_Mr. Toastmaster, Gentlemen_:
To-day I wish to speak to you on the question of the control and
regulation of those great corporations which are popularly, although
rather vaguely, known as trusts; dealing mostly with what has actually
been accomplished in the way of legislation and in the way of
enforcement of legislation during the past eighteen months, the period
covering the two sessions of the Fifty-seventh Congress. At the outset
I shall ask you to remember that I do not approach the subject either
from the standpoint of those who speak of themselves as anti-trust
or anti-corporation people, nor yet from the standpoint of those
who are fond of denying the existence of evils in the trusts, or who
apparently proceed upon the assumption that if a corporation is large
enough it can do no wrong.
I think I speak for the great majority of the American people when
I say that we are not in the least against wealth as such, whether
individual or corporate; that we merely desire to see any abuse of
corporate or combined wealth corrected and remedied; that we do not
desire the abolition or destruction of big corporations, but, on the
contrary, recognize them as being in many cases efficient economic
instruments, the results of an inevitable process of economic
evolution, and only desire to see them regulated and controlled so far
as may be necessary to subserve the public good. We should be false
to the historic principles of our government if we discriminated,
either by legislation or administration, either for or against a man
because of either his wealth or his poverty. There is no proper place
in our society either for the rich man who uses the power conferred
by his riches to enable him to oppress and wrong his neighbors, nor
yet for the demagogic agitator who, instead of attacking abuses as all
abuses should be attacked wherever found, attacks property, attacks
prosperity, attacks men of wealth, as such, whether they be good or
bad, attacks corporations whether they do well or ill, and seeks, in
a spirit of ignorant rancor, to overthrow the very foundations upon
which rests our national well-being.
In consequence of the extraordinary industrial changes of the last
half century, and notably of the last two or three decades, changes
due mainly to the rapidity and complexity of our industrial growth, we
are confronted with problems which in their present shape were unknown
to our forefathers. Our great prosperity, with its accompanying
concentration of population and of wealth, its extreme specialization
of faculties, and its development of giant industrial leaders, has
brought much good and some evil, and it is as foolish to ignore the
good as wilfully to blind ourselves to the evil.
The evil has been partly the inevitable accompaniment of the social
changes, and where this is the case it can be cured neither by law nor
by the administration of the law, the only remedy lying in the slow
change of character and of economic environment. But for a portion
of the evil, at least, we think that remedies can be found. We know
well the danger of false remedies, and we are against all violent,
radical, and unwise change. But we believe that by proceeding slowly,
yet resolutely, with good sense and moderation, and also with a firm
determination not to be swerved from our course either by foolish
clamor or by any base or sinister influence, we can accomplish much
for the betterment of conditions.
Nearly two years ago, speaking at the State Fair in Minnesota, I said:
“It is probably true that the large majority of the fortunes that
now exist in this country have been amassed, not by injuring our
people, but as an incident to the conferring of great benefits
upon the community, and this no matter what may have been the
conscious purpose of those amassing them. There is but the scantiest
justification for most of the outcry against the men of wealth _as
such_; and it ought to be unnecessary to state that any appeal which
directly or indirectly leads to suspicion and hatred among ourselves,
which tends to limit opportunity, and therefore to shut the door
of success against poor men of talent, and, finally, which entails
the possibility of lawlessness and violence, is an attack upon the
fundamental properties of American citizenship. Our interests are at
bottom common; in the long run we go up or go down together. Yet more
and more it is evident that the State, and if necessary the Nation,
has got to possess the right of supervision and control as regards the
great corporations which are its creatures; particularly as regards
the great business combinations which derive a portion of their
importance from the existence of some monopolistic tendency. The right
should be exercised with caution and self-restraint; but it should
exist, so that it may be invoked if the need arises.”
Last fall in speaking at Cincinnati I said:
“The necessary supervision and control, in which I firmly believe as
the only method of eliminating the real evils of the trusts, must
come through wisely and cautiously framed legislation, which shall
aim in the first place to give definite control to some sovereign
over the great corporations, and which shall be followed, when once
this power has been conferred, by a system giving to the government
the full knowledge which is the essential for satisfactory action.
