Reviewed by Robert Bricker Case Western University
Essential in the study of business regulation are questions of both origin and form. In his book The Prophets Of Regulation, McCraw hopscotches through the development of business regulation in the United States, skimming over the first question, his thesis being that individual personalities are the most potent forces in the establishment of regulatory form. Specifically, McCraw traces the lives of four men prominent in the regulatory arena; Charles Francis Adams, Louis Brandeis, James Landis, and Alfred Kahn.
McCraw’s choice of the four is interesting. None, save Kahn, is regarded as a theoretician. Instead, McCraw chose men whose publications were able to infuence implementation of their view of business regulation. Charles Francis Adams, the grandson of President John Quincy Adams, gained his reputation as a commissioner of the Massachusetts Board of Railroad Commissioners and pioneered the “sunshine” form of regulation, while encouraging industry self-regulation. Brandeis, a brilliant attorney and later a Supreme Court Justice, engaged in a lifelong battle against big business, and his influence was important in the development of the Federal Trade Commission. Landis, another lawyer, who princi-pally drafted the 1933 and 1934 securities acts worked under Felix Frankfurter as a member of Roosevelt’s “Happy Hotdogs”. Sub-sequently, his presence as a commissioner of the SEC was im-portant in establishing its early focus. Finally, Alfred Kahn provided the “economist’s hour”, beginning with numerous thoughtful publications on regulatory theory, then as a New York utility commissioner, and more recently as the deregulator of the commercial airline industry.
McCraw presents his subjects chronologically and devotes a chapter to each. Each chapter includes a broad biographical sketch and selected detailed biographical information. McCraw takes pains to tie these details into the subject’s regulatory thought and action. The scene for each of these vignettes is set with a brief intervening chapter. McCraw concludes the book with unifying thoughts in “Regulation Reconsidered.”
Of particular interest is the entire chapter on James Landis and the development of securities regulations. More narrowly, a discussion of pre-SEC financial reporting is touched on [165-168], in which McCraw innocently mistitles the 1917 publication Uniform Accounts as Uniform Accounting, but which is otherwise interesting. In addition, a brief section covers the enlistment of the accounting profession to the regulatory banner [188-192]. A page and a half of notes to this material [349-351] yields additional discussions on the cooperation between the SEC and the profession (Carey’s Accounting Historians Journal article “Early Encounters Between CPAs and the SEC” is referenced), the effect of McKesson and Robbins on auditing standards and oversight.
The style is entertaining. The work is well referenced. Although some profound influences on business regulation are omitted, McCraw succeeds in demonstrating the power of the individual on regulatory form. At a time during which regulation is of great concern to the profession, McCraws book conveys some interesting insights into regulatory theory and formulation.
