Joseph E. Davies: The Wisconsin Idea and the Origins of the Federal Trade Commission¹

by Elizabeth Kimball MacLean, Otterbein College

Poster issued by Wisconsin Democratic State Central Committee for 1918 Senate Campaign of Joseph Davies. Courtesy Library of Congress.
In response to an enormous growth of trusts in the late nineteenth century, demands for reform among a wide spectrum of interest groups culminated in the Federal Trade Commission Act of 1915. Playing an influential, though little-recognized role in framing this legislation was Wisconsin progressive Democrat Joseph E. Davies. As Commissioner of Corporations, Davies served in a unique, dual capacity as both politician and regulator, giving him access to President Woodrow Wilson and influence on the antitrust legislation. Davies used his position to promote a vision of administrative regulation based on the nationally recognized "Wisconsin Idea." In so doing, he intensified conflicts among Wilson's policy advisers that, in turn, had a critical impact on the antitrust legislation and on the potential effectiveness of the first commission. In the long run, however, Davies' approach to regulatory policy, based on the Wisconsin Idea, would become standard operating procedure for successful regulatory commissions of the twentieth century.
In the late nineteenth and early twentieth centuries, in response to an enormous wave of industrial mergers and consolidations, the issue of antitrust was propelled to the forefront of American concerns, culminating in 1914 in legislation creating a federal trade commission to regulate the nation's business. As only the second experiment in administrative regulation, the legislation attempted to satisfy the often contradictory objectives of a wide spectrum of interest groups. As a result, it became a critical subject of debate among contemporaries and later historians. Research among scholars focused not surprisingly on the relative power of organized socio-economic interest groups in framing the FTC act, emphasizing in particular the influence of corporate elites.2 More recently, historians have reassessed the importance of agrarian movements in the legislative process as well as the impact of national political party priorities.3 Organizational and institutional studies, meanwhile, considered the dynamics of middle- class ambition, party control, and bureaucratic state building.4	1
With the exception of famed lawyer and later Supreme Court Justice Louis Brandeis, who helped frame President Woodrow Wilson's "New Freedom" program, however, little attention has been paid to the individual policy analysts "strategically positioned" to influence Wilson and the antitrust legislation of 1914.5 As Commissioner of Corporations, Wisconsin progressive Democrat Joseph E. Davies (1876–1958) also had the ear of the president. Davies owed his strategic position to a unique role he was able to play in the Wilson administration as both politician and regulator. He used the influence gained by that dual role to serve as a voice at the heart of the administration for those progressives who promoted a vision of administrative regulation different from that of Brandeis, a vision based on the nationally, and even internationally, recognized "Wisconsin Idea."6 The ideological conflict generated by those alternative visions had a critical impact on the legislation of 1914 and on the potential effectiveness of the first commission. In the long run, however, it was Davies' approach to regulatory policy based on the Wisconsin Idea that became standard operating procedure for successful regulatory commissions in the twentieth century.	2
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