Did the Trusts Want a Federal Antitrust Law? An Event Study of State Antitrust Enforcement and Passage of the Sherman Act

  • Werner Troesken


Two interpretations dominate the current economic literature on the Sherman Antitrust Act, the standard public interest interpretation and the small business interpretation. The public interest interpretation portrays the law as a pro-consumer measure designed to promote competition and limit the market power of big business (Letwin 1965, 53–70; and Thorelli 1955, 58–95). The small business interpretation portrays the law as an anticompetitive measure designed to protect small businesses against their larger and more efficient competitors (Libecap 1992; and Stigler 1985). While both of these interpretations characterize the Sherman Act as a genuine effort to curtail the trust movement, older writings characterize the act as an empty measure of appeasement. Appeasement interpretations come in two varieties, weak and strong. Weak varieties suggest the trusts were indifferent to passage of the Sherman Act. According to these views, the antitrust act was a “populist sop” — it placated voters but did nothing to slow the trust movement (Josephson 1938, 457–459). Strong varieties suggest the trusts actually benefited from the Sherman Act. According to these strong views, the trusts, and the legislators who represented them, used the antitrust law to secure other federal legislation they wanted, such as increased tariffs (Fainsod and Gordon 1948, 450–452). Another possibility is that the trusts wanted a federal antitrust law because they hoped it would forestall more hostile forms of antitrust regulation taking place at the state level.


Trust Movement Average Trust Judiciary Committee Lead Trust Sugar Trust 
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© Springer Science+Business Media New York 2000

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  • Werner Troesken

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