Sherman Antitrust Act

The oldest of America's antitrust laws, the Sherman Antitrust Act was signed into law on July 2, 1890, by President Benjamin Harrison. The Sherman Antitrust Act was the first action taken by the federal government to place limits on business monopolies and cartels and to prevent restraints on trade, such as price fixing. Violations of the act were treated as misdemeanors. The Sherman Antitrust Act, written by the Republican senator John Sherman of Ohio, vested government attorneys and courts with both the authority and the responsibility to seek out and investigate suspected violators of the terms specified in the act. The original intention of the Sherman Antitrust Act was to protect consumers from big businesses that were using unscrupulous means to raise prices artificially, such as intentionally producing too few goods to meet consumer demand and thereby driving up the products' value and price. As one of the Sherman Antitrust Act's supporters, the Massachusetts senator George Hoar explained that if a business received its market share because it produced the best product or provided the best service, then the business was not in violation of the Sherman Antitrust Act.

While the Sherman Antitrust Act passed in 1890 in the Senate with a vote of 51 to 1 and in the House with a vote of 242 to 0, the act was not seriously enforced until President Theodore Roosevelt took office and used the act to break up the Northern Securities Company, a large railroad trust formed by John D. Rockefeller and J. P. Morgan, among others. President William Howard Taft also utilized the Sherman Antitrust Act to divide the American Tobacco Company, the merger of several large tobacco manufacturers. Perhaps the best-known case is that of Standard Oil. In 1911 the U.S. Department of Justice sued the company under the Sherman Antitrust Act, dividing the company into thirty-four separate companies.