What happened
In 1890, the United States enacted the Sherman Antitrust Act. It prohibited combinations restraining interstate or foreign trade and addressed monopolization, creating a federal instrument against concentrated commercial power.
The National Archives says it was the first federal act to outlaw monopolistic business practices, and named it for Senator John Sherman of Ohio, who chaired the Senate finance committee and had been Secretary of the Treasury under President Hayes. It passed the Senate 51–1 on April 8, 1890, and the House 242–0 on June 20, 1890. President Benjamin Harrison signed it on July 2, 1890.
How we know it
The statute’s text is preserved by the National Archives. It states prohibitions in broad terms, so reading the act alone cannot establish how every later business arrangement would be treated.
The text itself is eight sections. Section 1 declares illegal “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations.” Section 2 reaches anyone who monopolizes, attempts to monopolize, or combines or conspires to monopolize any part of that trade. Each offence was a misdemeanor punishable by a fine of up to five thousand dollars, up to one year in prison, or both. Section 7 let a person injured in business or property sue in federal court and recover three times the damages plus costs and attorney’s fees.
Why it went that way
The measure responded to concerns about trusts and economic concentration. Federal legislation addressed conduct extending beyond individual states, where purely local regulation faced obvious limits.
The Archives explains the device in question. A trust is an arrangement in which stockholders in several companies transfer their shares to a single set of trustees and receive certificates entitling them to a share of the combined earnings. Its example is the Standard Oil Trust, formed on January 2, 1882: all the Standard properties were placed in the hands of nine trustees, who determined dividends and elected the directors and officers of every component company. The Archives says that arrangement let Standard Oil function as a monopoly, and that toward the end of the 19th century trusts came to dominate a number of major industries, destroying competition.
Several states had passed similar laws, but they were limited to intrastate businesses. The Sherman Act rested instead on Congress’s constitutional power to regulate interstate commerce.
What is still contested
Passing a prohibition and enforcing it effectively are different outcomes. Disagreement over the reach of its language became central to its history; the statute did not supply a mechanical test for every dispute.
The Archives calls the act loosely worded and says it failed to define “trust,” “combination,” “conspiracy” and “monopoly.” Five years later, in United States v. E. C. Knight Company (1895), the Supreme Court ruled that the American Sugar Refining Company had not violated the law even though it controlled about 98% of sugar refining in the United States, reasoning that control of manufacture was not control of trade. The Archives says that ruling seemed to end any government regulation of trusts.
What it changed
The act established a lasting federal framework for challenging restraints on trade. Its practical meaning developed through litigation and enforcement rather than being exhausted by its passage.
By the Archives’ account, the act was nonetheless used with considerable success during Theodore Roosevelt’s “trust busting” campaigns. In 1904 the Supreme Court upheld the government’s suit to dissolve the Northern Securities Company in Northern Securities Co. v. United States, and by 1911 President Taft had used the act against the Standard Oil Company and the American Tobacco Company. The Archives adds that in the late 1990s the federal government used it against Microsoft.
Is it worth your time
Worth understanding as an institutional response to economic power. Begin with what the law prohibited, then examine a particular case before drawing conclusions about its success or the behavior it reached.
