Abstract: Living with Institutional Duality: Antitrust Laws, American Big Business and International Cartels, 1890-1940
The Sherman Act of 1890 made cartels illegal in the United States. At the same time, all other countries in the western world tolerated, or even encouraged cartel building before 1940. Indeed, the interwar period has been characterized as the height of the cartel movement and it has been estimated that at the outbreak of WWII cartels governed at least 40% of world trade . Thus any US company which was involved in international business had to deal with cartels in one way or another. This often created a very problematic situation as the behaviour that foreign companies expected of their US competitors (regulating competition through cartel coordination) was generally anathema to US antitrust authorities. For American big business to be able to be successful in both the US and in the international market they had to learn how to live with institutional duality. A number of US antitrust cases involving big business in the interwar years proves that this was not easy.
This paper studies how a number of big American companies tried to straddle the divide between different regulatory regimes and of different ways of doing business. By analysing the international behaviour of companies like Alcoa, Union Carbide, General Electric, Du Pont and Standard Oil and their relations with their European counterparts the paper will discuss the development of international business in the period from 1890 to 1940. Inspired by the framework developed by the varieties of capitalism literature, the article analyses how large US multinational companies handled operating under different business systems. What was the consequence of living with institutional duality?