The pessimist sees the difficulty in every opportunity; the optimist, the opportunity in every difficulty.
—L.P. Jacks
The men at the stockyards didn’t catch on at first. To be sure, the cattle coming in to be slaughtered weighed more than they usually did. But there was certainly no limit to what a steer could eat or how much it could weigh. These heavy cattle were probably just better fed.
It did not take too long before the scheme was exposed. The heavier steers were not, in fact, better fed. Ranchers simply took their stock to a watering hole a couple of days before the end of the cattle drive. The steer filled up on water and their weight skyrocketed. No one discovered that the increased weight was illusory until long after the cattle were sold to the stockyard. But the increased weight meant more dollars in the ranchers’ pockets—and who could argue with some “ingenuity” in the drive for higher profits?
In time people began to worry about another kind of watered stock—securities representing the assets of a business. People acting in good faith assumed that a business security, or stock certificate, represented something of value in the company (at least when the stocks were first issued). Sometimes, however, the assumption proved to be too much. Promoters looking for a quick profit might offer far more stock in the business than was justified. Selling stock equal to twice the value of the company, for example, might give the company some undeserved money; but it did nothing for public confidence in business ethics. By the end of the nineteenth century, many states, including Massachusetts, had adopted laws prohibiting what became known as “watered” stock.
The problem was especially troublesome in the case of public utilities. These companies provided an important public service and in most states were guaranteed a certain return on their investments. If a company could convince the regulatory authority that its stock was not watered, the owners could usually obtain a return on all the funds that had been invested in the company. It all came down to a question of the company’s capitalization—or how much money had actually been put into the business.
Edward Warren (not related to Sam Warren) understood all these basic concepts of utility regulation; and that was what bothered him about the Boston gas situation in the early 1900s. The public, he explained to friends and colleagues, was about to be cheated.
The situation had changed dramatically since 1823, when the Boston Gas Light Company became the first firm to offer natural gas to the public in Massachusetts. It appeared to be a good business, and by 1855 there were thirty-eight companies. Competition was keen, and there seemed to be no ethical limit to the devices firms used to beat their rivals. The environment was not entirely pleasant—predatory pricing, public deception, and other sordid practices became commonplace. And more than that, there was an unnecessary duplication of facilities. Government regulation seemed to be the only satisfactory answer, and in 1885 the legislature created the Board of Gas Commissioners, which, when the agency assumed supervisory authority for electricity, became the Board of Gas and Light Commissioners. The Board was given broad responsibility for the regulation of gas companies and their rates. In 1894 the legislature added an anti-stock-watering provision that empowered the board to control the price of new stock offered by the gas companies.
But all these regulatory measures were not enough. There was still too much competition—and with it too much duplication and waste. In 1903 the eight gas companies serving Boston and Brookline, a suburb of the city, decided to consolidate themselves into a single company. The legislature approved the consolidation and directed the Board of Gas and Light Commissioners to determine the “capitalization” of the new company—the amount of money that could be used as a basis for calculating the prices of the new stock; that figure would in turn determine the amount of money the new company could collect in gas rates from the consumer (since the rates would enable the company to earn a certain return on its capital, or investment).
Brandeis and Filene’s Public Franchise League opposed the consolidation bill. As in the earlier transit fight, the League was convinced that the creation of a single large public service company would create monopoly power that could dominate the regulatory authorities and escape public control. The law also offered a chance for mischief when it directed the Gas Commissioners to give “fair value” in assessing the amount of capital in the company. There was too much room in that loose phrase for shady deals. Who could really say what was “fair”?
Brandeis had not taken much interest in the 1903 consolidation bill. He was too preoccupied with his private practice and his other civic activities. Instead, Edward Warren had carried the ball for the League—and he felt that his lack of success in the legislature could be attributed to the lack of support from Brandeis and some other League members. So when the matter of capitalization was scheduled to come before the Board of Gas and Light Commissioners, Warren became concerned. He was afraid that the gas company would get approval for a capitalization higher than it deserved.
