CLAYTON ANTI-TRUST ACT

Passed by Congress in 1914, the Clayton Anti-Trust Act strengthened the legislation of the Sherman Anti-Trust Act of 1890. The Clayton Act thus provided the government with more power to prosecute trusts (large business combinations that conspired to limit competition and monopolize a market). The Sherman legislation declared as illegal every "contract, combination, or conspiracy in restraint of interstate and foreign trade." The Clayton legislation outlawed price fixing (the practice of pricing below or above cost to eliminate a competitive product), made it illegal for the same executives to manage two or more competing companies (a practice called interlocking directorates), and prohibited any corporation from owning stock in a competing corporation. The price-cutting provision was later strengthened (in 1936) by the passage of the Robinson-Patman Act. The Clayton Act also exempted labor unions from prosecution under the Sherman Anti-Trust Act; before the 1914 legislation, businesses had invoked, with some success, the Sherman legislation when labor strikes affected business in more than one state, citing the interruption as a conspiracy of interstate trade. Since organized labor had not been the target of the Sherman legislation, lawmakers exempted them from the antitrust legislation of 1914.

Between 1880 and the early 1900s, corporate trusts proliferated in the United States, becoming powerful business forces. The vague language of the Sherman Anti-Trust legislation and the courts' reluctance to prosecute big business based on that act did little to break up the monopolistic giants. The tide turned against corporate trusts when Theodore Roosevelt (1901–1909) became president in September 1901, after President William McKinley (1897–1901) was assassinated. Roosevelt launched a "trust-busting" campaign; through the attorney general's office, his administration launched some 40 lawsuits against American corporations such as American Tobacco Company, Standard Oil Company, and American Telephone and Telegraph (AT&T). Government efforts to break up the monopolies were strengthened in 1914, during the presidency of Woodrow Wilson (1913–1921), when Congress passed the Clayton Anti-Trust legislation and created the Federal Trade Commission (FTC), which is responsible for keeping business competition free and fair. Trust busting declined during the prosperity of the 1920s, but was again vigorously pursued during the 1930s by the administration of Franklin Roosevelt (1933–1945)

See also: Monopolies, Theodore Roosevelt, Sherman Anti-Trust Act, Tobacco Trust, Trust-Busting, Woodrow Wilson