For this act, “antitrust laws” includes past antitrust laws, “commerce” means trade, and “person” includes corporations.
Section 3. That it shall be unlawful for any person engaged in commerce, to take actions that lessen competition or create a monopoly in any type of commerce.
Section 4. That any person who shall be injured by a company breaking an antitrust law may sue for three times their damages, and the cost of suit, including a reasonable attorney’s fee.
Section 6. The labor of a human being is not a commodity or article of commerce. Antitrust laws shall not be used to forbid labor organizations, no organization shall be considered illegal.
Section 7. That no corporation shall acquire stocks of another corporation if it lessens competition, or creates a monopoly.
Section 8. No person at the same time shall be a director of two or more corporations, if such corporations are competitors.
Section 14. If a corporation violates an antitrust law, the directors, officers, or agents of the corporation who authorized, ordered, or did the violation will be deemed a misdemeanor and shall be punished by a fine of not exceeding $5,000 or by imprisonment for not exceeding one year, or by both.
First some vocabulary/concepts:
Trusts (Also called a Combination): A Trust/Combination is formed when one company takes over other companies to help their company grow. This leads to them having more power, and making more money for the owners, as well as the stockholders- people who own part of the company
Social Darwinism: Based on Darwin’s theory on Evolution , where the animal better adapted to its environment survives. This is also called “Survival of the fittest”. Some applied this rule to Animals, People and Businesses.
Monopoly: When one company has complete control over a whole industry.
1870 John D. Rockefeller creates the Standard Oil corporation in Ohio. The company made deals with railroad companies allowing them to ship their goods at a lower rate. Since this led to their goods costing less, they could sell them for less. They drove many competitors out of business and eventually developed a monopoly.
1887 - S.1532 “to regulate commerce” is passed and becomes the “Interstate Commerce Act of 1887”. It was the first Federal regulation of big businesses.
1890 - S.1 “A bill to declare unlawful trusts and combinations in restraint of trade and production.” is passed and becomes known as the “Sherman Antitrust Act”, named after Senator John Sherman who introduced it.
Details of the Sherman Antitrust Act
Section 1 of the Sherman Antitrust Act made it illegal for companies to form combinations in the form of trusts, or to create conspiracies to control trade or business.
Section 2 of the Sherman Antitrust Act made it illegal for people to monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the business.
1893 - Supreme Court Case United States v. Workingmen's Amalgamated Council of New Orleans ruled that labor unions were monopolies, and were illegal under the Sherman Antitrust Act.
1911- In the Supreme Court Case Standard Oil Co. of New Jersey v. United States the Supreme Court rules that Standard Oil violated the Sherman Antitrust Act, and broke Standard Oil up into 34 separate companies.
The bill does not interfere with the power of the States, but allows the Federal courts, within their constitutional powers, to help the States control the dangerous combinations threatening the businesses, property, and trade of the people of the United States.
This law aims only at unlawful combinations. It does not affect combinations where there is free and fair competition. It is the legal right of every man to work, produce, and transport his goods if he does so fairly. This is industrial liberty and lies at the foundation of the equality of all rights and privileges.
Corporations have invented a new form of combination called trusts. Trusts make competition impossible. They control the market, and work for their own selfish interests. Corporations take over industries and create monopolies. This injures the public, and should be a crime, and its leaders should be punished.
Trusts are against our democracy. A free government might not survive in a country where such enormous amounts of money are held by corporations, and used against the interests of the people, for the personal gain of a few individuals.
The people demand Congress fix this evil. We must listen to them or be ready for the communist to take over. While we should not stretch the powers granted to Congress, we can not surrender them; we need them to protect the people of the United States.
It is time to turn to the great question of monopolies. The monopolies have multiplied around us, and our action is needed. The great businessmen who organized monopolies, until now, have either denied monopolies existence or justified it as necessary for the development of business. The average businessman is convinced that the ways of liberty are also the ways of peace and success. At last the masters of business are ready to surrender.
The Government and businessmen are ready to meet each other halfway in an effort to square business methods with both public opinion and the law. No major changes are necessary. Our object is not to unsettle business. On the contrary, we desire the laws to protect industry against the forces that have disturbed it.
Laws should prohibit the interlockings of the personnel of the directors of great corporations, this has allowed competitors to become partners and masters of a whole field of business. Every act of business is done at the command of a person. They should be held individually responsible and they should be punished, not the business they make illegal use of.
Action must be taken if we are to square our laws with the thought and desire of the country. We are now about to write the additional articles of our constitution of peace, the peace that is honor and freedom and prosperity
George Rice owned a small oil company. This newspaper article was written after an argument between George Rice and John D. Rockefeller in New York hotel was witnesses by a group of people. After quoting the argument between Rockefeller and Rice, the newspaper article asked Rice about his story.