Warren’s fears were not academic. The gas company wanted to capitalize at about $20 million. The company claimed that the value of the stock of the eight consolidated companies was more than $24 million, and the proposed ($20 million valuation was the minimum it would accept from the Board. Warren took a different view. Only about ($9 million had been invested by stockholders in the companies, and the companies had borrowed another $6 million. Therefore, the company could not be valued at any more than $15 million—and even that might be high because all of the money might not have been used for capital investments. As for the $24 million claimed by the company, Warren thought that that was clearly excessive. The $9 million difference between his value figure and the companies’ represented surplus earnings the companies had obtained from the public. Warren concluded that the companies were able to acquire that surplus only because they had charged the consumer too much for gas. And it would be the height of irony if those overcharges could be used by the consolidated company to increase its valuation to $20 million, because then the company could use that valuation to justify charging the public even higher rates. In short, if the company’s plan were adopted, the public would be exploited not once but twice. And for Warren, once was too much.
He knew, however, that logic and statistics might not be enough to carry the Board. He needed the support of public figures like Brandeis. They alone could counter the pressure that would certainly be exerted by the gas company. Warren’s analysis was sound in theory; he just didn’t know whether the League would give him the support he needed. Warren was not shy about expressing his apprehension. “I cannot help feeling that the Public Franchise League is not concerning itself as it should with the Gas situation,” he wrote to Brandeis on April 30, 1904. Mayor Patrick Collins was very upset and was prepared to use his office to prevent the Board’s approval of an excessive capitalization for the consolidated gas company. The League had to be prepared to fight with the mayor, Warren said. In fact, it might even be wise to get the legislature to repeal the 1903 law and avoid the whole issue of capitalization. But Warren was adamant that the League had to take a firm stand. “If the League is not disposed to take this course,” he added, “I feel disposed to interest a new set of men, for I think it is of too great importance to be neglected. I sometimes fear the League has outlived its usefulness but I hope it is not so.”1
Brandeis did not take the challenge lightly. He too recognized the dangers of a powerful monopoly in the provision of important public services. A community could not control its own destiny if the government were more responsive to the pleas of special interests. So there was no doubt that the situation was indeed serious. But Warren, Brandeis thought, was getting a little carried away.
In a letter to his colleague, the Boston attorney explained that an effort to repeal the 1903 law would be “quixotic.” Better to deal with the existing situation than to waste energy arguing about something that had already been decided. But in resolving the capitalization issue, Brandeis agreed with Warren that it would be necessary to enlist the “moral support and assistance” of outside groups. And the League remained a leading member of those outside groups. “I do not share your fear,” Brandeis wrote Warren, “that the League has outlived its usefulness, but I am of the opinion, which I think I have expressed to you from time to time, that its membership should be strengthened by the introduction to it of new men, preferably younger men. I think it would be a great mistake,” the lawyer cautioned Warren, “to form a separate organization and thus lose the influence which the Public Franchise League has justly earned for itself.”2 And as a measure of his own good faith to become more actively involved, Brandeis sent another letter to Warren within a few days that discussed some of the legal principles involved in the capitalization issue.3
Warren was satisfied with this response, and he made no effort to bolt the League—at least not yet. Brandeis carried through on his promise and took charge of the campaign. He kept close tabs on developments. He continued to work with the press in maintaining the League’s public relations effort—as in the transit fight, he knew that public opinion could ultimately prove to be critical. He also conferred with Thomas Babson, the city’s attorney, and the mayor, whom he addressed as “General Collins.” But that was not enough. Although the mayor and Babson indicated that they shared the League’s perspective, Brandeis maintained a certain skepticism that they would come through in the pinch. So he secured the services of an aggressive and independent attorney to “assist” Babson. George W. Anderson, then forty-three, entered the scene. He not only initiated a relationship with the city attorney; he also began a friendship with Brandeis that was to endure many conflicts and last the rest of their lives.
