Labor Unions Win Exemption from Antitrust Laws Summary

  • Last updated on November 10, 2022

Provisions of the Clayton Antitrust Act exempted unions from prosecution under the Sherman Antitrust Act of 1890 and under the Clayton Act itself.

Summary of Event

The labor reforms embodied in provisions of the Clayton Antitrust Act of 1914 had been decades in coming to realization. American labor legislation in the mid-nineteenth century had been as advanced in some regards as any in the world. The famed decision of the Massachusetts Supreme Court in Commonwealth v. Hunt in 1842 exemplified wide public acknowledgment that efforts by labor combinations to raise wages did not constitute “conspiracy” and that laborers were justified in striking to win closed, or all-union, shops. Half a century later, however, the public’s tolerance of labor’s right to organize in its own self-interest had altered drastically, and therefore the character and interpretations of labor legislation had changed. Antitrust legislation Labor unions;legislation Clayton Antitrust Act (1914) [kw]Labor Unions Win Exemption from Antitrust Laws (Oct. 15, 1914) [kw]Unions Win Exemption from Antitrust Laws, Labor (Oct. 15, 1914) [kw]Antitrust Laws, Labor Unions Win Exemption from (Oct. 15, 1914) [kw]Laws, Labor Unions Win Exemption from Antitrust (Oct. 15, 1914) Antitrust legislation Labor unions;legislation Clayton Antitrust Act (1914) [g]United States;Oct. 15, 1914: Labor Unions Win Exemption from Antitrust Laws[03630] [c]Business and labor;Oct. 15, 1914: Labor Unions Win Exemption from Antitrust Laws[03630] [c]Laws, acts, and legal history;Oct. 15, 1914: Labor Unions Win Exemption from Antitrust Laws[03630] Wilson, Woodrow [p]Wilson, Woodrow;Clayton Antitrust Act Gompers, Samuel

Samuel Gompers.

(Library of Congress)

The unprecedented industrialization of the United States and the attendant political ascendancy of the business classes were reflected in judicial decisions relevant to labor organizations and their methods. By the 1880’s, the nation’s courts were stipulating that labor’s rights to combine and to strike were subject to serious legal restrictions. The judiciary’s antilabor bias was attributable in part to the violence that had marked many labor protests, notably during an 1877 national railroad strike and in the Haymarket Square bombing in 1886. More basically, however, judges’ antilabor decisions mirrored fresh interpretations of the nature of property and the presumptive rights of business. That is, during the last quarter of the nineteenth century, the right to do business became a “property.”

However troublesome strikes against employers’ physical properties were, they usually could be dealt with by police, by troops, or through criminal law. Labor’s picketing and boycotts, however, disrupted employers’ claimed right to have access to their markets. Beginning in the 1880’s, this perspective brought court injunctions into play as a preferred weapon of business against labor. Injunctions first won general public attention in 1894, when they were issued under provisions of the Sherman Antitrust Act of 1890 Sherman Antitrust Act (1890) against labor organizer Eugene V. Debs.

Injunctions were one cause of labor’s cries for national legislative reform. Such cries turned into screams when injunctions included provisions that led to the assessment of damages against unions resulting from boycotts that prevented employers from doing business. The U.S. Supreme Court’s decision in the Danbury Hatters case in 1908 (Loewe v. Lawlor) Loewe v. Lawlor (1908) not only gave specificity to this menace to labor but also, by subjecting labor organizations and their members to damages under antitrust law, threatened trade unions with extinction.

Labor’s salvation appeared in 1913 with the inauguration of President Woodrow Wilson. Taking a positive view of his office under the banner of his New Freedom, New Freedom Wilson sponsored or supported a whirlwind of reform legislation. These measures affected tariffs, banking, the hours and conditions of labor, the protection of seamen, income taxation, popular election of U.S. senators, aid to agriculture, and, by way of strengthening the Sherman Act, the regulation of business trusts. It was from this last step toward improved trust regulation that the Clayton Act emerged.

Three bills that had been drafted by the chairman of the House Judiciary Committee, Henry D. Clayton of Alabama, were subsequently combined into one. In its original form, the bill left the proclaimed needs of labor unaddressed. Primarily, the bill sought to abolish the trusts’ characteristic unfair trade practices, including price discrimination, tying contracts, and interlocking directorates and stockholdings.

Representatives of big business assailed the bill immediately, but the most vociferous of its critics were representatives of organized labor, led by a founder and the president of the American Federation of Labor American Federation of Labor (AFL), Samuel Gompers. Anticipating Wilsonian reform, Gompers had broken with AFL tradition by throwing the group’s political support behind Wilson’s election campaign. Nothing in the initial Clayton bill removed labor from the purview of Sherman Act antitrust injunctions and prosecutions. Vowing that he would lead the AFL into Republican arms against Wilson’s antitrust reforms, Gompers declared publicly that “without further delay the citizens of the United States must decide whether they wish to outlaw organized labor.”

