This is a compelling look by PhD economist Sherry Wise at the history of antitrust laws and how the Robber Barrons ruled unchecked by regulation. This is a vital look back to better understand where neocons and neoliberals are driving us now.
Republished with permission. The original published work and part 2 and 3 in this series are post to Beyond The Spectrum.

“Monopoly is business at the end of its journey.”—William DeMarest Lloyd

Captains and Robbers

If you grew up in the United States, you most likely learned something about antitrust, though you may not remember much about it. It is typically covered in history classes, just after the topic of “Robber Barons”, or their more genteel name, “Captains of Industry.” This of course refers to the industry magnates who arose as powerful, and very wealthy men (they were all men), in the latter portion of the nineteenth century. Men like Andrew Carnegie, John D. Rockefeller, J. P. Morgan, Jay Fisk, and Cornelius Vanderbilt. They capitalized on new innovations in energy, metals, transportation, and finance in an emerging economic powerhouse, with few regulations to limit their behavior.

They were ruthless to their employees and their competitors, often negligent or worse to their customers. Their frequently unethical, sometimes illegal, practices enabled them to dominate in part or in whole, entire markets. Their holdings were vast enough that they designed new ways of organizing corporations, e.g. the corporate trusts which became associated with their anticompetitive tactics.

What were these anticompetitive tactics? They were many and varied depending somewhat on the type of industry. Buying out competitors, often with insinuated or outright threats, sabotage, strategic alliances (known as combinations), and differentiated pricing (e.g. charging lower prices to preferred customers) were often used. Ida Tarbell, Upton Sinclair and other “muckrackers” exposed these practices in full public view through books and periodicals. For Tarbell, it was personal—when she was a teenager her father’s western Pennsylvania oil business was destroyed after he and his partner refused to sell out to Rockefeller. The family home was lost, and the partner committed suicide.

However, 12 years before Tarbell’s “The History of the Standard Oil Company” was serialized in McClure’s magazine, and 14 years before its publication as a book, the 1890 Sherman Antitrust Act was passed. It was authored by Senator John Sherman of Ohio, a former Secretary of the Treasury under Rutherford B. Hayes, and younger brother of General William Tecumseh Sherman. He had a long-standing interest in finance and commerce. At the time Ohio was the source of much friction between farmers and railroad interests, which included Rockefeller’s oil company. Rockefeller’s Standard Oil colluded with the railroads for favorable rail rates, while farmers were charged much higher prices, among other forms of market discrimination. The Sherman Act had broad support, with only one vote against it in the Senate.

John Sherman

The Sherman Act is a mere three sections. Section 1 prohibits restraint of trade. Section 2 makes it illegal to monopolize trade and commerce. Both Section and Section apply to commerce among the states (not within one state) and with foreign nations. Section 3 expands the provisions of Section 1 to U.S. territories and the District of Columbia. The Department of Justice was given the authority for its implementation.

While the Act was broadly supported in Congress, the compromises made to pass it left the law vague enough that not many actions were taken under it in the first few years after passage. However, this Act would be the platform upon which later antitrust laws would build.

“That poisonous woman” Ida Tarbell

In 1902 McClure’s magazine began the publication of Ida Tarbell’s investigation into the Standard Oil Company, and the business tactics of John D. Rockefeller. “The History of the Standard Oil Company” was a landmark series, not just because of the subject matter, but also because it was an innovative work that, along with the work of fellow muckrakers like Upton Sinclair and Lincoln Steffens, created the genre of investigative journalism.

John D. Rockefeller

Tarbell’s series, and the book version of the same work which was published later, held the attention of Americans and drew enough outrage that it contributed to the passage of four new acts to strengthen antitrust regulation, the Hepburn Act (1906), the Mann-Elkins Act (1910), the Clayton Antitrust Act (1914) and the 1914 Federal Trade Commission Act, which created the eponymous agency.

The Hepburn Act gave the Interstate Commerce Commission (ICC) the authority to regulate rates for railroads to end the practice of price discrimination, so that all customers would be charged the same rates. The Mann-Elkins Act expanded the ICC’s authority to regulate other forms of transportation, as well as communications companies in the telegraph, telephone and cable industries.

The Clayton Act strengthened the Sherman Act by identifying certain practices thought to be anticompetitive in order to prevent monopolization before it starts. The practices forbidden were price discrimination, exclusive dealing and tying (discussed in Part Two), mergers and acquisitions that would reduce competition in an industry, according to predetermined criteria, and executives serving on the board of directors of more than one competing firms. The Federal Trade Act created the Federal Trade Commission (FTC) and endowed it with the responsibility to protect consumers from harmful business practices. Today, both the DOJ and the FTC enforce antitrust law, but the FTC addresses only civil (noncriminal) offences, while the DOJ can enforce both civil and criminal offences.

These four laws, signed into law under three different presidents (Theodore Roosevelt, William H. Taft, and Woodrow Wilson), were seen as helping to advance the progressive cause which had significant momentum in the early 20th century. However, World War I would bring that era to an end, until the crisis of the Great Depression.

Woodrow Wilson was elected in 1912 with a progressive agenda, but as the U.S. became increasingly involved in the War, his progressive agenda was abandoned, and he openly supported policies that would restrict civil liberties. After the War, concerns about the economy and returning to a prosperous peace caused a shift towards pro-business, anti-regulatory policies.

