As the antimonopoly movement confronts dominant platforms like Apple and Amazon, early antitrust legislation is getting a much-needed rereading. One important antitrust provision—the “commodities clause” of the 1906 Hepburn Act—stipulated that railroads could not haul commodities in which they had a significant business interest. As reformers, including the new head of the FTC, Lina Khan, have pointed out, the commodities clause serves as a promising precursor for current efforts to separate tech companies’ status as both platforms and producers.
Context matters, however. The chief target of the original “commodities clause” was railroad control of coal mines, and the law emerged in the wake of an aborted United Mine Workers takeover of the coal market. This history carries significant implications for the way we should think about antitrust and antimonopoly today.
In the two decades before the Hepburn Act’s enactment, two entities vied for the right to coordinate the price and distribution of coal. (The notion of “coordination” and “coordination rights” here draws on Sanjukta Paul’s work). The first—a group known as the Joint Conference of Miners and Operators of the Central Competitive Field—was the child of the United Mine Workers.The second—a group of coal-hauling railroads known as the Seaboard Coal Association—was the child of J. P. Morgan and the Pennsylvania Railroad.
Railroads and miners usually had drastically different ends in mind. Railroads coordinated the coal market to achieve two objectives—low coal prices and high coal volumes. Miners, on the other hand, looked to coordinate the coal market to achieve a high coal price that would return a living wage to miners.
The UMW as Coal Mining Coordinator
The United Mineworkers emerged out of midwestern crucible of depressed coal prices. As prices fell in the wake of the Panic of 1873, local coal mine unions slowly and painfully learned that local, uncoordinated strike activity did little to nothing to change their bargaining position. If they secured a good contract, their low-margin bosses would immediately lose their market, leading to closed mines and unemployed miners. Realizing that the only way to win a fair price for their labor was to win a fair price for their coal, the workers established an annual meeting with operators across what they termed the Central Competitive Field—a geography formed by the railroad network—that put coal from Ohio, Pennsylvania, Indiana, Illinois, and later on, West Virginia, in competition with each other.