Domestic Fair Trade

The Dictionary of American History has the article Fair-Trade Laws. There is a section that discusses Domestic Fair Trade.

In the United States, fair-trade laws were first enacted in California in 1931 to protect small retailers and druggists.

Growing up in the 50s and 60s as the son of a small drugstore owner in Massachusetts, I may have had more awareness of fair trade laws than most of my peers. In my previous post The Antitrust Paradox, I had the excerpt that said the following:

The paradox of antitrust enforcement was that legal intervention artificially raised prices by protecting inefficient competitors from competition.

I immediately thought about the fair trade laws which might rightly be the target of the above complaint. I was quite aware of the history as described in the Domestic Fair Trade article.

In the 1950s, fair trade was hotly contested among various corporations and in the court system, particularly at the state level. By 1956, eight state supreme courts had ruled against fair-trade statutes, making the laws meaningless in some areas. Manufacturers were no longer able to dictate the retail price at which their goods could be sold, which was at the heart of fair-trade laws. Supporters of fair trade redoubled their efforts at the state and national level in the 1950s and 1960s, but by mid-1975, fair trade had been eliminated in 25 states.

At the time this overturn of the fair trade laws was happening, I could see the problems that these laws caused. Ironically, the fair trade laws passed out of existence in 25 states three years before Bork’s book was published. In thinking over the relation of Bork’s criticism of the anti-trust laws as raising prices and the connection to the fair trade laws, I came to realize that the situation was more complex than these rulings would encompass. When the courts looked at consumer prices alone, or fair trade alone, or anti-trust alone, they failed to take into account the interaction of these factors. A decision that fixed a problem in one sphere could cause untold damage in one or more of these and other related spheres. Is this any way to interpret laws? No wonder we have such a mess. We have lawyers and judges making decisions about domains in which they are way outside their areas of expertise.

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