Roosevelt’s utterances, however—as distinguished from his acts—became steadily bolder during his second term, and furnished the urgent leit-motif for the whole reform movement. He opposed the use of the injunction in labor disputes, he asked for restriction of stock-market gambling, he advocated full publicity for corporate earnings and capitalization, he suggested in 1905 and definitely urged in 1907 the supervision by the federal government of all corporations engaged in interstate commerce; and he constantly lectured the irresponsible rich with furious emphasis. No one can recapture the feeling of those days without hearing in his mind’s ear the loud Rooseveltian phrases echoing throughout the land with all the volume which Roosevelt’s huge personal popularity and the sounding-board of Presidential prestige could give them: “malefactors of great wealth,” “the tyranny of a plutocracy,” “the kind of business which has tended to make the very name ‘high finance’ a term of scandal,” “the speculative folly and flagrant dishonesty of a few men of great wealth,” the need for “moral regeneration of the business world.”
It is difficult, even after the lapse of many years, to view such a man as Theodore Roosevelt objectively. His bounding personality, his physical daring, his enthusiastic appetite for human contacts, his impetuous speech, his extraordinary range of interests, defy neutrality. The man was so enormously alive: not merely carrying the great administrative burdens of the Presidency, but denouncing nature-fakers, proposing simplified spelling, writing deliciously absurd letters to his children, clambering up cliffs in Rock Creek Park, devouring Tacitus and the prose works of Milton and thousands of other assorted books, announcing gleefully to John Burroughs his discovery of a yellow-throated warbler at Oyster Bay, writing voluminous letters to Trevelyan about the tactics of the generals of 1780, and inveighing against race suicide. To attempt a cold-blooded dissection of the policies of such a colossus of energy is like trying to make a precise working blueprint of a locomotive in full career. Yet the analysis of his economic position must be made if we are to understand the man, his influence, and his period.
Roosevelt knew little about economics. On matters like the tariff he accepted and repeated almost without question the traditional Republican arguments. The problems of banking and the currency were beyond him, and he knew it. He never seems to have made a careful study of the mechanics of corporate aggrandizement. The chief motive forces behind his economic policies and proclamations were, first, his wish to maintain the prestige of the government as sovereign even over the princes of finance; second, a natural and growing indignation at the process by which the rich expanded their already great power, corrupted governmental bodies to win privileges and immunities, bore down upon the laboring poor, and endangered the economic stability of the whole country by their speculative exploits; third, the political instinct for the middle of the road which kept him from going over all the way to the radical left,—an instinct buttressed by his conviction that only by staying in the middle of the road could he retain enough power to get anything done; and, finally, his overwhelming ethical bias, which led him to approach almost every problem with the animus of the “preacher militant” (to borrow Owen Wister’s phrase).
When Roosevelt took action against the Northern Securities Company it was largely from the first of these motives: to serve notice that Washington was still lord over Wall Street. When after an indignant sally against the powers of finance he would compromise and dally and fail to translate rhetoric into action, it was partly because he was too furiously busy with a thousand things to follow one of them through to a conclusion, partly because he had never developed a thorough-going economic philosophy, partly because political reforms engaged his interest more than economic reforms, but largely also because he knew that he must not get too far out of step with a conservative (and lobby-infested) Congress, a conservative Republican party, and an almost equally conservative country. It was far easier for a man in such a situation to denounce Wall Street than to find out where lay the springs of its power and decide what to do about them. It was also more in accordance with his preacher’s temperament. Predatory finance was wicked and must therefore be excoriated.
It is easy to criticize the man as a straddler, a big talker who backed away from a fight. Despite all his large talk about honesty and courage, it is true that Roosevelt was a master of the weasel word. It is not an elevating prospect to see him squirming out of an acknowledgment of his previous cordiality to Harriman in order to abuse Harriman in 1907 and maintain an appearance of consistency; or to see him dismissing LaFollette’s policies as “a string of platitudes” and LaFollette himself as one who offered the public “the kind of pleasurable excitement” that would be derived from “the sight of a two-headed calf”—and then, later, adopting many of LaFollette’s policies without adequate acknowledgment.
Nevertheless there was a practical hard sense behind much of Roosevelt’s compromising which some latter-day critics may not have taken into sufficient account. Being a Republican President of the United States, he faced the necessity—as the more consistent LaFollette, for example, did not—of keeping in some sort of line the East as well as the West, the stockholding community as well as union labor. To have become the hard-and-fast enemy of the financial powers would have left him as helpless in dealing with Congress and the country as was Woodrow Wilson in 1920. And if Roosevelt took out most of his reforming impulses in talk, it is only fair to add that many of them could never have been carried through to action in that decade. The temper of the country, even in his second term, was such that measures which called for mild governmental restraints upon business were viewed by business men generally as violently destructive attacks upon American prosperity. Nor should it be forgotten that Roosevelt’s sermonizing did much to relax that temper and open the way to legislation. If he kept in the middle of the road, he at least succeeded to a measurable degree in moving the road.