Through the 1920’s the consumer economy exploded, as business began to use the savvy propaganda techniques developed by early innovators of “public relations” (a more consumer friendly name for propaganda). New marketing techniques were employed to raise demand for the many products being brought onto the market, and credit became more accessible for middle class consumers to purchase modern conveniences like refrigerators and automobiles.

Of course, by the end of the 1920’s, the good times came to a crashing end as the U.S. and much of the world lost their livelihoods and their wealth. Franklin Delano Roosevelt was elected in 1932 and became an activist President as the needs of the nation were revealed. FDR was a pragmatist who was willing to try new ideas, and the body of policies and programs he put forward are collectively known as the New Deal.

“A Robin Hood of the Law”

Louis Brandeis was born to immigrant parents, who raised him in a secular home, despite their Jewish religion. He graduated at the age of 20 from Harvard Law School with what may have been the highest grades in the school’s history. He established a successful law practice, which enabled him to spend much of his life representing cases for progressive causes and civil rights.

He was nominated for the Supreme Court in 1916 by President Wilson and endured a contentious nomination process both because of his religion and his activism, as well as his intelligence and high moral character. He became the first Jewish Supreme Court Justice and produced highly respected opinions on freedom of speech and the right to privacy.

Louis D. Brandeis

Brandeis had been actively involved in Wilson’s first campaign for President, and also was an advisor in the formation of both the Federal Reserve and the FTC. He had a strong interest in banking and financial issues, and wrote the book “Other People’s Money and How the Bankers Use It” (1914) which was a collection of articles originally written for Harpers’s magazine. Brandeis condemned the use of the middle class’s savings by investment bankers to consolidate industries. He argued that industry concentration was economically inefficient, prevented innovation and was a threat to small businesses. The book contained the now well-known phrase “Sunlight is said to be the best of disinfectants”.

Over the years that he was battling financial, insurance and other corporate interests, even before entering government, he developed a different perspective on the approach to dealing with monopolies. The prevailing thought in the first two decades of the 1900s regarding the problem of industry concentration was that monopolies were an unavoidable fact of life in a modern economy, and that the best that could be done was to regulate them. Brandeis saw an alternative path—that of reducing concentration.

As the New Deal began, FDR first took a top-down approach to attacking the Depression, but he shifted to a more decentralized way of implementing his program. In part this was because of the rejection of the National Recovery Act as unconstitutional and the failure to increase the size of the Supreme Court (this is the controversy known as“packing the Court”). Another reason for the shift in approach was FDR’s inability to get the cooperation he needed from the business community. In the latter portion of the 1930’s the administration saw the need to address antitrust in a more active way, as Brandeis had long supported. From 1940 through 1980, federal antitrust policy, along with a sympathetic Supreme Court, used a “structuralist” approach to concentration, focusing on creating and maintaining competitive market structures across industries. Antitrust policy also focused on the prevention of monopolies before they had a chance to consolidate the market.

1968 Merger Guidelines

In taking a structuralist approach to antitrust policy through the 40 years of its primacy, the federal government was at least implicitly acknowledging a tradeoff between decentralization and prices, as in some industries, the economies of scale (cost advantages due to size) might not always be realized. This tradeoff was accepted because of a general belief that competitive markets were more representative of economic freedom and individual liberty, labor power, and a shared sense of purpose after the trials of the Depression and two world wars.

The administration of President Lyndon B. Johnson (LBJ) formalized the regulatory approach at the federal level with the 1968 publication of the Merger Guidelines, limiting the size of firms considering a merger or acquisition of another firm to no more than 20 percent of the overall market in that industry.

Starting in the 1960s, new problems began to be seen in the U.S. business community, and the overall economy. Many factors were at play, including the rise of competition from countries that had rebuilt their manufacturing sectors after the devastation of World War II. The post-war economic order established in the 1944 Bretton Woods Agreement was breaking down, and the dramatic increases in oil prices created by the Organization of Petroleum Countries (OPEC–a cartel of oil producing nations that dictated oil supplies) also contributed to the economic upheavals that dominated the 1970s.

The result of these upheavals was a new phenomenon that had not been anticipated by the Keynesian economic orthodoxy at the time. Stagflation (simultaneous inflation and unemployment) challenged the prevailing wisdom of the mainstream economic community This failure would lead to the rise of a different perspective on the problems of the day, one that would completely revamp antitrust policy in the U.S. and around the world.

Republished with permission. The original published work and part 2 and 3 in this series are post to Beyond The Spectrum.

About Sherry J. Wise

Wise is a PhD economist with decades of federal economic work to her credit. She is currently a Senior Economist with the USDA, Agricultural Division and has seen the affects of national policy on food supply chains, family farms and the consumer. She has a strong command of federal fiduciary policy and understands how money works through an MMT framework. She received her Master and Doctorate in Economics from Iowa State University and currently publishes educational and insightful economic commentary on Beyond the Spectrum, an independent media source.


  • “Break ‘Em Up: Recovering Our Freedom from Big Ag, Big Tech and Big Money” by Zephyr Teachout, All Points Books, 2020
  • “Goliath” by Matt Stoller, Simon & Schuster, 2019
  • “Antitrust and Economic History—The Historic Failure of the Chicago School of Antitrust” by Mark Glick, Working Paper No. 95, Institute for New Economic Thinking, May 2019,
  • “American Gothic: How Chicago School Economics Distorts ‘Consumer Welfare’ in Antitrust” by Mark Glick, Working Paper No. 99, Institute for New Economic Thinking, July 2019,
  • “Titan: The Life of John D. Rockefeller, Sr.” by Ron Chernow, Random House, 1998