In “The Real Villain Behind Our New Gilded Age” (May 1), Eric Posner and Glen Weyl perpetuate a common myth by writing that in late-19^th-century America “leaders put into place antitrust laws” because Standard Oil and other “great monopolies of that period … used their power to corrupt the economy and politics.”

In fact, as careful students of antitrust have shown, that legislation was enacted in order to protect smaller and less-efficient, but politically influential, producers from the dynamic, new, and more intense competition unleashed by entrepreneurs such as J.D. Rockefeller, Gustavus Swift, and James J. Hill. For example, as the economist D.T. Armentano documented about Standard Oil, “Prices for kerosene [Standard’s principal output] fell from 30 cents a gallon in 1869 to 9 cents in 1880, 7.4 cents in 1890, and 5.9 cents in 1897.  Most important, this feat was accomplished in a market open to competitors, the number and organizational size of which increased greatly after 1890. Indeed, competitors grew so quickly in the years preceding the federal antitrust case that Standard’s market share in petroleum refining declined from roughly 85 percent in 1890 to 64 percent in 1911. In 1911 [the year that Standard lost its antitrust case before the Supreme Court], at least 147 refining companies were competing with Standard, including such large firms as Gulf, Texaco, Union, Pure, Associated Oil and Gas, and Shell.”*

To the extent that the economy and politics of that period were corrupted, the guilty parties were opportunistic politicians serving as cronies for disgruntled competitors of the misnamed “robber barons.”

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* D.T. Armentano, Antitrust Policy (Washington, DC: Cato Institute, 1986), pp. 24-25.