Then, when this knowledge—one of the essential features of which is
proper publicity—has been gained, what further steps of any kind are
necessary can be taken with the confidence born of the possession
of power to deal with the subject, and of a thorough knowledge of
what should and can be done in the matter. We need additional power,
and we need knowledge.... Such legislation—whether obtainable now
or obtainable only after a Constitutional amendment—should provide
for a reasonable supervision, the most prominent feature of which at
first should be publicity; that is, the making public, both to the
government authorities and to the people at large, the essential facts
in which the public is concerned. This would give us exact knowledge
of many points which are now not only in doubt but the subject of
fierce controversy. Moreover, the mere fact of the publication would
cure some very grave evils, for the light of day is a deterrent to
wrongdoing. It would doubtless disclose other evils with which, for
the time being, we could devise no way to grapple. Finally, it would
disclose others which could be grappled with and cured by further
legislative action.”
In my Message to Congress for 1901 I said:
“In the interest of the whole people the Nation should, without
interfering with the power of the States in the matter, itself also
assume power of supervision and regulation over all corporations
doing an interstate business.”
The views thus expressed have now received effect by the wise,
conservative, and yet far-reaching legislation enacted by Congress at
its last session. In its wisdom Congress enacted the very important
law providing a Department of Commerce and Labor, and further
providing therein under the Secretary of Commerce and Labor for a
Commissioner of Corporations, charged with the duty of supervision
of and of making intelligent investigation into the organization and
conduct of corporations engaged in interstate commerce. His powers
to expose illegal or hurtful practices and to obtain all information
needful for the purposes of further intelligent legislation seem
adequate; and the publicity justifiable and proper for public purposes
is satisfactory guaranteed. The law was passed at the very end of the
session of Congress. Owing to the lateness of its passage Congress
was not able to provide proper equipment for the new Department;
and the first few months must necessarily be spent in the work of
organization, and the first investigations must necessarily be of a
tentative character. The satisfactory development of such a system
requires time and great labor. Those who are intrusted with the
administration of the new law will assuredly administer it in a
spirit of absolute fairness and justice and of entire fearlessness,
with the firm purpose not to hurt any corporation doing a legitimate
business—on the contrary to help it—and, on the other hand, not to
spare any corporation which may be guilty of illegal practices, or
the methods of which may make it a menace to the public welfare. Some
substantial good will be done in the immediate future; and as the
Department gets fairly to work under the law an ever larger vista for
good work will be opened along the lines indicated. The enactment
of this law is one of the most significant contributions which have
been made in our time toward the proper solution of the problem of
the relations to the people of the great corporations and corporate
combinations.
But much though this is, it is only a part of what has been done in
the effort to ascertain and correct improper trust or monopolistic
practices. Some eighteen months ago the Industrial Commission, an
able and non-partisan body, reported to Congress the result of
their investigation of trusts and industrial combinations. One of
the most important of their conclusions was that discriminations in
freight rates and facilities were granted favored shippers by the
railroads and that these discriminations clearly tended toward the
control of production and prices in many fields of business by large
combinations. That this conclusion was justifiable was shown by the
disclosures in the investigation of railroad methods pursued in the
fall and winter of 1901-1902. It was then shown that certain trunk
lines had entered into unlawful agreements as to the transportation
of food products from the West to the Atlantic seaboard, giving a few
favored shippers rates much below the tariff charges imposed upon the
smaller dealers and the general public. These unjust practices had
prevailed to such an extent and for so long a time that many of the
smaller shippers had been driven out of business, until practically
one buyer of grain on each railway system had been able by his illegal
advantages to secure a monopoly on the line with which his secret
compact was made; this monopoly enabling him to fix the price to
both producer and consumer. Many of the great packing house concerns
were shown to be in combination with each other and with most of the
great railway lines, whereby they enjoyed large secret concessions
in rates and thus obtained a practical monopoly of the fresh and
cured meat industry of the country. These fusions, though violative
of the statute, had prevailed unchecked for so many years that they
had become intrenched in and interwoven with the commercial life of
certain large distributing localities; although this was of course at
the expense of the vast body of law-abiding merchants, the general
public, and particularly of unfavored localities.
