The Age of Ruth and Landis: The Economics of Baseball during the Roaring Twenties

The Age of Ruth and Landis: The Economics of Baseball during the Roaring Twenties

by David George Surdam, Michael J. Haupert
The Age of Ruth and Landis: The Economics of Baseball during the Roaring Twenties

The Age of Ruth and Landis: The Economics of Baseball during the Roaring Twenties

by David George Surdam, Michael J. Haupert


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As the 1919 World Series scandal simmered throughout the 1920 season, tight pennant races drove attendance to new peaks and presaged a decade of general prosperity for baseball. Babe Ruth shattered his own home-run record and, buoyed by a booming economy, professional sports enjoyed what sportswriters termed a “Golden Age of Sports.”

Throughout the tumultuous 1920s, Major League Baseball remained a mixture of competition and cooperation. Teams could improve by player trades, buying Minor League stars, or signing untried youths. Players and owners had their usual contentious relationship, with owners maintaining considerable control over their players. Owners adjusted the game so that the 1920s witnessed a surge in slugging and a diminution in base stealing, and they provided a better ballpark experience by both improving their stadiums and minimizing disruptions by rowdy fans. However, they hesitated to adapt to new technologies such as radio, electrical lighting, and air travel.

The Major Leagues remained an enclave for white people, while African Americans toiled in the newly established Negro Leagues, where salaries and profits were skimpy. By analyzing the economic and financial aspects of Major League Baseball, The Age of Ruth and Landis shows how baseball during the 1920s experienced both strife and prosperity, innovation and conservatism. With figures such as the incomparable Babe Ruth, Kenesaw Mountain Landis, Rogers Hornsby, Ty Cobb, Walter Johnson, Tris Speaker, and Eddie Collins, the decade featured an exciting brand of livelier baseball, new stadiums, and overall stability.

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Product Details

ISBN-13: 9781496205711
Publisher: Nebraska
Publication date: 06/01/2018
Sold by: Barnes & Noble
Format: eBook
Pages: 402
File size: 1 MB

About the Author

David George Surdam is a professor of economics and the David W. Wilson Business Ethics Fellow at the University of Northern Iowa. He is the author of several books, including Run to Glory and Profits: The Economic Rise of the NFL during the 1950s (Nebraska, 2013) and Wins, Losses, and Empty Seats: How Baseball Outlasted the Great Depression (Nebraska, 2011). Michael J. Haupert is a professor of economics at the University of Wisconsin–La Crosse.

Read an Excerpt


Baseball's Interminable Wars

Major League Baseball was beset by struggles against the rival Federal League (1914–15) and the Germans (1917–18, with an armistice on November 11, 1918), and also within league ranks. Between 1914 and 1927, peace was elusive.

The Federal League Challenge

The Federal League aspired to Major League status after operating as a minor league in 1913. The league's owners built or acquired leases on ballparks in eight cities. The league competed directly with Major League Baseball (MLB) in Chicago, St. Louis, Pittsburgh, and Brooklyn. Despite two tightly contested pennant races, Federal League owners could not generate large enough crowds to turn a profit. Reporters and historians cited huge losses for the teams, but no one knows with much accuracy how extensive the losses were.

The Major League owners fought hard and sometimes dirty against the Federal League. The rival sets of owners fought over ballparks, players, and fans. The Major Leagues, of course, held an insurmountable advantage through ruthless application of the reserve clause and the blacklist. Players opting to play in the Federal League faced blacklisting from organized baseball for the rest of their careers. The Federal League, therefore, had to pay a premium or offer multiyear contracts to compensate players for the risks they were taking in joining the new endeavor. Small wonder that, in their antitrust lawsuit against Major League Baseball, the Federal League owners identified the reserve clause as one of the anticompetitive measures. Although the Federal League signed a number of current, former, and prospective Major League players, most were older veterans nearing the end of their careers or were very young. Few signees were in the prime of their careers. Benny Kauff, who was the Federal League's batting champion for both 1914 and 1915, was perhaps the best player in the league. When he returned to the New York Giants, his batting average skidded badly.

