Throughout the Progressive Era, giant monopolies began to form trusts with one another to dominate the free market competition. Large businesses continued to expand, while smaller businesses were suffering or completely shut down. These monopolies aimed to create trusts in order to decrease the competition, forcing consumers to pay the prices set by only one company. This allowed monopolies to charge whatever price they desired, without any worry of competition from other competing businesses. Corrupt policies that many large businesses followed had a strong negative impact on the consumers and laborers. The public began to see business tycoons created trusts, which further put them at unease. It was especially significant to dissolve the trusts …show more content…
Roosevelt had no intention of completely destroying businesses, but instead wanted to prevent them from negatively dominating the free market competition. He wanted the federal government to control and monitor corporations involved with interstate business. The public began to become aware of the exploitative corporations, which persuaded Roosevelt to create the Sherman Act. This antitrust act attacked the largest railroad trust in the United States and prohibited any anti-competitive activities to occur, such as forming trusts in order to limit the competition in a specific industry. The loose enforcement of the act made ineffective. By the end of Roosevelt’s presidency, he continued to believe that the most effective way to control the trusts was for the federal government to oversee the large corporations. Continuously attempting to attack individual monopolies by filing lawsuits was ineffective and …show more content…
The people were unhappy with the corruption of these businesses and pressured the government to take action against them. The Sherman Act, had a very small effect on the monopolies due to its loose enforcement and was followed by the enactment of the Federal Trade Commission Act and the Clayton Act. The Federal Trade Commission Act did not allow for unlawful practice and unlawful competition between businesses, but allowed to enforce stricter laws and policies that the Sherman Act did not have power over. The Clayton Act did not allow businesses to form together to reduce competition and initiate a large monopoly to form. These acts helped to dissolve and weaken monopolies and were continuously amended to strengthen
I claim that the Sherman Antitrust Act is a critical and necessary statute that gradually caused significant changes in business practices in order to ensure a competitive free market system essential for long term growth of the economy, although it faced criticisms for sacrificing economic efficiency. This fundamental statute continues to notably shape the economic landscape even today, albeit being more than 100 years old.
The Clayton Anti-Trust Act targeted business monopolies that could easily control the whole economy. Wilson being the arrogant president that he was, created a few minor laws that would not greatly improve the economy. It would be the next successor of the president that would be left with all these problems.
William Howard Taft spent the majority of his presidency concerning himself with foreign policy and proving to be even more progressive than Roosevelt in terms of busting trusts. Taft was very interested in involving American politics to areas abroad, a foreign policy critics dubbed "dollar diplomacy". Along with the help of Washington, Taft encouraged Wall Street bankers to invest their superfluous money into foreign areas of strategic concern to the United States, such as the Far East and regions critical to the Panama Canal. Their investments would supposedly "strengthen American defenses and foreign policies, while bringing further prosperity to their homeland- and to themselves" (683). Taft's "dollar diplomacy", although not coinciding with the domestic progressivism norm exemplified by Roosevelt, was progressive nonetheless as it replaced the necessity of the big stick. Not only interested with matters abroad, Taft focused his eyes on the issue that made his predecessor famous, busting the trusts. In all, Taft brought 90 suits against the trusts during his four year term, largely outnumbering Roosevelt's 44 suit total in seven and half years. Taft's most famous and publicized antitrust suit was against the U.S. Steel Corporation. This suit also brought the most criticism, surprisingly by Taft's "creator", Theodore Roosevelt. Under Taft's control, trusts were
Tom Scott found ways around the charter system in America and opened the doors for corporations to turn into monopolies. A monopoly is a company that has outmatched all other competition to where there is no more competition. without competition the company can charge whatever price they choose and no new competition ever challenges them because the monopoly buys out the new competition. Tom Scott made it so corporations could buy stock from other companies. Ted Nace explains Scott worked for a railroad. He was a very wealthy man and used his money and power within the company to make promises to people, such as building railroads to boost economic growth. These promises got him enough votes to be elected into the state congress. He then used his power to relieve taxation on the railroad and sway opinions of the people. Then to help his company expand Scott created a company that could modify its own charter. Scott then used this company to buy out other railroad companies creating a monopoly (Nace, 2003). Scott created what is know as a holding company. These companies are used to “hold” assets of a large corporation. Because Scott modified the charter he was then able to secretly buy other companies without gaining suspicion from the federal government. Scotts power was the beginning of corporations becoming more powerful than the government.
Roosevelt acknowledged that consolidation produced dangerous abuses of power and urged for the regulation of monopolies and trusts. Early on in his presidency the Hepburn Act was passed. The Hepburn Act was an attempt to clean up the railroad issues by setting fair rates and demanding to see their accounting records. There were ways to get around the law, but it was a sincere attempt to help.
Antitrust legislation is an important factor to the economy. The Sherman Act was the first part of legislation put into place by the United States to limit monopolies (“SHRM,” 2008). The focus of the law is to consider any type of conspiracy or attempt to monopolize any part of the trade or commerce will be held accountable by law (“SHRM,” 2008). The law is an important part of the foundation of Antitrust Legislation. The Sherman Act was the only law in place for many years until the Clayton Act was introduced.
