The Federal Trade Commission Act was originally a bill that was instigated by president Woodrow Wilson. The bill for Federal Trade Commission Act was created to the image President Wilson’s had in mind. When he suggested an investigatory commission in January 1914, the House of Representatives agreed with his proposal. When he proposed a prosecutorial commission in June, the Senate bill and final law embraced that proposal. When he later brought up the agency’s assistive abilities, his selection of Commissioners reflected that of a strong leadership(Winerman, 38).
The Federal Trade Commission Act has an interesting history. Unlike most bills, it actually came from the hand of the President of the United States. He did not necessarily write the entire bill himself, but he is the man who ordered to have it written, followed by having it presented to congress starting on the Senate floor. The bill was proposed along side the Clayton Act. They are both essential bills meant to reaffirm and give more power to the Sherman Act of 1890. The Sherman Act had the express ability to bust trusts, like big gas, oil, sugar and etcetera. Big companies were making agreements with each other that would give trusts the ability to increase the cost and reduce the quality of goods without penalty. The Sherman Act was pushed through congress quickly and put an end to these trusts, which helped the economy and generally improved the quality of life for millions of consumers. However the Sherman Act of 1890 still didn't quite have enough power to end all unfair business practices.
There was another form of anti competitive business practice that the Sherman Act wasn't quite able to rid of, the merging of big companies into coercive monopolies. When multiple companies selling the same product merge they become a monopoly and can have the ability to control in full the price of the goods they supply to the market. This represents the new need for the Clayton act. Since monopolies weren’t considered trusts the Sherman Act could do nothing about it, it didn’t have the power to prosecute or break up monopolies. So in comes the Clayton Act of 1914 alongside the Federal Trade Commission Act. The Clayton Act had the power to break up monopolies and prevent mergers that are likely to stifle competition. The Clayton Act would effectively come in and close the loopholes that the Sherman Act had, creating a stronger wall defending against anti competitive and unfair business practices(Oppenheim, 821-854).
The President of the time, Woodrow Wilson, saw a need for an agency specifically dedicated to watching out for and preventing anti competitive business practice. Wilson announced his antitrust initiative to Congress on January 20, 1914. Quoting multiple Democratic platforms, he declared “We are all agreed that ‘private monopoly is indefensible and intolerable.’”(Brown; 301 H.R. Doc. No. 625, 63d Cong., 2d Sess. 5 (1914)).
The Federal Trade Commission Bill was presented on January 20th, 1914 at a joint session of the 63rd Congress of the United States(Stevens, 840). President Wilson, with respect to creating the Federal Trade Commission to handle breaking up trusts and anticompetitive business strategies stated:
“The opinion of the country would instantly approve of such a commission(FTC). It would not wish to see it empowered to make terms with monopoly or in any sort to assume control of business, as if the government made itself responsible. It demands such a commission only as an indispensable instrument of information and publicity, as a clearinghouse for the facts by which both the public mind and the managers of great business undertakings should be guided, and as instrumentality for doing justice to business where the processes of the courts or the natural forces of correction outside the courts are inadequate to adjust the remedy to the wrong in a way that will meet all the equities and circumstances of the case(Daish, 46).”
His words sparked a strong support base for his bill, both in congress and from the general public. The response to the bill from the progressive platform was supportive:
“To that end we urge the establishment of strong Federal administrative commission of high standing, which shall maintain permanent active supervision over industrial corporations engaged in interstate commerce, or such of them as are of public importance doing for them what the government now dos for the nation banks, and what is now done for the railroads by the interstate commerce commission.”
Said the Progressive Platform 1912(Daish, 46). The Republican Platform declared:
“In the enforcement and administration of Federal laws governing interstate commerce and enterprises impressed with a public use engaged therein, there is much that may be committed to a Federal Trade Commission, thus placing in the hands of an administrative board many of the functions now necessarily exercised by the courts. This will promote promptness in the administration of the laws and avoid delays and technicalities incident to court procedure(Daish, 45).”
The Republicans gave more support to the Federal Trade Commission Act. The bill for the FTC Act now had a bipartisan backing and approval.
After a bipartisan and mutual backing of the bill from the majorities of both parties, it’s not difficult to see why congress backed and passed the bill so willingly. The Bill was introduced in the House of Representatives by Representative Clayton, whom the Clayton Act is named after, and was introduced in the Senate by Senator Newlands as S. 4160(Stevens, 841). The Senate approved the bill on September 8th by a 43-5 vote and the House of Representatives passed the bill on September 10th by a voice vote(FTC.gov).
After congress passed the bill with a march of support from both key parties, it went to the desk of President Wilson. Wilson’s bill was drafted, posted, passed by Congress, and finally made it to his desk to sign into law, which he eagerly did, on September 26th, 1914. It took less than a year and his mission had to come to fruition and because of his work, there would now be an agency to defend against trusts and monopolies. This would come to benefit the economy, the general public, and small business helping to continue to effectively support and continue to generate the “American Dream.”
Federal Trade Commission Act of 1914
Annotated Bibliography:
Brown, George Dobbin. An Essay Towards a Bibliography of the Published Writings and Addresses
of Woodrow Wilson, 1910-1917. Vol. 2. Library of Princeton University, 1917(301 H.R. Doc.
No. 625, 63d Cong., 2d Sess. 5 (1914)).
Daish, John. “The Yale Law Journal,” Vol. 24, No. 1 (Nov., 1914), pp. 43-55,
Published by: The Yale Law Journal Company, Inc., Stable URL:
The significance of this article by John Daish and its usefulness is directly related to the fact that it gives a picture of how the people saw coercive monopolies and why the public didn’t want to enable them. It gives a view of why unfair business practices were seen as a problem in the first place and who was there to voice their opinions about it.
Oppenheim, S. Chesterfield. "Guides to Harmonizing Section 5 of the Federal Trade
Commission Act with the Sherman and Clayton Acts." Michigan Law Review
(1961): 821-854.
This article provides information on section 5 of the FTC Act as well as illuminating some connections it has to the Clayton and Sherman Acts.
Stevens, W. H. S. “The American Economic Review”, Vol. 4, No. 4 (Dec., 1914), pp.
840-855, Published by: American Economic Association, Stable URL:
http://www.jstor.org/stable/1806005
In The American Economic Review, Stevens gives a good record of the presidents meeting and speech that led to and allowed the creation for the act.
Winerman, Marc. "The origins of the FTC: concentration, cooperation, control, and
competition.” Antitrust Law Journal (2003): 1-97.
This Article is very detailed in all aspects of the origins of the Federal Trade Commission Act, the Clayton Act, and how it was influenced by the Sherman Act.
Everything that there is to know about the FTC Act is available at this url. Where
I have cited FTC.gov this is the assosciated link.
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