Before long Anderson was doing most of the legal work for the League in the gas fight. Brandeis was more interested in getting other “outside” groups into the act. In early March 1905, he approached the Massachusetts State Board of Trade and offered to represent them for free on the gas question. As an association of merchants, the Board was of course concerned with utility rates. It was too good a deal to turn down, so Brandeis became the Board’s attorney. And none too soon. Governor William Lewis Douglas was considering legislation on the whole question, and the Board wanted to get its views registered before the governor reached any conclusion. And more than that, the Joint Legislative Committee on Public Lighting was about to convene its hearings on the capitalization of the Boston gas company. More and more people were criticizing the 1903 law’s command to give the gas company “fair value” in assessing its capital. It was hoped that the law could be made more precise. The legislature was also being pressed to consider a new law that would govern all utility consolidations and not just the one for gas companies.
On March 9, 1905, Brandeis appeared before the Committee on behalf of the State Board of Trade. At the outset he made it clear that the Board’s only goal was to ensure that the gas consolidation “be in accordance with the wise and established policy of the Commonwealth prohibiting stock-watering of quasi-public corporations. . . .” Of course, said Brandeis, the company was entitled to rates that would give it a fair return on its investment. But “in order to determine what a reasonable compensation is and to limit the return on capital to a reasonable compensation, it is essential that there should be before the public a knowledge of the capital originally invested in the enterprise.”
Because anti-stock-watering laws placed a limit on profits, some people viewed them as “communistic or socialistic.” Brandeis did not give much credence to those concerns. “To my mind,” he told the legislators, “nothing can be farther from the fact. When Massachusetts passed the anti-stock-watering laws, it adopted a measure of a most conservative character—a measure more potent for the protection of individual property than any other which could have been devised. The greatest factors making for communism, socialism, or anarchy among a free people are the excesses of capital. . . . It is certain,” Brandeis observed, “that among a free people every excess of capital must in time be repaid by the excessive demands of those who have not capital. Every act of injustice on the part of the rich will be met by another act or many acts of injustice on the part of the people.”
It was vital, said the Boston attorney, that no special exception be made for the Boston gas company. “The moment you make an exception and grant special privileges to one set of men,” he noted, “you create a score of evils. You create a feeling of unrest. You lay the basis for a charge of favoritism and of injustice.” It was therefore important for the gas consolidation to be implemented under general laws and policies. And if the gas companies get less than what they sought, so be it. “They will lose nothing more,” said Brandeis, “than the improper hope which was entertained at one time.”
Here again, the basic issue was the right of the people to control their own affairs. “We have a system [in Massachusetts],” Brandeis explained, “by which the public service company is sure of its rights as long as it deals justly with the community; and the knowledge that this continued existence is dependent upon the good will of the people protects the companies from committing arbitrary or unjust acts which would incite public indignation and lead to curtailment or destruction of their rights.”4
That was all well and good, but the Committee had a specific case before it. Could the gas company declare its normal 8 percent dividend on its $9 million surplus and then use those dividends to impose higher rates on the public? Brandeis’s response was not as tough as his rhetoric. Yes, he replied, there could be some dividends on the surplus—but no higher than the 4 or 5 percent interest that could be charged on a loan. Apparently, Brandeis did not want to totally alienate the company. Compromise was probably a necessity.
Dr. Morton Prince, a member of the Public Franchise League, immediately rose to say that Brandeis did not represent the League and that the League was strongly opposed to any dividends on surplus. Brandeis was not moved. “There is in the community,” he said, “such a thing as vested wrongs as well as vested rights. The community was wrong in allowing the surplus to pile up. There should be some return on the surplus; that fund is one in which the community has an equitable interest, but it has no right to confiscate it.”5
Brandeis knew that the gas company would still find his position objectionable. He was willing to allow dividends on surplus at a reduced rate; company representatives wanted the standard 8 percent dividend applied to surplus—and they thought they had enough influence with the legislature to get it.