In many ways Roosevelt typified the whole reform movement: its insistence upon a rebirth of public spirit, its tendency to prescribe for symptoms, its preoccupation with political as distinguished from economic measures (its chief energies were thrown into the initiative and referendum, the direct election of Senators, the direct primary, and so forth). He typified it also in his wary attitude toward any fundamental economic change. For the reform movement was not, considered in the large, a fundamentally radical movement.
Most of the reformers did not wish to make any far-reaching alteration in the capitalist system. They saw that it had so grown and spread that the captain of industry had powers which he had never possessed before; they wished to limit these powers for the protection of his little competitor and his employee and his consumers. They saw that he had become a successful political wirepuller; they wished to take the wires out of his hands and restore them to the rest of the voters. They saw many cruel results of the unregulated power of acquisitive commerce; they wished to forbid by law the repetition of these results. To think of the reformers as wishing to set up a fundamentally new order in America is to see them in a false light. Most of them—LaFollette particularly—looked back with nostalgic longing to the old days of little business and free competition. What they wanted to do was to restore the supposed freedom of those days by shackling the big bullies who had spoiled it.
In a very true sense they were conservatives—old-fashioned individualists trying to preserve individual liberty by calling in the policeman to protect it. In this sense it was the financiers, the promoters, the corporation lawyers, who were the true radicals of the time: it was they—though they would have been the last to admit it—who were taking the initiative in revolutionizing the American economy.
It is a mistake to think of capitalism as a system, in the sense of something fixed: an ancient structure of laws and rules and technics and traditions. It is a living growth, watered by acquisitiveness and constantly putting out new branches as new devices for the accumulation of profits or of power are invented or as old devices ar
e adapted to new uses. The reformers were engaged in pruning it, cutting it back, lopping off ugly and misshapen growths. That Roosevelt often thought of himself as a sort of tree-surgeon whose exploits with the saw (or, to be more accurate, whose strenuous sermons on the need for using the saw) would lengthen the tree’s life, is clear from many of his statements; and there was much reason in this argument. The reformers as a group were tree-surgeons—and while they were hacking away, the tree was continuing to thrust out new shoots.
Conservative business men, however, did not see things this way. What they saw was a group of men with axes and Roosevelt cheering them on, and they feared that a venerable tree was going to be demolished.
Roosevelt was not without friends in Wall Street, but as his term of office drew to a close and his voice became more and more strident they became more and more bewildered and resentful.
“Theodore talks nonsense about Wall Street,” wrote Major Higginson, the Boston banker, “where most of the men are honest—far honester than the politicians, who promise this or t’other for votes. He talks about the corporations as wicked, which means that the directors are wicked. I have known the inside of corporations for a great many years, and I have yet to see a director who has taken advantage of his position as director.” (This was quite sincere and probably quite true: such things were not done where men like Higginson could see them.) The men in Wall Street saw Roosevelt’s proposals for increased federal power over business as blows at the American principle of local self-rule, as measures which would submit the country to the dictates of cheap, bribe-taking politicians. They felt that he was posturing and blustering. They regarded him as dishonest for having accepted contributions from capitalists in 1904 and having denounced them subsequently. Many of them were completely convinced that his championship of the Hepburn Bill and his talk about rich men had brought on the Panic of 1907. They watched and waited uneasily as his term in the White House drew to a close, hoping for the day when his reproving voice would no longer carry Presidential authority.
When at last he left Washington and the vast and jovial bulk of William Howard Taft settled itself into the Presidential chair, most of the men of Wall Street would have echoed the remark popularly attributed to Pierpont Morgan as the Trust-buster sailed for his African hunting grounds: “I hope the first lion he meets does his duty!” Now at last there would be a chance for men to do business again, a chance for prosperity without governmental interference. (Things had been looking up since the dark days of 1907, but there was still uncertainty in the air.)
They were mistaken, however. The reform movement still had far to run.
4
During the next four years the reformers’ counter-offensive made remarkable headway.
To imagine it to have been in any sense a united movement would of course be highly erroneous. As Hacker and Kendrick have well pointed out, in its ranks were “the conservationists, the settlement-house workers, the suffragists, the advocates of direct as opposed to machine government, the budget experts, the municipal reformers, the commission-government supporters, the advocates of workmen’s compensation laws, mothers’ assistance, and liberal factory codes.… And the reformers, very often, expressed not the slightest interest in one another’s programs.” It was “as though a great horde of people had suddenly become inspired by the same objectives and had simultaneously hit upon the idea of taking to the road.” The politics of reform made strange bedfellows even in the supposedly homogeneous groups; in the innermost councils of Roosevelt’s Bull Moose party, for example, sat the very George W. Perkins who had been simultaneously a Morgan partner and an officer in the New York Life Insurance Company. What was taking place was a complex and pervasive change in the intellectual and emotional atmosphere of America: the spread of a contagious desire to purify politics, win justice for the poor, protect the helpless, and subdue wickedness in general by statutes, regulations, and moral conversions.
