Saturday, December 21, 2013

William and Mary Announces 2014 Football Schedule

Good Precedent for 2014!
William and Mary has announced its 2014 football schedule.   As is customary in recent years, the Tribe will open with an FBS opponent, this year Virginia Tech.  (Tech leads this series 40-18-4.) Other home game highlights will include CAA rivals Villanova (for homecoming) and Delaware.  As always, the Tribe will end the regular season against Richmond, playing for what is now known as the "Capital Cup."  As previously explained on this blog, the W&M v. Richmond rivalry is the oldest in the South and the fourth most prolific college football rivalry judged by games played.  
The Tribe will also travel to Durham, New Hampshire and Harrisonburg, Virginia to play CAA opponents New Hampshire and James Madison, respectively.  This season the Tribe defeated JMU 17-7 (see the above photo) and New Hampshire 17-0.  Hopefully the 2014 Tribe will repeat such performances against both teams!  
Fans with a sharp eye will notice two new opponents on the schedule: The Stony Brook Seawolves and Elon Phoenix.  Both schools have just joined the CAA, and each will be playing full league schedules this coming year.   (See here for Elon's announcement and here for Stony Brook's.)    No doubt the Tribe will give each team a vigorous CAA "welcome!" 

Here is the schedule.  Home games are in bold, and all times are "to be announced."  I have also included the all-time series record for each rivalry.    For a complete list of the Tribe's all time records against various opponents, currently up-to-date through the 2012 season, go here.

August 30       Virginia Tech                                 Tech leads 40-18-4

September 6    Hampton                                      WM leads 3-1

September 13  Norfolk State                                WM leads 4-0

September 20  Lafayette                                      Series is tied 1-1

September 27  Stony Brook                                   0-0

October 11      New Hampshire                              WM leads 13-3

October 18     Villanova  (HC)                               WM leads 16-14-1

October 25    Delaware                                        Del. leads 22-16

November 1   James Madison                                JMU leads 20-15

November 8  Elon                                                  0-0

November 15 Towson                                            WM leads 7-3

November 22 Richmond                                        WM leads 61-57-5

Tuesday, December 17, 2013

Sixty four years ago today the German Navy scuttled the Graf Spee off the coast of Montevideo, Uruguay.  Though often dubbed a "pocket battleship" because of her 11 inch guns, the 16,000 ton Graf Spee, while larger than a heavy cruiser, was only one third the size of battleships such as the HMS Hood (47,000 tons) and German battleship Bismarck (50,000 tons).  After the outbreak of World War II, the ship sank several merchant vessels in the South Atlantic, and Great Britain responded by deploying nine different squadrons of ships in search of the raider.   On December 13, 1939, a British squadron consisting of one heavy cruiser (Exeter) and two light cruisers (Achilles and Ajax), intercepted the ship off the coast of Uruguay.  The German warship moved south toward the British squadron at full speed, and opened fire while still beyond the range of its adversaries.   The larger Exeter moved northwest, drawing a portion of Graf Spee's fire, while the two smaller cruisers moved to the northeast.  See Winston Churchill, The Second World War: Vol. I: The Gathering Storm, 521-22  (1948) (producing five diagrams detailing various phases of the battle).  Battered by several 11 inch shells, the Exeter withdrew, after scoring several hits of her own.   Damaged and still harried by the Ajax and Achilles, the Graf Spee made smoke and sought refuge in port of Montevideo. 
Once in port, the German vessel sought two weeks to make repairs.  However, British diplomats invoked the 1907 Hague Convention Concerning the Rights and Duties of Neutral Powers in Naval War, to which Uruguay was a signatory.  Article XII of the Convention required belligerent ships to depart from a neutral port within 24 hours of entry.  British diplomats initially invoked this article in an effort to force Uruguay immediately to expel the German raider.  However, the British Admiralty had dispatched the heavy cruiser Cumberland to join the Ajax and Achilles, and additional vessels were scheduled to arrive on December 19.  As a result, the British invoked Article XVI of the convention, which prohibited a belligerent ship from leaving a neutral port less than 24 hours after a ship from a different belligerent.  British and French merchant vessels began departing in 24 hour intervals, thereby delaying any possible departure by the German vessel.  Anticipating that the injured vessel would soon be hopelessly outnumbered and outgunned, a skeleton crew sailed the Graf Spee out to sea and scuttled her, as pictured above.

