Antitrust

1

Monopoly—It’s Not Just a Game

The Roots of America’s Antimonopolist Movement

A Trip Down Monopoly Lane: The Game, the Colonists, and the Boston Tea Party

My favorite game growing up was Monopoly. While my dad, then a journalist with The Minneapolis Star, would sometimes convince my sister and me to play Scrabble, and the neighborhood kids loved our home version of Jeopardy! (complete with little metal clickers to take the place of the TV buzzer), Monopoly was in a class of its own. For one, it was endless, with weekend marathons at my friends’ houses, especially when it rained. For another it had weird tokens like a thimble and a wheelbarrow (now sadly replaced by the game’s “updated” tokens, which include a rubber ducky and T. rex).

With Monopoly, you could collect hotels and houses. You could moan when you paid exorbitant rents for landing on the superchic Park Place, and rejoice when you missed the dreaded Income Tax square. The basic concept was this: the more you owned, the more you controlled, the more you made, the more you squeezed your opponents out of existence. This was assumed to be the true—and the one and only—model of American capitalism. If you managed to monopolize the board by buying up multiple properties of the same color and covering them in rent-producing real estate, you took your opponents out of the game. Whole corners of the game board became debt traps, and with each roll of the dice and trip around the board your opponents would sell off more and more of their meager holdings just to afford your escalating rents. It was all about winning with monopolies, and there were no competing “antitrust enforcement” cards to get you out of the soup (line).

When I first started running that thimble token around the Monopoly board at the kitchen table of my best friend Amy Scherber’s family cabin, I never imagined I would end up as one of the two U.S. senators heading up the committee dealing with antitrust policy for our country. Yet when people ask me as a senator what monopolies and antitrust policy have to do with their lives, the answer I give now is the same one I gave back then as I raked in the Monopoly money rent on my railroads. Everything.

The answer is everything. Antitrust and monopolies have everything to do with our economy, the prices we pay, and the way we live.

The freedom to buy and sell goods and succeed on your own merit has long been at the core of American antitrust policy. But more important, a century before antitrust laws were even considered, the freedom to participate in a competitive economic market was a central guiding tenet of the American economy. It was one of the major reasons our country was founded in the first place when a ragtag group of settlers and colonists decided to start a new life in a new land. They were fiercely independent and entrepreneurial. And they wanted nothing to do with monopolies—especially government-controlled monopolies—dictating their economic choices.

The American colonists were well aware of the dangers of monopoly power. At the time of America’s birth as a nation, most of its people were farmers, many of them immigrants or descendants of immigrants who’d fled Europe to get a new beginning. They’d purposefully come to a country where they could practice their religion, politics, and entrepreneurship without rules and regulations and without a king telling them what to buy and whom to buy it from. While the European nations financed American exploration and settlements to expand their land acquisitions and trading markets, the actual people who settled America had a different plan in mind. They wanted liberty.

American colonists, as best exemplified by Benjamin Franklin, prized new inventions, but they despised monopoly power. The 1641 laws of colonial Massachusetts, known as “The Body of Liberties,” contain an audacious expression of the early Americans’ aversion to monopolies: “No monopolies shall be granted or allowed amongst us, but of such new Inventions that are profitable to the Countrie, and that for a short time.” Maryland’s first constitution, adopted in November 1776, just a few months after the Second Continental Congress’s issuance of the Declaration of Independence, specifically recited in its Declaration of Rights, “That monopolies are odious, contrary to the spirit of a free government, and the principles of commerce; and ought not to be suffered.” North Carolina’s constitution of December 1776 similarly asserted in its Declaration of Rights that “monopolies are contrary to the genius of a free state, and ought not to be allowed.”

In England, monopolies were technically illegal, except there was one gaping hole in English law: Parliament itself had the right to grant monopolies. In Darcy v. Allen (1602), which came to be known as “The Case of Monopolies,” the Court of the King’s Bench ruled that while members of the royal family could not grant monopolies to individual subjects, Parliament had free rein to do so. In that case, Edward Darcy (no relation to the fictional Mr. Darcy of Jane Austen’s novel Pride and Prejudice) had received from Queen Elizabeth an exclusive right to import, make, and sell playing cards. The queen felt that playing cards were too popular among servants and apprentices and had reduced productivity. Her solution? She put the entire playing card trade into one person’s hands. The beneficiary was Darcy, who held a position in the royal household known as groom of the privy chamber. After Thomas Allen, a representative of the Worshipful Company of Haberdashers, started making and selling his own line of playing cards, Darcy sued Allen for damages. While Darcy had manufactured “400 grosses of cards” at a cost of 5,000 pounds sterling, Allen, responding to public demand, had produced an additional 180 grosses of playing cards without any royal license to do so.

