The Federal Trade Commission Act of 1914 laid the foundations of government regulation of trade and commerce by creating a commission to collect information on prices, competition, and trade. In response to the consolidation of economic power among corporations, monopoly and unfair trade practices became central issues of progressive reform. They also became major points of conflict in the presidential election of 1912. Of the four major candidates in 1912, three advocated progressive reforms to address the growing power of corporations. The socialist candidate, Eugene Victor Debs, argued that the federal government should assume ownership of the trusts. For the other primary candidates, Theodore Roosevelt, William Howard Taft, and Woodrow Wilson, this solution was unacceptable. Despite their unity in rejecting socialist ideas, Wilson and Roosevelt clashed during the 1912 campaign over their respective plans to address the trust issue in the American economy. Running on the Progressive Party ticket, former president Theodore Roosevelt advocated a New Nationalism that would strengthen the federal government. The reinvented government would create powerful government agencies that regulated and, when necessary, limited the power of trusts.
In contrast, the Democratic candidate, Woodrow Wilson, found the proposal to strengthen the federal government to be a threat to state governments. Accordingly, his proposal did not call for stringent regulation, but rather for the government to actually break up the trusts. Wilson contended that the monopolies created by various trusts undermined the competition and commerce that had been responsible for much of the economic prosperity of the nation since the last century. While the federal government would be empowered and, accordingly, strengthened to dismantle the trusts, it would be only a temporary arrangement, ending the concentration of economic power in the hands of the few. Once this objective was achieved, Wilson insisted that the federal government would relinquish these new powers. Wilson presented these ideas to the American public during the 1912 campaign as the New Freedom that would restore economic opportunity to the people.
Despite making the pledge to break up the trusts during the 1912 campaign, Woodrow Wilson ultimately deviated from that position after assuming the office of the president in 1913. Two initiatives—banking and anti-trust—became the core of his progressive reform agenda during his first term in office. In 1914, Congress passed the Federal Trade Commission Act, which created the federal agency by that name. The Federal Trade Commission (FTC) was empowered to collect information on corporate pricing procedures and competition between companies. Wilson eagerly signed the Federal Trade Commission Act into law, declaring that the breakup of large-scale industry was no longer practical for the American economy. Instead, he now fully embraced Theodore Roosevelt’s position that large industry was an inescapable aspect of 20th-century America and that the proper role for government would be to regulate industry through government agencies. Despite wide powers of investigation, the FTC was left without any significant enforcement mechanism as Congress stripped its companion legislation, the Clayton Antitrust Act, of the power to break up trusts. The Federal Trade Commission, like other Progressive Era reforms, only partly addressed economic consolidation issues of the period.
Further reading: Marc Allen Eisner, Antitrust and the Triumph of Economics: Institutions, Expertise, and Policy Change (Chapel Hill: University of North Carolina Press, 1991).
—David R. Smith
World History