Organized labor continued to surge ahead, though its prestige suffered a staggering blow in 1911 when two union leaders, the McNamara brothers, confessed that they had so far extended the arts of persuasion as to dynamite the building of the anti-labor Los Angeles Times. The toughly militant I.W.W. invaded the big industrial centers, reaching the height of its power in 1912 when it led the strikers in the textile mills of Lawrence to partial victory over a particularly blind and reactionary group of employers. In that year a socialist rival to Gompers won a third of the votes cast for the presidency of the A. F. of L., and Debs’ vote for the Presidency of the United States was more than double what it had been in 1904 and 1908, running close to 900,000.
The reform movement was also giving a new shape to the contest between the two dominant political parties. This is no place to tell the familiar story of Roosevelt’s triumphant return from Africa (where the lions had failed to do their duty); of his increasing impatience with his old friend and disciple, the all-too-compliant Taft; of his decision to run against Taft for the Republican nomination, his capture of most of the support which would otherwise have gone to LaFollette, his defeat by Taft in the Republican convention of 1912 as a result of the crushing performance of the political steam-roller; of his formation of a third party of miscellaneous reformers, idealists, bandwagon-followers, and cranks; and of the inevitable result: the division of the Republican vote and the election of a Democrat, Governor Woodrow Wilson of New Jersey. Suffice it to remark that Wilson, too, was a reformer, though of another breed from either Roosevelt or LaFollette. The counter-offensive had won its way back to the White House, and with a mandate for action.
By the time of Wilson’s inauguration in 1913, an extraordinary quantity of legislation, particularly state legislation, had already been enacted at the instance of the reforming spirit: political measures to bring about direct primaries, the popular election of United States senators, the initiative, and the referendum; measures for the protection of labor—such as workmen’s compensation laws, laws regulating hours and conditions of work (especially for women and children), industrial safety laws, tenement-house laws, and the first state minimum-wage law; measures for the regulation of public-utility rates by state commissions; and measures for taxation on new principles—such as the income-tax amendment to the Constitution; to say nothing of the legislative progress from state to state of woman’s suffrage—and of prohibition.
5
Still, however, the question of what to do about the extension of corporate power remained unanswered.
On this problem, counsel was confused and baffled.
To begin with, the status and interpretation of the Sherman Anti-Trust Law gave great difficulty. It forbade combinations in restraint of trade—but what was a combination in restraint of trade? The number of business combinations—principally through the medium of holding companies—had multiplied enormously. By 1908, according to LaFollette, their total capitalization had reached the vast sum of 31 billion dollars—nearly nine times what it had been in 1900. Would these hundreds of combinations be allowed to stand, or would they not?
The Supreme Court, which had interpreted the word “restraint” very broadly where labor unions were concerned, also seemed disposed for a time to interpret it broadly where corporations were concerned (a logical disposition, it may be remarked, since after all the law had been originally designed to apply to corporations and not to unions). This tendency caused much quaking in Wall Street, as did the activity of Taft’s Department of Justice in bringing actions against some of the biggest combinations. (The list of the companies against which the Taft Administration acted included such giants of the industrial world as the American Sugar Refining Company, the International Harvester Company, the National Cash Register Company, the General Electric Company, and even the United States Steel Corporation.) When business, after an upsurge in 1909, declined again in 1910, a common explanation was that business leaders feared a general upsetting of the economic apple-cart. In 1911, however, the Supreme Court chang
ed its position: it enunciated its famous “rule of reason.” In the process of consenting to the break-up of the Standard Oil Company of New Jersey (the holding company which had fallen heir to much of the one-time power of the famous Standard Oil Trust), the Court stated that only “unreasonable” restraint of trade would be considered punishable under the Sherman Act.
But what was “unreasonable”? The Court did not adequately define the term. All one could be sure of was that whatever a majority of the nine justices of the Court considered reasonable in any given case would be permitted; whatever they considered unreasonable would be punished. Obviously the “rule of reason” did not dispel the fog which hung about the interpretation of the Sherman Act. It made only two things clear: first, that the Court intended, in effect, to exercise what had hitherto been considered a legislative prerogative, by revising the trust law to suit itself; and second, that the Court was on the whole disposed to look more kindly than heretofore upon the principle of combination, not penalizing it unless it was accompanied by flagrant acts.
Another source of confusion was the fact that although a large number of combinations had already been broken up by the government, they continued in most cases to operate virtually as units. A holding company might be duly dissolved and its stock might be distributed to the original owners, but if the men who managed the component companies had learned to work in concert and had found it profitable to do so, they would keep right on doing so in various hidden ways. What the hope of profitable operation had joined, man apparently could not put asunder.
Lords of Creation Page 16