In what is now regarded as a foundational case in antitrust law, the English court ruled that Darcy’s patent to manufacture and sell playing cards was “utterly void” and constituted a violation of the English common law and acts of Parliament. As the decision was reported by the English jurist Sir Edward Coke, “The queen could not suppress the making of cards within the realm, no more than the making of dice, bowls, balls, hawks’ hoods, bells, lures, dog-couples, and other the like, which are works of labor and art, although they serve for pleasure, recreation, and pastime, and cannot be suppressed but by Parliament, nor a man restrained from exercising any trade, but by Parliament.” The court thus squarely rejected Darcy’s argument that Queen Elizabeth could—on her own—restrict the production and distribution of playing cards to moderate their use by servants or laborers or for any other reason. But Parliament kept the power to bestow monopolies for itself, later codifying and cementing its sole right to grant monopolies in what was aptly called the Statute of Monopolies (1624).

In the British Empire, the monopolies conferred by Parliament were the product of corruption, influence peddling, and outright bribes. By 1621, the year after the Mayflower had brought the Pilgrims to the New World, there were approximately seven hundred British monopolies in operation. As Christopher Hill writes in The Century of Revolution (1961), a typical seventeenth-century Englishman was “living in a house built with monopoly bricks, with windows (if any) of monopoly glass; heated by monopoly coal (in Ireland monopoly timber), burning in a grate made of monopoly iron.” As Hill further observed, “He slept on monopoly feathers, did his hair with monopoly brushes and monopoly combs. He washed himself with monopoly soap, his clothes in monopoly starch. He dressed in monopoly lace, monopoly linen, monopoly leather, monopoly gold thread.” A man’s clothes, Hill wrote of that time, “were held up by monopoly belts, monopoly buttons, monopoly pins,” with the man’s food “seasoned with monopoly salt, monopoly pepper, monopoly vinegar.” Even mice, Hill stressed of royal patents, “were caught in monopoly mousetraps.”

It makes perfect sense then that a major motivation of those sailing to the New World was to leave their monopoly handcuffs—not to mention their monopoly mousetraps—far behind. Just as the Pilgrims came to America in search of religious freedom, many settlers came to our shores in hopes of gaining economic freedom—the ability to buy land and farm on their own, get a new job and a fresh start. They were rewarded economically when other countries’ businesses bought their crops and goods, and they, in turn, wanted the freedom to do business with whomever they wanted, whenever they wanted. In Rights of Man (1791), a book dedicated to President George Washington, Thomas Paine—often described as the father of the American Revolution because of his authorship of Common Sense (1776)—lamented that England “is cut up into monopolies.” Paine’s ideal: “That there shall be no monopolies of any kind—that all trades shall be free, and every man free to follow any occupation by which he can procure an honest livelihood, and in any place, town and city throughout the nation.”

Thus, our country’s Declaration of Independence from England was not only a political Declaration of Independence from a foreign country but also an act of economic rebellion against monopoly power. Back then, colonists who even tried to compete against the British monopoly mercenaries could be fined or imprisoned by the Crown’s prosecutors. And when the economy got tough in England, the king—who, at the time of the American Revolution, was George III—would inevitably resort to more demands dictating from whom the colonists could purchase their goods. His purpose? To bring more profits back across the pond to the mother country in order to shore up England’s eroding economy.

One memorable example back in the 1770s of British efforts to impose a monopoly on America’s colonists? Tea.

The most common takeaway from the 1773 Boston Tea Party—in which colonists threw 342 chests of British East India Company tea into the Atlantic Ocean—was one of taxation without representation. That was most certainly part of the story. The colonists were protesting the English Parliament’s Tea Act because they believed it violated their rights to “no taxation without representation.” The Tea Act, which provided that tea imported into the colonies would be taxed, was the brainchild of Lord North, who’d become the prime minister of Great Britain in 1770. The East India Company, the monopoly established by England in 1600, was in dire financial straits, and Lord North—the British politician who was later said to have “lost America”—was attempting to rescue that failing enterprise with more American tax dollars after a severe famine in India had drastically reduced its revenue.