Monday, December 16, 2013

In Praise of Conventional Wisdom on Munich



In an essay entitled: "Why Neville Chamberlain Was Right," one Nick Baumann bucks conventional wisdom and praises the so-called Munich agreement, signed September 30, 1938.  Under this agreement, Great Britain, led by then-Prime Minister Neville Chamberlain, and France, led by Prime Minister Edouard Daladier, acquiesced in Hitler's illegal demand that Czechoslovakia cede the Sudetenland to Nazi Germany, thereby temporarily staving off a German invasion of the entire Czech nation.  In particular, Baumann contends that Chamberlain obtained the best deal he could, given that Britain was militarily weak and thus (according to a study by the British military) "could not possibly stop Germany from taking Czechoslovakia."  Baumman also contends that British public opinion would have opposed Britain's defense of Czechoslovakia and that other states within the British Empire, i.e., the Dominions, would have opposed such intervention as well.  Thus, Baumann concludes that: "Chamberlain's story is of a man who fought for peace as long as possible, and went to war only when it was the last possible option.  It's not such a bad epitaph."  (Chamberlain, of course, is pictured above, holding a copy of a September 30, 1938 joint declaration between the British Prime Minister and Hitler.  To hear Chamberlain's remarks upon returning from Germany after finalization of the Munich agreement, listen to this 1938 report from the BBC.  (Chamberlain's remarks begin at about 4:55.)).

This Blogger agrees that re-examination of conventional wisdom is always appropriate.  However, in my view, Baumann overlooks four considerations that weaken his case and support the conventional view that Chamberlain's policies, including those leading up to Munich, helped pave the way for a war that may well have been avoided.  In this case, conventional wisdom appears to be correct.
1. Baumann overlooks the origins of Britain's 1938 unpreparedness, namely, Chamberlain's own policies of appeasement and military weakness, policies also pursued by his predecessor, Stanley Baldwin.  From the early 1930s onward Winston Churchill (pictured above) and others consistently warned that Hitler was bent on aggressive expansion throughout Europe and urged Britain to rearm as quickly as possible to deter and, if necessary, oppose such conquest.     See William Manchester, Winston Spencer Churchill, The Last Lion: Alone 1932-1940 (1988).    Both Baldwin and Chamberlain (the latter of whom served as Baldwin's Chancellor of the Exchequer)  rejected these repeated calls, choosing instead more modest (but significant) increases in arms spending, increases that largely overlooked the need to modernize and expand Britain's army.  Both also assured the British public that appeasement, and not force, would contain Hitler.  Thus, both Chamberlain and Baldwin helped create the very weakness that Baumann invokes in support of the Munich accords.  Indeed, the supposed fact that Munich was the best deal Chamberlain could strike is itself a powerful indictment of the Baldwin-Chamberlain policy of rearmament in moderation.  Any epitaph that overlooks Chamberlain's role in creating the conditions that emboldened Hitler is woefully incomplete. 
2.    Baumann asks whether Britain herself could have prevented Hitler's annexation of the Sudetenland.  His answer, that Britain could not have prevented such an annexation, is obviously correct.  But the question is meaningless.  It is equally true that Britain could not have unilaterally prevented Hitler's conquest of Poland in September, 1939, and yet Baumann endorses Chamberlain's decision to go to war at that time. 

