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Business and Legal History

Morton Keller

• Brandeis University

The two winners of the 1978 Bancroft Prize in American History, Alfred D. Chandler's The Visible Hand: The Managerial Revolution in American Business and Morton J. Horwitz's The Transformation of American Law 1780–1860, are prime examples of important scholarly work currently being done in the fields of business and legal history. Each is a notable and worthy contribution to its own area of research; yet, while each deals with his subject in a broad institutional manner, neither author fully relates the impact of his own subject area to the other's field. Business and law, it would seem, developed institutionally independent of each other.

A duality governing the nineteenth and twentieth centuries in America was that of growth versus order. Following in the tradition of James Willard Hurst, Horwitz demonstrates how the law was fashioned and interpreted early in the nineteenth century to “release energy” and to create the nationwide conditions for economic growth. Later in the century the law was used, at least in part, to regulate the economic environment. The history of the late nineteenth and twentieth centuries has been described as a balance between “release” and “control.” Yet Horwitz sees the period as one of rigid formalism that continued mainly to serve business interests. Chandler, however, sees the institutional growth and development of nineteenth century business to be a function of its own inner dynamic, remaining largely unaffected by changes in the law. Neither author takes into consideration the sheer scale of the American legal system. In the 1930s, for example, fifteen million legal actions per year were recorded in the United States. Surely many of these litigations had a great impact on business conduct and institutions, and, these changes in turn had their effect on the law itself.

The three authors of the articles which constitute this issue of Business History Review approach their task by studying legal development within the context of economic and business history and vice versa. Tony Freyer studies the struggle during the late nineteenth century between the federal courts and local interests and its subsequent effect on the rise of a national economy. It was a struggle in which the federal judiciary resolved most of the issues along nationalist lines but one whose results nevertheless still maintained a considerable residue of local diversity. Gary Libecap examines the interplay between Western mining, the law, and its consequent legal and public policy effects. Freyer and Libecap show that the American economy developed within a considerable panoply of regulation long before the generally acknowledged rise of the Administrative State.

Charles McCardy discusses the development of corporate law in relation to the antitrust question. He concludes that the Supreme Court's action in the United States versus E.C. Knight Company case—which made the distinction between commerce and manufacturing—was a well established legal distinction and not a contrivance to enervate the Sherman Act.

These three articles show that the courts played an important and assertive role in the development of the United States economy both on the “macro” and the “micro” level. The interplay of business and law is a clear reality, and much more interdisciplinary work needs to be done to capture the results of this important interrelationship.