On domestic issues
Roosevelt
will follow, you can see the pattern of him following, this sort of middle way
and one of the most important and most well-known
activities that he endeavors to undertake
as President will be to go after
certain trusts. Now
you may ask, you may want to know what's a trust here. Let let me remind you
if you didn't
already know this; that a trust is
a form of combination. Now you can have
corporations or businesses that sort of
integrate a suck up and began to
include by osmosis sort of like a, sort of like an
organism pulling other organisms in to make a bigger organism.
You can see that happening in the economy as these giant corporations
grow and grow and grow by swallowing smaller competitors until
you have this huge massive corporate
entity. One place you can see that for instances in a railroad networks.
Like the Southern Railway that's put together by
no less a figure than JP Morgan. The great financier from New York.
Railways
the history of railroads in this country is just full
of this process of combination and expansion.
But a trust, the idea behind the trust is that you don't necessarily combined all
the companies into one legal entity
rather by means of control of stock
or other legal instrument. One company or one group of individuals gain sufficient
control
over individual corporations or companies that they can have the say
the final deciding say in what these other companies do.
And that's kind of like having
the big corporation except you don't exactly have to deal with the backlash
from having the big corporation. In other words
you can't really cast the pejorative term monopoly at somebody if they can
turn around and say well
here you've got company 'a', here you've got company 'b'. here you've got
company 'c',
and while I control stock in all of them I don't own them.
They're not my company. Sort of an easy out certainly from a legal perspective.
So that's what a trust is. It's a mechanism for controlling the
decision-making of multiple companies, multiple corporations
without actually exercising complete ownership of
those corporations. Now
Theodore Roosevelt is not anti-trust,
but he's a nationalist
and he's gonna ride that sort of middle road, he's going to create his own way.
In other words, he's not gonna just hand himself over to the great powers that be
in American finance, he's not simply gonna be a pawn of
the great corporate interests. But at the same time he's not exactly out to get
the corporate interest because he thinks
big business can be good for America. Rather
Theodore Roosevelt wishes to pursue
and prosecute those corporate interests,
those trusts, which
in his way of thinking work against
the National interest. Now
to do that he's already got a law on the books that
dates back to 1890 known as the Sherman Antitrust Act. It may have been mentioned
in these lectures before,
but what the Sherman Antitrust Act does is to provide
a precedent suggesting that the Federal Government
has an interest in preventing
any unreasonable restraint of trade. In other words,
any actions within the economy that
create an unfair advantage
that would restrict freedom of trade in this nation.
Roosevelt uses that law which, it was passed but there was no real mechanism
for enforcement.
So, Roosevelt then begins to enforce this law, the Sherman Antitrust Act.
Remember he's not going after every possible trust,
he's going after those trust that he begins to think
are not, are in fact, working for an unreasonable restraint of trade,
working against the national interest.
The major corporate entity that Roosevelt goes after
will be the Northern Securities Company.
It's a huge railroad combination
worth well over 400 hundred million dollars and created
by J.P. Morgan, the great New York financier and his friends.
Morgan is the major financier.
Roosevelt, Theodore Roosevelt instructs the Justice Department
to use the Sherman Antitrust Act
to prosecute the railroad, but also he wants to expand this to go after the
meatpacking, oil,
and tobacco trust. Northern securities the big one
for now, but we're going to more broadly in the future.
When Morgan heard, when JP Morgan heard that Roosevelt
was coming after Northern Securities and this dates to about 1902,
Morgan decided to try and settle things the way things had been settled. Remember
that it had been Morgan to whom Grover Cleveland President Cleveland had gone
when the United States Treasury was in such dire straits,
when the US government needed money in particularly gold.
Well Morgan thinks it can all be settled with a simple note.
Sends this note that says to Roosevelt, says
if we have done anything wrong send your man to my man and we can fix it up.
Roosevelt's not interested in fixing it up, he's not interested in collusion.
He's interested in seeing his policies carried through.
Roosevelt triumphs in 1904 when
the United States Supreme Court orders the dissolution
of Northern Securities Company.
Again, Roosevelt's made a decision that this particular corporation, this
corporate entity,
is working in an unreasonable way to restrain trade in the United States and
ultimately thereby
hurting the economy and the national interest.
In 1906, we'll see passage of the so-called Hepburn
Act. An act which provides for stricter controls
over railroad rates.
Extends power to the interstate commerce commission to set those rates.
Allowed railroads to appeal to the Supreme Court,
so it was a bit of a compromise thus the middle way,
but nonetheless establishes the, or authorizes and establishes, the power of
the Federal Government
over these massive corporate entities like the great railroad combinations of
which Northern Securities was one.
In the next section, we'll turn to some of the other features
of the Roosevelt Administration and the argument
that these were in deed progressive measures
part of Roosevelt's middle way.