But there was also an underlying monopoly issue that led the Sons of Liberty—men like the Boston silversmith Paul Revere—to toss all that tea into Boston Harbor. During the lead-up to that act of rebellion, the colonists were buying lots of their tea from Dutch traders, with that untaxed tea illegally smuggled on ships from Holland, the Caribbean, and elsewhere. But the Tea Act sought to change things to favor the East India Company’s monopoly. As the historian Mary Beth Norton explains in her book 1774: The Long Year of Revolution, seven ships carrying East India Company tea had set sail from Great Britain to North America in October 1773 under the auspices of the newly adopted Tea Act. That law allowed the East India Company, for the first time, to sell its tea directly to colonists. Prior to that time, the law required the East India Company to sell its tea at London auctions to wholesalers, who then marketed it to retailers.

By December 1773, five of the ships carrying the East India Company tea had arrived in American ports—in Boston, Charleston, and Philadelphia—while one wrecked off Cape Cod and still another blew off course and got stranded in Antigua for the winter. The American colonists, however, had grown accustomed to getting a large portion of their tea illegally from other merchants. One historian has estimated that just a quarter of the tea consumed in the colonies actually came from the East India Company, with another scholar saying the figure might be as low as 10 percent. Even before the arrival of the ships at American ports, the colonists—in published writings in October 1773—vociferously attacked the Tea Act. One American merchant, Alexander McDougall, in five broadsides titled The Alarm, called the East India Company a “corrupt” monopoly obtained through “bribery” that would “rob” colonists.

The Tea Act was extremely unpopular. And when George III and Lord North insisted on handing over control to one enterprise—the East India Company—it was the proverbial last straw. The East India Company had been founded by royal charter nearly two centuries earlier and given a permanent monopoly in exchange for a £400,000 annual payment to the Crown. But the colonists were not impressed with the company’s long pedigree. They sought liberty. And they wanted it so much that they even shunned their beloved tea, shifting their consumption to coffee, in protest, even though colonists were described by one contemporary as “probably the greatest tea drinkers in the universe.” “Tea must be universally renounced,” John Adams would write to his wife, Abigail, in 1774 in the midst of the patriotic fervor, which came to be known as the “anti-tea hysteria.”

When ships loaded with British tea arrived in Boston Harbor in the days before the Boston Tea Party, the American patriot Samuel Adams organized mass protests. More than five thousand people responded to the call, and on the evening of December 16, 1773, the protest meeting was so large that it had to be relocated from Faneuil Hall to the larger Old South Meeting House. Being forced to buy this tea—and to pay taxes on it to prop up a government-sponsored private monopoly—incensed the colonists. As if it weren’t enough that they were paying taxes to a British-sponsored foreign merchant, their ability to trade with the Dutch was now stifled and a monopoly foisted upon them.

On December 17, 1773, the day after the Boston Tea Party, John Adams took note in his diary of the “3 Cargoes” of tea that “were emptied into the Sea.” “This is the most magnificent Movement of all,” he wrote, observing that “there is a Dignity, a Majesty, a Sublimity, in this last Effort of the Patriots, that I greatly admire.” “This Destruction of the Tea is so bold, so daring, so firm, intrepid and inflexible,” he emphasized, that “it must have so important Consequences, so lasting.”

And the response of the king? To quote Lin-Manuel Miranda’s evocative words from the musical Hamilton (as captured in King George’s witty solo “You’ll Be Back”), the Crown’s basic reaction to the colonists’ tea hurling was this: “Remember we made an arrangement when you went away” and “Remember, despite our estrangement, I’m your man.” The refrain of the song includes what was the common belief of the royals at the time—“You’ll be back, soon you’ll see / You’ll remember you belong to me”—capped off by the punchy warning that “when push comes to shove / I will send a fully armed battalion to remind you of my love.”

In the wake of the Boston Tea Party, the British Parliament passed the Boston Port Act in 1774, resulting in the blockade of Boston Har-bor. Parliament demanded that the city’s residents pay for all the tea that had been dumped into the harbor. In the end, of course, that demand backfired, and the colonists, defiantly donning their tricorne hats, would stand up to the Brits’ monopoly “arrangement” and their “fully armed battalion.” And the flags they carried into battle—bearing blunt messages like “LIBERTY OR DEATH” and “DON’T TREAD ON ME”—captured much of the antitax and antimonopoly sentiment of their time.