Theodore Roosevelt by Theodore Roosevelt (read this if .TXT) 📕

CHAPTER XII THE BIG STICK AND THE SQUARE DEAL

One of the vital questions with which as President I had to deal was the attitude of the Nation toward the great corporations. Men who understand and practice the deep underlying philosophy of the Lincoln school of American political thought are necessarily Hamiltonian in their belief in a strong and efficient National Government and Jeffersonian in their belief in the people as the ultimate authority, and in the welfare of the people as the end of Government. The men who first applied the extreme Democratic theory in American life were, like Jefferson, ultra individualists, for at that time what was demanded by our people was the largest liberty for the individual.

During the century that had elapsed since Jefferson became President the need had been exactly reversed. There had been in our country a riot of individualistic materialism, under which complete freedom for the individual—that ancient license which President Wilson a century after the term was excusable has called the “New” Freedom—turned out in practice to mean perfect freedom for the strong to wrong the weak.

The total absence of governmental control had led to a portentous growth in the financial and industrial world both of natural individuals and of artificial individuals—that is, corporations. In no other country in the world had such enormous fortunes been gained.

In no other country in the world was such power held by the men who had gained these fortunes; and these men almost always worked through, and by means of, the giant corporations which they controlled. The power of the mighty industrial overlords of the country had increased with giant strides, while the methods of controlling them, or checking abuses by them, on the part of the people, through the Government, remained archaic and therefore practically impotent. The courts, not unnaturally, but most regrettably, and to the grave detriment of the people and of their own standing, had for a quarter of a century been on the whole the agents of reaction, and by conflicting decisions which, however, in their sum were hostile to the interests of the people, had left both the nation and the several States well-nigh impotent to deal with the great business combinations. Sometimes they forbade the Nation to interfere, because such interference trespassed on the rights of the States; sometimes they forbade the States to interfere (and often they were wise in this), because to do so would trespass on the rights of the Nation; but always, or well-nigh always, their action was negative action against the interests of the people, ingeniously devised to limit their power against wrong, instead of affirmative action giving to the people power to right wrong. They had rendered these decisions sometimes as upholders of property rights against human rights, being especially zealous in securing the rights of the very men who were most competent to take care of themselves; and sometimes in the name of liberty, in the name of the so-called “new freedom,” in reality the old, old “freedom,” which secured to the powerful the freedom to prey on the poor and the helpless.

One of the main troubles was the fact that the men who saw the evils and who tried to remedy them attempted to work in two wholly different ways, and the great majority of them in a way that offered little promise of real betterment. They tried (by the Sherman law method) to bolster up an individualism already proved to be both futile and mischievous; to remedy by more individualism the concentration that was the inevitable result of the already existing individualism. They saw the evil done by the big combinations, and sought to remedy it by destroying them and restoring the country to the economic conditions of the middle of the nineteenth century. This was a hopeless effort, and those who went into it, although they regarded themselves as radical progressives, really represented a form of sincere rural toryism. They confounded monopolies with big business combinations, and in the effort to prohibit both alike, instead of where possible prohibiting one and drastically controlling the other, they succeeded merely in preventing any effective control of either.

On the other hand, a few men recognized that corporations and combinations had become indispensable in the business world, that it was folly to try to prohibit them, but that it was also folly to leave them without thoroughgoing control. These men realized that the doctrines of the old laissez faire economists, of the believers in unlimited competition, unlimited individualism, were in the actual state of affairs false and mischievous. They realized that the Government must now interfere to protect labor, to subordinate the big corporation to the public welfare, and to shackle cunning and fraud exactly as centuries before it had interfered to shackle the physical force which does wrong by violence.

The big reactionaries of the business world and their allies and instruments among politicians and newspaper editors took advantage of this division of opinion, and especially of the fact that most of their opponents were on the wrong path; and fought to keep matters absolutely unchanged. These men demanded for themselves an immunity from governmental control which, if granted, would have been as wicked and as foolish as immunity to the barons of the twelfth century. Many of them were evil men. Many others were just as good men as were some of these same barons; but they were as utterly unable as any medieval castle-owner to understand what the public interest really was. There have been aristocracies which have played a great and beneficent part at stages in the growth of mankind; but we had come to the stage where for our people what was needed was a real democracy; and of all forms of tyranny the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of a plutocracy.