Edwin Sprague, an official of the State Board of Trade, was still pleased with Brandeis’s performance. “I want to say,” Sprague wrote, “that your argument before the Committee on Public Lighting today was a most excellent and forceful presentation. . . .”6 Edward Warren did not share Sprague’s enthusiasm. After all, Brandeis’s views did not coincide with the League’s, and wasn’t Brandeis the League’s attorney? “There seems to have been an unfortunate misunderstanding in regard to your position at the hearing before the Public Lighting Committee, as far as the Public Franchise League is concerned,” Warren wrote to Brandeis on March 10, 1905. “In the first place our Executive Committee certainly understood that you had volunteered to represent the League, as well as the State Board of Trade, on behalf of the general bill. Secondly, you advocated to the Committee the desirability of dividends being paid on the surplus earnings of a public service corporation, though I believe at a lower rate than on the paid-in capital. So far as I know this doctrine is not held by the members of the League. . . . Don’t you think,” Warren concluded, “we should have a clearer understanding in the future?”
Brandeis could certainly appreciate someone who vigorously fought for what he thought was right. He had done it—and would do it again—many times himself. But he was losing patience with Warren. The man was so obsessed with the policy against stock watering that it blinded him to political realities. The surplus may have been a wrong to begin with, but now the money legally belonged to the gas company. It would be unfair to prevent any dividends on it—or so Brandeis thought at the time.
Brandeis tried to set Warren straight. He was certainly right, Brandeis wrote, that an attorney representing the League “should represent fully the views of the League,” regardless of “whether he is paid counsel or not. . . .” But Brandeis was not acting for the League. Moreover, Prince had fully explained the position held by Warren, so no damage was done. Finally, Brandeis said that, to his knowledge, the League members had never voted on the matter—but maybe now they should. The critical questions would involve the value of the new stock and the dividend to be allowed on it. Brandeis accepted the view that the amount of capital could determine the value of the stock; but, said Brandeis, the dividend rate should “have nothing whatever to do with fixing the amount of the capitalization. . . .” Instead, the dividend should be tied directly to the rates. If the company charged the public $1 for a unit of gas, it should get a lower dividend than if it charged seventy-five cents. This was a “sliding scale” designed to give the company an incentive to lower rates. The lower the rates, the higher the dividends.7
Warren was not at all persuaded. So when the League executive committee and the State Board of Trade representatives met in a joint meeting at the Hotel Bellevue on May 3, 1905, Warren argued strenuously for his position. Both the dividend and the rates should be fixed, he asserted; otherwise the monopoly would—somehow, some way—take advantage of the situation. Brandeis disagreed just as vehemently. It was important to give the company an incentive to lower rates. Regulation by statute was inefficient and likely to be ineffective in the end. “Brandeis made a wonderful speech,” Warren recalled years later. “I have always felt personally that it was his forceful personality, his determination to carry the point, which carried the committee. . . . Brandeis has a wonderful magnetism when he speaks, and he has a wonderful way of carrying his points, and he carried those men right off their feet.”8 The vote was overwhelmingly in support of Brandeis.
However much he admired Brandeis’s rhetorical skills, Warren was not about to give up. At a luncheon meeting of the League the following day, the matter came up again. If the legislature hadn’t reported the bill yet, Warren said, couldn’t the subject be discussed one more time? Norton Prince quickly supported Warren. He pointedly asked Brandeis whether the issue could be reopened. Brandeis had had enough. He turned to Prince and Warren and sarcastically said, “Don’t cry, baby!” That reaction hit Warren like a bulldozer, and years later he would cite the episode to justify his opposition to Brandeis’s appointment as a Supreme Court justice.9
In part, Brandeis’s impatience with Warren and Prince no doubt reflected the fact that he had already worked out a compromise with the Boston gas company. It had not been entirely his doing. In fact, he found some unexpected allies in the gas company itself.
