Act creating the Federal Trade Commission (FTC), which had the power to control monopolistic practices by corporations.
The introduction of the Clayton Bill in 1914 provided enforcement for the Sherman Anti-Trust Act regarding monopolies. The introduction of the Clayton Bill ended the “new freedom” phase of antitrust legislation (which had emphasized individualism and states’ rights) during the presidency of Woodrow Wilson. Soon Wilson had major doubts that the Clayton Bill would provide an effective solution to unfair business competition and monopolies. Relying on advice from Boston lawyer Louis D. Brandeis, Wilson supported a Federal Trade Commission bill that embraced Theodore Roosevelt’s “new nationalism” idea of a powerful commission to regulate business. The passage of the Federal Trade Commission Act served to kill monopolies at their source. The president appointed the five members of the commission to seven-year terms with the Senate’s approval. The act authorized the commission, which replaced the Bureau of Corporations, to use investigations and cease-and-desist orders to prevent people, partnerships, or corporations other than banks and common carriers from using unfair business practices. Banks and common carriers remained exempt because they were supervised by the Federal Reserve Board and Interstate Commerce Commission, respectively. Initially, however, the Federal Trade Commission suffered from poor leadership and Supreme Court rulings. Indeed, the Supreme Court would stay cease-and-desist orders because it did not accept the commission’s facts, and in 1921 the Court ruled that the federal courts, not the commission, should define unfair competition. Nevertheless, many Americans often praise the Federal Trade Commission for improving business ethics and curtailing price fixing and false advertising.
