through Assistant Attorney General Thomas W. Gregory for information about lawyers being considered for Justice Department positions. In mid-1913 an attack by a Justice Department lawyer over the way McReynolds had handled a high-profile case led Brandeis to note that the whole incident had been “entirely unnecessary,” and he added, “How the fusillade would have poured in on me, had I been there.”
Although Brandeis had approved of the way McReynolds had fought against the Taft administration in trying to move forward the Sherman Act suit against the tobacco trust, he realized something that Wilson had missed. A fervent advocate of antitrust laws, McReynolds otherwise was very conservative, even reactionary. “He is a standpatter,” Louis told Alice, “without a particle of sympathy with insurgent methods.” Brandeis recognized the attorney general’s intelligence, and appreciated the way McReynolds understood and tried to utilize Brandeis’s suggestions, and tried to explain some of McReynolds’s curtness with others as due to overtiredness. This brought a guffaw of laughter from La Follette, who told Louis that his good opinion of McReynolds did little credit to his intelligence. McReynolds’s true colors would emerge later, not only as a reactionary, but as a virulent anti-Semite, and possibly the most unpleasant fellow ever to sit on the high court.
On 1 March, Brandeis spent three hours with the attorney general and his advisers going over the Clayton bill and pointing out how it could be strengthened. Two weeks later Clayton agreed to add the stronger wording on interlocking directorates and requested that Brandeis provide the language, which he did. On 5 June a revised Clayton bill, the Rayburn measure on railroad securities, and the Covington bill for a weak trade commission passed the House of Representatives. They faced an uncertain future in the more conservative Senate, where pressure built to amend them based on the belief that the measures were unrealistic, ineffective, and totally unworkable.
The provisions on individual guilt, so dear to Wilson’s heart, scared businessmen large and small. After the mad scramble of the Gilded Age, American businessmen had begun looking for methods that would avoid not only the destructive excesses of cutthroat competition but also government regulation. The details for the great trade association activities of the 1920s had just started to take shape, and the Clayton bill threatened to halt this “new cooperation.” Conceivably, a zealot in the attorney general’s office could interpret any act of cooperation as a restraint of trade, punishable by a fine and/or jail sentence. The long list of proscribed activities also made little sense, especially to reformers, who had no doubts that entrepreneurs could easily invent new ways to get around the prohibitions. Brandeis himself had admitted the near impossibility of trying to define in advance all the illicit means of competition. George Rublee, who was working with Brandeis in early 1914 on this legislation, recalled the fear that in trying to be too specific, the Clayton Act would open the doors to every sort of evasion that could be developed by American ingenuity.
One answer would have the Clayton Act proscribe anticompetitive practices in a broad manner, and then set up a strong trade commission to interpret and apply the broader principles to specific actions, with the power to enforce its decisions. Wilson, upset and confused by the criticism, recognized the validity of the arguments, but hesitated, his old fears against government regulation still strong. At this point Brandeis again acted decisively to change the president’s thinking.
ON 10 JUNE, Brandeis went to see Wilson along with Senator Henry Hollis, Congressman Raymond B. Stevens, and George Rublee, a New York lawyer who had worked with Brandeis on Pinchot-Ballinger and had come down to Washington as an unofficial aide on antitrust legislation. At the White House meeting Rublee and Stevens pushed for creation of a strong federal commission with powers to police business behavior. Brandeis seconded the proposal, and Wilson agreed, helping to break the logjam on the antitrust bills in Congress. It is a dramatic story, especially since it would appear that both Wilson and Brandeis turned their backs on their original opposition to just such an agency that Theodore Roosevelt had offered in the 1912 campaign. While the decision did amount to a sort of volte-face by the president, Brandeis reached that position the way he always did, by looking at facts.
Brandeis had never been opposed to a trade commission, and in fact had recommended to Wilson at their first meeting that there be some agency to help administer the Sherman Act. He had in mind, however, the “sunshine” type of commission represented by the Massachusetts Board of Railroad Commissioners. Such a body would collect large amounts of information, especially financial reports, digest them, and then report to the public. Advocates of the sunshine commission believed that by shining light into a company’s business practices, it would expose illicit and unethical practices, and the public outcry would force the company to stop its behavior or face legislative action. Other than collecting data, this type of agency had no enforcement powers. It would work in cooperation with the Justice Department so that if it discovered violations of the law, the government could then initiate prosecution, and it stood in marked contrast to the type of regulatory body that Theodore Roosevelt had proposed, and that Wilson and Brandeis had opposed in 1912.