President Wilson remained adamant, but pressure from Gompers produced a congressional compromise. It was engineered by North Carolina’s Representative E. Y. Webb, who believed, as did many others, that the Sherman Act was never intended to apply to labor unions. The compromise therefore incorporated labor provisions in a bill otherwise aimed at eliminating restraint-of-trade strategies employed by trusts. Affirmed by an overwhelmingly favorable vote, the Clayton bill cleared the House of Representatives on June 5, 1914. After its Senate passage, it was signed into law on October 15, 1914.

Because of the Clayton Act’s sections 6 and 20, Gompers instantly hailed the law as providing basic but important rights. On its face, the act appeared to confirm this appraisal. Section 6 asserted that human labor was neither a commodity nor an article of commerce and further declared that nothing in federal antitrust laws forbade the existence of labor and agricultural unions or their lawful activities. Section 20 prohibited federal courts from issuing injunctions in labor disputes, except when irreparable damage to property might result and when there was no legal remedy for the dispute. More specifically, section 20 forbade federal injunctions prohibiting the encouragement of strikes, primary boycotts, peaceful assembly, and any other labor activities that were otherwise lawful under federal statutes.

Significance

With passage of the Clayton Act, organized labor had its day in Congress, but it had not had its day in the nation’s judicial system. Outside labor circles, many experts agreed that the act in no sense gave labor organizations immunity from antitrust prosecution. Evidence indicates that Wilson himself opposed such exemption. Sharp critics of the act’s provisions further noted that the original bill had been so diluted in debate that its final version was an anemic sop to labor.

As swift and brilliant as President Wilson’s reform legislation had been, its momentum was halted by the nation’s preparation for and participation in World War I. At war’s end, the American public soon wearied of ideological and partisan battles over Wilson’s foreign policy and became disillusioned with reformist exuberance. The 1920’s witnessed a revival and strengthening of traditional conservative probusiness politics.

Taking advantage of the nation’s postwar lassitude, fears generated by violence attending postwar strikes, and antipathy toward Communists, who were said to be leaders of the labor movement, employers again went on the offensive against labor. They created thousands of company-sponsored unions and again resorted to hiring armed company guards and strikebreakers. Capitalizing on antilabor sentiments, employers drew on local and state authorities to deploy police and troops to harass and arrest union organizers. Yellow-dog contracts Yellow-dog contracts[Yellow dog contracts] (which threatened workers with dismissal if they joined a union) became commonplace and, chiefly under the auspices of the National Association of Manufacturers, antilabor propaganda was circulated widely and systematically that argued in favor of open shops, which allow nonunion workers to be employed even though a union may have organized the workplace.

The fabric of protective legislation that Gompers and his fellow labor leaders presumed to be embodied in the Clayton Act’s labor provisions was shredded by a U.S. Supreme Court decision in 1921 in the seminal case of Duplex Printing Press Company v. Deering. Duplex Printing Press Company v. Deering (1921) Supreme Court, U.S.;labor law This case presented the Court’s interpretation of the Sherman and Clayton Acts as protecting employers from labor violence, from secondary boycotts, and from the use of other labor tactics that could be construed as unlawful interference with interstate commerce. The Duplex case involved attempts by a Michigan union in 1919 to organize the Duplex Company, one of only four such companies manufacturing printing presses and the only one that remained unorganized. To this end, the Michigan union persuaded workers and their employers in New York to boycott Duplex products—that is, to impose a secondary boycott.

Speaking for a conservative Court, Justice Mahlon Pitney held that certain union tactics constituted unlawful interference with interstate commerce and therefore were subject to antitrust laws. Secondary boycotts fell under antitrust laws as restraints of interstate trade and conspiracies. Section 6 of the Clayton Act, Pitney asserted, protected unions solely in regard to their lawful pursuit of legitimate objectives. Given that, in the Court’s view, secondary boycotts were unlawful, unions that instituted them were deprived of protection by the Clayton Act. The act’s provisions in section 20 shielded unions from the issuance of injunctions against them, but injunctions were prohibited, Pitney noted, only in regard to the employees of an offending employer, the immediate parties to a labor dispute. The act thus did not prohibit an injunction against the New York workers and employers secondarily involved in the dispute.

By holding unions accountable under antitrust laws for anything the Court deemed to be other than normal and legitimate union activity, the Court effectively nullified the Clayton Act’s labor provisions. As experts observed, the only remaining union actions that fell under protection of the Clayton Act were those considered lawful before passage of the act. This narrow judicial interpretation of sections 6 and 20 effectively negated the intent of a reform Congress and made it almost impossible for unions to organize workers in nonunion companies.