Owners sued players, and players sued owners over contracts. Some players jumped their reserve clause, having not signed new contracts with their old clubs, but a few jumped their contracts. As other professional sports leagues would discover, under interleague warfare, only the lawyers win unambiguously.

Walter Johnson, tempted by a big contract with the Federal League, eventually decided to trust Clark Griffith's promise of a pay increase from the Senators and to stay put. Ban Johnson (no relation to Walter) persuaded Charles Comiskey to help the Washington Senators placate Walter Johnson's pay demands; Ban Johnson convinced Comiskey that the specter of Walter Johnson hurling for a Chicago Federal League team was well worth avoiding. Griffith did indeed increase Johnson's salary. It rose from $7,000 to $10,000 in 1914 and then to $12,500 in 1915. It remained at that level until 1918 when the war-shortened season depressed player salaries across the league. After Connie Mack lost Chief Bender and Eddie Plank to Federal League teams, Ban Johnson urged Mack to sell Eddie Collins to the Chicago White Sox. The White Sox gave Collins a five-year contract for $15,000 per annum, the longest-term contract in history to that point. In addition, the contract struck the ten-day release clause — the option for the team to curtail the contract at their discretion — and a "no trade" clause that prevented the White Sox from transferring his contract to any other team without his permission.

Major League owners watched their attendance shrivel in 1914 and 1915. The leagues had drawn a combined 6.36 million fans in 1913, but the attendance figures were below 5 million in each of the next two seasons. Attendance rebounded in 1916 before the war in Europe disrupted baseball.

The Federal League owners filed an antitrust lawsuit under the Sherman Antitrust Act against Major League Baseball early in 1915. The lawsuit asked the court to "declare the national agreement illegal, dissolve the alleged combination maintained by that agreement, declare the acts of the national commission void, nullify all contracts made under the national agreement, and order organized baseball to dismiss all injunction suits against Federal League players, and restrain defendants from instituting any more such suits." The hearing raised all sorts of interesting points. Presiding judge Kenesaw Mountain Landis opted to delay issuing a verdict in the hopes that the owners would reach a settlement, thereby earning the gratitude of and eventual employment by Major League Baseball owners.

Major League Baseball justified its behavior as demonstrating its ability to self-police baseball and cast incendiary aspersions at the attorneys for the Baltimore club, comparing them to Lenine [sic] and Trotzky [sic]. "You would have thought that we were on trial in Russia," huffed Ban Johnson, American League president, simultaneously making the ill-timed claim that baseball was successful in "keeping the sport clean and retaining the dignity of the game."

James A. Gilmore, former president of the Federal League, testified that his league bluffed the Major Leagues into settling by instituting a rumor the Federal League was going to place a team in New York. The Federal League enhanced their ruse by taking out a lease on office space in New York City.

The owners reached a settlement. The Federal League's Chicago and St. Louis owners got to buy the Cubs and Browns, while other Federal League teams divided hundreds of thousands of dollars and won the right to sell their more desirable players to organized baseball. Part of the payment to the Federal League owners was for their stadiums in order to ensure that future promoters could not use these facilities. Ineligible players were reinstated.

The Baltimore Federal League club was dissatisfied with the peace settlement, so its owners filed an antitrust suit against Major League Baseball, its officials, and some Federal League officials. The latter were named because they allegedly negotiated a settlement without Baltimore's participation.

Baltimore had a checkered history in organized baseball. The famed Baltimore Orioles of John McGraw and Willie Keeler, while potent on the field, were lackluster in the stands. As soon as land for a stadium was procured in New York City, Ban Johnson quickly relocated the league's Baltimore franchise to the bigger city. In the minds of Major League owners, Baltimore was not a desirable location. During the peace negotiations, Charles Comiskey responded to the Baltimore owners' offer to accept $250,000 for their franchise; he stated that the price was "just the right price for a minor-league franchise," before adding, "Baltimore is a minor league city and not a hell of a good one at that." His fellow owner Charles Ebbets claimed Baltimore was a poor Minor League city because, "you have too many colored population to start with. They are a cheap population when it gets down to paying their money at the gate."