Although the Sherman Act had been on the books since 1890, in its first fifteen years there had been only 24 suits, but this jumped to 180 over the next decade, the result of greater trust-busting by Roosevelt, Taft, and Wilson. Despite the presence of some high-profile cases such as steel, tobacco, and oil, however, most of these cases did not concern the types of monopolies Brandeis condemned. Half of all antitrust suits involved firms Thomas McCraw has termed “peripheral,” loose combinations of firms that did not really control their markets. The Justice Department went against these associations of small companies and not the big integrated trusts because it was easier to identify their behavior as fitting the Sherman Act’s definition of a combination, contract, or conspiracy in restraint of trade.
Then came the oil and tobacco decisions of 1911, in which the Supreme Court enunciated a “rule of reason” and in effect said that combinations and contracts in restraint of trade would be held illegal only if they “unreasonably” restrained trade. As Brandeis and others immediately recognized, the decisions left “in vast uncertainty the question as to what, in any case, will be deemed a reasonable restraint,” and much of the advice he gave La Follette dealt with trying to create a tough law that defined reasonable and unreasonable behavior. Businesses across the spectrum, from small firms to industrial giants, greeted the court decisions with apprehension. In addition to the wording of the Sherman Act, ambiguous at best, the courts would now say what constituted reasonable or unreasonable behavior—and after the fact. If a company wanted to engage in a new pricing scheme, for example, how would it know if the courts would consider it reasonable? Brandeis worried not only that the small companies he represented would now be faced by unpredictability regarding their actions, but that the new rule of reason would make it that much more difficult to prosecute the great monopolies he opposed.
For many businesses, the obvious answer lay in a government agency they could go to ahead of the fact and present their plans. If the body approved them, they would then be immune from antitrust prosecution; if the bureau said no, then they knowingly proceeded at risk. While no one liked the idea of having a governmental body approve or disapprove business decisions, this seemed far preferable to the unpredictable findings of idiosyncratic judges. The National Civic Federation and the U.S. Chamber of Commerce took detailed opinion surveys in 1911 and again in 1914, and the findings showed overwhelming support among all types of businessmen for a new regulatory commission.
Brandeis, who knew his clients and their business practices well, and who had been associated with the National Civic Federation, certainly knew how businessmen felt; the last thing any business owner wants to deal with is uncertainty. But at least until the summer of 1914, when Brandeis spoke of a trade commission, he seemingly had in mind the sunshine model rather than one with real enforcement powers. In his letter to Franklin Lane in December 1913, Brandeis noted, “We have no comprehensive detailed information concerning the character and effect of these trade agreements between competitors; and in the absence of such data we cannot deal with them intelligently.” The data had to be obtained and then used, but, at least in this letter, he does not expect anything more than the illumination of business practices. The Covington bill passed by the House followed the sunshine pattern of the Massachusetts model and did little more than expand the fact-finding authority of the older Bureau of Corporations.
Because Wilson preferred to spell out prohibitions in the statute, the draft of the Clayton bill that reached the Senate included many of the proscriptions that Brandeis had first proposed in the La Follette bill and then explained to McReynolds: price-cutting, tying clauses, and the like; and a guilty finding could lead to fine and/or imprisonment for directors as well as managers of the offending company. If the Justice Department decided to vigorously enforce this law, thousands of businessmen, big and small, faced the possibility of jail.
By June the president had recognized the qualms many business leaders had about the discrepancy between the two measures—a strong antitrust law with severe criminal penalties and a weak trade commission that could give business no guidance. Moreover, instead of striking at the great trusts, the two measures seemed more likely to put small businesses in harm’s way, and Wilson and his cabinet members were inundated with letters protesting this possibility. Beyond that, in the summer of 1914 a mild recession set in, and Wilson felt increasing pressure not to do anything to upset the business community. Politically, he had already come too far to turn back; he needed an antitrust bill, but one that would win over the support of small and medium-size businesses.
Thomas McCraw, a business historian, charges that Brandeis abdicated his responsibility to the president during these months by failing to push Wilson and Congress toward the type of antitrust legislation he had been advocating for so long. Nobody, according to McCraw, had more influence with Wilson, and one would have expected him to be “working night and day with the congressional committees, shuttling back and forth between the White House and Capitol Hill, taking a major part in drafting and redrafting the bills until they were in exactly the right form.” Instead, he was doing “lawyer’s work,” the ICC case. What might have been the crowning achievement of his career as a reformer, McCraw charges, would be played by a stand-in.
