In a two-part article, Tarbell argued that “if one wants a neat demonstration, complete to the last detail, that the Standard Oil Company is to-day, as always, ‘a conspiracy in restraint of trade,’ he should go to Kansas”; there, the company continued to perpetuate “exactly what it did” three decades earlier in Pennsylvania—crushing independents, fixing prices, operating pipelines as private fiefdoms, and colluding with railroads. Her revelations produced a growing demand for official action. If her charges proved accurate, the Wall Street Journal commented, “we take it that Commissioner Garfield will be honest enough to report the fact, and if the fact is reported, we believe that the administration is courageous enough to prosecute even the Standard Oil Company.”
Early on, Garfield had decided to take on the daunting task of expanding the scope of his investigation beyond Kansas, to encompass Standard’s methods of operation nationwide. He traveled to “nearly all of the great fields” and talked with hundreds of producers, refiners, and railroadmen. Special agents were dispatched throughout the United States and even to Europe. Garfield’s wife, Helen, was anxious about the investigation. “Do read Ida Tarbell’s McClure article,” she urged her husband. “It is very cleverly written—I feel that the man and those in the ring will lie to you just as she says they have lied all along.” She needn’t have worried; not only had Garfield read the piece, he had borrowed Tarbell’s collection of relevant sources and documentary evidence. “I shall try to find the truth,” he reassured his wife.
Garfield’s report was published in two parts. The first concluded that Standard Oil had continued to receive the same “unjust and illegal” preferences from the railroads outlined in Tarbell’s exhaustive series and that these rebates, bribes, and kickbacks had facilitated development of the trust’s extensive pipeline system. The second outlined the monopolistic position of Standard Oil in the petroleum industry. Roosevelt transmitted the first report to the Congress with a special message: “All the power of the government will be directed toward prosecuting the Rockefeller trust.” Commentators agreed that the report, endorsed by the president, constituted “the most severe arraignment of a corporation” ever issued from such “a high official source.”
“Garfield’s Report Causes Sensation,” blasted the Laredo (Texas) Times. “Makes Almost as Good Reading as Ida Tarbell’s Magazine Articles.” Indeed, public commentary invariably referenced Tarbell’s earlier work. “All that Ida Tarbell told in McClure’s Magazine is being reaffirmed,” one newspaper remarked; another termed the report “a vindication” of her methods, validated now by the official seal. If the commissioner “can prove all he says,” Tarbell herself told a reporter, “he has rendered one of the most important public services in the history of the country.”
The Justice Department prepared two lines of attack corresponding to Garfield’s report: the first alleged illegal rebates under the Elkins Act of 1903; the second charged “conspiracy in restraint of trade” based on violation of the Sherman Anti-Trust Act. “If my report affords the basis for making these prosecutions successful I shall be mightily pleased,” Garfield wrote to Helen. While “conspiracy and monopoly” were difficult to prove, the rebate case promised to be relatively straightforward.
Judge Kenesaw Mountain Landis, a colorful jurist who would later become the first commissioner of baseball, presided over the first case, in which the government charged Standard of Indiana with receiving illegal rebates from the Chicago & Alton Railroad. On the day the ruling was handed down, hundreds of would-be spectators were denied entrance to the overcrowded courtroom. The ruling, which found Standard guilty of accepting rebates on 1,462 carloads of oil, required nearly two hours to read. Landis rendered the judgment with a series of dramatic “sledgehammer blows,” drawing applause on two occasions for his condemnation of Standard’s corrupting influence on its employees and the nation as a whole. Never before, one court reporter noted, had a judicial sentence featured such inflamed rhetoric.
Although the guilty verdict surprised few, the size of the resulting fine stunned the company and the country. For each of the 1,462 carloads of oil that had enjoyed an illegal rebate, Landis levied the highest possible fine, $20,000, generating a spectacular cumulative total of $29,240,000. Commenting on the hefty charge, Mark Twain drolly remarked that the sum evoked the bride’s proverbial astonishment on the morning after her wedding: “I expected it but didn’t suppose it would be so big.”