As the court case wended its way up to the Supreme Court, Major League owners occasionally sought to squelch public protest at their practices by suggesting the desirability of a third major league. Reporters, wanting something exciting to write about during the winter months, may have seized on the flimsiest rumors. The proposed third major league usually consisted of taking four teams from the International League and four teams from the American Association, but the proposal went nowhere despite the hopes of Baltimore fans in particular. Jack Dunn worked hard to make his Minor League team a worthy candidate for elevation to Major League status. His team featured several future Major League players. National League president John Tener lent credence to the third-league rumor with a vague statement, "there will be a third major league some day." He cautioned, though, that eight cities with the "necessary public demand" were needed to make any such league a success.

Unlike the Federal League owners, who had to fight to obtain players, a third major league under the auspices of organized baseball would have had easier access to players. If composed of Minor League teams, an exemption from the player draft would have allowed these teams a chance to accumulate sufficient playing talent to be deemed "Major League." Sportswriter H. G. Salsinger, though, demurred. He didn't thinkthere were sufficient numbers of quality players to outfit the sixteen big league teams: "the National League looked as much like a minor circuit as a circuit can look without being officially classed as 'bush.'" Other critics of the third major league contended that some of the current Major League teams should relocate with Detroit being a popular destination (at least in the minds of the pundits). Salsinger dismissed Baltimore as a potential site, while he bemoaned Washington's lack of support for the Senators. He disputed whether Detroit would support two teams, especially given that the Tigers had a big attraction in Ty Cobb.

Baltimore won the first trick in its lawsuit, getting a favorable ruling and an award of $80,000, trebled under the Sherman Act to $240,000. Organized baseball won the second trick, when District of Columbia chief justice Constantine J. Smyth reversed the decision of the lower court. Smyth wrote that baseball was not trade or commerce under the Sherman Act; he also ruled that the reserve clause and blacklists did not directly affect the interstate features of the plaintiff's business. Smyth cited the well-worn defense of the reserve clause, that its absence would lead to wealthier clubs corralling most of the talent and to competitive imbalance. During the lawsuit, Baltimore officials claimed Ban Johnson and other baseball officials had made derogatory statements regarding the Federal League in an attempt to dissuade players from signing with the new league.

Major League counsel George Wharton Pepper, former senator from Pennsylvania, made a weird analogy regarding whether baseball was interstate commerce. Baltimore's attorneys argued that courts had ruled that the white slave traffic constituted interstate commerce, but Pepper argued, "such transportation [of players to game sites was similar] to the sending of a surgeon's tools into another state for use in an operation." Baltimore's attorneys characterized organized baseball owners as "highwaymen" while characterizing players as chattels and slaves. The Baltimore owners and their lawyers lashed out at their former comrades in the Federal League by accusing them of selling out to organized baseball.

Reporters generally rejoiced when the higher court reversed the original court decision. They viewed the decision as wise and as protectingbaseball. The reporters, as did almost everyone — even many players — viewed the reserve clause as necessary. The Baltimore club, of course, did not admit defeat, so the case went to the United States Supreme Court.

In the final, winner-take-all Supreme Court decision, Major League Baseball won a big victory. In a unanimous decision, delivered in May of 1922, the court ruled that organized baseball was not interstate commerce, so the Sherman Antitrust Act did not apply. Justice Oliver Wendell Holmes expressed the majority view:

The business is the giving of exhibitions of baseball which are purely state affairs. It is true that in order to attain for these exhibitions the great popularity they have achieved, competition must be arranged between clubs from different cities and States. But the fact that in order to give an exhibition leagues must induce free persons to cross State lines, and must arrange and pay for their doing so, is not enough to change the character of the business ... the transport is a mere incident, not the essential. That to which it is incident, the exhibition, although made for money, would not be called trade or commerce in the commonly accepted use of those words.

He went on to compare baseball with, "a firm of lawyers sending out a member to argue a case, or a Chautauqua lecture bureau sending out a lecturer, do not engage in such commerce because the lawyer or lecturer goes to another state."

Although some later legal scholars and justices have questioned the wisdom of the ruling and its key interpretation, there were previous cases that guided the jurists' decision. The E. C. Knight case of 1894 showed that the court did not consider manufacturing as commerce. In People v. Klaw v. Erlanger (1907), the court ruled that the theatrical businesses were amusement enterprises and not interstate commerce. In theater as in baseball, performers traveled across state lines to give performances. In another case, involving horse racing, the judge dismissed a charge of antitrust conspiracy on the basis that horse racing was not commerce under the Sherman Antitrust Act.

