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Revenge: John Sherman, Russell Alger and the origins of the Sherman Act

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Abstract

This paper argues that Senator John Sherman of Ohio was motivated to introduce an antitrust bill in late 1889 partly as a way of enacting revenge on his political rival, General and former Governor Russell Alger of Michigan, because Sherman believed that Alger personally had cost him the presidential nomination at the 1888 Republican national convention. When discussing his bill on the Senate floor and elsewhere, Sherman repeatedly brought up Alger’s relationship, which in reality was rather tenuous, with the well-known Diamond Match Company. The point of mentioning Alger was to hurt Alger’s future political career and his presidential aspirations in 1892. Sherman was able to pursue his revenge motive by combining it with the broader Republican goals of preserving high tariffs and attacking the trusts. As a result, this paper reinforces previous public choice literature arguing that the 1890 Sherman Act was not passed in the public interest, but instead advanced private interests.

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Notes

  1. For an overview of public choice see Mueller (2003). For an overview of public-choice influenced research on antitrust policy and economic regulation, see Shughart (1995), Kovavic (1995), McChesney (1995), and Shughart and McChesney (2010).

  2. For examples of research that consider the Sherman-Alger motive plausible, see Bradley (1990), Josephson (1938), Hazlett (1992), Nam (2014) and Rothbard (2017). For examples that consider it implausible, see Kolasky (2009) and Thorelli (1955). A neutral interpretation is Letwin (1965). All of those scholars consider the explanation only briefly.

  3. I am indebted to Roger Donway for alerting me to the fact that Alger played only a limited role in the company and was neither its president nor a principal investor.

  4. With ominous foresight before the convention in mid-June, Ohio political heavyweight Marcus Alonzo Hanna, who supported Sherman, wrote to Ohio Governor Joseph Foraker to encourage Alger to back Sherman: “Better for his future… to be a power with a man like Sherman than merely a prominent citizen of Michigan.” Hanna also wrote directly to Alger, promising him a prominent position: “If you should be disappointed in this instance, and our man successful there is no reason why you should not have the consideration in the management of affairs that your high position deserves” (Bell 1975, pp. 224-225).

  5. Although Alger later was appointed to be Secretary of War under President William McKinley (1897-1899), his term unfortunately overlapped John Sherman’s tenure as Secretary of State (1897-1898). Cooperation between the two departments reportedly was strained during that time (Thorelli 1955, p. 402).

  6. A contemporary in 1896 noted that the fact that Sherman was still willing to dig up old skeletons showed just how much he could hold a grudge: “These extraordinary charges, it should be borne in mind, are not made in the first heat of anger and disappointment, but are set down deliberately in a book and published fully seven years later” (Bishop 1896, p. 311).

  7. Dilorenzo (1985, pp. 77–80) presents evidence which shows that many trust dominated industries expanded output and lowered prices greater than in non-trust dominated sectors.

  8. Gresham’s wife had the date wrong and wrote that it was December 6th, when it actually was the 4th.

  9. For evidence that Standard Oil increased its market share through efficiency and innovation, and state and federal antitrust lawsuits against it were instigated at the behest of its competitors, see Reksulak and Shughart (2011, 2012).

  10. Letwin (1965, p. 92) cites this article to emphasize that Sherman “did not forego the opportunity to indulge the passion; contemporary observers remarked the relish with which he read the opinion.”

  11. Matilda Gresham (1919, p. 574) had written earlier that “Possibly had General Alger not entered the lists, Sherman, as he professed to believe, would have been nominated. However this may be, the operations of the essentially business men’s [sic] candidate in the ’88 Convention were a potent factor in the enactment of John Sherman’s anti-trust act of 1890”.

  12. See also Dilorenzo (1985, pp. 80–82) and Troesken (2000, p. 80). That Sherman was more interested in protecting the tariff and the big business interests who benefited from it than in aiding small businesses can be seen from the fact that Sherman did not respond to lobbying from various small businesses asking for lower tariffs in trust-dominated industries or for laws against various types of vertical integration (Troesken 2002, p. 292). Troesken (2000) also provides evidence from the stock market showing that the trusts did not consider passage of the Sherman Act as threatening, but that the market reacted favorably to legislative progress leading to the tariff’s passage.

  13. Historians hardly can be faulted for that mistake since many of his contemporaries also considered Alger to have been involved with the company intimately; his actual relationship as a passive investor was buried in the historical record.

  14. The erroneous connection apparently started with Josephson (1938, pp. 414, 444 & 458), who called Alger the “match king” and the “monopolist of matches.” In reality, Josephson was mistakenly using a title that had been adopted to characterize Diamond Match’s actual head, O. C. Barber, sometimes also called “America’s match king.” Thorelli appears to have been the first historian to call Alger the “Diamond Match King” and also considered him to be “the moving spirit in the combine”; researchers afterwards have relied on those two sources as authorities for describing Alger as the head of the Diamond Match Company (Thorelli 1955, pp. 49, 168 & 402). Interestingly, Bell’s (1975) otherwise exhaustive biography of Alger does not mention the Diamond Match Company or Richardson v. Buhl et al.

  15. The hypothesis that Sherman actually thought Alger was the head of the company and pushed for the bill to also hurt Alger financially cannot be disproven definitively. However, as reiterated earlier herein, Sherman’s selective use of quotations from the Michigan court case hints that he knew what he was doing. Be that as it may, Sherman appears to have realized that an immediate and more directly rewarding consequence of his actions would be to hamper Alger’s future presidential aspirations.

  16. See Lee (2017) for an analysis of voters’ motives when they are influenced by hatred, anger, and revenge.

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Acknowledgements

I would like to thank an anonymous referee, Joseph Salerno, Mark Thornton, Ennio Piano, Rosolino Candela, Christopher Coyne, Samuel DeCanio, Thomas Dilorenzo, and especially Roger Donway for their helpful comments on earlier drafts of this paper. All errors are entirely my own.

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Newman, P. Revenge: John Sherman, Russell Alger and the origins of the Sherman Act. Public Choice 174, 257–275 (2018). https://doi.org/10.1007/s11127-017-0497-x

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