Ida Tarbell optimistically declared that the decision presaged the “beginning of the end” for the “giant octopus.” For thirty-five years, Rockefeller’s corporation had absorbed small fines as the cost of doing business; this “Big Fine,” she hoped, would mark the moment when Standard “must either conform” to “fair dealing” or face ruin. Despite such predictions, John D. Rockefeller remained sanguine about his company’s prospects. He was on a golf course when word of the judgment reached him. “Judge Landis,” he complacently predicted, “will be dead a long time before this fine is paid.” Rockefeller’s prophecy was confirmed eleven months later when Appeals Court Judge Peter Grosscup overturned the decision on a technicality. “It’s nothing more than we expected,” the Standard attorneys smugly proclaimed. Roosevelt publicly derided Grosscup’s ruling as “a gross miscarriage of justice,” further proof of “too much power in the bench.”
His momentary frustration aside, Roosevelt remained optimistic about the administration’s second and more trenchant line of attack. Six months after the publication of the Garfield Report, the attorney general filed suit in St. Louis, charging Standard Oil of New Jersey and its five dozen subsidiaries with conspiracy to monopolize the oil industry in violation of the Sherman Anti-Trust Act. With this prosecution, the Des Moines Daily News observed, “the government [had] finally attacked the very citadel of the Standard Oil Company.” Again, reports invariably cited Tarbell’s work as both inspiration and template for the government’s case. “The petition of the US government for an injunction dissolving the Standard Oil Company of New Jersey reads like a chapter from Ida Tarbell,” one commentator asserted. “Every essential charge made by Miss Tarbell in her exposé,” another suggested, was “repeated and put into the form of a legal allegation,” substantiating her crusade against bribery and spying, sham independent companies, preferential relationships with the railroads, and interlocking boards of directors. In sum, the editorial continued, “the person who more than any other started the government attack on the biggest trust in the world was Ida Tarbell.”
This time, the federal court found in the government’s favor. Two years later, in a decision that stunned the business world, the Supreme Court affirmed the lower court’s ruling. The High Court condemned Standard Oil, “not because it is a trust, but because it has an infamous record,” and delivered a warning to “every trust that is tempted to oppress and destroy.” A few short weeks later, the Court drove the point home with a similar judgment against the American Tobacco Company. Standard Oil was given six months to dissolve. Once again, Rockefeller was in the middle of a golf game when the news arrived. “Buy Standard Oil,” he curtly responded. Even when the corporate “octopus” was divided into thirty-eight parts, Standard Oil of New Jersey preserved its identity, eventually morphing into Exxon; Standard Oil of New York incorporated as Mobil; and Standard Oil of Indiana evolved into Amoco.
While Roosevelt exulted in each of his anti-trust victories, he continued to regard the judicial system as an ineffective arena for controlling giant corporations. For the Department of Justice simultaneously “to carry on more than a limited number” of major suits was “not feasible,” and protracted delays meant that “even a favorable decree may mean an empty victory.” Regulation, he believed, promised a far better remedy. “The design should be to prevent the abuses incident to the creation of unhealthy and improper combinations,” he argued, “instead of waiting until they are in existence and then attempting to destroy them by civil or criminal proceedings.”
Unli
ke anti-trust proceedings, federal regulation required approval in the House and Senate, where conservative Republicans remained a dominant force. After failing to defeat the Bureau of Corporations, this reactionary bloc was determined to prevent Roosevelt from miring the party and the country in policy it considered tantamount to socialism. “The fundamental idea on which our government was founded,” conservatives argued, “was that the functions of the federal government were strictly limited, and that all regulations which most closely affect the lives of the people should be left in the hands of state and municipal bodies.” Roosevelt’s regulatory ideas would “extend the power of the federal government” to an unlimited degree. “Are we to have a national government as highly centralized as that of France or Germany?” opponents ominously queried, warning, “That is what we certainly shall have if we find no way of checking the tendencies in government of which Theodore Roosevelt is so conspicuous and enterprising an exponent.”
CHAPTER SEVENTEEN
The American People Reach a Verdict
Roosevelt’s looming visage frightens the U.S. Senate in a Feb. 7, 1906, cartoon from Puck, entitled “The Latest Thing in Nightmares.”