National League president John Heydler rejoiced and stated, "The Supreme Court's decision will prove a great stimulus to the future development of baseball. ... All of these basic features of our mode of operation have now been safe-guarded and made more secure. ... The decision stabilizes the whole structure of American baseball. It insures protection for the owners as well as for the players, and will mean more attractive exhibitions for the public." Had there been a futures market for baseball franchises, the Supreme Court's ruling should have induced a jump in the price, given the strengthened property rights of franchise ownership.

A Real War

Baseball had survived the Spanish-American War of 1898. That war hadn't lasted too long and didn't require a military draft. The Great War of 1914–18, though, required a military draft for the relatively short period of American involvement.

Since owners were still trying to adjust player salaries to pre–Federal League levels, the war seemed a heaven-sent opportunity. Baseball owners undoubtedly gnashed their teeth that American's declaration of war occurred after players had signed their contracts for 1917. Chicago Cubs president Charles Weeghman candidly said that players should have had their salaries reduced because of wartime economy: "It will have to be economy all along the line for the baseball owners." Yankees owner T. L. Huston also cautioned economy, citing a possible reduction in patronage. Huston, however, volunteered for military service, unlike most of the owners (although in fairness to them, many were overage and out of shape).

For most of the 1917 season, players, aside from those who were drafted or who volunteered, saw little change in their lives. At most, they had to participate in rather insipid military drills.

Owners weren't sure what the public response would be to baseball being played during wartime. Some owners, wary of the risks, suggested pooling players and receipts. Apparently Charles Comiskey was the instigator of this idea. Given the White Sox's eventual loss of key players to military service or industrial employment, perhaps Comiskey was prescient; the White Sox fell from world's champions to sixth place in 1918.

After staggering through the 1917 season, owners were understandably perplexed. Would the government allow baseball to operate during 1918? If so would there be restrictions on travel and players lost to military service or to industrial jobs? As early as November 22, 1917, Ban Johnson asked the military authorities to exempt 288 players from the draft. His sense of public opinion failed him miserably; many of the owners repudiated his statement. National League president, John Tener, attacked Johnson's statement: "Baseball is a trifling thing compared to the gaining of liberty for the nations of the world. I cannot state too strongly that the National League has no sympathy with any selfish plan of discrimination in favor of its business or its players. It will not ask special exemption for any of its ballplayers." As it was, many players failed physical examinations, with gnarled fingers (the bane of many a baseball player).

The National League urged its players to offer their services to the military. These owners were angered by Johnson's statements as they had given him no authority to claim they wanted exemptions for their players. Johnson would increasingly issue opinions or statements at odds with some or all of his owners; over the years, these misstatements may have created an accumulation of doubts about his fitness to continue in office.

In a somewhat more astute suggestion, Johnson wanted a war clause included in the 1918 contracts that would absolve clubs of the responsibility of paying players who were drafted or enlisted. Of course, if the player became discharged from the military, he remained bound to his club.

Because of travel restrictions and expenses, many of the big-league teams canceled spring training trips to southern sites. Managers urged their players to begin training on their own for the rigors of the upcoming season.


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Table of Contents

List of Tables
1. Baseball’s Interminable Wars
2. The Rise of Judge Kenesaw Mountain Landis
3. Baseball’s Longstanding Gambling Problem
4. The Financial Side of the Game
5. Getting Fans to the Ballpark
6. Trying to Make the Game More Popular
7. Not a Perfect Game
8. The Stars Are Realigned
9. Competitive Balance and Its Discontents
10. Owners versus Players
11. Highly Paid but Exploited Players
12. Hang On, the Minor Leagues’ Bumpy Ride
13. Baseball and Ethnic Diversity
14. Hilldale and the Negro Leagues in the 1920s
Epilogue: The Roaring Twenties and Major League Baseball
Appendix 1: New York Yankees Financial Records
Appendix 2: Salary Data Sources

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