At least one contemporary shared this view of Brandeis as more involved with railroad matters than with antitrust, although without McCraw’s condemnation. In April, Norman Hapgood wrote to Wilson:
Mr. Brandeis has been so tied up with his railroad work that he has given only general thought to the trust question as it has developed in the bills now before Congress, and as it has been affected by recent decisions of the Supreme Court. The most important part of the really hard work done recently by the little group he represents has been carried on by Mr. George Rublee…. He is not only in intimate touch with Mr. Brandeis and Senator La Follette, but he has one of the best minds for this sort of thing I ever knew.
This scenario is hardly accurate. From the time Wilson delivered his antitrust message in January, Brandeis had been actively involved; he had met with the president, with cabinet secretaries, and with members of both houses of Congress. He had helped in drafting the Clayton bill and had twice testified before congressional committees. Much of the nitty-gritty work, the markup of drafts, the hashing out of what particular phrases meant—the work that McCraw charges Brandeis with shirking—got done by Brandeis’s lieutenant George Rublee, who acted at all times with Brandeis’s knowledge and approval.
Perhaps because Brandeis preferred the—to him—far more challenging work of the rate case, Rublee first came to see the need for, and the importance of advocating the idea of, a strong commission. He discussed the plan with Congressman Raymond Stevens of New Hampshire, an old ally of Brandeis’s in the New Haven fight. The two of them spent several hours going over what powers such a commission should have and how to structure it. Rublee drafted it, and Stevens then tried to introduce it as a substitute for the Covington bill, only to be told that Wilson supported the Covington plan, the whole thing had been settled, and the committee voted it down.
Rublee and Stevens then decided that if the Senate would not even consider it because the president would accept only the Covington measure, then their only chance would be to talk Wilson into supporting a strong commission. They got Senator Henry Hollis of New Hampshire to make the appointment, and then Rublee went to tell Brandeis what he had done. The Boston attorney questioned him closely, making him defend the change. Rublee may have thought that Brandeis wanted to see if Rublee could convince him; it is just as likely that Brandeis wanted to make sure that Rublee could make a good case to Wilson. After all, the president would have known that Rublee acted as Brandeis’s lieutenant and would assume that he was there on Brandeis’s behalf. Then Brandeis surprised Rublee by agreeing to go to the White House with him.
The four men originally had a half-hour appointment with Wilson, but he kept them there far longer and, because of the beautiful spring weather, moved the meeting out of the Oval Office onto the White House lawn. Hollis said little. Stevens made the opening remarks, explaining why they had come and why they believed a strong agency necessary. Rublee then went over the proposal in detail, answering Wilson’s questions. (Wilson, one can be sure, knew about the Stevens bill and had at least since April, when Hapgood had written to him that Rublee had been the bill’s chief author.) Brandeis himself said little, but made it quite clear to Wilson that he supported Rublee’s plan. By the end of the meeting Wilson had apparently signed on to the strong-commission proposal, although he still had a few questions. As they left, Brandeis, surprised and pleased by the president’s decision, took Rublee’s arm and said, “That’s the most remarkable interview that I’ve ever been present at. I’ve never seen anything like this before.”
As it turned out, just as Rublee left, James Covington showed up to see the president, who told him that he had changed his mind and had decided to support a strong regulatory commission. Covington immediately went over to Brandeis’s hotel room, where he sat down with Rublee, Stevens, and Brandeis and went over the new measure. That evening Brandeis, Rublee, Hollis, and Stevens dined together at the Tea Cup Inn to prepare answers to the president’s queries. Louis told Alice that he felt he had to take a strong hand, not only to help George, but also to ensure that some very bad legislation did not pass.
Within days the Stevens bill, now with Wilson’s backing, had been substituted, and the whole tone of the debate shifted. Here again Brandeis did not work the committee rooms, write speeches, or reassure hesitant senators, but his lieutenant did, and everyone Rublee spoke with knew that he carried not only Brandeis’s support but Wilson’s blessing as well. When necessary, however, Brandeis would step in, as he did when Moses Clapp began fulminating that Wilson, whom he derided as “Morgan in the White House,” had given away too much to the interests. Within a short time, Congress created the Federal Trade Commission and, because that agency would, under section 5, be able to issue cease-and-desist orders, deleted some of the more controversial criminal provisions of the Clayton bill. Brandeis later regretted that this had happened, and believed the Clayton Act would have been more effective had the Senate committee not removed some of the provisions he had managed to get into the House draft.
