The Sherman Antitrust Act: Corruption In The Economic System

Roosevelt persuaded Congress to create a Bureau of Corporations to investigate and regulate big business, then brought an anti-trust suit against J.P. Morgan's Northern Securities Company, a railroad trust controlled by the Wall Street financier, with the United States Supreme Court upholding the closure of the trust in the case of Northern Securities Co. v. United States issued in 1904. During Roosevelt's Administration, over 40 major corporations were sued for antitrust or price-fixing violations. Roosevelt greatly expanded the powers of the government within the economy, often by endorsing new power for organized labor to organize and put forth leverage against employers. By supporting labor in the settlement of the Anthracite Coal Strike of 1902, Roosevelt became the first president to assume such a direct role in intervening in labor disputes, including the threatened use of the U.S. Army to seize the coal mines and operate them until the owners agreed to arbitration to settle the strike. Rosevelt unlike many of his successors really took advantage of the power given to him as president. During his presidency he revived the Sherman Antitrust Act ,which was an act that sought to prevent companies from combining into trusts and gaining monopolies. Roosevelt was also one to enforce the Hepburn Act, which allowed the Interstate Commmerce Commission to regulate railroads. The railroads had allied themselves with large

It required that all prices must be reasonable and just, rates must be publically posted, outlawed all secret rebates and deals, and price discrimination against smaller companies was now made illegal. While the act promised many changes to reduce the domination of the railroad monopolies, it was not enforced as pro-railroad commissioners were appointed by most of the later presidents. The next act passed by congress in 1890 called Sherman Antitrust Act. The objective of the act was to ban trusts and other contracts that restrained free trade. Much like the Interstate Commerce it was not enforced at all. In fact it was used to help the railroad monopolies even more by regulating labor unions. The very pro-business Supreme Court would rule that strikes violated the prohibition against “a conspiracy in restraint of trade.” In the act. This was the opposite intent of the act, and would not be properly enforced until the early

Swift was the industrialist that pioneered vertical integration, a model where a company controls all aspect of production from raw materials to finished goods. The long production line created many job opportunities for people and a new group of workers, named blue collar emerged. Many firms copied Swift's idea and used predatory price to reinforce their market control. Such unfair business practices also appeared in Rockefeller’s firm, Standard Oil of Ohio (Document H). With the assistance of railroad companies, Rockefeller succeed rapidly. He used horizontal integration to expand his corporations. The predatory price became a strategy he used to drive his competitors into failure. As George Rice said, joining Rockefeller’s trust was his only choice. By 1900, the American economy was dominated by these large companies, which controlled most of resources of the country. Even though the emergence of these powerful business ended the chaos of market competition, the negative impact of their alliance with political officers was too severe to be neglected (Document D). In that period, the senate was not elected directly and was controlled by the trusts which had supreme political discourse due to monopolies of resources. Their unwise decision on approving the coinage act and joining the gold standard increased american’s animosity toward capitals,

When Woodrow Wilson was inaugurated in 1913, he stated in his address that, “We shall deal with our economic system as it is and as it may be modified, not as it might be if we had a clean sheet of paper to write upon” (First Inaugural Address, online). He did just that when he passed the Clayton Antitrust Act in October 1914. The Sherman Antitrust Act was passed in 1890, but it was very vague in the way it described monopolies (Clayton Antitrust Act, online). Big business took advantage of the loopholes, which diminished competition (Clayton Antitrust Act, online). Although Roosevelt and Taft successfully busted about 150 trusts, big businesses continued to grow and our entire economic system remained in the hands of a few men (Taft Biography, online; T. Roosevelt – Section 8, online; Clayton Antitrust, online). Wilson requested Congress to modify the Sherman Antitrust Act, and the Clayton Antitrust Act was born (Clayton Antitrust, online). It is “An Act To supplement existing laws against unlawful restraints and monopolies, and for other purposes” (HR 15657, online). The Sherman Act simply declared monopolies illegal, while the Clayton Act declared activities linked with monopolies to be illegal (Clayton Antitrust Act, online). Such activities include mergers and acquisitions that are intended “substantially to lessen competition, or to tend to create a monopoly” (HR 15657, online). The Federal Trade Commission Act, passed about a month before the Clayton Act, banned

No wonder that only a handful of people can’t distinguish that this old man was a crock and deserves to rot in hell! With all this positive media attention, the public had been fed lies! In real life, this money hungry, greedy villain is the prime reason why the Sherman Antitrust Act was passed. Rockefeller’s dream was to monopolize the oiling industry, and he so successfully did. Because of his great empire (the Standard Oil Co.)

The government also enacted the Hepburn Act, which made shipping internationally difficult on the railroad. Despite the fact that government grants led to incompetent railroads, the Interstate Commerce Commission and Hepburn Act were put into place, which made it so Hill “could not offer rate discounts on exports traveling on the Great Northern en route to the Orient” which was helping improve the economy with increased trade. Hill and other market entrepreneurs were not corrupt or unfair when choosing to not have subsides, but rather the political entrepreneurs were corrupt and insolvent. Also, Folsom argues that John D. Rockefeller was negatively impacted by government intervention. The Sherman Act was intended “to prevent monopolies and those companies ‘in restraint of trade’. Yet Standard Oil had no monopoly and certainly was not restraining trade” . Rockefeller’s goal was not to create a monopoly but in order to keep his business succeeding he needed directors in each state. By enacting the Sherman Act, Rockefeller’s company struggled, due to competition rising. These laws essentially stopped the growth of successful businesses, such as Hill and Rockefeller, who became so successful due to no government intervention.

