Wilson's Proposal

    Wilson agreed with most progressives that the Sherman Act was not sufficient to handle the problems created by trusts. Few doubted the law had some flaws or weaknesses that made it entirely ineffective, but there was disagreement emerging as to what should replace the law.

    According to Wilson’s camp, the law had a good foundation, but didn’t go far enough. The law needed more powerful and specific legislation to supplement it in order to achieve results.

    The Sherman Act set up a system where large corporations that had reached their position by unfair means of competition should be broken up. Wilson advocated this approach, saying large corporations were inefficient. According to Wilson, it was clear that trusts did not prosper in proportion to their size, and that they only gained power in market segments where competition ceased to exist, and were actually losing ground where competition still stood.

    Wilson said large corporations were inefficient because they carried both efficient and inefficient plants, all bought at exorbitant prices from competitors. They could afford to make these purchases because of loans, and because the net result was the elimination of competition which was detrimental to their profits. With this competition out of the way, the prices they set were undisputed, and they could cover their losses by raising prices.

Next