Clayton Act Signed: Curbing Monopolies in America

President Woodrow Wilson signed the Clayton Antitrust Act on October 15, 1914, delivering the most significant expansion of federal power over corporate behavior since the Sherman Antitrust Act of 1890. The legislation explicitly banned corporations from purchasing the stock of competing companies, closing a loophole that had allowed industrial trusts to reconstitute themselves under new names after court-ordered dissolutions. The Sherman Act had proven frustratingly vague in practice: courts interpreted its broad prohibition on "restraint of trade" so inconsistently that Standard Oil and American Tobacco were broken up while other combinations survived identical legal challenges. The Clayton Act addressed this by specifying prohibited conduct in concrete terms. It outlawed price discrimination intended to destroy competitors, exclusive dealing arrangements that restricted suppliers from working with rival firms, and interlocking directorates in which the same individuals sat on the boards of competing companies. The law also contained provisions that profoundly affected the American labor movement. Section 6 declared that human labor was not a commodity or article of commerce, and it exempted labor unions and agricultural organizations from antitrust prosecution. Samuel Gompers, president of the American Federation of Labor, called the Clayton Act "the Magna Carta of labor," a characterization that, while somewhat exaggerated, reflected how desperately organized labor had needed protection from injunctions used to break strikes. Congress established the Federal Trade Commission the same month as an independent enforcement agency with authority to investigate and prosecute unfair business practices, completing a legislative package that shaped American corporate regulation for the rest of the century.