Did Brandeis suddenly abandon the sunshine plan? Did Rublee, on the strength of his argument, suddenly convert Brandeis on that sparkling June day? There is no letter or other document to verify one view as against another, but a reasonable surmise can be made. In a perfect world, Brandeis and Wilson would have both preferred a sunshine agency to one with strong powers, simply because both of them feared big government. Moreover, any mention of strong government invoked Roosevelt’s idea of power to control big business. The Federal Trade Commission had far more powers than any sunshine bureau, but while it could issue cease-and-desist orders—a very powerful weapon—it could not regulate business in the way that TR had implied in 1912. The commission, thanks to Brandeis, also had the authority to issue advisory opinions in response to business requests. This fit perfectly with his ideas on the regulation of competition. Brandeis did not abandon his principles in the revised Covington bill; rather, the bill would, he hoped, lay the necessary groundwork for a revived and competitive economy.
Brandeis wanted, on the one hand, a proscriptive bill that would clearly outlaw certain practices, such as interlocking directorates. But once the worst sins had been identified, businesses would still need guidance to ensure that they did not act either illegally or in a way that transgressed the idea of fair competition. Lawyers could advise them on the overtly illegal, but even the best lawyers could make only a judgment on whether a particular activity would be considered anticompetitive. Businessmen and their lawyers needed more precise information.
Ever since John Jay served as chief justice in the 1790s, federal courts have refused to give advisory opinions, such as whether a particular presidential action or a congressional bill would be constitutional or not. Because the FTC was a federal agency that had quasi-judicial powers, and because the enabling legislation was silent on this point, some people argued that the FTC should not issue advisory opinions. Brandeis, however, came from a state where the high court did issue advisory opinions in response to questions from the governor or the assembly. Also, as a commercial lawyer, he thought it made far more sense to have an agency that could give businessmen and their lawyers solid information that they could then utilize in formulating business strategies. When the commission organized in April 1915, it held a series of hearings on how it could best use its powers and whether it had certain authority. Brandeis appeared and spent the better part of the morning convincing the commissioners that they did have the power to issue advisory opinions.
The FTC, even though hampered by what Brandeis and others believed to be bad appointments, did take a number of actions that carried out his ideas for regulated competition. In the 1920s the commission worked closely with accounting groups and trade associations to develop standardized methods of cost accounting, a tool Brandeis believed essential in providing alternatives to cutthroat competition based on huge volume sales. The FTC also facilitated the growth of trade associations and then helped them to draw up codes of fair conduct. In addition, the commission promoted scientific management in the form of analytical studies that it made available to business.
Wilson and others may have thought that Brandeis’s idea of regulated competition meant little more than drawing up a Robert’s Rules of Order for the market and then leaving businesses to act accordingly, relying on an honor system for enforcement and negating the need for almost any governmental involvement. Brandeis, because of his extensive experience as a commercial attorney, understood that businesses without effective guidance would be at a loss to understand the rules, and because conditions changed continuously, there would always be new questions to be answered. The Federal Trade Commission would be able to do this through advisory opinions. Just as important, the FTC could develop the tools needed to make regulated competition work. Brandeis did not abandon his principles in the revised Covington bill, nor did he find George Rublee’s suggestions unfamiliar. He had assumed he would not be able to get anything more than a sunshine agency and jumped at the opportunity to get a commission that he hoped would have the ability to facilitate regulated competition.
BRANDEIS COMPLETELY FAILED in one area, however. He could not get either a price maintenance provision added to the Clayton Act or a separate bill enacted. Long a foe of cutthroat competition, Brandeis believed that manufacturers ought to be able to set the minimum price at which their goods could be sold at retail. He opposed volume discounts, whereby larger purchasers could buy a product at a per-unit cost less than a small retailer would pay. For him, a fixed price worked to the advantage of the small-business man, because he would not be at a disadvantage in competing against bigger stores. Fixing retail prices, he argued, would make it possible for a small retailer, knowing he would not be undersold on a particular item, to offer other items, and thus compete against other stores, even bigger stores, on the basis of service rather than price. “Every dealer, every small stationer, every small druggist, every small hardware man, can be made a purveyor of that article,” he argued, “and you have stimulated, through the fixed price, the little man as against the department store, and as against the large unit which may otherwise monopolize that trade.”