This Act gave them the power to hammer down on companies that seemed threatening to them, making it a success. Equally important, there were also disadvantages for many of the consumers. Some of these inconveniences including, fixed prices, and poor quality. The public often does not respond well to these things making it a priority and a sign that things needed to change. The government isn’t always out to get people, in fact they often want to help, and by deciding on creating the Sherman Antitrust Act they indeed helped many a consumer get away from high and unfair prices. Besides, this economy, being of a competitive nature since our revolution, will not be left alone to be ruined by the many monopolies dominating it. The government often looks to protect this economy, resulting in the action to stop monopolies from ruling the market. Additionally, John Sherman, Secretary of Treasury under President Rutherford B. Hayes, Senator of Ohio, and principal author of the Sherman Antitrust Act, tells us of a reason of his own for this law being drawn up. The reason, as stated by Mr. Sherman, is to protect the country from the foul effects of the buildings of monopolies, rather than the final end result of the monopolies. He even went as far as to say that the actions of companies after they become monopolies are even good for innovation (“John Sherman”). People even now are
A driving force in the Progressive Era, Theodore Roosevelt believed that the government had the right to regulate big business and that the government should use its resources to help achieve economic and social justice. In his first term, he launched the Square Deal, which focused on the control of corporations, the consumer protection, and the conservation of natural resources. In order to achieve his goal of controlling the large corporations and railroad companies, Congress, under Roosevelt’s urge, created the Department of Commerce and Labor to monitor corporations, help dissolve monopolies, and promote fair competition between companies. At the same year, Roosevelt initialized the Elkins Act of 1903 to end the practice of railroad granting shipping rebates to certain companies, and three years later, Theodore’s administration issued the Hepburn Act, which gave the Interstate Commerce Commission the power to regulate shipping rates on railroads. The second element in the
Monopolies defied the principles of a free market by promoting income inequality and giving individuals an opportunity to control the price. Roosevelt said concerning them, “[W]here, in either [unions] or [corporations], there develops corruption or mere brutal indifference to the rights of others, and short-sighted refusal to look beyond the moment’s gain, then the offender, whether union or corporation, must be fought” (These United States 73). The Sherman and Clayton antitrust acts were Congress’s attempt to fight back. However, the Sherman Act failed to define monopoly and the Clayton Act was merely a civil statute which carried no criminal penalties.
The act is brief, but served as a foundation for the government to protect businesses from monopolies. In section 1, states, that contracts, a combination in the form of trusts—such as collusive price fixing—or conspiracy in the restraints of trade among states or with foreign nation is illegal (517). Section 2, points out that those who attempt to monopolize, or combine aspects of monopoly in any part of the trade or commerce will be guilty of felony (to which later became amended to a misdemeanor) (517). The Clayton Act of 1914, is an elaborate form of the Sherman Act that further explains the measures taken to promote competition. Section 2, outlaws price discrimination that reduces competition (518). Section 3, prohibits “trying contracts”, which are contracts in which a producer requires the buyer to purchase another product—similar or different—in order to allow the buyer to purchase its desired product (518). Section 7, prohibits the purchase of stocks of a competing firm (518). And section 8 prohibits a director of one firm to be a board member of a competing firm, which is known as a formation of interlocking directorates
Lessening competition and rising prices have led many people to question when government regulators will intervene if at all. During the past few years regulators have been scrutinized for their lack of involvement. In the recent past multiple large mega-mergers have been approved even though these type of mergers have and continue to lead to freedom to charge whatever those companies want to (Soergel). Antitrust laws work to regulate these markets and keep them from turning into full fledge monopolies. The Sherman Act was established in 1890 and made it illegal to restrict interstate trade by any means and outlawed attempting to monopolize. The Clayton Act which was established in 1914 outlawed
Roosevelt created the Truth in Securities Act, making it illegal for banks to loan money to people to use in the Stock Market. The “run on the banks”, one of the major causes of the panic of the Great Depression, caused mostly by people being afraid of losing their life savings in a failing bank, and rightfully so. Banks loaned out money for the Stock Market, and after the crash of the Stock Market people could not pay back the loans, resulting in the bankruptcy of many banks and thousands of people losing all of their money. Roosevelt knew that to bring
The development of capital intensive industries raised fixed costs to a higher level than previously experienced. This lead to a drive for mass production techniques in the late nineteenth century to lower the variable costs. The more that they could produce with the same equipment, the cheaper that the finished good could be delivered to consumers. Then there was a period of extreme growth in the industry, which attracted new firms and expanded the level of demand. Once the depression began in 1893 the production capacities of all the firs greatly outweighed the demand. This lead to downward pressures on prices, in addition to the face that companies were attempting to undercut each other by lowering prices even further. To counteract decline in prices, many different strategies were tried. There were gentlemen’s agreements between companies where they agreed not to undercut each other’s business, distributing their products through selling agencies, and they created inventory pools. In the long run, none of these methods effectively controlled process, which eventually lead to consolidation. Once consolidated, there were few companies in the industry, and they were all relatively sizable. This made it much more practical for them to control prices and act as oligopolies. The only way that these companies could ensure that new competitors didn’t enter and disrupt their share of the market was to erect barriers of entry, however at that point the government stepped in and started to disband some of the trusts which were prohibiting competition. In the end, the great merger movement had a significant impact on the history of American
In various countries various steps have been taken of enacting suitable laws to deal with the problem of corporate crimes. The steps include the legislative, administrative and executive measures. For example, in United States, the Sherman Anti Trust Act of 1890was one of the most important legislative enactments to deal with the financial problems created by the business and economic organizations. The American Congress had passed this Act to limit effectively the exercise of monopolies. The Act prohibited any contract, conspiracy or combination of business interests in restraint of foreign or interest trade. This legislation was followed by the Clayton Anti
but it was the most effect in doing. The Sherman Anti-Trust Laws were the first attempt of achieving these goals, but these laws were not always strictly enforced. For this reason President Woodrow Wilson instituted the FTC to ensure that business could be properly regulated. In this instance the efforts of the political machine was able to bring about positive results and limit the control business