John. D Rockefeller “How are you George? We are getting to be gray-haired men now, ain’t we? Don’t you wish you had taken my advice years ago?”
George Rice responded; “Perhaps it would have been better for me if I had. You have certainly ruined my business, as you said you would.”
Rockefeller; “Uh, perhaps, that isn’t so, George?”
Rice; “But I say it is so. You know well that by the power of your great wealth you have ruined my business, and you cannot deny it.”
The history of the argument between George Rice and Rockefeller:
“I am but one of many victims of Rockefeller’s gigantic combination, My company was called Ohio Oil Works.
I was surprised to find out the Standard Oil Company was selling the same quality of oil I was at much lower prices than I could. I discovered they were able to sell it for less than I could by making secret deals with the railroads. The railroads gave them better rates and privileges of all kinds than they gave myself and all other outside competitors.
Standard Oil’s policy is to oppress and strangle every competitor. They offered to buy my company for far less than it was worth. I chose not to accept the price and my business was destroyed. My story is the same as fifteen to twenty other independent oil refiners in Ohio, and in many others all over the country.
The people of this country must take up this fight and settle the question of whether they will rule the trusts, or let the trusts rule them.
Everybody has been asking, “can more money be made by trusts than by small businesses?”, “will trusts improve the production of goods?”, “Will investors benefit or be injured by trusts?”, “Will trusts endanger the financial system of the country?”, “Will trusts help us better compete for the world's trade?”
These questions don’t matter. It is more important to ask if any advantage of the trust is worth the price we pay for them.
The strength of our republic has always been our middle class. This is made up of manufacturers and businessmen. It would be a disaster to encourage any industrial development that would hurt this class of our citizens. The skilled workers are another strength of the nation. He is more than just a machine. He deserves equal opportunities to advance.
The trusts make it impossible for the small business to be successful. The individual businessman will lose his business, and will end up working for the trust. His employees must follow him. They become cogs in a machine. There is no real advance for them. They may become larger cogs, but they can not have a life of business freedom.
The trust is the creator of industrial slavery. The master is the trust manager or director whose duty to serve the soulless stockholder. To the stockholder the money is more important than the happiness or prosperity of any one.
When Ida Tarbell was 14 her father’s oil business was run out of business by Standard Oil. After college she became a teacher, but went back to school to study history. She wrote a series of articles for McClure’s Magazine about Standard Oil, which became a book. Her biography
In 1870 Mr. Rockefeller realized competition in the Oil Industry was lowering his profits. Some Pennsylvania refiners, brought to him a remarkable scheme. They would secretly bring together enough refiners to make railroads to give them deals. This would make it hard for other companies to compete with them, eventually they would become the only refiners. If they were the only buyers of crude oil and the only sellers of refined oil they would put the entire oil business in their hands. They decided to take over every refinery they could. They planned kill off all but themselves and their friends.
In 1872 Rockefeller went to extend his combination to the twenty six refineries in Cleveland, Ohio. Mr. Rockefeller went to their owners one by one, and explained the Company. "You see," he told them, "this scheme is bound to work. It means an absolute control by us of the oil business. There is no chance for anyone outside. But we are going to give everybody a chance to come in. You are to turn over your refinery, and I will give you Standard Oil Company stock or cash. I advise you to take the stock." Certain refiners objected. They did not want to sell. They wanted to keep their business. Mr. Rockefeller was regretful, but firm. It was useless to resist, he told them; they would certainly be crushed if they did not accept his offer.
Library of Congress Summary
Library of Congress summary
Library of Congress Summary
Summary of Keppler's "The Bosses of the Senate"
Library of Congress Summary
Library of Congress Summary
Library of Congress Summary
Library of Congress Summary
Explanation: J.P. Morgan mixing a little competition/soda water with his monopoly/whiskey.
At the Pujo Committee, December 19, 1912, Morgan was asked by Samuel Untermyer if he disliked competition and replied "I like a little competition."
Library of Congress Summary
Explanation of Samuel Ehrhardt’s cartoon: 'History repeats itself. - The robber barons of the middle ages and the robber barons of to-day.',
The term “robber baron” comes from a name given to the feudal lords of the middle ages who charged people who were traveling through their lands very high fees.
People used the term “Robber Baron” again in the early 20th century to describe the industrial leaders who ran the trusts. They used the term to describe them because they felt the large amount of money made by industrial leaders such as Andrew Carnegie, J.P. Morgan and John D. Rockefeller was made by exploiting their workers and manipulating politicians.