Indeed, so far as this blogger is aware, no contemporary or modern opponent of the Munich agreement believed that Britain could or should defend Czechoslovakia unilaterally.  On the contrary, Churchill and others contended that Britain should embrace a policy of what Churchill repeatedly called "collective security," building an alliance between Britain, France, Czechoslovakia and perhaps Russia to thwart Hitler's planned conquests.  Indeed, the Covenant of the League of Nations, adopted in 1924, expressly contemplated that member states would respond collectively to aggression.  (See Article 16)    Thus, the relevant question for those examining Chamberlain's decision is whether such an alliance, perhaps led and orchestrated by Great Britain, could have thwarted Hitler's designs on Czechoslovakia and the rest of Eastern Europe, averting general war and saving millions of lives.

The answer to this question seems to be "obviously yes."  To be sure, Britain's army was quite small at the time.  However, Czechoslovakia's army, the second most potent in Eastern Europe (behind Russia), was not.  Instead, the Czechs could field 35 divisions, well-equipped by the nation's modern munitions industry.  See Winston Churchill, The Second World War, Vol. I: The Gathering Storm 301-302 (1948).   More importantly, France could field 100 divisions after full mobilization.  See Benjamin Martin, France in 1938, 164 (2005).  Moreover, the mountainous and heavily-wooded Sudetenland was far more defensible than Poland or, for that matter, France, and the Czechs had been fortifying this portion of their country with pillboxes and forts in anticipation of a German invasion since 1935.     
France had entered a mutual defense agreement with Czechoslovakia in the mid-1920s, and Prime Minister Daladier urged Britain to join France in resisting German aggression against Czechoslovakia.  See John Lukacs, The Last European War, 14 (1976).  Such aggression, of course, contravened Article 10 of the Covenant of the League of Nations.   Such an alliance between Britain, France and Czechoslovakia would have presented Hitler with an insurmountable strategic problem, even assuming that Russia would have remained neutral. (Russia, it should be noted, did not border on Czechoslovakia, with the result that the Russian Army would have to march through an unwilling Poland to defend the Czechs.  Though it should be noted that Article 16 of the Covenant of the League of Nations required member states to allow transit through their territories of troops co-operating with those of other countries to enforce the Covenant.)

Germany's generals were well aware of Czechoslovakia's ability to defend herself.   As a result, Hitler's invasion plan would have required Germany to deploy most of her then-untested army in the East, leaving only 13 divisions, 8 of them reserve units, to defend her western border with France. See Churchill, Gathering Storm, at 302 ("According to [German] Generals Halder and Jodl, there were but thirteen German divisions, of which only five were composed of front-line troops, left in the West at the time of the Munich arrangement."). 

Simply put, even in 1938, Britain and France had the military wherewithal to prevent Germany's invasion of Czechoslovakia and thus vindicate International Law by presenting Germany with the prospect of a two-front war that Germany could not have won at that time.  See Churchill, Gathering Storm, at  302.  See also id. at 304 (explaining that Germany's production of tanks necessary for the 1940 invasion of France did not take place until after 1938).    Indeed, fearing such an all-out war, several German generals had conspired to overthrow Hitler if he ordered an invasion of Czechoslovakia, as he was planning to do.  See Richard Overy with Andrew Wheatcroft, The Road to War, 62 (Rev. ed. 1999); Churchill, Gathering Storm, at 280-81.  Instead, Chamberlain's intervention and the resulting extra-legal Munich accords stripped Czechoslovakia of its most defensible terrain and paved the way for Germany's occupation of most of Czechoslovakia  six months later.  See Overy and Wheatcroft, Road to War, at 57 ("Examination of the Czech frontier defenses a few weeks [after Munich] showed Hitler that war with the Czechs would not have been easy after all.  Without the defenses the rump Czech state was now powerless."); id. (noting Hitler's statement that Munich's elimination of Czechoslovakia's Sudetenland defenses left Germany in a "marvelous position"). 

