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Sherman Antitrust Act

Benjamin Harrison

Sherman Antitrust Act: Benjamin Harrison was the 23rd American President who served in office from March 4, 1889 to March 4, 1893. One of the important events during his presidency was the Sherman Antitrust Act of 1890.

Definition and Summary of the Sherman Antitrust Act
Summary and definition:
The 1890 Sherman Antitrust Act was named after its primary supporter, Ohio Senator John Sherman and dated July 2, 1890. The purpose of the Sherman Antitrust Act was to maintain free competition in business and made it a crime to monopolize any part of trade or commerce.

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.

US American History
1881-1913: Maturation Era

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