1890
Sherman Antitrust Act for kids: What is a Trust?
Definition and Summary:
A trust is a business organization, or a number of corporations,
formed mainly for the purpose of regulating the supply and price of
products and commodities or monopolizing an industry or business.
The advantages of a trust are due to the economies of scale made
possible in conducting a large business, and by doing away with
competition.
1890
Sherman Antitrust Act for kids: What is an Antitrust?
Definition and Summary:
Antitrust relates to laws and regulations that are designed
to protect trade and commerce from unfair business practices that
limit competition, or control prices.
1890
Sherman Antitrust Act for kids: Background History
The 1800's was a
period of extensive growth and the new
Inventions of the
Industrial Revolution. The government of the United States at
first encouraged the growth of big business. Then the wealthy and powerful men, referred to as the 'Robber Barons', took
a stranglehold on American Industries and the emergence of the powerful trusts
were seen as a threat as nationwide monopolies. The Robber Barons
found that by forming trusts they could fix prices, making excessive profits and
accumulating great wealth. During the period of the Industrial
Revolution the number of American millionaires rose from 300 to
4000. The Robber Barons had great influence over the politicians
which led to even greater economic
benefits for the trusts in terms of as tariffs (taxes) and discriminatory railroad
rates or rebates. For additional facts refer to
Rise of Big Business and Corporations.
Sherman Antitrust Act for kids: The 1887 Interstate Commerce Act
The 1887
Interstate Commerce Act attempted to address the cost of
freight-shipping on the railroads and created an Interstate Commerce
Commission to oversee the conduct of the railroad industry, but the
laws were relatively ineffective. Furthermore the Interstate
Commerce Act had only applied to the railroads. The public demanded
legislative action and John Sherman was determined to address the
monopolies and the trusts of other major industries including the
industries dealing with steel, sugar, tobacco and oil. John Sherman
called his law the “Magna Carta of free enterprise.”
What was the Purpose of the Sherman
Antitrust Act?
What was the purpose of the Sherman Antitrust Act
do? The purpose of the Sherman Antitrust Act was:
-
To respond to the public
outcry against monopolies and their damaging effect on prices
and therefore consumers and suppliers
-
To reduce the power of the
Robber Barons
-
To regain a balance in
industry allowing equal opportunities to all businesses
-
To prohibit
anti-competitive practices
-
To regulate interstate
commerce
What were the Provisions of the Sherman Antitrust Act?
What did the Sherman Antitrust Act
do? The
Provisions of the Sherman Antitrust Act addressed the issues of
Restraint in Trade, Concerted Action, Price Fixing and Market
Allocation, Boycotts, Tying Arrangements and Monopolies:
-
Restraint in Trade: To
curb restraint in trade, due to a conspiracy to form a trust,
was declared to be illegal
-
Concerted Action, Price
Fixing and Market Allocation: Restricting concerted actions like
price fixing and market allocation
-
Boycotts: To prevent
boycotts by two or more companies, meaning a concerted refusal
to deal with a third party, in an anti-competitive way
-
Tying Arrangements: To
restrict the practice of 'Tying Arrangements' by which a seller
conditions the sale of a particular product on a buyer's promise
to purchase an additional, unrelated product
-
Monopolies: The Sherman
Antitrust Act prohibited monopolies and attempts or conspiracies
to monopolize
How did the Sherman Antitrust Act harm businesses?
The Sherman
Antitrust Act harmed some ethical businesses because
trusts benefited consumers by expanding
production, lowering prices, and creating jobs.
What were
the Effects of the
Sherman Antitrust Act?
The Effects of the Sherman Antitrust Act were minimal.
The McKinley Tariff was passed in
October, 1890 just after the Sherman Antitrust Act (July, 1890)
and resulted in much higher prices of goods. Many Americans felt
deceived by the Republican politicians and was a contributing factor
led to the defeat of Benjamin Harrison and the Republicans in the
next presidential election and the re-election of Grover Cleveland
and the Democrat Party.
The only
successfully prosecution of the Sherman Antitrust Act was not
against big business, but against labor unions during the
Pullman strike of 1894. The
government argued that by striking, the railroad workers were
placing a restraint on trade and commerce, resulting in a direct
violation of the Sherman Antitrust Act. For addition
facts refer to the article on the
Labor Unions History.
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