3.    Baumann ignores the economic and military value of Czechoslovakia to Hitler. The Skoda Works, in Pilsen, was at the time one of the largest munitions factories in the world.  Churchill reports that Czechoslovakia's annual output of arms nearly equaled that of Great Britain during this period.  See Churchill, Gathering Storm at 302.   After Nazi occupation of Czechoslovakia, these works would supply munitions that outfitted 19 German Divisions, 4 of them armored.  See Overy and Wheatcroft,  Road to War, at 63.  Czechoslovakia was also an important source of coal, iron, and machine tools.  Id.   Thus, by granting Hitler the Sudetenland and thereby paving the way for German conquest of the entire Czech nation, Chamberlain both deprived the anti-Hitler alliance of a powerful ally and strengthened Hitler's economic position at a time when German munitions output doubled that of Britain and France combined.   See Churchill, Gathering Storm at 301.

4.    Baumann ignores the large gap between Anglo-French and German munitions output in 1938 and 1939 as well as the gap between German and French manpower.  As just noted, Germany produced far more weapons in 1938 and 1939 than Britain and France combined.   Germany, with a population much greater than France, used much of this production to outfit its rapidly-expanding army, inexorably altering the balance of military power on its Western Front.  Thus, by delaying the start of the war, the Munich agreement allowed Germany to enhance its military might relative to that of England and France, thereby altering the balance of power in Germany's favor.   As Churchill would put it shortly after the war:

   "[T]he year's 'breathing space' said to be 'gained' by Munich left Britain and France in a much worse position compared with Hitler's Germany than they had been at the Munich Crisis."
 * * * * *

None of this is to say that resisting Hitler in 1938 would have been easy, at least as a political matter.  British public opinion  was slow to awake from its pacifist slumber, and France was was badly divided politically.    But effective democratic leadership require identification of the best course, not that which is most popular, as well as articulate advocacy that sways public opinion in the right direction.  Judged by this standard, Chamberlain did not measure up.


Thursday, December 5, 2013

William Howard Taft's Prescient Endorsement of Standard Oil, 112 Years Young

Knew Something About The Sherman Act

A previous post on this blog celebrated the birthday of Standard Oil Co. v. United States, 221 U.S. 1 (1911).  As explained in that post, Standard Oil articulated the "Rule of Reason" that courts apply when determining whether an agreement between two or more firms is a "contract, combination or conspiracy in restraint of trade or commerce among the several states" and thus contrary to Section 1 of the Sherman Act.  Recognizing that all agreements restrain trade in some sense, the Standard Oil Court read Section 1 narrowly, so as not to offend liberty of contract.  Thus, the Court held that Section 1 bans only those restraints that produce "the consequences of monopoly," namely, prices above the competitive level, output below the competitive level, and/or quality below the competitive level. 

Standard Oil was controversial at the time, with Justice Harlan (in dissent) and various commentators claiming that the Court's Rule of Reason contravened two key Supreme Court precedents, including United States v. Joint Traffic Association, 171 U.S. 505 (1898), and United States v. Trans Missouri Freight Association, 166 U.S. 290 (1897).   Harlan and others also invoked Addyston Pipe and Steel Co. v. United States, 85 F. 271 (6th Cir. 1898), which the Supreme Court unanimously affirmed.  See 175 U.S. 211 (1899).  According to Harlan, for instance, the Sixth Circuit's Addyston Pipe decision had read Section 1, as interpreted by Trans-Missouri Freight, to ban every contract that restrained trade, without regard to reasonableness.  Harlan issued a similar dissent in American Tobacco v. United States, 221 U.S. 106, 180 (1911), which reiterated Standard Oil's Rule of Reason when interpreting and applying Section 2 of the Sherman Act.
Whether he knew it or not, Harlan's charge was potentially embarrassing for then-President William Howard Taft, who, as an appellate judge, had authored the Sixth Circuit's decision in Addyston Pipe and appointed Edmund White, then an Associate Justice, as Chief Justice upon the death of Melvin Fuller. 
112 years ago today, President Taft responded to this critique of Standard Oil, without mentioning Harlan by name, in his Third Annual message to Congress.  Some of Taft's remarks, found here on the website of the University of Virginia's Miller Center, are worth re-reading:

