SHERMAN ANTITRUST ACT 26 Stat. 209 (1890)

This concisely worded law represented the first congressional attempt at antitrust legislation. Neither the reasons for its approval nor its framers' intent are clear, but several circumstances ordained its passage. Individual state attempts to regulate monopoly were often unsuccessful; a federal statute would satisfy the need for uniform national policy as well as consistent practice. In addition, a heritage of antimonopoly sentiment and an economic depression combined to inflame public opinion against the industrial giants. Consequently, the platforms of both major parties contained antimonopoly planks in 1888, and, following his election, President benjamin harrison asked Congress to redeem this pledge. Of sixteen bills introduced into the next Congress, one, sponsored by Senator John Sherman (Republican, Ohio), was briefly debated and then referred to the Judiciary Committee. Six days later the committee reported out a completely re-written bill which received only cursory debate and passed 52–1 in the senate and 242–0 in the house. The lack of debate, particularly over such a potentially controversial bill, has never been satisfactorily explained. Often-cited possibilities include fierce interparty competition for support from the vigorously antimonopoly West and an underestimation of the act's importance. Contemporaries paid it little attention—the trusts and their congressional allies did not even bother to oppose the bill. Its proponents conceded that the act was an experimental entry into a new field of economic regulation. In fact, it contained nothing new.

Although Senator Sherman was the moving force behind the bill, Senator George Edmunds (Republican, Vermont), chairman of the Senate Judiciary Committee, wrote most of it. Despite Edmunds's claim that it was "clear in its terms… [and] definite in its definitions," the act failed to define the two most important concepts in it: monopoly and restraint of trade. Although there is a debate over the (Anglo-American) common law underpinnings of the act, most scholars agree that the common law forbade agreements in restraint of trade and criminal conspiracy to monopolize. The controversy arises over these doctrines' application in America and the extent of their incorporation into the Sherman Act. The final bill also omitted any specific exemption for labor or farm organizations. Congress either meant to leave the issue to the courts (see loewe v. lawlor) or, more likely, believed an exemption was self-evident from the text.

The first section of the act outlawed "every contract, combination … or conspiracy, in restraint of trade" or interstate commerce and was directed against joint action. Section 2—equally applicable to individuals—outlawed any means of achieving monopoly. Broader than section 1, this clause declared void any attempt, combination, or conspiracy to monopolize. It did not outlaw monopoly per se. Among the remaining provisions were those granting jurisdiction to the circuit courts, providing for equity proceedings, and authorizing treble damage suits.

Even with public support, the Sherman Act proved ineffective initially. The economic depression of the 1890s adversely affected business, and the general terms of the act required interpretation which could only come with time. The Court hamstrung the act in united states v. e. c. knight (1895), holding that it did not apply to manufacturing. Even though a bare majority of the Court resuscitated the act against pooling arrangements in united states v. transmissouri freight association (1897), the government would not achieve any notable success until philander c. knox became attorney general under theodore roosevelt. Then, in quick succession, the government won major victories in northern securities co. v. united states (1904) and swift & co. v. united states (1905). The next decade saw a limitation on antitrust policy as the Court formulated the rule of reason and additional implementation by Congress which passed the clayton and federal trade commission acts.

David Gordon
(1986)

Bibliography

Neale, A.D. and Goyder, D.G. 1980 The Antitrust Laws of the United States of America, 3rd ed. Cambridge: At the University Press.

Thorelli, Hans B. 1955 The Federal Antitrust Policy. Baltimore: Johns Hopkins University Press.