Antitrust, Again
This article was posted in October, 1998.
| Standard Oil had come to symbolize the ruthless pursuit of profit, often in defiance of the law. The trust had been formed in 1882 and used a Byzantine legal structure to shield assets, mask dealings, and impede investigation. |
Though the American Dream is built on a capitalist foundation, the excesses that some businesses engage in to succeed have only been tolerated to varying degrees throughout our history. Once the agrarian ideal gave way to the industrial revolution, Americans became ambivalent about progress. While we were attracted to the possibility of amassing obscene personal wealth, we were repelled by the knowledge that to become wealthy usually meant doing so on the backs of hundreds if not thousands of underpaid laborers. As the Robber Barons of the 19th century developed an insatiable appetite for bigger and bigger profits, public discontent at the seemingly unfair advantages enjoyed by the likes of Carnegie Steel and Standard Oil grew, eventually leading to the passage of The Sherman Antitrust Act in 1890. The Act made it illegal to restrict interstate trade, with penalties ranging from fines and jail terms to dissolution of the offending corporation.
The Sherman Act was used to break up the Northern Securities Company in 1904, paving the way for the federal suit against the Standard Oil trust, American Tobacco Company, and others. The Standard Oil case was particularly notorious since Standard Oil itself had come to symbolize the ruthless pursuit of profit, often in defiance of the law. The trust had been formed in 1882 and used a Byzantine legal structure to shield assets, mask dealings, and impede investigation. Within ten years the Ohio Supreme Court would order the dissolution of the trust, but it merely transferred these assets to a new holding company, Standard Oil of New Jersey. Public outcry over Standard Oil's monopoly and its concomitant concentration of economic power peaked in 1906, when the federal government filed suit under the Sherman Antitrust Act. It took six years of legal wrangling, but in 1911 the firm was ordered dissolved, with all 33 of its corporations put up for sale.
The ideals of fair play in business were further codified in the Clayton Antitrust Act in 1914. The Federal Trade Commission, an independent arm of the U.S. government, was created in 1914 to police businesses and ensure that consumers—and other businesses—were treated fairly by big business. Though subsequent legislation strengthened the restrictions against monopolistic business practices, "trust-busting" took a back seat to both hot and cold wars, and the next major case was not filed until 1949.
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