"In two early cases, where the statute was invoked to enjoin a transportation rate agreement between interstate railroad companies, it was held that it was no defense to show that the agreement as to rates complained of was reasonable at common law, because it was said that the statute was directed against all contracts and combinations in restraint of trade whether reasonable at common law or not. It was plain from the record, however, that the contracts complained of in those cases would not have been deemed reasonable at common law. In subsequent cases the court said that the statute should be given a reasonable construction and refused to include within its inhibition, certain contractual restraints of trade which it denominated as incidental or as indirect.

These cases of restraint of trade that the court excepted from the operation of the statute were instances which, at common law, would have been called reasonable. In the Standard Oil and Tobacco cases, therefore, the court merely adopted the tests of the common law, and in defining exceptions to the literal application of the statute, only substituted for the test of being incidental or indirect, that of being reasonable, and this, without varying in the slightest the actual scope and effect of the statute. In other words, all the cases under the statute which have now been decided would have been decided the same way if the court had originally accepted in its construction the rule at common law.

It has been said that the court, by introducing into the construction of the statute common-law distinctions, has emasculated it. This is obviously untrue. By its judgment every contract and combination in restraint of interstate trade made with the purpose or necessary effect of controlling prices by stifling competition, or of establishing in whole or in part a monopoly of such trade, is condemned by the statute. The most extreme critics can not instance a case that ought to be condemned under the statute which is not brought within its terms as thus construed.

The suggestion is also made that the Supreme Court by its decision in the last two cases has committed to the court the undefined and unlimited discretion to determine whether a case of restraint of trade is within the terms of the statute. This is wholly untrue. A reasonable restraint of trade at common law is well understood and is clearly defined. It does not rest in the discretion of the court. It must be limited to accomplish the purpose of a lawful main contract to which, in order that it shall be enforceable at all, it must be incidental. If it exceed the needs of that contract, it is void.

The test of reasonableness was never applied by the court at common law to contracts or combinations or conspiracies in restraint of trade whose purpose was or whose necessary effect would be to stifle competition, to control prices, or establish monopolies. The courts never assumed power to say that such contracts or combinations or conspiracies might be lawful if the parties to them were only moderate in the use of the power thus secured and did not exact from the public too great and exorbitant prices. It is true that many theorists, and others engaged in business violating the statute, have hoped that some such line could be drawn by courts; but no court of authority has ever attempted it. Certainly there is nothing in the decisions of the latest two cases from which such a dangerous theory of judicial discretion in enforcing this statute can derive the slightest sanction."
In short, Taft rejected claims that Chief Justice White's Standard Oil opinion departed from Supreme Court precedent and his own Addyston Pipe decision.   As Taft noted, subsequent decisions had imposed upon Section 1 a "reasonable construction," holding that the statute did not reach incidental or indirect restraints.   See United States v. Joint Traffic Association, 171 U.S. 505 (1898) and Hopkins v. United States, 171 U.S. 578 (1898).   In so doing, the Court avoided claims that the statute was so broad as to offend liberty of contract.  (See here).   Standard Oil, Taft said, simply employed a different verbal formulation, "The Rule of Reason," to describe the very same standard that courts, including Addyston Pipe, had been applying since the late 1890s.  If anything, Taft actually understated his case.  After all, decisions such as Joint Traffic and Hopkins had announced that indirect restraints, including mergers and the formation of partnerships, were beyond the scope of the Sherman Act altogether, regardless of their impact upon prices or output.  Standard Oil, by contrast, contemplated that at least some such transactions could be unreasonable, ironically expanding the scope of the Act to condemn welfare-reducing conduct previously beyond its reach. (See pp. 796-97 of this source).  Moreover, the decision suggested that some agreements were automatically unreasonable, if the "nature and character" of such conduct established that they necessarily produced the consequences of monopoly.  The resulting rule, then replicated, in substance, but not in form, the distinction between "naked" and "ancillary" restraints announced by then-judge Taft in Addyston Pipe.   Like the Rule of Reason itself, this distinction has stood the test of time.

