The Election of 1912 and the Debate over Antitrust Policy

Since the initial initial passage of the Sherman Act in 1890, the antitrust laws have been the subject of great debate among lawyers, economists, and judges. Little interest, however, has been shown by the popular media in this debate over the years.  Stories tend to focus only on particular cases, rather than on broader issues of policy. This was not the case, however, during the presidential election of 1912, when the candidates presented different approaches regarding how the antitrust law should be enforced, and whether new legislation was required.

There were four major candidates for president in 1912. William Howard Taft, the incumbent president, was the Republican nominee. Theodore Roosevelt, the former president, became the candidate of the newly-formed Progressive (“Bull Moose”) Party, after he was denied the Republican nomination in what appeared to be a rigged convention. Woodrow Wilson, who had served as governor of New Jersey and as president of Princeton University, won the nomination of the Democrats. Eugene Debs, the firebrand labor leader, was once again the nominee of the Socialist Party.

Wilson was elected president, winning 43 percent of the popular vote, and carrying 40 states. He won, at least in part, because Taft and Roosevelt split the traditional Republican vote. The incumbent Taft won 23 percent of the popular vote, but carried only two states. Roosevelt won six states, and 27 percent of the vote. Debs accounted for most of the remaining seven percent.

In the campaign, the four major candidates presented four different views on antitrust.


Roosevelt distinguished between “good” and “bad” trusts, and did not believe that all large corporations should be broken up. He explained that “The corporations against which we had proceeded had sinned, not merely by being big (which we did not regard as in itself a sin), but by being guilty of unfair practices toward their competitors, and by procuring advantages from the railways.” He directed his animus against what he called “malefactors of great wealth,” writing that “When I took the presidency, it was a common and bitter saying that a big man, a rich man, could not be put in jail. We put many big and rich men in jail.”

Roosevelt believed that the antitrust laws were ineffective to restrain corporate abuses. As such, he argued for “thoroughgoing administrative control by the government,” which would exercise “a steady expert control” over corporations because large corporations required “close and jealous supervision.” He therefore supported the establishment of a commission “covering the whole field of interstate business, exclusive of transportation.”

Despite his reservations about the efficacy of the then-existing antitrust laws, the Roosevelt Administration filed numerous antitrust lawsuits. The most notable was the Northern Securities case, in which the Supreme Court found, by a five-to-four vote, that the formation of a holding company combining several railroads into one integrated operation in 17 states was an illegal combination because the holding company stock “was acquired and held to be used in suppressing competition between those companies. It came into existence only for that purpose.”


William Howard Taft was a lawyer strongly committed to the rule of law. He had served as a judge on the Sixth Circuit Court of Appeals, and would go on after his presidency to become Chief Justice of United States. He was the only person to serve as both president and chief justice, and was a strong defender of the judiciary, which Roosevelt had attacked in his campaign as “the agents of reaction.”

Taft believed that the dictates of the law should be clear and certain. He stated that American business should be assured “of that measure of stability and certainty in respect to those things that may be done and those that are prohibited which is essential to the life and growth of all business.”

In the area of antitrust law, Taft believed in strong enforcement of the existing law. In fact, his administration filed approximately twice the number of antitrust prosecutions in four years than Roosevelt did in seven. He felt that the trusts stifled competition by allowing “the aggregation of wealth in plants so great the owners of it were able, by cunningly devised means, to stifle compensation, to control prices of goods and shove them up above what the costs of production would justify.”

While he agreed with Roosevelt that the size of a corporation was not determinative — that “big” was not necessarily “bad” — he disagreed that the law could lawfully distinguish between “good” and “bad” trusts. As such, his administration filed an antitrust lawsuit against United States Steel, a mammoth corporation which Roosevelt had determined to be a “good” trust.

Taft was originally opposed to the concept of interpreting the Sherman Act under a so-called “rule of reason” approach, since the statutory language did not support such an interpretation. Nevertheless, after the Supreme Court chose to follow that approach in the Standard Oil case, he declared that while the court “did not take exactly the line of distinction I have drawn,… it certainly approximates it.”