Under those circumstances it was a serious problem to determine
the wise course to follow in vitalizing a law which had in part
become obsolete or proved incapable of enforcement. Of what the
Attorney-General did in enforcing it I shall speak later. The
decisions of the courts upon the law had betrayed weaknesses and
imperfections, some of them so serious as to render abortive efforts
to apply any effective remedy for the existing evils.
It is clear that corporations created for quasi public purposes,
clothed for that reason with the ultimate power of the state to take
private property against the will of the owner, hold their corporate
powers as carriers in trust for the fairly impartial service of all
the public. Favoritism in the use of such powers, unjustly enriching
some and unjustly impoverishing others, discriminating in favor
of some places and against others, is palpably violative of plain
principles of justice. Such a practice unchecked is hurtful in
many ways. Congress, having had its attention drawn to the matter,
enacted a most important anti-rebate law, which greatly strengthens
the interstate commerce law. This new law prohibits under adequate
penalties the giving and as well the demanding or receiving of such
preferences, and provides the preventive remedy of injunction. The
vigorous administration of this law—and it will be enforced—will, it
is hoped, afford a substantial remedy for certain trust evils which
have attracted public attention and have created public unrest.
This law represents a noteworthy and important advance toward just
and effective regulation of transportation. Moreover, its passage
has been supplemented by the enactment of a law to expedite the
hearing of actions of public moment under the anti-trust act, known
as the Sherman law, and under the act to regulate commerce, at the
request of the Attorney-General; and furthermore, additional funds
have been appropriated to be expended under the direction of the
Attorney-General in the enforcement of these laws.
All of this represents a great and substantial advance in legislation.
But more important even than legislation is the administration of the
law, and I ask your attention for a moment to the way in which the
law has been administered by the profound jurist and fearless public
servant who now occupies the position of Attorney-General, Mr. Knox.
The Constitution enjoins upon the President that he shall take care
that the laws be faithfully executed, and under this provision the
Attorney-General formulated a policy which was in effect nothing but
the rigid enforcement, by suits managed with consummate skill and
ability, both of the anti-trust law and of the imperfect provisions of
the act to regulate commerce. The first step taken was the prosecution
of fourteen suits against the principal railroads of the Middle West,
restraining them by injunction from further violations of either of
the laws in question.
About the same time the case against the Northern Securities Company
was initiated. This was a corporation organized under the laws of
the State of New Jersey with a capital of four hundred million
dollars, the alleged purpose being to control the Great Northern
and the Northern Pacific railroad companies, two parallel and
competing lines extending across the northern tier of States from
the Mississippi River to the Pacific Ocean. Whatever the purpose,
its consummation would have resulted in the control of the two great
railway systems—upon which the people of the Northwestern States were
so largely dependent for their supplies and to get their products
to market—being practically merged into the New Jersey corporation.
The proposition that these independent systems of railroads should
be merged under a single control alarmed the people of the States
concerned, lest they be subjected to what they deemed a monopoly
of interstate transportation and the suppression of competition.
The Governors of the States most deeply affected held a meeting
to consider how to prevent the merger becoming effective and
passed resolutions calling upon the National Government to enforce
the anti-trust laws against the alleged combination. When these
resolutions were referred to the Attorney-General for consideration
and advice, he reported that in his opinion the Northern Securities
Company and its control of the railroads mentioned was a combination
in restraint of trade, and was attempting a monopoly in violation of
the national anti-trust law. Thereupon a suit in equity, which is now
pending, was begun by the Government to test the validity of this
transaction under the Sherman law.
At nearly the same time the disclosures respecting the secret
rebates enjoyed by the great packing house companies, coupled with
the very high price of meats, led the Attorney-General to direct an
investigation into the methods of the so-called beef trust. The
result was that he filed bills for injunction against six of the
principal packing house companies, and restrained them from combining
and agreeing upon prices at which they would sell their products in
States other than those in which their meats were prepared for market.
