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SHERMAN ANTI-TRUST ACT

The Sherman Anti-Trust Act was passed by Congress in 1890 in an attempt to break up corporate trusts (corporate trusts are combinations of firms or corporations formed to limit competition and monopolize a market). The legislation stated that "every contract, combination in the form of trust or otherwise, or conspiracy in the restraint of trade" was illegal. While the act made clear that anyone found to be in violation of restraining trade would face fines, jail terms, and the payment of damages, the language lacked clear definition of what exactly constituted restraint of trade. The nation's courts were left with the responsibility of interpreting the Sherman Anti-Trust Act; the Justices proved as reluctant to take on big business as was Congress.

The legislation was introduced in Congress by Senator John Sherman (1823–1900) of Ohio, in response to increasing outcry from state governments and the public for the passage of national anti-trust laws. Many states passed their own anti-trust bills or made constitutional provisions prohibiting trusts, but the statutes proved difficult to enforce, since big business found ways around them. When the legislation proposed by Sherman reached the Senate, conservative congressmen rewrote it; many charged the Senators with being deliberately vague. In the decade after the legislation's passage, the federal government prosecuted only eighteen anti-trust cases, and court decisions did little to break up monopolies. But after the turn of the century, reformers demanded that government regulate business.

In 1911 the U.S. Justice Department won key victories against monopolies, breaking up John D. Rockefeller's Standard Oil Company of New Jersey and James B. Duke's American Tobacco Company. The decisions set a precedent for how the Sherman Anti-Trust Act would be enforced, and they demonstrated a national intolerance toward monopolistic trade practices. In 1914 national anti-trust legislation was further strengthened by the passage of the Clayton Anti-Trust Act. This act outlawed price fixing (the practice of pricing below cost to eliminate a competitive product); it was also illegal for the same executives to manage two or more competing companies (a practice called interlocking directorates); and a corporation was prohibited from owning stock in another competing corporation. The creation of the Federal Trade Commission (FTC) that same year provided further insurance that U.S. corporations engaging in unfair practices would be investigated by the government.

See also: Clayton Anti-Trust Act, Monopoly, Tobacco Trust

FURTHER READING

Bryan, William Jennings, and Robert W. Cherny. Cross of Gold: Speech Delivered Before the Democratic National Convention at Chicago, July 9, 1896. Lincoln: University of Nebraska Press, 1996.

Calhoun, Catherine. Winter with the Silver Queen. American Heritage, November 1995.

Doty, Richard. American Silver Coinage: 1794–1891. New York: American Numismatic Society, 1987.

Eichengreen, Barry J., ed., and Marc Flandreau. The Gold Standard in Theory and History. New York: Routledge, 1997.

Dictionary of American History. New York: Charles Scribner's Sons, 1976, s.v. " Sherman Silver Purchase Act."