Roosevelt's Monopolies During The Progressive Era

During the 1900s, there were multiple movements that intended to take power out of the hands of businesses and put more power into the hands of the government. The government decided to put the Sherman Antitrust Act into effect, which prohibit monopolies and put a restraint on trade. In 1984, the government ordered AT&T to break apart and end its monopoly.

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

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

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

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.

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.

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.

Throughout mankind existence, civilization has brought many changes that have affected lives. For some, these changes have brought better condition of living, for others disparities. With the emergence of industrialization businesses have focused on controlling world market and prices by creating a monopoly in order to have absolute control, making it almost impossible for competition to survive. As consumers begin to suffer government were forced to create policies in order to address this alarming behavior. By the 1890’s U.S gorvernment has introduced legislation of the Interstate Commerce Act. The Sherman Act of 1890’s regulation of antitrust competition policies was created as competing mechanisms to control monopolistic behaviors. Since

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.

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

Knowing they would ruin smaller factories, they attempted to use political power to stop trusts from consolidating corporate superpowers. Failing to gain traction from state legistation, the anti-trust supporters went to congressional legislation for support. The Sherman Anti-Trust Act of 1890 prevented combinations in limiting trade, but large companies quickly found ways to manipulate the act. Few cases were tried and they ended up being unsuccessful for the anti-trust supporters. A side effect of this act was that labor unions also were unable to consolidate, as it was considered a restraint of trade under the same logic, which stopped labor unions from gaining large

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