October 15: The Clayton Anti-Trust Act

Samuel Gompers, the Jewish head of the American Federation of Labor, called it “the Magna Carta of the American worker” and “the greatest measure of humanitarian legislation in the world’s history,” yet the Clayton Anti-Trust Act, signed into law on this date in 1914 by President Woodrow Wilson, was actually “watered down” and did not try to “aggressively seek to break up trusts,” according Paul D. Moreno’s The American State from the Civil War to the New Deal. The reason, says Moreno, is that Louis Brandeis, Wilson’s chief adviser on labor and corporate issues, “wanted small business to be able to work together to limit competition” and feared that a more aggressive bill would target small businesses rather than large conglomerates. In fact, the the Sherman Antitrust Act of 1890 had been applied by U.S. courts more often against against labor unions than against corporations. The Clayton Act did deter such actions by declaring labor to be “not a commodity or article of commerce.” Brandeis, who would become the first Jewish U.S. Supreme Court Justice in 1916, also convinced Wilson to establish the Federal Trade Commission and to push for the Sixteenth Amendment, ratified in 1913, which allowed Congress to levy an income tax.

“Brandeis shared some of the progressives’ preference for regulation, but unlike most progressives, he was generally skeptical of ‘bigness’ in both business and government. He thought the most pro-consumer approach to restraining corporate power was to break huge corporations and overlapping trusts into smaller firms, which he believed would catalyze more competition and weaken their grip on political power.” —Peter Dreier, Huffington Post