The only reason department stores could undersell smaller competitors is that they bought in bulk and thus enjoyed quantity discounts. This gave an unfair advantage to larger retailers, Brandeis claimed, and the practice should be prohibited. Alben Barkley, then a first-term congressman from Kentucky, could not believe he had heard Brandeis correctly; after all, quantity discounts had been an accepted business practice for centuries. But Brandeis insisted; he termed such discounts “fraught with a very great evil” and thought they should be outlawed.
Here McCraw’s characterization of Brandeis as, if not anticonsumer, then at the least uninterested in the consumer, is surely accurate. Brandeis did not care if a person had to pay a bit more for a specific product, because what he termed fair-trade price maintenance worked to the benefit of small businesses, and they, not consumers who foolishly bought by price, needed protection. In a 1923 letter to the economist George Soule, Brandeis blamed high prices in part on the consumers themselves, who refused to use their heads or their buying power intelligently. “The consumer is servile, self-indulgent, indolent, ignorant. Let the buyer beware.” Whether this view can be characterized as the difference between the nineteenth century’s producing culture and the twentieth century’s consumer culture is open to question, but it is clear that Brandeis had little of the “consumer” in him, and practically no interest in what we now call consumer preference, a bedrock principle of modern economics.
Whatever logic Brandeis marshaled, he never had a chance. To most legislators and businesspeople, quantity discounts made sense, while efforts to fix prices struck many as monopolistic, not much different from tying clauses. Larger retailers of course supported the discounts, and in their campaign labeled price maintenance as a device to get around the antitrust laws. Moreover, the Supreme Court in 1911 had held that patents did not give manufacturers the right to fix retail prices, and termed the practice anticompetitive. That decision would stand for almost a century until overturned in 2007, in a majority opinion by Justice Anthony Kennedy that sounded vaguely Brandeisian.
“ROOSEVELT BIT ME,” William Allen White famously remarked, “and I went mad.” The same would not be said by Brandeis about Wilson. Although he greatly admired him and advised him on various matters right up to the latter’s death in 1924, Brandeis recognized the president’s shortcomings. He applauded Wilson’s actions to repeal the exemption granted to American coastal vessels traversing the Panama Canal, a clear violation of the 1901 Hay-Paunceforte Treaty, but thought the reasoning behind them pitiable. Wilson needed British backing in the face of potential trouble in Mexico. In essence, Brandeis told Alice, Wilson had gone to the Senate and said, “Gentlemen, if you don’t let me bribe the nations of Europe, I don’t know how in thunder I shall be able to handle our Mexican situation.” The worst of it, Brandeis concluded, was yet to come; after Wilson had paid this bribe, he would still not have any good way to handle Victoriano Huerta and Mexico. Brandeis had been unhappy with Wilson’s Latin American policies almost from the beginning.
He also deplored the poor quality of some of Wilson’s appointees to the Federal Reserve Board and the Federal Trade Commission. “[Edward N.] Hurley was no good at all,” Brandeis told Ray Stannard Baker. “Joe Davies was poor, and Senator [William] Harris small caliber, with no grasp of the real situation. It was a stupid administration.” After the Senate would not confirm the appointment of one of the directors of the so-called zinc trust to the Federal Reserve Board, Wilson had to withdraw the appointment and sent an angry letter to the Senate. Alice thought the letter showed poor judgment on the president’s part, and Louis agreed. “He isn’t a good loser, and that defect will make him less courageous I fear, and perhaps not more careful,” he responded. “The general effect will probably be to make him fear progressives more, treating all opposition as cantankerous.” Brandeis also believed Wilson failed to comprehend the curse of bigness, focusing on the evils of monopoly rather than on the greater menace of immense size.
With the outbreak of the war in August 1914 and Wilson’s sense of needing to placate the business community, Brandeis’s influence with the president began to wane, although Wilson continued to hold the Boston attorney in “the highest personal esteem.” Years later, Brandeis still spoke approvingly of Wilson during the first few years of his administration, although he made many mistakes, starting in August 1918. With his puritan values, Brandeis appreciated Wilson’s stern Presbyterian standards, although he recognized in Wilson a rigidity that often frustrated political negotiations. In all his experience, though, Brandeis had never seen such a purifying influence in Washington as he had in 1913 and 1914. Wilson “changed the atmosphere,” he recalled, “and it was the only time in recent American history when rich men had not had an undue influence with an administration.”