The Sherman Anti-trust Act in1890 aimed to stop monopolies from their unfair practices: The standard oil company being one of the government’s first attempts to stop. The government’s actions demonstrated their attitude towards monopolies. “ In 1887, congress passed the Interstate Commerce Act, which outlawed railroad rebates and kickbacks and also established the Interstate Commerce Commission to ensure that railroad companies obeyed the new laws” (“Sherman”). Both the Sherman Anti-trust and Interstate Commerce Acts were established to minimize the control monopolies had over the economy.

The population of the United States had almost doubled from 1870 to 1900 because immigrants came to the United States to work in the country's growing factories. As the United States became increasingly urban and industrial, it acquired many of the attributes common to industrial nations: overcrowded cities, poor working conditions, great economic disparity, and the political dominance of big business. One of Roosevelt’s main beliefs was that the government had the right to regulate big business to protect the welfare of society. Although Congress had passed the Sherman Antitrust Act in 1890, former Presidents had only used it sparingly. So when the Department of Justice filed suit in early 1902 against the Northern Securities Company, it sent shockwaves through the business community. The suit alarmed the business community, which had hoped that Roosevelt would follow precedent and maintain a "hands off" approach to the market economy. It was then that Roosevelt would his ‘hands off” approach in the economy. At issue was the claim that the Northern Securities Company; a giant railroad combination created by a syndicate of wealthy industrialists and financiers

Big businesses, such as the Standard Oil company, had trust and monopolies which meant they could set high prices since they controlled the industry. Reform was again demanded and the Pendleton Act was put into effect. The Pendleton Act insured that only qualified individuals would be able to hold a political service job - this was made possible by instituting a qualification test (if an individual wanted to work in politics they had to pass a test to prove they were qualified to hold the position). The Sherman Antitrust Act was also put into effect. This act protected consumers from the efforts of trust and monopolies, its aim was to sustain economic competition and impose penalties on those companies whom violated the

Sherman Anti-Trust Act-It was used to ban trusts in business. However, it was used to turn against labor combinations instead of stopping big business owners.

Before a series of antitrust acts and laws were instituted by the federal government, it was not illegal for businesses to use any means to eliminate competition in late nineteenth-century America. Production technology was now advanced to the point that supply would surpass product demand. As competition in any given market increased, more and more companies joined together in either trusts or holding companies to bring market dominance under their control (Cengage 2). As President Theodore Roosevelt was sworn into office in 1901, he led America into action with forceful government solutions (“Online” 1). Roosevelt effectively regulated offending business giants by the formation of the Department of Commerce and Labor, the Bureau of

Roosevelt sued Northern Securities under the Sherman Anti-Trust Act. The Sherman Anti-Trust Act was an act of Congress which prohibited any contracts of business interests in restraint of foreign or interstate trade. Northern Securities violated the Sherman Act, so, Roosevelt sued them. This prevented a railroad monopoly from happening and so it met progressive goals.

One law, which helps protect businesses and promotes fair competition for the benefit of the consumers, is the US Anti-Trust law. This law is comprised of three different acts: The Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914. The first role these acts perform is to restrict the formation of cartels which would perform outside of the guidelines of the government and there for not be bound by there laws. The second role these acts perform is to ensure no single business entity can perform a certain level of mergers and acquisitions, which would essentially turn them into a monopoly and reduce competition. Overall, the antitrust laws are constantly debated for their overall functionality and efficiency in protecting the fair business practices of the United States. [2] “One view, mostly closely associated with the "Chicago School of economics" suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of

The Sherman Anti-Trust Act of 1890 was passed to prohibit trusts, this was the first law passed by U.S. Congress to enforce this. This act was named after Senator John Sherman. Before this act was put into place, many other states had enforced laws very similar to the Sherman Anti-Trust Act. These laws were not perfect though, the large corporations had the majority of the economic power. Congress was not pleased with this, thus making the Sherman Anti-Trust Act. This act allowed Congress to regulate interstate commerce, outlawing monopolistic practices. If a person were to violate this act, he or she could be imprisoned for a year and fined five-thousand dollars. This law was successfully used to help Theodore Roosevelt during his campaign, “trust-busting”. Also, President Taft used the law to back himself up against the Standard Oil Trust and American Tobacco Company. The Standard Oil trust was when a board of nine trustees was set up to make all of the company decisions , allowing the company to run as a monopoly. The Sherman Anti-Trust Act allowed both presidents to dissolve the trusts that were creating problems. On the other hand, the Sherman Anti-Trust Act had many holes, it did not have exact wording, therefore allowing companies to still control the majority of the producing and still get away with it. The Sherman Anti-Trust Act had substantial success, but was put to rest and replaced with the Clayton Anti-Trust

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