When I became President, the question as to the method by which the United States Government was to control the corporations was not yet important. The absolutely vital question was whether the Government had power to control them at all. This question had not yet been decided in favor of the United States Government. It was useless to discuss methods of controlling big business by the National Government until it was definitely settled that the National Government had the power to control it. A decision of the Supreme Court had, with seeming definiteness, settled that the National Government had not the power.

This decision I caused to be annulled by the court that had rendered it; and the present power of the National Government to deal effectively with the trusts is due solely to the success of the Administration in securing this reversal of its former decision by the Supreme Court.

The Constitution was formed very largely because it had become imperative to give to some central authority the power to regulate and control interstate commerce. At that time when corporations were in their infancy and big combinations unknown, there was no difficulty in exercising the power granted. In theory, the right of the Nation to exercise this power continued unquestioned. But changing conditions obscured the matter in the sight of the people as a whole; and the conscious and the unconscious advocates of an unlimited and uncontrollable capitalism gradually secured the whittling away of the National power to exercise this theoretical right of control until it practically vanished. After the Civil War, with the portentous growth of industrial combinations in this country, came a period of reactionary decisions by the courts which, as regards corporations, culminated in what is known as the Knight case.

The Sherman Anti-Trust Law was enacted in 1890 because the formation of the Tobacco Trust and the Sugar Trust, the only two great trusts then in the country (aside from the Standard Oil Trust, which was a gradual growth), had awakened a popular demand for legislation to destroy monopoly and curb industrial combinations. This demand the Anti-Trust Law was intended to satisfy. The Administrations of Mr.

Harrison and Mr. Cleveland evidently construed this law as prohibiting such combinations in the future, not as condemning those which had been formed prior to its enactment. In 1895, however, the Sugar Trust, whose output originally was about fifty-five per cent of all sugar produced in the United States, obtained control of three other companies in Philadelphia by exchanging its stock for theirs, and thus increased its business until it controlled ninety-eight per cent of the entire product. Under Cleveland, the Government brought proceedings against the Sugar Trust, invoking the Anti-Trust Law, to set aside the acquisition of these corporations. The test case was on the absorption of the Knight Company. The Supreme Court of the United States, with but one dissenting vote, held adversely to the Government. They took the ground that the power conferred by the Constitution to regulate and control interstate commerce did not extend to the production or manufacture of commodities within a State, and that nothing in the Sherman Anti-Trust Law prohibited a corporation from acquiring all the stock of other corporations through exchange of its stock for theirs, such exchange not being “commerce”

in the opinion of the Court, even though by such acquisition the corporation was enabled to control the entire production of a commodity that was a necessary of life. The effect of this decision was not merely the absolute nullification of the Anti-Trust Law, so far as industrial corporations were concerned, but was also in effect a declaration that, under the Constitution, the National Government could pass no law really effective for the destruction or control of such combinations.

This decision left the National Government, that is, the people of the Nation, practically helpless to deal with the large combinations of modern business. The courts in other cases asserted the power of the Federal Government to enforce the Anti-Trust Law so far as transportation rates by railways engaged in interstate commerce were concerned. But so long as the trusts were free to control the production of commodities without interference from the General Government, they were well content to let the transportation of commodities take care of itself—especially as the law against rebates was at that time a dead letter; and the Court by its decision in the Knight case had interdicted any interference by the President or by Congress with the production of commodities. It was on the authority of this case that practically all the big trusts in the United States, excepting those already mentioned, were formed. Usually they were organized as “holding” companies, each one acquiring control of its constituent corporations by exchanging its stock for theirs, an operation which the Supreme Court had thus decided could not be prohibited, controlled, regulated, or even questioned by the Federal Government.

Such was the condition of our laws when I acceded to the Presidency.

Just before my accession, a small group of financiers, desiring to profit by the governmental impotence to which we had been reduced by the Knight decision, had arranged to take control of practically the entire railway system in the Northwest—possibly as the first step toward controlling the entire railway system of the country. This control of the Northwestern railway systems was to be effected by organizing a new “holding” company, and exchanging its stock against the stock of the various corporations engaged in railway transportation throughout that vast territory, exactly as the Sugar Trust had