A gentleman`s agreement is a term used to describe an unwritten and unenforceable agreement between two parties, usually involving a verbal pledge to maintain specific actions or behavior. While gentleman`s agreements have been a common practice all over the world, it was particularly prevalent in the United States during the late 19th and early 20th centuries.
During this time, business owners, industrialists, and financiers were looking for ways to consolidate their power and create monopolies in their respective industries. However, they faced significant legal and regulatory hurdles in doing so. As a result, many of these businessmen turned to gentleman`s agreements to achieve their goals.
One of the most famous examples of a gentleman`s agreement in US history is the understanding between J.P. Morgan, the wealthiest man in America at the time, and several other leading financiers in the early 1900s. These businessmen agreed to work together to stabilize the country`s financial markets and avoid the kind of market turbulence that had characterized the late 19th century.
Under this agreement, Morgan and his compatriots would pool their resources and use their collective power to control the supply of credit in the country. They would also work to prevent any competition that might threaten the stability of their businesses. This agreement was never written down and had no backing in law, but it was widely understood among the parties involved.
Another example was the gentleman`s agreement that limited Japanese immigration to the United States in the early 1900s. In 1907, President Theodore Roosevelt reached an informal agreement with the government of Japan that limited the number of Japanese immigrants allowed to enter the United States each year. This agreement was never ratified by Congress, but it was an effective way for both governments to avoid a potential diplomatic crisis.
Gentleman`s agreements started to fall out of favor in the US during the mid-20th century as the government began to pass more stringent antitrust and competition laws. The Sherman Antitrust Act of 1890, in particular, was designed to prevent businessmen from using informal agreements to control markets and stifle competition.
Today, gentleman`s agreements are still used in some instances, but they are far less common than they once were. They are often seen in industries where formal contracts are difficult to enforce, such as in the world of sports or entertainment.
In conclusion, the gentleman`s agreement was a common practice in the late 19th and early 20th centuries in the United States, where business owners and financiers sought ways to consolidate their power and create monopolies. While it was an effective means of achieving their goals, it was also a practice that was prone to abuse. Today, the legal system is more equipped to prevent such agreements from occurring, making them a less common practice.