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1914 Clayton Antitrust Act

Woodrow Wilson

1914 Clayton Antitrust Act: Woodrow Wilson was the 28th American President who served in office from March 4, 1913 to March 4, 1921. One of the important  New Freedom progressive reforms, attacks against unfair business practices and federal laws passed during his presidency was the Clayton Antitrust Act.

Definition and Summary of the 1914 Clayton Antitrust Act
Summary and definition:
The Clayton Antitrust Act was a federal law passed during the era of the Progressive Movement to protect trade and commerce against unlawful restraints and monopolies.

The Clayton Antitrust Act revised the 1890 Sherman Antitrust Act and banned monopolistic practices by business. In response to Labor Unions requests for exemption from the antitrust laws as their purpose was not to inhibit trade  The Clayton Antitrust Act also gave unions the right to exist and affirmed the right of workers to go on strike.

Wilson's New Freedom Reforms: 1914 Clayton Antitrust Act for kids
President Woodrow Wilson, like his predecessors Theodore Roosevelt and William Taft, was a firm supporter of the Progressive Movement and Progressive reforms. His New Freedom polices included the passing of the federal law known as the Clayton Antitrust Act which attacked the trusts and protected the labor unions. The 1914 Clayton Antitrust Act was important legislation during the Progressive Era and addressed the issues of Price Discrimination, Tying And Exclusive Dealing, Private Lawsuits, Mergers and included a Labor Exemption.

Who drafted the Clayton Antitrust Act?
The 1914 Clayton Antitrust Act was drafted by congressman Henry De Lamar Clayton (1857–1929), a lawyer and progressive Representative from Alabama. the Act was an "antitrust law" described as "An Act to protect trade and commerce against unlawful restraints and monopolies".

1914 Clayton Antitrust Act: What is a Trust and What is an Antitrust?
Definition of a Trust: 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 running a big business, and by doing away with competition. Definition of an Antitrust: The term Antitrust relates to laws and regulations that are designed to protect trade and commerce from unfair business practices that limit competition, or control prices.

Purpose of Clayton Antitrust Act for kids: Why was the amendment to the law passed?
The purpose of the Clayton Antitrust Act was to revise and strengthen the 1890 Sherman Antitrust Act and clearly define unfair business practices. It was designed to prevent greedy corporations from taking advantage of consumers and small businesses. The purpose of the Clayton Antitrust Act was:

  • To promote competition in American businesses and discourage the formation of monopolies and exclusive dealing and tying practices

  • To prohibit anticompetitive mergers

  • To prohibit anticompetitive price discrimination

  • To prohibit price fixing, and exclusive sales contracts

  • To expand the power of private parties to sue and obtain triple damages and costs

  • To legalize the organization of Unions including peaceful strikes, boycotts and picketing against companies and to restrict the use of the injunction against labor

Clayton Antitrust Act Examples for kids: Price Discrimination
The Clayton Antitrust Act addresses corporate price discrimination preventing companies from engaging in predatory lending that might lessen competition or create a monopoly. Example of price fixing: A large company, such as Standard Oil, would charge a high price in a town where it held a monopoly but would charge a lower price in a competitive town until it drove the competitors out of business. The bottom line was that companies could not charge different customers different prices.

Clayton Antitrust Act Examples: Exclusive Deals and "Tying arrangements"
The Clayton Antitrust Act prevents companies from exclusive dealing and "tying arrangements" by selling products with the condition that the buyer can only use their product. The act also banned tying agreements, which required retailers who bought from one company to stop selling a competitor’s products.

Clayton Antitrust Act Examples: Private Lawsuits
Both the United States government and the states have the right to enforce antitrust laws. The Clayton Antitrust Act provides for private lawsuits to be brought against companies and obtain a damage award three times as large as the actual loss. If the plaintiff wins such a lawsuit the Clayton Antitrust Act states that the defendant will have to pay the plaintiff's (claimant) attorneys' fees.

Clayton Antitrust Act Examples: The Prohibition of Anticompetitive Mergers
The Clayton Antitrust Act provides for the prohibition of anticompetitive mergers that are designed to limit competition, create monopolies and make price fixing easier.

Clayton Antitrust Act Examples: Labor Union Organization
President Woodrow Wilson was lobbied by Labor Unions for to exemption from the antitrust laws as their purpose was not to inhibit trade. The Clayton Antitrust Act legalized Labor Union Organization and affirmed the right of workers to go on strike. The law ensured that companies and corporations were forbidden from preventing the organization of labor unions including peaceful strike action, boycotts and picketing.

Modern Significance of the Clayton Antitrust Act
The Clayton Antitrust Act was legislation that provided the basis for a great many important and law suits against large corporations that continue to this day.

US American History
1913-1928: WW1 & Prohibition
Progressive Reforms

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