It scarcely mattered in the short run that Supreme Court Justice Louis D. Brandeis, Brandeis, Louis D. who had been one of the architects of Wilson’s New Freedom, defended labor’s right to push its struggle to the limits of its self-interest through encouraging sympathetic strikes. Employers benefited from judicial protection, a fact seemingly confirmed in a 1922 decision that upheld the possibility of prosecution of unions as trusts. That same year, U.S. attorney general Harry M. Daugherty Daugherty, Harry M. invoked a wholesale issuance of court injunctions, nearly three hundred of them, against striking railway workers. Final hearings on these injunctions were repeatedly postponed until union battles against employers had failed. The wide latitude allowed to courts by the Duplex decision meant not only a denial of jury trials but the use of injunctions against payment of strike benefits and even against the public’s feeding of strikers’ families.

Relief from what labor and most liberals regarded as the blatant injustices of a probusiness and ultraconservative decade seemed possible by the end of the 1920’s. In 1928, the platforms of both major political parties featured anti-injunction proposals. The public pressures that resulted in enactment of the prolabor Norris-La Guardia Act in 1932 Norris-La Guardia Act (1932)[Norris Laguardia Act] and passage of the seminal National Labor Relations Act National Labor Relations Act (1935) (Wagner Act) Wagner Act (1935) three years later were mounting. The New Deal administration of Franklin D. Roosevelt ushered in an era rich in labor reform. However, in 1947, under the Taft-Hartley Act, Taft-Hartley Act (1947)[Taft Hartley Act] Congress tempered its previous prolabor posture by disallowing jurisdictional strikes by unions, prohibiting closed shops (in which unions could force all employees to become union members), and requiring that both business and labor must bargain in good faith. Antitrust legislation Labor unions;legislation Clayton Antitrust Act (1914)

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Babson, Steve. The Unfinished Struggle: Turning Points in American Labor, 1877-Present. Lanham, Md.: Rowman & Littlefield, 1999. A concise and comprehensive history of the American labor movement. Includes notes and index.
  • citation-type="booksimple"

    xlink:type="simple">Brooks, Thomas R. Toil and Trouble: A History of American Labor. 2d ed. New York: Delacorte Press, 1971. A colorful and not uncritical prolabor account. Solid and informative. Chapters 11 and 12 provide especially relevant discussion related to antitrust laws.
  • citation-type="booksimple"

    xlink:type="simple">Greene, Julie. Pure and Simple Politics: The American Federation of Labor and Political Activism, 1881-1917. New York: Cambridge University Press, 1998. Study of the American Federation of Labor shows the organization’s attention to political activity and focuses on the dilemmas this approach posed for union members. Includes index.
  • citation-type="booksimple"

    xlink:type="simple">Gregory, Charles O. Labor and the Law. New York: W. W. Norton, 1946. A law professor’s pithy and straightforward account. Excellent on labor, injunctions, and antitrust problems in chapters 7 and 8. Includes a list of cases.
  • citation-type="booksimple"

    xlink:type="simple">Link, Arthur S. Woodrow Wilson and the Progressive Era, 1910-1917. New York: Harper & Brothers, 1954. Authoritative survey by the leading Wilson scholar. Chapter 3 is excellent on Wilson, Congress, labor, and the Clayton Act. A fine introduction to the topic.
  • citation-type="booksimple"

    xlink:type="simple">Northrup, Herbert R., and Gordon F. Bloom. Government and Labor. Homewood, Ill.: Richard D. Irwin, 1963. Balanced, detailed, and authoritative discussion of the relationship between government and labor. Includes a table of cases.
  • citation-type="booksimple"

    xlink:type="simple">Taft, Philip. The A. F. of L. in the Time of Gompers. New York: Harper & Brothers, 1957. Dry, dense narrative, but an authoritative study. Invaluable for discussion of Gompers’s views on and politics involving the Sherman and Clayton Acts and injunctions.
  • citation-type="booksimple"

    xlink:type="simple">Wilcox, Clair. Public Policies Toward Business. 3d ed. Homewood, Ill.: Richard D. Irwin, 1966. Splendid analysis of the subject. Balances the interests and motives of government, business, and labor in regard to antitrust regulations. Includes table of cases.

U.S. Supreme Court Rules Against Northern Securities

U.S. Supreme Court Upholds Prosecution of the Beef Trust

Danbury Hatters Decision Constrains Secondary Boycotts

Clayton Antitrust Act

United States v. United States Steel Corporation

Norris-La Guardia Act Strengthens Labor Organizations

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