Wilson believed in a legislative solution to the trusts problem. He sought to restructure competition by imposing rules of engagement, calling for “The destruction of monopoly not by regulation, but by the enactment of specific legislation.” These were enacted after Wilson’s election as the Clayton Act and the Federal Trade Commission Act. The Clayton act prohibited certain practices thought to be anticompetitive, including price discrimination, mergers that substantially lessened competition, interlocking directorates, and tying arrangements, under which one product was only sold in combination with another, less desirable, one. The Federal Trade Commission was empowered to seek out other, unspecified “unfair methods of competition,” and was empowered to issue cease-and-desist orders.

These legislative approaches reflected the Progressive Era system of imposing structure and order everywhere, with the government serving as a watchmaker deity over society.


The Socialist Party candidate, Eugene Debs, took the most radical approach of all the candidates. He sought no less than “mastery and control of industry.” He favored the approach taken in the Populist Party Platform of the 1890s, which called for nationalization of key industries, including transportation, communications, and banking.

Where We Are Now:

Today the rule of reason approach continues generally to be the polestar in antitrust litigation. Initially, after the Standard Oil decision, the courts differentiated between restraints that were judged under the rule of reason, and others that were deemed to be so pernicious as to be labeled “per se” violations of the Sherman Act. These per se violations included price-fixing and division of territories between competitors. In the era after World War II until the mid-1970s, the Supreme Court broadened this per se approach, following a populist consumer impact model that resulted in protecting small competitors and consumer interests rather than competition itself. That model was largely abandoned starting with the 1977 opinion in Continental T.V. Inc. v. GTE Sylvania, Inc., in favor of an expanded rule-of-reason inquiry using economic analysis in place of a consumer impact model. This reflected the influence of the Chicago school of economics, supported on the Supreme Court by Justices Lewis Powell, a former president of the American Bar Association, and John Paul Stevens, a former antitrust lawyer from Chicago. Today, most restraints are judged under a rule-of-reason approach that asks whether a restraint promotes or suppresses competition. The Supreme Court has explained that this rule-of-reason approach requires a court to decide “whether the questioned practice imposes an unreasonable restraint on competition, taking account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint’s history, nature, and effect.” Nevertheless, some per se rules still apply, especially in the areas of price fixing and territorial allocations.

By permitting businesses to justify many types of restraints, and by elevating economic analysis over populist ideals of preserving small producers and competitors, this approach continues a history tracing back to the Marshall Court of the Supreme Court’s protection of business against overregulation, a history which has been interrupted only briefly in the later New Deal years. Nevertheless, particularly with the emergence of giant corporations such as Amazon and Google swallowing up other businesses in different areas of the economy, and healthcare companies acquiring or being acquired by businesses in related areas of the economy, there are several voices seeking to cut back on a purely economic analysis, and calling for greater regulation of these large corporations, together with some calling for expanding the reach of the antitrust laws. In some ways, therefore, the ghost of Theodore Roosevelt rises again, in his call for a commission which would regulate virtually all large corporations operating in interstate commerce.

For Further Reading:

I discuss the Election of 1912 and the approaches taken by Roosevelt, Taft, Wilson, and Debs on antitrust issues in more detail in Chapter 4 of my book, Politics and American Business: The Growth of Industrial America, 1860-1960 (2016). In addition, the Supreme Court cases from this and later time periods are analyzed in my book, Shaping America: The Supreme Court and American Society (2009), at 93-100.

Case Citations:

Northern Securities Co. v. United States, 193 U.S. 197 (1904).

Standard Oil Co. v. United States, 221 U.S. 1 (1911).

United States v. United States Steel Corp., 251 U.S. 417 (1920).

Continental T.V. Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977).

This entry was posted in american business, American History, American Judges, American Politics, Antitrust Litigation, Business Litigation, Economics, Politics, Supreme Court and tagged , , , , , . Bookmark the permalink.

Comments are closed.