The publicity agents for the company had come upon an ingenious scheme. They began sending out “news” stories to the daily papers; and if the papers agreed to run them without indicating the source, the company would pay the paper’s normal advertising rates. Some papers could not resist the temptation. “I’m a merchant just like you,” Charles H. Taylor, owner of the Boston Globe, told an inquiring Edward Filene. “I sell my merchandise at a dollar a line.”10 Other papers had a little more integrity. The Springfield Republican exposed the scheme in bold headlines, and soon the gas company felt public support ebbing away. It was time to cut a deal.
The new president of the gas company, James L. Richards, decided to call on Brandeis. Richards was a tall, dark, handsome man with pointed features. He had made his fortune in the tobacco business and then quit. Because his reputation as a businessman was so good, and since he was available, the gas company got him to take over. Richards explained to Brandeis that he had nothing to do with the ads and agreed that they should be condemned. He also had some ideas on a bill to allow the consolidation of the gas companies. Both he and Brandeis now knew that the legislature would not adopt a general bill concerning all consolidations by utility companies. The question, then, was how much stock and dividend the gas company would be allowed. Richards proposed a capitalization of $15 million and a sliding scale system along the lines proposed by Brandeis.
Brandeis was having second thoughts about pushing for the sliding scale system now. He had already received some indication of political resistance to the concept.11 He did not want to undercut Richards’s offer by fighting for a provision that was probably doomed to failure. Politics was the art of the possible, and Brandeis was willing to settle for a fixed amount of capitalization. The sliding scale proposal, he told Richards, could wait until next year.
Over the next few days Brandeis and company representatives conferred at length on a compromise bill. Upon inspection it turned out that Richards’s $15 million proposal did involve a small amount of stock watering. This was so because the value of some of the stock now exceeded its original cost; hence, the consolidated company was paying more for the stock than it represented in investment. Brandeis was no purist, however. He could compromise for the sake of resolution.
Not so other people. Edwin Sprague and the State Board of Trade, for instance, were very disappointed with the compromise gas bill. None of that seemed to matter much to Brandeis. Although he had agreed to represent them in the gas fight, it was now clear that their views were largely irrelevant. Brandeis had the chance to accomplish something; and although he would try to persuade the State Board of the bill’s merits, he did not feel duty bound to advocate the board’s viewpoint.12 Nor was he deterred by criticism from other members of the Public Franchise League. George Anderson, for one, wrote to Brandeis that he opposed the bill and wanted none of the credit—or responsibility—for it.13
With Brandeis now on the “other” side, the opposition lost much of its influence. Before the summer arrived the law was adopted. In addition to the capitalization issue, the law did include one measure of relief for the public: Gas rates would be reduced from $1 to ninety cents per 1,000 cubic feet. But the job was hardly completed. Brandeis was now fixated on the sliding scale principle. And he was prepared to labor again to see it enacted into law.
Adolph Brandeis was getting old. He was now past eighty, and he was beginning to slow down. But his mind was as alert as ever. Frederika and Fanny were no longer with him, but he had Alfred and the rest of his family nearby. And he still had Louis.
His youngest child took vacations in Louisville. And he continued to correspond regularly with Adolph about a whole assortment of things—city planning in Europe, trade with the Far East, Secretary of State John Hay, immigration policy, and the “trick” of New York bankers who got rich on “other people’s money.” And when Louis had lunch with the chief negotiator for the Japanese in settling the Russo-Japanese War, he made sure that Al told their father all about it. Adolph and Louis even discussed football—and here Louis agreed with his father that the financial aspects of the game had changed it from a sport to an obsession in which any tactic was employed to win.14
Louis also kept his father advised of his political activities, and there was plenty to report on that score. In addition to his numerous civic causes, Louis was now heavily involved in Boston’s mayoral election. It was an annual event, and in the autumn of 1905, Brandeis had a special reason for becoming interested: Louis Frothingham was seeking the position at City Hall.
