The Corporation and the Twentieth Century

cal space once filled by the rapidly declining Liberal Party. In this period the Conservative Party had not (yet) allied itself with liberal economic ideas, and thus the occasional postwar Conser- vative governments did little to change the economic regime Labour had installed.

89. Yergin and Stanislaw (2002, p. 8).

90. Waller (2005, p. 111).

91. His law partner was future Supreme Court Justice Abe Fortas. Now called Arnold &

Porter, the firm has become one of the largest in the world. In a kind of reverse-Brandeis, Arnold in private practice discovered a good corporation, Coca-Cola, which he extolled in academic lectures as a paragon of what the American corporation should be. Rather than hegemonically owning its own bottling plants, Coke operated though market contracts with independent bot- tlers in the countryside, thus creating “wealth in outlying communities.” Coke also “created wealth” with its competitor Pepsi, presumably by not competing too hard (Freyer 2009, p. 361).

92. Berge (1944).

93. Wells (2002, p. 99).

94. Wells (2002, p. 104). In the end, courts found against the government on this and related

prosecutions.

95. Graham (2001, pp. 292 and 325); Hounshell (1996).

96. Wilkins (1974, pp. 300–310).

97. “Before World War Two the typical international investor was a bondholder or banker

who lent money to foreign governments and corporations. In the Bretton Woods era the typical international investor was a corporation that built factories in foreign nations” (Frieden 2006, p. 293).

98. Jones (2005, p. 101).

99. “The Enemy of Abundance,” The New Republic, February 15, 1943, p. 197.

100. “Message to the Congress on the State of the Union and on the Budget for 1947,”

Harry S. Truman Library and Museum, https://www.trumanlibrary.gov/library/public-papers /18/message-congress-state-union-and-budget-1947 (accessed August 9, 2022). As we saw, of course, the American private sector was at that moment engaged in precisely the opposite of restricting output. Truman’s speechwriters were well aware of this, and that the country’s main macroeconomic problem was inflation. Yet “no backlog of demand can exist very long in the face of our tremendous productive capacity. We must expect again to face the problem of shrink- ing demand and consequent slackening in sales, production, and employment. This possibility of a deflationary spiral in the future will exist unless we now plan and adopt an effective full employment program.”

101. G. D. Smith (1988).

102. Chandler (1977, p. 363). This hydropower was small in comparison to the output even of existing government-owned hydro facilities let alone of all potential hydropower, and bauxite was in fact plentiful around the world (Lopatka and Godek 1992). The contemporary economist Donald H. Wallace (1937) argued that Alcoa’s vertical integration was motivated

Notes to Chapter 8 631

by efficiency considerations, including better quality control and more effective coordination between stages. He anticipates some of the famous arguments made by Ronald Coase in the same year.

103. Peck (1961, p. 125). This is, of course, an example of vertical integration because of dy- namic transaction costs.

104. G. D. Smith (1988, pp. 139–46). Rates under the Fordney-McCumber tariff were five cents a pound for ingot and nine cents a pound for sheet. The rates actually came down a penny in the Hawley-Smoot Tariff. Alcoa had almost entirely exited European markets by the Depres- sion, not because of cartel market division but because the company saw export as overreaching its core competences, a not implausible reason given the firm’s functional organizational form. The Canadian subsidiary, which, as we will see, would evolve into the competitor Alcan, held and managed all of Alcoa’s earlier foreign interests.

105. Kolasky (2013, p. 87). Mellon was cleared of fraud but made to pay $800,000 in taxes. Much of the case turned on whether Mellon could deduct $40 million in paintings, many of which he had acquired from the Hermitage collection that Joseph Stalin, desperate for foreign exchange, was selling off to foreign capitalists. The paintings would form the founding collection of the National Gallery of Art in Washington.

106. G. D. Smith (1988, pp. 191–249); Waller (2007).

107. United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945).

108. United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945), at 430–31.

109. Winerman and Kovacic (2013).

110. United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945), at 429. In crafting