CORPORATIONS.

As regards the great corporations engaged in interstate business, and

especially the railroad, I can only repeat what I have already again

and again said in my messages to the Congress, I believe that under the

interstate clause of the Constitution the United States has complete

and paramount right to control all agencies of interstate commerce, and

I believe that the National Government alone can exercise this right

with wisdom and effectiveness so as both to secure justice from, and to

do justice to, the great corporations which are the most important

factors in modern business. I believe that it is worse than folly to

attempt to prohibit all combinations as is done by the Sherman

anti-trust law, because such a law can be enforced only imperfectly and

unequally, and its enforcement works almost as much hardship as good. I

strongly advocate that instead of an unwise effort to prohibit all

combinations there shall be substituted a law which shall expressly

permit combinations which are in the interest of the public, but shall

at the same time give to some agency of the National Government full

power of control and supervision over them. One of the chief features

of this control should be securing entire publicity in all matters

which the public has a right to know, and furthermore, the power, not

by judicial but by executive action, to prevent or put a stop to every

form of improper favoritism or other wrongdoing.

The railways of the country should be put completely under the

Interstate Commerce Commission and removed from the domain of the

anti-trust law. The power of the Commission should be made

thoroughgoing, so that it could exercise complete supervision and

control over the issue of securities as well as over the raising and

lowering of rates. As regards rates, at least, this power should be

summary. The power to investigate the financial operations and accounts

of the railways has been one of the most valuable features in recent

legislation. Power to make combinations and traffic agreements should

be explicitly conferred upon the railroads, the permission of the

Commission being first gained and the combination or agreement being

published in all its details. In the interest of the public the

representatives of the public should have complete power to see that

the railroads do their duty by the public, and as a matter of course

this power should also be exercised so as to see that no injustice is

done to the railroads. The shareholders, the employees and the shippers

all have interests that must be guarded. It is to the interest of all

of them that no swindling stock speculation should be allowed, and that

there should be no improper issuance of securities. The guiding

intelligences necessary for the successful building and successful

management of railroads should receive ample remuneration; but no man

should be allowed to make money in connection with railroads out of

fraudulent over-capitalization and kindred stock-gambling performances;

there must be no defrauding of investors, oppression of the farmers and

business men who ship freight, or callous disregard of the rights and

needs of the employees. In addition to this the interests of the

shareholders, of the employees, and of the shippers should all be

guarded as against one another. To give any one of them undue and

improper consideration is to do injustice to the others. Rates must be

made as low as is compatible with giving proper returns to all the

employees of the railroad, from the highest to the lowest, and proper

returns to the shareholders; but they must not, for instance, be

reduced in such fashion as to necessitate a cut in the wages of the

employees or the abolition of the proper and legitimate profits of

honest shareholders.

Telegraph and telephone companies engaged in interstate business should

be put under the jurisdiction of the Interstate Commerce Commission.

It is very earnestly to be wished that our people, through their

representatives, should act in this matter. It is hard to say whether

most damage to the country at large would come from entire failure on

the part of the public to supervise and control the actions of the

great corporations, or from the exercise of the necessary governmental

power in a way which would do injustice and wrong to the corporations.

Both the preachers of an unrestricted individualism, and the preachers

of an oppression which would deny to able men of business the just

reward of their initiative and business sagacity, are advocating

policies that would be fraught with the gravest harm to the whole

country. To permit every lawless capitalist, every law-defying

corporation, to take any action, no matter how iniquitous, in the

effort to secure an improper profit and to build up privilege, would be

ruinous to the Republic and would mark the abandonment of the effort to

secure in the industrial world the spirit of democratic fair dealing.

On the other hand, to attack these wrongs in that spirit of demagogy

which can see wrong only when committed by the man of wealth, and is

dumb and blind in the presence of wrong committed against men of

property or by men of no property, is exactly as evil as corruptly to

defend the wrongdoing of men of wealth. The war we wage must be waged

against misconduct, against wrongdoing wherever it is found; and we

must stand heartily for the rights of every decent man, whether he be a

man of great wealth or a man who earns his livelihood as a wage-worker

or a tiller of the soil.

