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This Month in Business History

Sherman Anti-Trust Act Signed into Law

Harris & Ewing, photographer. John Sherman, head-and-shoulders portrait, between 1840 and 1860. Library of Congress Prints and Photographs Division.

On July 2, 1890, President Benjamin Harrison signed into law the Sherman Anti Trust Act. The proponent of the law and the man it was named after was Senator John Sherman, a Republican from Ohio.

In the years following the Civil War and during the period that has become known as the Gilded Age, many American businesses grew, and grew so big that in some cases, one or two dominated their industry. This was particularly true of the railroads and banks, but also came to apply to lumber, sugar, petroleum, and others. Newspapers and some government officials used words like combinations and trusts, and felt they were not good for American capitalism, as well as having other deleterious effects.

Senator Sherman had once been a member of Congress from Ohio's 13th district before becoming Senator in 1861. He had a real interest in financial issues and had at one point been on the Committee on Ways and Means where he worked with his colleague Justin Smith Morrill on the Morrill Tariff. After he was elected to the Senate, he sat on the Finance Committee and as such, was part of the currency discussions of the post-Civil War years. He served as the 32nd United States Secretary of the Treasury under President Rutherford B. Hays from 1877-1881, but returned to the Senate in 1881. After he returned to the Senate, he went back on the Finance Committee and was witness to the changes coming to the country. Railroads were dominating in the country and Wall Street, and when the Interstate Commerce Act of 1887, a bill to establish regulation of the railroads came up for a vote, Sherman voted Yes. Along with the growth of the railroads, other business in other industries were growing in size and power and this growth made many, including Sherman, wary. His solution was what became the Sherman Anti-Trust Act.

On March 21, 1890 he began by asking for the bill to be read and entered into the record.

If there is no further morning business, I move that the Senate proceed to the consideration of the bill (S. 1) to declare unlawful trusts and combinations in restraint of trade and production. It is really the unfinished business.1

The bill passed both houses of Congress with little dissent, and the president signed it into law. This was the first law passed to prohibit trusts. Section 1 says:

Every contract, combination in the form of trust or other-wise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal.2

After this and other antitrust laws like the Clayton Act were passed, there have been major investigations and legal cases including two that are referenced often: the Industrial Commission in 1898 that investigated railroad pricing, and the Money Trust investigations of 1912 and 1913 (also known as the Pujo Committee) that investigated the banking sector. In the coming years and decades, there were other cases like ones involving American Sugar Refining Company and AT&T Corporation as well:

  • Northern Securities Co. v. United States, 193 U.S. 197 (1904)
  • Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911)
  • United States v. American Tobacco Company, 221 U.S. 106 (1911)

The issue of trusts was not settled with the passage of this law. Congress revisited the topic when they passed the Federal Trade Commission Act and Clayton Antitrust Act in 1914, and the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Since then, the courts and Congress have continued to weigh in.

Print Resources

Included are a few titles related to some of the trusts that were at issue. The following titles link to fuller bibliographic information in the Library of Congress Online Catalog. Links to digital content are provided when available.

Library of Congress Digital Resources

The following resources created and digitized by the Library of Congress can be used to find out more about the Sherman Antitrust act as well as the events of the day.

Internet Resources

The links below are for content on the Library of Congress website or more generally on the internet.

Search the Library's Catalog

Additional works on this topic in the Library of Congress may be identified by searching the Library of Congress Online Catalog under appropriate Library of Congress subject headings. Choose the topics you wish to search from the following list of subject headings to link directly to the Catalog and automatically execute a search for the subject selected. Please be aware that during periods of heavy use you may encounter delays in accessing the catalog. For assistance in locating other subject headings that may relate to this subject, please consult a reference librarian.

Notes

  1. Senator John Sherman, Congressional Record, (March 21, 1890) p 2455. Back to text
  2. 26 Stat. 209, 15 U.S.C. §§ 1–7.Back to text