The Effects Of The Sherman Anti-Trust Act

Since the end of the Civil War, powerful men, referred to as captains of industry, formed

trusts to control markets. They did this through their collusion, price-fixing, and anticompetitive

activities, which took a toll on competition and innovation. The Sherman Anti-Trust Act was

passed to combat the harmful effect of trusts which the captains of industry controlled by

creating an uneven playing field through their size and scope. The act passed with strong public

support however due to the government’s inability to regulate these companies, even after

passage of the act, stronger measures were introduced and passed to help protect and open

markets to competition. Further, the U.S. government began to explore the idea

Before explaining the effects of the Sherman Anti Trust law it is important to first

understand what a trust is. According to the dictionary (New Oxford American Dictionary), a

trust is a company which has or attempts to, through forcing competition out of business, gain

sole control of a market. This means that if the main suppliers of an item join together in a trust

then what they can do is either buy out competition or lower their prices to a point where

competitors cannot compete and have to shut down. Once all competition is bought out or

forced out of business, the trust can freely charge any price they want because their company is

the sole provider of that item. Many trusts or monopolies would usually underpay employees

and give them long hours.

An example of a harmful trust would be the infamous Standard Oil Trust. The trust was

formed in January, 1882 and according to linfo (www.linfo.com), “At that time, Standard Oil and

its affiliates controlled more than 90 percent of the oil refining capacity and most of the

The law did more to break up unions, which fought for the average worker, than

harmful trusts due to their “illegal combinations”. This was a result from the political pressure

which trusts and monopolies were putting on the justice system because of the law’s weak

wording. According to linfo (www.linfo.com), “critics pointed out that it failed to define such

key terms as combination, conspiracy, monopoly and trust.”

As the public clamored for a fix, congress passed more laws to strengthen the Sherman

Anti-Trust Act. The main laws passed were the Clayton Anti-Trust Act, the Robinson-Patman

Act of 1936, Celler-Kefauver Act of 1950, and the establishment of Federal Trade Commission.

The purpose of the Clayton Anti-Trust Act was to strengthen the wording of the law. According

to info (www.linfo.com), “The Robinson-Patman Act of 1936 strengthened the Clayton Act by

prohibiting large sellers from offering different prices to different buyers if it resulted in harm to

even a single small firm,” while the purpose of the Celler-Kefauver Act of 1950 was to further

strengthen the Clayton Act by preventing a firm from merging with a competitor by