Werner on the Tobacco Trust

George F. K. Werner, a student at Duke Law School, has posted his note in the Duke Law Journal, Norm Commandeering and the Tobacco Trust: 

(NYPL)

In the early 1870s, Durham became a major center of tobacco marketing. Farmers brought their crops to auction warehouses, which then sold them to the town’s manufacturers. This was a process facilitated by a well-developed system of social norms. But the formation of the American Tobacco Company’s “tobacco trust” in the 1890s threatened that arrangement—buyers conspired to pay less per pound of tobacco, and warehousemen lost the ability to police buyers’ conduct. When farmers attempted to organize in response, geographic and social distance caused their efforts to fail. By the time federal courts dissolved the trust in 1911, the damage had already been done. This Note’s historical analysis will be relevant for scholars of both informal ordering and competition law. For the former, it shows that some norm systems depend on the presence of competition. Informal ordering can, of course, also be a response to a lack of competition. But the possibility of collective action problems means that attempts to organize in reaction will often fail. For scholars of competition law, the possibility of norm commandeering provides a concrete example of how concentrated market power can affect economic and social dynamics.

--Dan Ernst