It is to the interest of all of us that there should be a premium put

upon individual initiative and individual capacity, and an ample reward

for the great directing intelligences alone competent to manage the

great business operations of to-day. It is well to keep in mind that

exactly as the anarchist is the worst enemy of liberty and the

reactionary the worst enemy of order, so the men who defend the rights

of property have most to fear from the wrongdoers of great wealth, and

the men who are championing popular rights have most to fear from the

demagogues who in the name of popular rights would do wrong to and

oppress honest business men, honest men of wealth; for the success of

either type of wrongdoer necessarily invites a violent reaction against

the cause the wrongdoer nominally upholds. In point of danger to the

Nation there is nothing to choose between on the one hand the

corruptionist, the bribe-giver, the bribe-taker, the man who employs

his great talent to swindle his fellow-citizens on a large scale, and,

on the other hand, the preacher of class hatred, the man who, whether

from ignorance or from willingness to sacrifice his country to his

ambition, persuades well-meaning but wrong-headed men to try to destroy

the instruments upon which our prosperity mainly rests. Let each group

of men beware of and guard against the shortcomings to which that group

is itself most liable. Too often we see the business community in a

spirit of unhealthy class consciousness deplore the effort to hold to

account under the law the wealthy men who in their management of great

corporations, whether railroads, street railways, or other industrial

enterprises, have behaved in a way that revolts the conscience of the

plain, decent people. Such an attitude can not be condemned too

severely, for men of property should recognize that they jeopardize the

rights of property when they fail heartily to join in the effort to do

away with the abuses of wealth. On the other hand, those who advocate

proper control on behalf of the public, through the State, of these

great corporations, and of the wealth engaged on a giant scale in

business operations, must ever keep in mind that unless they do

scrupulous justice to the corporation, unless they permit ample profit,

and cordially encourage capable men of business so long as they act

with honesty, they are striking at the root of our national well-being;

for in the long run, under the mere pressure of material distress, the

people as a whole would probably go back to the reign of an

unrestricted individualism rather than submit to a control by the State

so drastic and so foolish, conceived in a spirit of such unreasonable

and narrow hostility to wealth, as to prevent business operations from

being profitable, and therefore to bring ruin upon the entire business

community, and ultimately upon the entire body of citizens.

The opposition to Government control of these great corporations makes

its most effective effort in the shape of an appeal to the old doctrine

of State's rights. Of course there are many sincere men who now believe

in unrestricted individualism in business, just as there were formerly

many sincere men who believed in slavery--that is, in the unrestricted

right of an individual to own another individual. These men do not by

themselves have great weight, however. The effective fight against

adequate Government control and supervision of individual, and

especially of corporate, wealth engaged in interstate business is

chiefly done under cover; and especially under cover of an appeal to

State's rights. It is not at all infrequent to read in the same speech

a denunciation of predatory wealth fostered by special privilege and

defiant of both the public welfare and law of the land, and a

denunciation of centralization in the Central Government of the power

to deal with this centralized and organized wealth. Of course the

policy set forth in such twin denunciations amounts to absolutely

nothing, for the first half is nullified by the second half. The chief

reason, among the many sound and compelling reasons, that led to the

formation of the National Government was the absolute need that the

Union, and not the several States, should deal with interstate and

foreign commerce; and the power to deal with interstate commerce was

granted absolutely and plenarily to the Central Government and was

exercised completely as regards the only instruments of interstate

commerce known in those days--the waterways, the highroads, as well as

the partnerships of individuals who then conducted all of what business

there was. Interstate commerce is now chiefly conducted by railroads;

and the great corporation has supplanted the mass of small partnerships

or individuals. The proposal to make the National Government supreme

over, and therefore to give it complete control over, the railroads and

other instruments of interstate commerce is merely a proposal to carry

out to the letter one of the prime purposes, if not the prime purpose,

for which the Constitution was rounded. It does not represent

centralization. It represents merely the acknowledgment of the patent

fact that centralization has already come in business. If this

irresponsible outside business power is to be controlled in the

interest of the general public it can only be controlled in one way--by

giving adequate power of control to the one sovereignty capable of

exercising such power--the National Government. Forty or fifty separate

state governments can not exercise that power over corporations doing

business in most or all of them; first, because they absolutely lack

the authority to deal with interstate business in any form; and second,

because of the inevitable conflict of authority sure to arise in the

effort to enforce different kinds of state regulation, often

inconsistent with one another and sometimes oppressive in themselves.

