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Sherman Antitrust Act

Date: 1890 
From: Encyclopedia of American History: The Development of the Industrial United States, 1870 to 1899, Revised Edition, vol. VI.

The last two decades of the 19th century were marked by widespread discontent among farmers, workers, and small businessowners toward the monopolistic practices of the railroad, oil refining, lead, sugar, and meatpacking industries. Although a number of states had enacted antitrust laws, state legislation had little or no impact on huge trusts engaged in interstate commerce. Increasing demand for national regulatory legislation forced Congress to act. In 1887 it passed the Interstate Commerce Act, creating a commission to regulate railroads, and in 1890 passed the Sherman Antitrust Act to regulate monopolies. These laws, designed to protect small business owners, farmers, and consumers, were largely ineffective in the Gilded Age.

Introduced by Senator John Sherman, an Ohio Republican, the Sherman Antitrust Act declared that any "combination in the form of trusts or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations" was illegal. Vagueness, however, weakened the Sherman Act. It did not clearly define what it exactly meant by a trust, a combination, or restraint of trade. Between 1890 and 1893, the government lost seven of eight cases involving the Sherman Antitrust Act that were brought before federal courts.

The most important case involving the Sherman Antitrust Act was United States v. E. C. Knight Company (1895). Since the Knight Company controlled virtually all sugar refining in the United States, the federal government argued it violated the Sherman Act.

The Supreme Court, however, in an 8 to 1 decision (John Marshall Harlan was the lone dissenter) ruled against the government's claim. The majority distinguished between commercial and manufacturing enterprises and declared that manufacturing was not commerce, did not restrain trade, and therefore did not fall under the jurisdiction of the Sherman Antitrust Act. The justices reasoned that manufacturing was essentially intrastate, even if the goods produced were sold across state lines. The E. C. Knight decision was not only a major setback to the antitrust movement in the United States, but it also restricted the application of the Sherman Antitrust Act to such a degree that it virtually became a dead letter until Theodore Roosevelt resuscitated it a decade later.

 

Edward C. Kirkland, Industry Comes of Age: Business, Labor, and Public Policy, 1860–1897 (New York: Holt Rinehart and Winston, 1961).

Text Citation (Chicago Manual of Style format):

Papas, Phillip. "Sherman Antitrust Act." In Hoogenboom, Ari, and Gary B. Nash, eds. Encyclopedia of American History: The Development of the Industrial United States, 1870 to 1899, Revised Edition (Volume VI). New York: Facts On File, Inc., 2010. American History Online. Facts On File, Inc. http://www.fofweb.com/activelink2.asp?
ItemID=WE52&iPin=EAHVI253&SingleRecord=True (accessed November 26, 2014).

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