THE CHICAGO HISTORY JOURNAL: Henry Robbins and the Chicago Board of Trade

By Joe Mathewson

The Chicago Board of Trade had a weak case but an astute lawyer. Henry S. Robbins, however, faced a dilemma.

The longtime lawyer for the Chicago Board of Trade, who had successfully represented it before the U.S. Supreme Court, opposed a new rule adopted by his client. He saw it as illegal price-fixing under the Sherman Antitrust Act of 1890.

The Board of Trade, the dominant commodities exchange, had decided that its members’ purchases of grain from country dealers after the close of an afternoon trading period must be at the day’s closing bid price. No deviation permitted until the opening of the next day’s public trading. In a letter to the Board prior to its decision, Robbins had opined that “this part of the rule is liable to be adjudged an illegal restraint upon free competitive bidding.”

It was 1910. Though slow to act, the government three years later brought suit against the Board of Trade, alleging, as Robbins had feared, unlawful price-fixing. Could he defend the rule he considered illegal?

Henry Robbins was a Chicago heavyweight. His law partners were a former mayor and U.S. senator [Washburn, Trumbull, & Robbins]. He exposed bribes paid to Wabash Avenue property owners by the company proposing to build an elevated rail track over Wabash and around downtown. In another case he fought transit tycoon Charles T. Yerkes. He led the Illinois Democrats’ “hard money” opposition to William Jennings Bryan’s “free silver” movement in the 1890s. When President Woodrow Wilson spoke in Chicago, Robbins was on the platform, along with Senator J. Hamilton Lewis, Mayor William “Big Bill” Thompson, Julius Rosenwald of Sears, Roebuck and civic leader Charles H. Wacker. Robbins’ socially-prominent wife was president of the American Fund for the French Wounded during World War I.

But Henry Robbins always gave his highest priority to the Board of Trade, that quintessential Chicago institution. In 1905 he won an important victory for the exchange at the U. S. Supreme Court, which held that the Board had a property right in its grains quotations and thus could prevent unaffiliated brokers from using them in their business.

Despite their happy relationship, Robbins didn’t hesitate to take issue with his distinguished client and its loud-mouthed members. When they voted to change the terms of a wheat futures contract that was already in use, Robbins publicly rebuked them. In a notice posted at the Board of Trade, Robbins asserted that the BOT could not lawfully alter an existing contract.

Now he again questioned the legality of a board decision, to set after-trading prices. But he did what a good lawyer should do: make the best case possible for his client. He defended the Board of Trade in the U.S. District Court in Chicago. Uncharacteristically, he lost.

But Robbins carried on with his uphill task, taking the case to the U.S. Supreme Court. There were giants up there: Chief Justice Edward Douglass White, William Rufus Day, Willis Van Devanter, Oliver Wendell Holmes, Louis Brandeis.

Shrewdly, Robbins sought to shift the perception of the disputed rule. He asserted that it was just a normal method of promoting the business of the Board of Trade and the welfare of its members. It was a curious argument under the consumer-oriented Antitrust Act.

Chicago Tribune, April 28, 1932

But it worked. Writing for a unanimous court in 1918, Justice Brandeis minimized the market impact of the rule, saying it applied “only to a small part of the grain shipped from day to day to Chicago” and “only during a small part of the business day.” He noted that all exchanges place limits on trading hours and declared such restrictions salutary because “they tend to shorten the working day, or at least, limit the period of most exacting activity.”

Years later antitrust scholar Robert Bork of Yale commented that “Brandeis clearly was introducing considerations of producer welfare into the law as a policy competitive with consumer welfare. . . Brandeis was not so much a believer in competition as a believer in safety and smallness in the economic world.”

Be that as it may, Brandeis did more than exonerate the Board of Trade. He fashioned a memorable statement of the Court’s Rule of Reason, adopted and applied a few years before in bigger antitrust cases, notably the government’s successful effort to break up Standard Oil. The purpose of the rule was to soften the Sherman Act’s prohibition of business practices tending to restrain competition, in other words, to allow some “reasonable” degree of restraint.

Here’s how Brandeis put it, in part:

“The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. . . The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts.”

These words still resonate today. In an important 2010 decision, the Supreme Court cited the Board of Trade case in overturning a lower court ruling for the National Football League, which had severely hurt the sports-cap business of American Needle Inc. of suburban Chicago when it gave an exclusive contract to Reebok International Inc.

The persuasion of Henry S. Robbins, the lawyer who doubted his client’s case but won it anyway, lives on.

Joe Mathewson teaches media law at Northwestern University’s Medill School. He is the author of “The Supreme Court and the Press: The Indispensable Conflict” in the Northwestern University Press series “Visions of the American Press” edited by David Abrahamson.

Biography of Henry Spencer Robbins:

(from The Book of Chicagoans, 1911)

ROBBINS, Henry Spencer, lawyer; born East Stoughton, Mass., Feb. 5, 1853; son John V. and Anastasia (Ford) Robbins; grad. Yale, 1 874 (A.B., 1895); LL.B., Univ. of Wis., 1874; admitted to bar of Wis., 1874; married Dec. 12, 1883, Fanny F., daughter of H. Mooris Johnson, of Chicago: 4 children: Marjorie J., Dorothy F., Isabelle M., Frances J. Practiced law in New York City, 1874-6; came to Chicago, 1876, and became partner with Hempstead Washburne, until 1883, when Senator Lyman Trumbull joined the firm which became Trumbull, Washburne &Robbins until Mr. Washburne was elected mayor of Chicago; now in practice alone. Counsel for Chicago Board of Trade. Mem. Am. Bar Assn. Clubs: Chicago, Iroquois, Onwentsia, University. Summer Residence: Lake Forest, 111. Residence: Virginia Hotel. Office: Home Ins. Bldg. [Died: 1932]

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