Sunday, December 1, 2013

How to Monitor Apple's Monitor

Suspicious of Monitors
Section 1 of the Sherman Act forbids "contracts in restraint of trade or commerce among the several states," while Section 2 forbids  "monopolization" and "attempts to monopolize."  The Act also requires the Department of Justice to enforce the Act, by seeking, where applicable, equitable and legal relief in U.S. District Courts against firms and individuals who have violated the Act's provisions.  It appears that the Department may have used this authority to impose, no doubt inadvertently, the very type of monopoly pricing the Sherman Act was designed to prevent.

This last July the United States prevailed in a civil suit that challenged Apple's alleged agreements with book publishers to maintain e-book prices above the levels that unbridled competition would produce.  Among other forms of relief, the United States sought and obtained from the U.S. District Court for the Southern District of New York the appointment of a so-called "External Compliance Monitor," in addition to a new "Internal Compliance Officer," both, of course, at Apple's expense.  The final judgment requiring these appointments did not provide for competitive bidding to set the fees of either monitor but instead simply provided that the monitors would charge a "reasonable" fee. 

In paper's filed the day before Thanksgiving, Apple informed the court that the External Monitor, charged with ensuring that Apple comply with the antitrust laws, is himself charging Apple $1,100 per hour, as well as an "administrative fee" of fifteen percent, for a total of $1265 per hour.  Apple claims that it has never paid such high legal fees.  (See here for a more detailed summary of Apple's objections.)

If Apple's assertions are correct, the government's insistence on such a monitor on the terms described above is supremely ironic.   After all, as explained in previous posts (see  here and here), the whole point of the Sherman Act and its Rule of Reason as articulated in Standard Oil v. United States, 221 U.S. 1 (1911) is to prevent contracts (Section 1) or other practices (Section 2) that produce or maintain monopoly or the consequences of monopoly, without any offsetting efficiency benefits.  These consequences, of course, include prices above those that a competitive market would produce.  By winning the appointment of an External Monitor, against Apple's will and without competitive bidding, the Department of Justice has created conditions conducive to the very sort of competitive harm the Sherman Act was designed to prevent.  To be sure, the monitor's fees cannot themselves violate the Sherman Act, which only regulates "trade or commerce among the several states."  Like the Commerce Clause itself, the Act assumes the existence of pre-existing commerce  that parties might restrain. (See also here and here).  The District Court's coercive (but apparently legal) requirement that Apple purchase legal services against its will does not seem to qualify as such commerce.  Moreover, the terms of the final judgment would authorize Apple to seek a judicial determination that the External Monitor's fee is unreasonable.    However, as William Howard Taft explained long ago in his most famous judicial decision, see Addyston Pipe and Steel Co. v. United States, 85 F. 271 (6th Cir. 1898) (Taft, J.),  judicial oversight of pricing decisions is a poor substitute for the determination of such prices by a competitive market, there competitive bidding by pipe producers.  Judges who take on this task, Taft said, "set sail on a sea of doubt," and rely upon their own "vague and varying opinions" regarding "how much, based on principles of political economy, men ought to be allowed to restrain competition."  See id. at 282-84.  See also National Society of Professional Engineers v. United States, 435 U.S. 679, 692-94 (1978) (describing competitive harm resulting from horizontal agreement not to engage in competitive bidding).

This Blogger has no doubt that the court-appointed External Monitor is a superb attorney who is highly-qualified to perform the duties described in the final judgment.  Moreover, there is no indication that, in setting his fee, the External Monitor has acted in anything other than complete good faith.   Nonetheless, as the Roman poet Juvenal (pictured above) asked, admittedly in a different context, "sed quis custodient ipsos custodes," viz. "who will monitor the monitors themselves?"  The best such monitor, as William Howard Taft explained, is competition.