Frothingham was descended from a long line of distinguished forebears, including the legendary Puritan governor John Winthrop. He was in every sense a blueblood. He had attended the prestigious Boston Latin School and then Harvard College. In 1901 he was a Republican serving the first of four consecutive one-year terms in the Massachusetts House of Representatives. He then became one of only four representatives from Boston to vote against the Washington Street subway bill being pushed by the Elevated Railway Company. Brandeis took note of the young man’s courage. And that admiration was enhanced considerably when Frothingham became Speaker of the House and helped push the compromise gas bill through the legislature. Brandeis knew a good leader when he saw one, and being a public figure of sorts himself now, he wanted to do what he could to help his political ally.
For Brandeis it was an easy choice. The other candidate for the Republican nomination was a political hack named Henry Dewey, and Frothingham ultimately defeated him in the November primary. The Democratic opposition was another story. John F. Fitzgerald—”Honey Fitz” to friends and admirers—was a young Irish politician with a lot of clout. Decades later he would achieve fame posthumously as the grandfather of a United States president named John F. Kennedy. But in 1905 Fitzgerald’s reputation was not one of an eloquent idealist. Quite the contrary. Many people thought he was just another corrupt politician who traded patronage for votes. Edmund Billings, a member of the Good Government Association, wrote to Brandeis in late November that, according to reliable sources, Fitzgerald “is an out and out ‘grafter’ and . . . no kind of ‘graft’ is too small for him to stoop to.”15 Brandeis asked Billings to substantiate the charges, and in a few days the Boston attorney wrote letters to the editors of Boston newspapers explaining his support for Frothingham. I may be a Democrat, Brandeis said, but the Republican nominee was clearly the better candidate.
It was all to no avail. Fitzgerald easily defeated Frothingham and remained mayor. Even without the help of Frothingham, though, Brandeis was still ready to push for adoption of the sliding scale system in gas regulation. If they couldn’t have the help of old friends like Frothingham, they would make new ones. And that they did.
The governor had already appointed a special committee of five to review the operation of the sliding scale system in London. The three Gas Commissioners on the panel found much to criticize. The system could lead to higher corporate dividends; and although those increases would be accompanied by lower rates, they probably would include a deterioration in service as well. One of the other two members on the panel was Charles Hall, a close friend of Brandeis’s. Hall and the other member saw much merit in the plan, and they were willing to let Brandeis help them write their minority report.16
Brandeis recommended that the gas company be allowed an initial 7 percent dividend—a 1 percent reduction of the current dividend. However, Brandeis offered the company a carrot—for every five-cent reduction in unit rates, the company could get another percent added to the dividend. So if the company reduced its rate from ninety cents to eighty-five cents, it could distribute 8 percent dividends to its stockholders.
There was a great deal of dissension in the Public Franchise League over this proposal. Edward Warren and some others resigned from the League and publicly voiced their criticisms. But there was one man who still sided with Brandeis in the controversy: James L. Richards. The gas company president believed in the wisdom of the sliding scale system. On April 20, 1906, he wrote to Brandeis that he was willing to go along with the plan—as long as he remained free in public to disavow it if it should fail in the legislature. The company was asserting a right to an 8 percent dividend from the start, and they did not want to be undercut by agreeing to accept the 7 percent dividend advocated by the League.
