In my report "on the state of the Union," which I had the privilege of
reading to you on the 2d of December last, I ventured to reserve for
discussion at a later date the subject of additional legislation
regarding the very difficult and intricate matter of trusts and
monopolies. The time now seems opportune to turn to that great question;
not only because the currency legislation, which absorbed your attention
and the attention of the country in December, is now disposed of, but
also because opinion seems to be clearing about us with singular
rapidity in this other great field of action. In the matter of the
currency it cleared suddenly and very happily after the much-debated Act
was passed; in respect of the monopolies which have multiplied about us
and in regard to the various means by which they have been organized and
maintained it seems to be coming to a clear and all but universal
agreement in anticipation of our action, as if by way of preparation,
making the way easier to see and easier to set out upon with confidence
and without confusion of counsel.
Legislation has its atmosphere like everything else, and the atmosphere
of accommodation and mutual understanding which we now breathe with so
much refreshment is matter of sincere congratulation. It ought to make
our task very much less difficult and embarrassing than it would have
been had we been obliged to continue to act amidst the atmosphere of
suspicion and antagonism which has so long made it impossible to
approach such questions with dispassionate fairness. Constructive
legislation, when successful, is always the embodiment of convincing
experience, and of the mature public opinion which finally springs out
of that experience. Legislation is a business of interpretation, not of
origination; and it is now plain what the opinion is to which we must
give effect in this matter. It is not recent or hasty opinion. It
springs out of the experience of a whole generation. It has clarified
itself by long contest, and those who for a long time battled with it
and sought to change it are now frankly and honorably yielding to it and
seeking to conform their actions to it.
The great business men who organized and financed monopoly and those who
administered it in actual everyday transactions have year after year,
until now, either denied its existence or justified it as necessary for
the effective maintenance and development of the vast business processes
of the country in the modern circumstances of trade and manufacture and
finance; but all the while opinion has made head against them. The
average business man is convinced that the ways of liberty are also the
ways of peace and the ways of success as well; and at last the masters
of business on the great scale have begun to yield their preference and
purpose, perhaps their judgment also, in honorable surrender.
What we are purposing to do, therefore, is, happily, not to hamper or
interfere with business as enlightened business men prefer to do it, or
in any sense to put it under the ban. The antagonism between business
and government is over. We are now about to give expression to the best
business judgment of America, to what we know to be the business
conscience and honor of the land. The Government and business men are
ready to meet each other half-way in a common effort to square business
methods with both public opinion and the law. The best informed men of
the business world condemn the methods and processes and consequences of
monopoly as we condemn them; and the instinctive judgment of the vast
majority of business men everywhere goes with them. We shall now be
their spokesmen. That is the strength of our position and the sure
prophecy of what will ensue when our reasonable work is done.
When serious contest ends, when men unite in opinion and purpose, those
who are to change their ways of business joining with those who ask for
the change, it is possible to effect it in the way in which prudent and
thoughtful and patriotic men would wish to see it brought about with as
few, as slight, as easy and simple business readjustments as possible in
the circumstances, nothing essential disturbed, nothing torn up by the
roots, no parts rent asunder which can be left in wholesome combination.
Fortunately, no measures of sweeping or novel change are necessary. It
will be understood that our object is _not_ to unsettle business or
anywhere seriously to break its established courses athwart. On the
contrary, we desire the laws we are now about to pass to be the bulwarks
and safeguards of industry against the forces that have disturbed it.
What we have to do can be done in a new spirit, in thoughtful
moderation, without revolution of any untoward kind.
We are all agreed that "private monopoly is indefensible and
intolerable," and our program is founded upon that conviction. It will
be a comprehensive but not a radical or unacceptable program and these
are its items, the changes which opinion deliberately sanctions and for
which business waits:
It waits with acquiescence, in the first place, for laws which will
effectually prohibit and prevent such interlockings of the _personnel_
of the directorates of great corporations--banks and railroads,
industrial, commercial, and public service bodies--as in effect result
in making those who borrow and those who lend practically one and the
same, those who sell and those who buy but the same persons trading with
one another under different names and in different combinations, and
those who affect to compete in fact partners and masters of some whole
field of business. Sufficient time should be allowed, of course, in
which to effect these changes of organization without inconvenience or
confusion.
Such a prohibition will work much more than a mere negative good by
correcting the serious evils which have arisen because, for example, the
men who have been the directing spirits of the great investment banks
have usurped the place which belongs to independent industrial
management working in its own behoof. It will bring new men, new
energies, a new spirit of initiative, new blood, into the management of
our great business enterprises. It will open the field of industrial
development and origination to scores of men who have been obliged to
serve when their abilities entitled them to direct. It will immensely
hearten the young men coming on and will greatly enrich the business
activities of the whole country.
In the second place, business men as well as those who direct public
affairs now recognize, and recognize with painful clearness, the great
harm and injustice which has been done to many, if not all, of the great
railroad systems of the country by the way in which they have been
financed and their own distinctive interests subordinated to the
interests of the men who financed them and of other business enterprises
which those men wished to promote. The country is ready, therefore, to
accept, and accept with relief as well as approval, a law which will
confer upon the Interstate Commerce Commission the power to superintend
and regulate the financial operations by which the railroads are
henceforth to be supplied with the money they need for their proper
development to meet the rapidly growing requirements of the country for
increased and improved facilities of transportation. We cannot postpone
action in this matter without leaving the railroads exposed to many
serious handicaps and hazards; and the prosperity of the railroads and
the prosperity of the country are inseparably connected. Upon this
question those who are chiefly responsible for the actual management and
operation of the railroads have spoken very plainly and very earnestly,
with a purpose we ought to be quick to accept. It will be one step, and
a very important one, toward the necessary separation of the business of
production from the business of transportation.
