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Clayton Antitrust Act 1914 Essay

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Updated: Oct 11th, 2018

The United States of America introduced the Clayton antitrust Act in October 15, 1914. According to Johnston and Johnston (256), the Act aimed to deter unfair business practices such as monopolistic market structures, which affect negatively the consumers due to lack rivalry in the market. Conventionally, competition is healthy and it always works for the benefit of the consumers because the competing companies have to tailor their products to suit and appeal the users.

The founding of the Act based on the Sherman Antitrust Act 1890, which preceded it. The Sherman Antitrust Act 1890 had failed to produce the desired impact in curbing the unfair business practices. As a result, there was amending and reintroduction of the Act as the Clayton antitrust Act in 1914 (Clark 396).

Effects and Significance of Clayton antitrust Act 1914

The United States shuns monopoly since monopoly can cripple an economy if not kept in check. It does so by infringing on consumer freedom for the sake of a few companies. After the world war, the economy of the United States began to grow because of improved infrastructure.

However, monopolistic tendencies prevented international and foreign trade through high taxes and tariffs (Clark 396). To stimulate the growth of the economy further, the government required to put in place measures, which would finally put an end to monopolies in the market.

Initially the United States government used fines to curb the monopolistic tendency but later introduced the Sherman Antitrust Act in 1890 and then the Clayton Antitrust Act in 1914. According to Clark, prior to the anti trust Acts the government did not regulate the market (396).

This gave companies the freedom to compete as they saw fit but also affected negatively on consumers in situation where a single company controlled the market and held a sizable portion of all the resources in the market compared to other players in the same market.

On introduction, the Clayton Antitrust Act 1914 protects consumers’ right through fair trades, which are achievable through fair competition in the market (Johnston, and Johnston 256).

The Act provides guidelines for companies as to which practices are illegal to engage in and for which, if found guilty, the company is punishable by law. For example, the Act stipulates that companies should not restrict buyers from exercising their right to purchase from alternative suppliers in the market if they wish to continue transacting with the organizations in future.

The Act was able to curb monopolist tendencies in the United States and according to Clark (396); the government was able to prosecute nearly a hundred companies engaging in the vice.

Although the Act stimulated economic growth in the United States, it also serves to oppress companies who can amass more wealth from the public by using strategies that give them more power than their counterparts do in the market.

The Act allows equitable wealth distribution in the society through restricting tendencies, which could result into a few wealthy in the society. According to Clark (396), the antitrust laws discourage capitalism by ensuring means of production is not held by a few people in the market to restrict monopolies and encourage rivalry in the market.

According to Johnston and Johnston (256), the antitrust laws serve to promote consumer freedom through allowing them the chance to choose from alternative products available from alternative companies in the industry. When the market is a monopoly it dictates the products that consumers consume because there is no alternative market. Antitrust laws also accord consumers financial freedom by allowing them to choose from competitive market prices.

Sometimes monopolist market structures are important in that they serve consumers better. They also protect the consumers’ rights since provision of some products and services cannot take place through open market. The courts have widely interpreted the Clayton Antitrust Act 1914.

Some critics view the interpretation as an infringement on company’s rights to make profit even if they are not infringing on consumers’ freedom. This goes against the principle that there should be reward for hard work. The Act does clearly stipulate when the government should hold companies guilty of monopolistic tendencies even if they are not infringing on consumer. It has left the decision at the peril of the courts.

The antitrust Act does not restrict monopolies as recommended by the United States to include companies, which appear to be operating as monopolies (Johnston and Johnston 257). This aimed at deterring companies who have found loopholes to continue dominating the market even if they do not have monopolistic characteristics.


The Clayton Antitrust Act since its enactment in 1914 has stimulated economic growth in the United States of America by advocating for consumer freedom and elimination of monopolies in the market. Monopolies reduce rivalry in the market, which results into production mechanism, which few individuals own and control in the economy. Moreover, monopoly in market harms the consumers because the monopolistic company knows consumers have to use its products regardless of the price.

Works Cited

Clark, Cynthia. The American Economy: A Historical Encyclopedia. United States: ABC-CLIO, 2011. Print.

Johnston, David, and Johnston, Daniel. Introduction to oil company financial analysis. Oklahoma, USA: Pennwell, 2006. Print

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