Brandeis smelled success. He began to crank up his public relations efforts. He checked his elaborate filing-card system, determined which newspapers had supported him in the earlier gas fight, and then sent letters asking for continued support.17 The articles and letters were duly published, and it helped pave the way through the legislature. “We have won so far, triumphantly in the House, and the prospects are good in the Senate,” Louis reported to Al on May 20, 1906. “But we have many opponents—the most active being some of our own former associates who are in my opinion fanatics, and as ready to do injustice to capital as the. capitalists have been ready to do injustice to the people.”18
Within a few days the bill was passed by the Senate and sent to Governor Curtis Guild for signature. He ultimately signed it. But it was no simple matter. “The Governor signed our Sliding Scale Gas Bill, after much heartrending wrestling yesterday,” Louis wrote to Al on May 27. “The poor man was sorely distressed and made me lots of work.” As for his own role in the affair, Louis was rather matter-of-fact about it. “I succeeded in running this campaign mainly by putting others on the firing line,” he told Al; “as your [daughters] would say, ‘the man behind.’”19
For Brandeis there was much reason to feel satisfied with the result. There would now be no need for government ownership of the gas company—a prospect that carried the risk of corruption. Nor would there be a need for detailed regulation by government—a prospect that carried the risk of inefficiency. Instead, the gas company itself would have an economic incentive to be both efficient and fair. It was perhaps the ideal way for the community to retain control over its affairs. The only question was whether the system would remain viable.20
Ten years later Brandeis had more important matters on his mind. He was fighting for confirmation as a justice of the United States Supreme Court. But James L. Richards, still president of the Boston Consolidated Gas Company, was in constant touch with him on the gas legislation. Things had not fared as well as they had hoped under the new law. By 1907 the gas rate had been reduced to eighty cents and the dividends increased to 9 percent. And there things stood. In nine more years there were no more changes. Meanwhile, in cities that did not have the sliding scale system, like Lynn and Worcester, the rate was already down to seventy-five cents. The Gas Commissioners, who never liked the system to begin with, complained that the gas company was using “unorthodox” accounting methods and hiding extra profits. People were clamoring for a change in the law, and in a short time they got it. The sliding scale system was dead.
In retrospect, it was easy to see the law’s principal defects. The idea was sound as long as there was a close relationship between management and ownership. But as companies grew large and the stockholders became more dispersed, the system broke down. It was not enough of an incentive for managers to be told that their efficiency would be rewarded by increased dividends to stockholders—people who probably didn’t even know the names of company officials. The managers needed a piece of the pie too—something that would be more tangible for them. Maybe that’s why they used “unorthodox” accounting methods.
Aside from that problem, there were others down the road. To begin with, technological innovation would enable the company to reduce costs—but it was not the kind of development that warranted a reward for the stockholders. And then there was the prospect of inflation. With increasing costs there would be little likelihood—even with increased efficiencies—of reducing gas rates substantially. If anything, the price pressure would be upward.
The real significance of the gas fight, then, was not in any long-term control of gas rates. Rather, the effort was more noteworthy for what it revealed about Brandeis’s goals and methods in working for reform. First and foremost, the gas fight reflected his keen desire to find attractive alternatives to government regulation of business. To him, such regulation was usually inefficient, sometimes corrupt, and almost always less desirable than a system built on the natural incentives of the entrepreneur. In this context the sliding scale was almost an ideal solution.
Brandeis, however, did not entertain false hopes for the future. He recognized that changing circumstances sometimes made today’s solutions inapplicable to tomorrow’s problems. Indeed, it was for this reason that he himself drafted the provisions enabling the legislature to review and, if warranted, repeal the sliding scale system. So he could not have been entirely surprised when the legislature used that opportunity to try something else after ten years’ experience.
Lastly, the gas fight exposed the persistent drive that was to be a Brandeis hallmark in later activities, even on the Supreme Court. Achievement required careful work and patience, he believed. So he would not push for results unless the foundation for success had been laid; but once it was, he would strike as soon as the iron was hot—even, sometimes, if it required that he compromise personal and professional obligations. The compromise could mean, as in the gas fight, the abandonment of clients or organizations to which he had earlier been committed; or, as in later years, it could mean a willingness to retreat, if only temporarily, from otherwise cherished principles.
These occasional compromises did not indicate any indifference to moral precepts. Quite the contrary. Brandeis was very sensitive to doing the right thing. His scale for measurement, though, did not always coincide with others’. But whatever could be said of his standards for evaluation, he was a tenacious fighter, a man who believed that almost any obstacle could eventually be overcome. And if there was any doubt on that score, it surely was laid to rest when he tried to rectify the inequities in the insurance system.