Why Was The Sherman Antitrust Act Ineffective
Why was the Sherman Antitrust Act ineffective?
While the U.S. does not come right out and state that economic freedom is one of its central tenets, it can be logically deduced from those provisions, especially in Article I, which establishes the Legislative Branch of government, that free enterprise was certainly an important consideration. It was with that branch of the government, the U.S. Congress, that the Framers vested key authorities over commerce, include the power to print money and regulate commerce. Intended as the branch of government most directly responsive to the American public, the concept of economic freedom is considered a bedrock of constitutional government. Ohio senator John Sherman (1823-1900) was a staunch supporter of the principle of economic freedom, recognizing that economic and political freedoms were closely intertwined. For that reason, the threat of the emergence oligopolies resulting from the centralization of economic power in fewer and fewer hands was tantamount to the degradation of the political freedoms upon which the nation was founded. It was in this context that Senator Sherman pushed through Congress what has become known as the Sherman Anti-Trust Act of 1890. A key provision of that Act, Section II, explicitly prohibits the monopolization of industry:
“Every person who shall monopolize, or attempt to monopolize, or
combine or conspire with any other person or persons, to monopolize
any part of the trade or commerce among the several States, or with
foreign nations, shall be deemed guilty of a felony,. . .
The Sherman Anti-Trust Act has remained a pillar of U.S. economic freedom, and provided the legal basis from which future president Theodore Roosevelt would launch his assault on businesses that were emerging as monopolies or trusts. The prohibition on monopolization of markets is essential to prevent the consolidation of economic, and political power in too-few hands and to prevent the proper functioning of a free market economic system.
There are several reasons why the Sherman Antitrust Act was ineffective. One reason was there was little support for regulating businesses in the 1890s. The laws were generally pro-business and the attitude toward business and the economy was a laissez-faire one. The government generally tended to let businesses do as they pleased. There was little government regulation in the economy. Additionally, business owners and the judges were generally very friendly with each other, so the judges were in no rush to enforce a law that might hurt business owners.
The Sherman Antitrust Act was designed to restrict business mergers. However, the law was so poorly worded that people weren't sure what the law was supposed to do. As a result, the courts wouldn't touch this law or enforce it because they weren't sure what the law required. In 1899, there were over 1200 business mergers, which is what the law was designed to prevent.
The Sherman Antitrust Act didn't accomplish what it intended to accomplish mainly because of the unclear wording and the supportive attitude toward businesses.
The main reason that the Sherman Antitrust Act was not very effective was that the government did not generally have much interest in enforcing it. Part of this is that the government was not (at least until the time of the Progressives) very supportive of the idea of regulating business. Therefore, it did not choose to spend much money or effort in enforcing the law. Between 1890 and 1901, there were only 18 lawsuits brought using the act and four of them were against labor unions rather than monopolies. This changed once the Progressives were in power and they A) used the act more and B) strengthened it through the Clayton Antitrust Act of 1914.
the Sherman Antitrust Act (1890) was designed in "intent" to protect the consumer and prevent monopolies; however, what it failed to do (by way of example) was prevent "price discrimination". Price discrimination (as you be taught currently) is: a discriminatory practice that exists when sales of identical goods or services are transacted at different prices from the same provider. It wasn't until 1914 that theClayton Antitrust Act was passed that provided for this section which was unintentionally overlooked within the Sherman Act.