What was the Sherman Anti-Trust Act? How was it used during the Presidency of Roosevelt?
During the 19th century the emergence of what we now call the “economy” was born. Prior to 1840 there were really no such thing as “big business”. The first real “big business” was the Railroad. The building of the Railroad Empire and rail lines throughout the United States drastically changed the American way of life. Due to new abilities to travel long distances and communicate at a much faster pace than before, the American economy began to boom.
Competition between Railroad lines was a cutthroat and fierce environment. Railroad executives were in line to become extremely wealthy. Not only were the Railroad companies booming but also the steel manufacturing business was working overtime to supply steel for the railroad line. Steel companies were also experiencing stiff competition.
The result of all of the competition between large industry was that the companies turned to Pools, Trusts, and Holding companies for a solution. The holding company’s goal was to control price competition through cooperation and coordination of rival businesses. This resulted in large monopolies. Larger railroad companies would intimidate and buy out the smaller ones putting themselves in total control of the railroad business.
In 1890, with the support of President Benjamin Harrison, Congress passed the Sherman Anti-Trust Act. John Sherman, a lawyer and senator from Ohio, was the author of the legislation that attempted to curb the growth of monopolies. The act declared illegal any business combination that sought to restrain trade or commerce. Penalties for violation of the act included a $5,000 fine and/or a year’s imprisonment.
Due to the vague wording of the act and the lack of a commission willing to enforce the act, it was rarely ever put into use.
In 1904 President Teddy Roosevelt revitalized the Sherman Anti-Trust