TRUST-BUSTING/ PROGRESSIVE ERA
Trust-busting is any government activity designed to break up trusts or monopolies. Trusts were large business entities that largely succeeded in controlling a market, essentially becoming a monopoly. The term became common in the late 19th century, when a system of trusts controlled much of the economy of the United States.
In 1898, President William McKinley launched the "saw-busting" era when he appointed the U.S. Industrial Commission on Trusts, which interrogated the industrial titans (Carnegie, Rockefeller, etc.). The report of the Industrial Commission was seized upon by Theodore Roosevelt, who became known as a "Trust-Regulator," dissolving 44 trusts during his two terms as president. The "Trust Buster" name is probably more suited for Roosevelt's successor, William Howard Taft, who brought an end to 90 trusts in one term. Although Taft may have done more to control the trusts while in office, Roosevelt retains the nickname because he was the pioneer of trust-busting.
Senator John Sherman from Ohio introduced legislation, the Sherman Antitrust Act, on July 2, 1890 to prevent trusts from forming. Progressives argued over how to regulate big business. Some progressives even wanted the government to break up big business and restore competition.
The Sherman Antitrust act outlawed every contract, combination in form of trust or otherwise, or conspiracy in restraint of trade. The act made it a crime to combine or conspire to monopolize any part of the trade or commerce among several states.
Although the Sherman Antitrust act was in place as a check on big business, it had never been vigorously checked or enforced. In the decade following its passage, the generally pro-business presidents did little to enforce the act. In fact during the next ten years more trusts were created than ever before. President Roosevelt called for an end to special privileges.
In the summer of 1914 at Wilson’s urging Congress created the Federal Trade Commission (FTC) to monitor American Business. The FTC had the power to investigate companies. Wilson did not want the FTC to break up big business. Instead, it was to work with business to limit activities that unfairly limited competition. He deliberately appointed conservative business leaders to serve as the FTC’s first commissioners.
Wilson’s approach did not satisfy progressives in congress, who responded by passing the Clayton Antitrust Act. The act banned tying agreements, which required retailers who bought from one company to stop selling a competitor product. It also banned price discrimination. Businesses could not charge different customers different prices. Discounts for companies that bought more from you would not be given anymore. The Clayton Antitrust Act was enacted in 1914 to remedy deficiencies in the Sherman Act. Like the Sherman Act, much of the substance of the Clayton Act has been developed and animated by the U.S. courts, particularly the Supreme Court.