Kansas Passes Antitrust Legislation for the First Time

This Day in Kansas History

Antitrust laws have been a part of the fabric of our country for over a century with the first being the Sherman Act passed in 1890. However, this act was not the first antitrust legislation in the country, rather the states took matters into their own hands. State governments passed antitrust laws before the Federal Government by just a couple years. Iowa was the first to pass these laws in April of 1888 and eleven others followed just a year later. One of those eleven was Kansas who passed antitrust legislation on March 2, 1889, making it the second state to do so. Kansas’s antitrust movement is heavily intertwined with the countries antitrust movement and so you can’t talk about one without the other. The antitrust movement spread across the United States in the late 19th century as there was an explosion of industrial activity after the Civil War. With this new industrial activity came the anxiety and uncertainty that united American society.

This rise of increasingly urban, industrial and commercial economy that was linked by a nationwide network of transportation and communication would severely disrupt what was described as “a society of island communities” or local, static economies that were based on linkages between small towns and the countryside. Those required to deal with the manufacturing and processing firms in the growing urban areas were faced with an immense economic power. However, farmers in the west and south reacted against what they saw as abusive tactics of powerful railroads, middlemen, creditors, warehouse and grain elevator operators. Small business owners fell victim to cutthroat business strategies that led to many Americans feeling they were at the mercy of those whom they bought life’s necessities from. Much of this was due to the concerting of multiple firms which were referred to as trusts such as the Standard Oil Trust. By the end of the 1880s there were many nationwide combinations modelled after Standard Oil that dominated the industries. At the same time many Americans had placed a large value on the ideal of personal independence based on economic opportunity. The widespread and often general hostility towards trusts was not because of concerns with higher prices but rather came from deeply rooted ideological concerns that were firmly grounded in long standing political traditions that were obsessed with the protection of individual autonomy.

While many Americans felt this way, it was the states rather than the federal government that took the lead in challenging the enormous powers of the trusts. This would occur just two years prior to the passing of the Sherman Act which was the federal government’s first antitrust bill in 1890. There were several states who passed antitrust legislation in the late 1880s and many more followed suit in the 1890s though there was nothing revolutionary about these laws. These laws were seen as a natural extension of earlier state law efforts to promote economic growth and opportunity. In some respects, these laws were an expression of the states’ traditional police responsibilities to protect its citizens. While Kansas was not the first state to pass these laws, Kansas’s antitrust laws were the most broad and therefore are seen as the most important of the state antitrust legislation. Kansas lawmakers passed the Kansas Antitrust legislation on March 2, 1889 and was signed a week later on March 9, 1889. The legislation opened with a general condemnation of “all arrangements, contracts, agreements, trusts or combinations” designed to “prevent full and free competition” or to fix prices. The Kansas statute first sought to define collective action and did so as broadly as possible. Second it identified the problem of restraint on competition as its target and the third thing that it did was refer to agreements that were anticompetitive either in purpose or in effect.

The Kansas statute also had a separate prohibition on the issuance or ownership of trust certificates like the ones used to create the great trusts. Violators of the Kansas Statutes were subject to criminal punishment, but the Kansas laws also contained another important innovation when it came to the enforcement of the laws. It gave private right of action for those injured by the actions of an illegal combination. This made the Kansas Statutes the first state laws to anticipate the Sherman Act’s private action remedy. It also represented an important step in the direction of broad prohibition of contracts, combination, and conspiracies. However, the Kansas Statutes lacked provision on the condemnation of monopolies that the Sherman Act did provide. There was however little need for a bill to protect individual entrepreneurs from the tactics of single firms trying to drive them out of the market due to the fact that at this point in time (1889) Kansas had a predominantly agrarian economy.

What is important about the Kansas Statutes and many others that were passed either before or shortly after the passing of the Sherman Act was that one can see the clear evidence that they provide of the depth of the antitrust sentiment among the American people. These antitrust laws also testified to the key roles that the states played in the earliest stages of the antitrust movement. The federal government would pass two more antitrust acts in 1914. The first was the Clayton Act passed on June 5, 1914, and signed into law on October 15, 1914. It banned the practice of price discrimination and anti-competitive mergers. It further declared that under federal law boycotts, strikes, and labor unions were legal. The second was the Federal Trade Commission Act which created the Federal Trade Commission on September 26, 1914. Today Kansas still has her own antitrust laws and statutes and each year there are a number of antitrust cases that appear before the Kansas Supreme Court. The Kansas laws today prohibit trusts or agreements between two or more people that create or carry out restrictions in commerce or the full and free pursuit of any legal business.