Writs of injunction were issued accordingly, and since then, after
full argument, the United States Circuit Court has made the injunction
perpetual.
The cotton interests of the South, including growers, buyers, and
shippers, made complaint that they were suffering great injury in
their business from the methods of the Southern railroads in the
handling and transportation of cotton. They alleged that these
railroads, by combined action under a pooling arrangement to support
their rate schedules, had denied to the shippers the right to elect
over what roads their commodities should be shipped, and that
by dividing upon a fixed basis the cotton crop of the South all
inducement to compete in rates for the transportation thereof was
eliminated. Proceedings were instituted by the Attorney-General under
the anti-trust law, which resulted in the destruction of the pool
and in restoring to the growers and shippers of the South the right
to ship their products over any road they elected, thus removing the
restraint upon the freedom of commerce.
In November, 1902, the Attorney-General directed that a bill for
an injunction be filed in the United States Circuit Court at San
Francisco against the Federal Salt Company—a corporation which had
been organized under the laws of an Eastern State, but had its main
office and principal place of business in California—and against a
number of other companies and persons constituting what was known
as the salt trust. These injunctions were to restrain the execution
of certain contracts between the Federal Salt Company and the other
defendants, by which the latter agreed neither to import nor buy or
sell salt, except from and to the Federal Salt Company, and not to
engage or assist in the production of salt west of the Mississippi
River during the continuance of such contracts. As the result of these
agreements the price of salt had been advanced about four hundred per
cent. A temporary injunction order was obtained, which the defendants
asked the court to modify on the ground that the anti-trust law had no
application to contracts for purchases and sales within a State. The
Circuit Court overruled this contention and sustained the Government’s
position. This practically concluded the case, and it is understood
that in consequence the Federal Salt Company is about to be dissolved
and that no further contest will be made.
The above is a brief outline of the most important steps, legislative
and administrative, taken during the past eighteen months in the
direction of solving, so far as at present it seems practicable by
national legislation or administration to solve, what we call the
trust problem. They represent a sum of very substantial achievement.
They represent a successful effort to devise and apply real remedies;
an effort which so far succeeded because it was made not only
with resolute purpose and determination, but also in a spirit of
common-sense and justice, as far removed as possible from rancor,
hysteria, and unworthy demagogic appeal. In the same spirit the laws
will continue to be enforced. Not only is the legislation recently
enacted effective, but in my judgment it was impracticable to attempt
more. Nothing of value is to be expected from ceaseless agitation
for radical and extreme legislation. The people may wisely, and with
confidence, await the results which are reasonably to be expected from
the impartial enforcement of the laws which have recently been placed
upon the statute books. Legislation of a general and indiscriminate
character would be sure to fail, either because it would involve all
interests in a common ruin, or because it would not really reach any
evil. We have endeavored to provide a discriminating adaptation of the
remedy to the real mischief.
Many of the alleged remedies advocated are of the unpleasantly drastic
type which seeks to destroy the disease by killing the patient. Others
are so obviously futile that it is somewhat difficult to treat them
seriously or as being advanced in good faith. High among the latter I
place the effort to reach the trust question by means of the tariff.
You can, of course, put an end to the prosperity of the trusts by
putting an end to the prosperity of the Nation; but the price for
such action seems high. The alternative is to do exactly what has been
done during the life of the Congress which has just closed—that is,
to endeavor, not to destroy corporations, but to regulate them with
a view of doing away with whatever is of evil in them and of making
them subserve the public use. The law is not to be administered in
the interest of the poor man as such, nor yet in the interest of the
rich man as such, but in the interest of the law-abiding man, rich or
poor. We are no more against organizations of capital than against
organizations of labor. We welcome both, demanding only that each
shall do right and shall remember its duty to the Republic. Such a
course we consider not merely a benefit to the poor man, but a benefit
to the rich man. We do no man an injustice when we require him to obey
the law. On the contrary, if he is a man whose safety and well-being
depend in a peculiar degree upon the existence of the spirit of law
and order, we are rendering him the greatest service when we require
him to be himself an exemplar of that spirit.