Sherman Antitrust Act: America's First Federal Strike Against Monopolies in 1890
Signed into law on July 2, 1890, the Sherman Antitrust Act was the first federal law in the United States to outlaw monopolistic business practices. According to the report, the law takes its name from Ohio Senator John Sherman, who chaired the Senate finance committee and served as Treasury Secretary under President Hayes.
The push behind the law was the rise of trusts that came to dominate major industries in the late 19th century and destroyed competition. A trust was an arrangement in which stockholders in several companies transferred their shares to a single board of trustees and received certificates entitling them to a share of the combined earnings. The Standard Oil Trust, formed in 1882, was the best-known example: nine trustees ran all the component companies, letting Standard Oil operate as a monopoly. State laws already existed but covered only intrastate businesses, while the federal act rested on Congress's power to regulate interstate commerce. The bill passed the Senate 51–1 and the House 242–0, and President Benjamin Harrison signed it.
The act authorized the federal government to sue trusts in order to dissolve them, declared combinations in restraint of trade illegal, set fines of $5,000 and a year in jail, and let those harmed sue for triple damages in federal court. But as the article notes, the wording was loose and left critical terms such as "trust," "combination," "conspiracy" and "monopoly" undefined. Five years later, the Supreme Court effectively gutted it by ruling that American Sugar Refining, which controlled about 98% of US sugar refining, had not broken the law.
Even so, the act did not stay dormant. According to the report, it was used with considerable success during President Theodore Roosevelt's trust-busting campaigns, and by 1911 President Taft had turned it against Standard Oil and American Tobacco. In the late 1990s, the federal government invoked the more than century-old law against software giant Microsoft. That legacy keeps it a reference point in today's debates over digital monopolies.