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John Bates Clark on Trusts: New Light from the Columbia Archives

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  • Luca Fiorito

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  • John F. Henry

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Abstract

The paper sheds new light on John Bates Clark’s mature position on the “trust” issue. Access to previously unpublished 1911 testimony before the Interstate Commerce Committee of the U.S. Senate, it is shown that, although Clark relied generally on competitive forces to keep monopoly power in check, following the Standard Oil and American Tobacco cases of that year, he lost considerable faith in the power of his concept of “potential competition,” or latent competition that may or may not be realized. What he advocates here is government promotion of actual competition, largely through the dissolution of the “perilous” trusts and the development of a common pricing policy where all producers face the same price regimes in both the output and input markets. What is desired as an outcome is the promotion of what Clark terms “tolerant competition.” Tolerant competition is not the perfect competition of the neoclassical model, nor the rough-andready competition of the pre-1870 era. Rather, it is a live-and-let-live form of competition where big firms and small firms face the same pricing conditions and only efficiency determines the profit outcome.

Suggested Citation

  • Luca Fiorito & John F. Henry, 2005. "John Bates Clark on Trusts: New Light from the Columbia Archives," Department of Economics University of Siena 462, Department of Economics, University of Siena.
  • Handle: RePEc:usi:wpaper:462
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    File URL: http://repec.deps.unisi.it/quaderni/462.pdf
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    References listed on IDEAS

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    1. Jeremiah W. Jenks, 1912. "Economic Aspect of the Recent Decisions of the United States Supreme Court on Trusts," Journal of Political Economy, University of Chicago Press, vol. 20, pages 346-346.
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    Cited by:

    1. Giocoli, Nicola, 2008. "Competition vs. property rights: American antitrust law, the Freiburg School and the early years of European competition policy," MPRA Paper 33807, University Library of Munich, Germany.
    2. Luca Fiorito, 2012. "When Economics Faces the Economy: John Bates Clark and the 1914 Antitrust Legislation," Working Paper Series, Department of Economics, University of Utah 2012_01, University of Utah, Department of Economics.
    3. repec:oup:jcomle:v:5:y:2009:i:4:p:747-786. is not listed on IDEAS

    More about this item

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals

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