Such divided authority can not regulate commerce with wisdom and

effect. The Central Government is the only power which, without

oppression, can nevertheless thoroughly and adequately control and

supervise the large corporations. To abandon the effort for National

control means to abandon the effort for all adequate control and yet to

render likely continual bursts of action by State legislatures, which

can not achieve the purpose sought for, but which can do a great deal

of damage to the corporation without conferring any real benefit on the

public.

I believe that the more farsighted corporations are themselves coming

to recognize the unwisdom of the violent hostility they have displayed

during the last few years to regulation and control by the National

Government of combinations engaged in interstate business. The truth is

that we who believe in this movement of asserting and exercising a

genuine control, in the public interest, over these great corporations

have to contend against two sets of enemies, who, though nominally

opposed to one another, are really allies in preventing a proper

solution of the problem. There are, first, the big corporation men, and

the extreme individualists among business men, who genuinely believe in

utterly unregulated business that is, in the reign of plutocracy; and,

second, the men who, being blind to the economic movements of the day,

believe in a movement of repression rather than of regulation of

corporations, and who denounce both the power of the railroads and the

exercise of the Federal power which alone can really control the

railroads. Those who believe in efficient national control, on the

other hand, do not in the least object to combinations; do not in the

least object to concentration in business administration. On the

contrary, they favor both, with the all important proviso that there

shall be such publicity about their workings, and such thoroughgoing

control over them, as to insure their being in the interest, and not

against the interest, of the general public. We do not object to the

concentration of wealth and administration; but we do believe in the

distribution of the wealth in profits to the real owners, and in

securing to the public the full benefit of the concentrated

administration. We believe that with concentration in administration

there can come both be advantage of a larger ownership and of a more

equitable distribution of profits, and at the same time a better

service to the commonwealth. We believe that the administration should

be for the benefit of the many; and that greed and rascality, practiced

on a large scale, should be punished as relentlessly as if practiced on

a small scale.

We do not for a moment believe that the problem will be solved by any

short and easy method. The solution will come only by pressing various

concurrent remedies. Some of these remedies must lie outside the domain

of all government. Some must lie outside the domain of the Federal

Government. But there is legislation which the Federal Government alone

can enact and which is absolutely vital in order to secure the

attainment of our purpose. Many laws are needed. There should be

regulation by the National Government of the great interstate

corporations, including a simple method of account keeping, publicity,

supervision of the issue securities, abolition of rebates, and of

special privileges. There should be short time franchises for all

corporations engaged in public business; including the corporations

which get power from water rights. There should be National as well as

State guardianship of mines and forests. The labor legislation

hereinafter referred to should concurrently be enacted into law.

To accomplish this, means of course a certain increase in the use

of--not the creation of--power, by the Central Government. The power

already exists; it does not have to be created; the only question is

whether it shall be used or left idle--and meanwhile the corporations

over which the power ought to be exercised will not remain idle. Let

those who object to this increase in the use of the only power

available, the national power, be frank, and admit openly that they

propose to abandon any effort to control the great business

corporations and to exercise supervision over the accumulation and

distribution of wealth; for such supervision and control can only come

through this particular kind of increase of power. We no more believe

in that empiricism which demand, absolutely unrestrained individualism

than we do in that empiricism which clamors for a deadening socialism

which would destroy all individual initiative and would ruin the

country with a completeness that not even an unrestrained individualism

itself could achieve. The danger to American democracy lies not in the

least in the concentration of administrative power in responsible and

accountable hands. It lies in having the power insufficiently

concentrated, so that no one can be held responsible to the people for

its use. Concentrated power is palpable, visible, responsible, easily

reached, quickly held to account. Power scattered through many

administrators, many legislators, many men who work behind and through

legislators and administrators, is impalpable, is unseen, is

irresponsible, can not be reached, can not be held to account.

Democracy is in peril wherever the administration of political power is

scattered among a variety of men who work in secret, whose very names

are unknown to the common people. It is not in peril from any man who

derives authority from the people, who exercises it in sight of the

people, and who is from time to time compelled to give an account of

its exercise to the people.