The business of the country awaits also, has long awaited and has
suffered because it could not obtain, further and more explicit
legislative definition of the policy and meaning of the existing
antitrust law. Nothing hampers business like uncertainty. Nothing daunts
or discourages it like the necessity to take chances, to run the risk of
falling under the condemnation of the law before it can make sure just
what the law is. Surely we are sufficiently familiar with the actual
processes and methods of monopoly and of the many hurtful restraints of
trade to make definition possible, at any rate up to the limits of what
experience has disclosed. These practices, being now abundantly
disclosed, can be explicitly and item by item forbidden by statute in
such terms as will practically eliminate uncertainty, the law itself and
the penalty being made equally plain.
And the business men of the country desire something more than that the
menace of legal process in these matters be made explicit and
intelligible. They desire the advice, the definite guidance and
information which can be supplied by an administrative body, an
interstate trade commission.
The opinion of the country would instantly approve of such a commission.
It would not wish to see it empowered to make terms with monopoly or in
any sort to assume control of business, as if the Government made itself
responsible. It demands such a commission only as an indispensable
instrument of information and publicity, as a clearing house for the
facts by which both the public mind and the managers of great business
undertakings should be guided, and as an instrumentality for doing
justice to business where the processes of the courts or the natural
forces of correction outside the courts are inadequate to adjust the
remedy to the wrong in a way that will meet all the equities and
circumstances of the case.
Producing industries, for example, which have passed the point up to
which combination may be consistent with the public interest and the
freedom of trade, cannot always be dissected into their component units
as readily as railroad companies or similar organizations can be. Their
dissolution by ordinary legal process may oftentimes involve financial
consequences likely to overwhelm the security market and bring upon it
breakdown and confusion. There ought to be an administrative commission
capable of directing and shaping such corrective processes, not only in
aid of the courts but also by independent suggestion, if necessary.
Inasmuch as our object and the spirit of our action in these matters is
to meet business half-way in its processes of self-correction and
disturb its legitimate course as little as possible, we ought to see to
it, and the judgment of practical and sagacious men of affairs
everywhere would applaud us if we did see to it, that penalties and
punishments should fall, not upon business itself, to its confusion and
interruption, but upon the individuals who use the instrumentalities of
business to do things which public policy and sound business practice
condemn. Every act of business is done at the command or upon the
initiative of some ascertainable person or group of persons. These
should be held individually responsible and the punishment should fall
upon them, not upon the business organization of which they make illegal
use. It should be one of the main objects of our legislation to divest
such persons of their corporate cloak and deal with them as with those
who do not represent their corporations, but merely by deliberate
intention break the law. Business men the country through would, I am
sure, applaud us if we were to take effectual steps to see that the
officers and directors of great business bodies were prevented from
bringing them and the business of the country into disrepute and danger.
Other questions remain which will need very thoughtful and practical
treatment. Enterprises, in these modern days of great individual
fortunes, are oftentimes interlocked, not by being under the control of
the same directors, but by the fact that the greater part of their
corporate stock is owned by a single person or group of persons who are
in some way ultimately related in interest. We are agreed, I take it,
that holding _companies_ should be prohibited, but what of the
controlling private ownership of individuals or actually cooeperative
groups of individuals? Shall the private owners of capital stock be
suffered to be themselves in effect holding companies? We do not wish, I
suppose, to forbid the purchase of stocks by any person who pleases to
buy them in such quantities as he can afford, or in any way arbitrarily
to limit the sale of stocks to bona fide purchasers. Shall we require
the owners of stock, when their voting power in several companies which
ought to be independent of one another would constitute actual control,
to make election in which of them they will exercise their right to
vote? This question I venture for your consideration.
There is another matter in which imperative considerations of justice
and fair play suggest thoughtful remedial action. Not only do many of
the combinations effected or sought to be effected in the industrial
world work an injustice upon the public in general; they also directly
and seriously injure the individuals who are put out of business in one
unfair way or another by the many dislodging and exterminating forces of
combination. I hope that we shall agree in giving private individuals
who claim to have been injured by these processes the right to found
their suits for redress upon the facts and judgments proved and entered
in suits by the Government where the Government has upon its own
initiative sued the combinations complained of and won its suit, and
that the statute of limitations shall be suffered to run against such
litigants only from the date of the conclusion of the Government's
action. It is not fair that the private litigant should be obliged to
set up and establish again the facts which the Government has proved. He
cannot afford, he has not the power, to make use of such processes of
inquiry as the Government has command of. Thus shall individual justice
be done while the processes of business are rectified and squared with
the general conscience.
I have laid the case before you, no doubt as it lies in your own mind,
as it lies in the thought of the country. What must every candid man say
of the suggestions I have laid before you, of the plain obligations of
which I have reminded you? That these are new things for which the
country is not prepared? No; but that they are old things, now familiar,
and must of course be undertaken if we are to square our laws with the
thought and desire of the country. Until these things are done,
conscientious business men the country over will be unsatisfied. They
are in these things our mentors and colleagues. We are now about to
write the additional articles of our constitution of peace, the peace
that is honor and freedom and prosperity.