About Quizzes

Wilson and Antitrust Legislation

Woodrow Wilson was initially confident that a refinement of the Sherman Antitrust Act (1890) would be sufficient to address the public`s concerns about dealing with giant corporations. The president wanted to move cautiously, fearing that dramatic moves might threaten confidence in the business community. While his initial proposal was under consideration in Congress, Wilson rethought his position. He ended up adopting a two-pronged approach: (1) to create an investigative body to observe corporate activity, and (2) define unfair business practices. Clayton Antitrust Act. Henry D. Clayton of Alabama was the driving force behind the reform legislation in the House of Representatives. The measure that emerged in the fall of 1914 was designed to clarify the existing antitrust law. A number of business practices were prohibited, including:

  • Predatory price cutting
  • Price fixing
  • Ownership of stock in competing companies
  • Interlocking directorates (the practice of having the same individuals serve as directors of competing companies)
Another nagging situation was addressed by this legislation. The Sherman Antitrust Act was designed to shield the public from the actions of big business that were deemed to restrain trade. However, early court decisions more frequently found unions, not corporations, in violation. The Clayton Act, lauded as the Magna Charta of labor, placed limitations on the use of injunctions against unions and stipulated that labor organizations were not illegal combinations acting to restrain trade; boycotts, strikes and picketing were all recognized as legal activities. The antitrust provisions of the law had little immediate impact because of the outbreak of World War I. The labor protections were honored until the next Republican era in the 1920s. Federal Trade Commission Act. A new agency, the Federal Trade Commission, was created in the fall of 1914. It was to be composed of five members, all of whom were to be appointed by the president and confirmed by the Senate. The commissioners were to be selected on a non-partisan basis and serve seven-year terms. The agency was empowered to investigate corporate practices and, if necessary, issue cease and desist orders to halt illegal activities. The commission replaced the earlier and less powerful Bureau of Corporations. The passage of the FTC Act marked a departure for Wilson. He recognized that retooling existing legislation was not enough to tame the illegal practices of big business. Wilson had moved much closer to Teddy Roosevelt`s conception on the role of the federal government as a regulator. The measure did have some immediate impact on corporate activities. The commission was not shy about exercising its cease and desist powers and issued dozens of orders in its early years.
See other early domestic legislation under Wilson.