Louis Brandeis helped design the Federal Trade Commission

Person: Louis Brandeis
Lived: 1856–1941
Field: Law
From: American

The story

By the early 1900s Louis Brandeis, a Boston lawyer born in Louisville, Kentucky, to Jewish immigrants from Prague, had spent years fighting powerful corporations in court, usually without pay. He became convinced that giant trusts were neither inevitable nor desirable. He argued that once a large company drove out its competitors, the quality of its products tended to fall while prices rose, and that such companies became less inventive because their secure positions freed them from the need to innovate.

Although the Sherman Antitrust Act had been passed in 1890, it was little enforced for years. By 1910 even leaders such as Theodore Roosevelt had come to believe that big business was here to stay and should simply be regulated. Brandeis disagreed. In a 1912 address to the Economic Club of New York, he argued that unless competition itself was regulated, its excesses would destroy competition and leave monopoly in its place.

In August 1912 Brandeis met the Democratic candidate Woodrow Wilson for three hours, and Wilson adopted his idea of 'regulated competition' as part of his programme. After Wilson's victory, Brandeis served as his chief economic adviser. He urged the administration to draft new antitrust legislation that would give the Department of Justice real power to enforce the antitrust laws, and he became one of the architects of the Federal Trade Commission, the agency charged with policing unfair business practices.

Wilson signed the Federal Trade Commission Act on 26 September 1914, and the Clayton Antitrust Act followed three weeks later. The new commission took over the staff and duties of the old Bureau of Corporations and gained power to challenge unfair methods of competition, price discrimination, interlocking directorates and anticompetitive stock acquisitions.

The historian Thomas McCraw wrote that Brandeis exemplified the anti-bigness ethic without which there would have been no Sherman Act, no antitrust movement and no Federal Trade Commission. His thinking has had a long life: it laid the intellectual foundation for the modern 'New Brandeis' revival of antitrust thought associated with figures such as Lina Khan and Tim Wu.

Why it matters

The Federal Trade Commission, which Brandeis helped design, has protected American consumers and small businesses from unfair competition for more than a century.

About Louis Brandeis

“The People’s Lawyer” who became the first Jewish Supreme Court justice in 1916, wrote classic defences of free speech and privacy, and led American Zionism.

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Louis Brandeis

1856–1941 · Law

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