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- Theodore Roosevelt and His Times, - 10/31 -


During the times of Roosevelt, the American people were profoundly concerned with the trust problem. So was Roosevelt himself. In this important field of the relations between "big business" and the people he had a perfectly definite point of view, though he did not have a cut and dried programme. He was always more interested in a point of view than in a programme, for he realized that the one is lasting, the other shifting. He knew that if you stand on sound footing and look at a subject from the true angle, you may safely modify your plan of action as often and as rapidly as may be necessary to fit changing conditions. But if your footing is insecure or your angle of vision distorted, the most attractive programme in the world may come to ignominious disaster.

There were, broadly speaking, three attitudes toward the trust problem which were strongly held by different groups in the United States. At one extreme was the threatening growl of big business, "Let us alone!" At the other pole was the shrill outcry of William Jennings Bryan and his fellow exhorters, "Smash the trusts!" In the golden middle ground was the vigorous demand of Roosevelt for a "square deal."

In his first message to Congress, the President set forth his point of view with frankness and clarity. His comprehensive discussion of the matter may be summarized thus: The tremendous and highly complex industrial development which went on with great rapidity during the latter half of the nineteenth century produced serious social problems. The old laws and the old customs which had almost the binding force of law were once quite sufficient to regulate the accumulation and distribution of wealth. Since the industrial changes which have so enormously increased the productive power of mankind, these regulations are no longer sufficient. The process of the creation of great corporate fortunes has aroused much antagonism; but much of this, antagonism has been without warrant. There have been, it is true, abuses connected with the accumulation of wealth; yet no fortune can be accumulated in legitimate business except by conferring immense incidental benefits upon others. The men who have driven the great railways across the continent, who have built up commerce and developed manufactures, have on the whole done great good to the people at large. Without such men the material development of which Americans are so justly proud never could have taken place. They should therefore recognize the immense importance of this material development by leaving as unhampered as is compatible with the public good the strong men upon whom the success of business inevitably rests. It cannot too often be pointed out that to strike with ignorant violence at the interests of one set of men almost inevitably endangers the interests of all. The fundamental rule in American national life is that, on the whole and in the long run, we shall all go up or down together. Many of those who have made it their vocation to denounce the great industrial combinations appeal especially to the primitive instincts of hatred and fear. These are precisely the two emotions which unfit men for cool and steady judgment. The whole history of the world shows that legislation, in facing new industrial conditions, will generally be both unwise and ineffective unless it is undertaken only after calm inquiry and with sober self-restraint.

This is one side of the picture as it was presented by the President in his message to Congress. It was characteristic that this aspect should be put first, for Roosevelt always insisted upon doing justice to the other side before he demanded justice for his own. But he then proceeded to set forth the other side with equal vigor: There is a widespread conviction in the minds of the American people that the great corporations are in certain of their features and tendencies hurtful to the general welfare. It is true that real and grave evils have arisen, one of the chief of them being overcapitalization, with its many baleful consequences. This state of affairs demands that combination and concentration in business should be, not prohibited, but supervised and controlled. Corporations engaged in interstate commerce should be regulated if they are found to exercise a license working to the public injury. The first essential in determining how to deal with the great industrial combinations is knowledge of the facts. This is to be obtained only through publicity, which is the one sure remedy we can now invoke before it can be determined what further remedies are needed. Corporations should be subject to proper governmental supervision, and full and accurate information as to their operations should be made public at regular intervals. The nation should assume powers of supervision and regulation over all corporations doing an interstate business. This is especially true where the corporation derives a portion of its wealth from the existence of some monopolistic element or tendency in its business. The Federal Government should regulate the activities of corporations doing an interstate business, just as it regulates the activities of national banks, and, through the Interstate Commerce Commission, the operations of the railroads.

Roosevelt was destined, however, not to achieve the full measure of national control of corporations that he desired. The elements opposed to his view were too powerful. There was a fortuitous involuntary partnership though it was not admitted and was even violently denied between the advocates of "Let us alone!" and of "Smash the trusts!" against the champion of the middle way. In his "Autobiography" Roosevelt has described this situation:

"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 doctrine 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 government 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 a 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."*

* Autobiography (Scribner), pp. 424-25.

When Roosevelt became President, there were three directions in which energy needed to be applied to the solution of the trust problem: in the more vigorous enforcement of the laws already on the statute books; in the enactment of necessary new laws on various phases of the subject; and in the arousing of an intelligent and militant public opinion in relation to the whole question. To each of these purposes the new President applied himself with characteristic vigor.

The Sherman Anti-Trust law, which had already been on the Federal statute books for eleven years, forbade "combinations in restraint of trade" in the field of interstate commerce. During three administrations, eighteen actions had been brought by the Government for its enforcement. At the opening of the twentieth century it was a grave question whether the Sherman law was of any real efficacy in preventing the evils that arose from unregulated combination in business. A decision of the United States Supreme Court, rendered in 1895 in the so-called Knight case, against the American Sugar Refining Company, had, in the general belief, taken the teeth out of the Sherman law. In the words of Mr. Taft, "The effect of the decision in the Knight case upon the popular mind, and indeed upon Congress as well, was to discourage hope that the statute could be used to accomplish its manifest purpose and curb the great industrial trusts which, by the acquisition of all or a large percentage of the plants engaged in the manufacture of a commodity, by the dismantling of some and regulating the output of others, were making every effort to restrict production, control prices, and monopolize the business." It was obviously necessary that the Sherman act, unless it were to pass into innocuous desuetude, should have the original vigor intended by Congress restored to it by a new interpretation of the law on the part of the Supreme Court. Fortunately an opportunity for such a change presented itself with promptness. A small group of powerful financiers had arranged to take control of practically the entire system of railways in the Northwest, "possibly," Roosevelt has said, "as the first step toward controlling the entire railway system of the country." They had brought this about by organizing the Northern Securities Company to hold the majority of the stock of two competing railways, the Great Northern and the Northern Pacific. At the direction of President Roosevelt, suit was brought by the Government to prevent the merger. The defendants relied for protection upon the immunity afforded by the decision in the Knight case. But the Supreme Court now took more advanced ground, decreed that the Northern Securities Company was an illegal combination, and ordered its dissolution.

By the successful prosecution of this case the Sherman act was made once more a potentially valuable instrument for the prevention of the more flagrant evils that flow from "combinations in restraint of trade." During the remaining years of the Roosevelt Administrations, this legal instrument was used


Theodore Roosevelt and His Times, - 10/31

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