Interstate Commerce Act &

Sherman Antitrust ActMAST

US History – Period 4Ms. Richardson

• AIM: How did the government respond to big business in the late 1800s?

• SWBT analyze the Interstate Commerce Act (1887) and the Sherman Antitrust Act (1890) and evaluate their effectiveness.

The Interstate Commerce Act

• Inter – between • Commerce – trade

• Act – law

NOTES

What was the primary goal of the Interstate Commerce Act?

• To eliminate unfair business practices by regulating big business.*

• Interstate Commerce Commission (ICC) would serve as a model for future government regulation of private business.

BEFORE ICA & AFTER ICA• States were powerless to

regulate [control] interstate commerce

• Railroads were privately owned & unregulated*

• Railroad monopolies had the power to:– set prices– exclude competitors– control the market in several

locations– Provided discount to large

shippers or buyers

• Federal regulation [control] of railroad industry*

• Publicly posted "just and reasonable” prices

• Ban on rebates and pools*• Railroads required to

submit* annual reports to the ICC

Wabash, St. Louis & Pacific R.R. v. Illinois (1886)

Declared that states could not regulate commerce that went beyond their boundaries. Instead, regulation had to come from the federal government.

SHERMAN ANTI-TRUST ACT (1890)

• (John) Sherman – Ohio Senator and main writer of the Sherman Antitrust Act.

• Anti – against

• Trust – an alliance of companies, run by a board of trustees that function as one company. (Super corporation)

SHERMAN ANTITRUST ACT (1890)

•Made it illegal to form a trust that interfered with free trade between states or with other countries.

How Effective Were They? Interstate: • Faced difficulty regulating railroad rates. Why?

Too much paperwork. Did not have the power to be effective.

• Supreme Court rule the ICC could not set maximum railroad rates.

Sherman: • Did not define the term “trust”• When the government cracked down on super

corporations they reorganized into a single corporation. LOOPHOLE!

THE 3 GOALS OF BUSINESS

• Maximize profits

• Reduce cost

• Limit competition

"The Bosses of the Senate”