Antitrust Laws

With the onset of the Industrial Revolution in the late 1880s wealth and power in America consolidated. From what were once small family business across the County sprang giant corporations that controlled the most important aspects of the economy. These giant corporations controlled the railroads, oil, steel and other necessities of American Economic Power. While these new corporations reaped in millions of dollars, the American Consumer lost out. With no competition and unregulated prices, the American Consumer was at the mercy of the new monopolies.

Two of the most powerful of the corporations were U.S. Steel and Standard oil. Each held a monopoly over the respective industry; steel and oil. Each were able to set their own price, set the supply of their product and controlled the entire industry. As such, each held enormous power in the market and in Washington.

Beginning in the early 1900s, the American Public began to get angry over these corporations power. When Theodore Roosevelt became President, one of his main priorities was to break the cycle of power held by few giant businesses. Roosevelt termed his actions as “trust busting.”

Roosevelt led the march towards taking down these monopolies. What were passed are what are termed “antitrust” laws. The goal of these laws was to protect the American Consumer by promoting competition in the marketplace by outlawing unfair or illegal business practices. .

The U.S. Congress passed several laws at Roosevelt’s urging to promote trust busting. The first of these laws was The Sherman Act. The Sherman Act was passed in 1890. The Act made it illegal for business to make agreements with each other to limit competition. The Act also makes it illegal for one business to control an entire industry by unfair business practices. However, the Sherman Act was not truly enforced until Roosevelt began trust busting.

In 1914, Congress passed the Clayton Act. With the enforcement of the Sherman Act, businesses were finding ways to work around the existing law to keep their consolidated power. The Clayton Act worked to close these loopholes. Companies had discovered that merging was another way to control prices and supply. The Clayton Act made mergers that are likely to stifle competition illegal and void.

Congress in 1914 also passed the Federal Trade Commission Act. This created a federal agency that would serve as a watchdog for unfair and illegal business practices. The Act also gave the newly created Federal Trade Commission the authority to investigate and stop deceptive and unfair business practices.