Explanation of G. Frederick Keller’s The Curse of California
A powerful railroad monopoly is an octopus, with its many tentacles controlling such financial interests as the elite of Nob Hill (an area of San Francisco), farmers, lumber interests, shipping, fruit growers, stage lines, mining, and the wine industry.
The Committee on the Judiciary submitted this report for the members of Congress to consider when H.R. 15657 was introduced.
The Committee on the Judiciary, does not agree with H. R. 15657.
The current antitrust laws if properly enforced are believed by us to strip corporations and trusts of any power to injure or oppress.
No possible good can come from constant interference with business. It is our belief that business should have a rest from further legislation and be given an opportunity to adjust to the existing antitrust laws. It is undesirable to bring uncertainty and doubt to worry and harass the business of the country.
The policy of the antitrust laws is to foster competition, because competition is a normal and desirable thing; but this law would tend to prevent competition. Competition is a struggle for business between competitors. This bill would seriously interfere with, if not deny, competition, and take away from the general public the benefits which such competition might bring.
The Sherman Act of 1890 makes it illegal to create a monopoly, and that law is fully capable taking care of all offenders. This act, however, goes beyond and leads us into a most dangerous realm. It introduces new and uncalled-for risks and penalties.
(modified/link to original) George's biography
The trusts and combinations are hurting the people. They invade the people’s lives. They increase the cost of the necessaries of life. They change prices at their will. They make themselves wealthy by cheating the people and making them poor. They are uncontrolled by law. The people are asking us for help.
Mr. President, let me explain why the bill is unconstitutional. This task is an easy one, I don’t even need the argument of State rights.
There are two types of powers given to the Federal Government by the Constitution, expressed powers and implied powers. Expressed powers are powers the Constitution clearly says the Government can do.
The Bill would create a criminal law. The only Expressed power in the Constitution giving Congress the right to create criminal laws, are laws to punish counterfeiting money and acts of piracy. This Bill does not address either of those acts, therefore we do not have the Constitutional power to create this bill.
The Constitution is a reasonable instrument, and it does not tolerate the abuse of power. This would be a regulation not within the jurisdiction of the Federal Government.
Rockefeller was the owner of Standard Oil
It is too late to argue about advantages of industrial combinations. They are a necessity. If Americans want to extend their business in all the States of the Union, and into foreign countries, they are need combinations. Their main advantages are:
Command of necessary capital.
Extension of limits of business.
Increase of number of persons interested in the business.
Economy in the business.
Improvements and economies which are derived from knowledge of many interested persons of wide experience.
Power to give the public improved products at less prices and still make a profit for the stockholders.
Permanent work and good wages for laborers.
I speak from my experience in business with which I have been intimately connected for about 40 years.
Combinations can be dangerous if they abuse their power. But this fact is no more of an argument against combinations than the fact that steam may explode is an argument against steam. Steam is necessary and can be used safely. Combinations are necessary and their abuses can be minimized. However, so far most legislative actions have focused on destroying the combinations, not controlling them. This is why all of those actions have failed.
The Commoner was William Jennings Bryan's newspaper in Lincoln, Nebraska. (source)
This cartoon was accompanied with a quote from John D. Rockefeller’s son’s speech at Brown University;
“Business is survival of the fittest. The American Rose can only grow the beauty and fragrance which brings cheer to its owner by killing the early buds growing around it. This is not an evil in business. It is the laws of nature and God.”
~John D. Rockefeller Jr.
Harpweek summary
Cartoon’s text, Carnegie interview, NY Times "The public may regard trusts or combinations with serene confidence."
The monster has six heads, each labeled ‘coal trust’, ‘sugar trust’, ‘oil trust’, ‘steel trust’, ‘lumber trust’ and ‘salt trust.’
In 1914 Congress passed H.R.15657, which became known as the Clayton Act.
Also in 1914, Congress created the Federal Trade Commission (FTC) Act. This new federal agency was created to watch out for unfair business practices. Congress gave the Federal Trade Commission the authority to investigate and stop unfair methods of competition and deceptive practices.
In 1936 Congress passed the Robinson-Patman Act. The goal of the Act was to protect smaller, local, stores against the growth of chain stores. The Act made it illegal for companies selling goods to stores to give discounts to larger companies, but give the same discounts to smaller stores.
Some of the biggest Government Actions to break up monopolies include the breaking up of Standard Oil in 1911, the breaking up of AT&T in 1984, and the breaking up of Microsoft in 2000.
In 1984 a Supreme Court case called United States v. AT&T was decided. As a result of the case American Telephone & Telegraph was ordered to be broken up into seven regional Bell operating companies and a much smaller new AT&T.
In 2000, the Supreme Court Case United States v. Microsoft Corporation results in the court ordering a breakup of Microsoft into two separate units, one to produce the operating system, and one to produce other software components.