INCREASINGLY FRUSTRATED IN THE WINTER of 1905 by the bickering in Washington and the rancor within his own party, Theodore Roosevelt ranted to a friend that “there are several eminent statesmen at the other end of Pennsylvania Avenue whom I would gladly lend to the Russian Government, if they cared to expend them as bodyguards for grand dukes whenever there was a likelihood of dynamite bombs being exploded!” His sardonic suggestion targeted the coterie of conservative Republican senators who opposed his signature plan to regulate the railroads.
The cost to both his party and the country would be immense, he believed, if “the people at large” perceived “that the Republican party had become unduly subservient to the so-called Wall Street men—to the men of mere wealth, the plutocracy.” It would result in “a dreadful calamity,” Roosevelt told a conservative friend, to see the nation “divided into two parties, one containing the bulk of the property owners and conservative people, the other the bulk of the wageworkers and the less prosperous people generally; each party insisting upon demanding much that was wrong, and each party sullen and angered by real and fancied grievances.”
In the struggle to avert this calamitous future, nothing was more essential, Roosevelt believed, than railroad regulation. His first address to Congress following his election victory had indicated his belief in the primacy of the issue. “Above all else,” he declared, “we must strive to keep the highways of commerce open to all on equal terms.” The most critical piece of legislation the country needed was an act to give the Interstate Commerce Commission the power to regulate railroad rates that gave an “unreasonable” advantage to the trusts.
As the battle lines formed that winter, S. S. McClure decided that the magazine’s next series would concentrate on the railroads. His staff had already concluded that many of the country’s gravest problems, from state and municipal corruption to the ascendancy of the trusts, could be traced to the railroads. Whereas earlier modes of transportation (the wagon roads and waterways) had been available to all on an equal basis, a small circle of private owners now controlled the transportation network essential to all commerce. This exclusive circle could effectively determine the fortunes of cities, towns, and companies, the futures of entire industries. Both the Grangers and the Populists had called for governmental regulation of the railroads, but despite the passage of the 1903 Elkins Act, the industry had remained essentially unregulated.
Ida Tarbell’s study of Standard Oil had convinced her that Rockefeller had employed discriminatory freight rates as the primary instrument in his campaign to crush independent competitors. “Until the transportation problem is settled and settled right,” she warned, “the monopolistic trust will be with us, a leech on our pockets, a barrier to our free effort.” Steffens, too, had discovered that in every city and state he had explored, “the story was always the same”: corruption “came from the top”—from the men who owned streetcar lines in the cities and railroads in the states. New Jersey’s dominant railroad had “seized the government,” and the Southern Pacific Railroad had become “the actual sovereign” of California. Like his colleagues, Baker’s own countrywide investigations had persuaded him that “the Railroad problem is pretty nearly the basic problem of our life: and we know little or nothing about it!”
Having completed his labor series, and “eager for more dragons to slay,” Ray Baker was thrilled to be chosen for the assignment. By supplying “the real facts,” the nation’s reporters could shape that essential discussion. The journalist, he passionately believed, is the “true servant of democracy.” This new project on the railroads, he told his father, would be “far more important than anything [he had] ever done.” Baker started by examining everything he could gather on the subject—pamphlets, congressional reports, local investigations, scholarly studies, and court testimonies. He read accounts of La Follette’s titanic fight against the railroads in Wisconsin and sought guidance from experts on the railroad industry.
Upon learning that Baker had begun his investigation, Roosevelt invited him to Washington. Baker promptly replied that he hoped to take up the railroad problem “in some big, important, and impressive way.” On January 28, 1905, Baker joined the president for a “simple and most informal” family lunch, after which the two men engaged in a private conversation. By this time, Baker had gained “a pretty good grip on the railway problem” and shared with the president a detailed outline of his planned series. Central was the argument that railroads were public highways that must be accessible to all on fair and equal terms. They should no longer enjoy peculiar charter rights from the government—including the right of eminent domain and the right to charge tolls.
For his part, Roosevelt was confident he could steer a bill through the House, where the members felt the direct pressure of growing agitation against the railroads. “His chief trouble,” he told Baker, would be the Senate, where members were sent by the state legislatures and many owed their seats to corporate interests. His best chance lay in mobilizing the public so that the Senate could no longer refuse to act. Nevertheless, he urged the reporter to be fair; an analysis couched in demagogic rhetoric would not be trusted. “My job is not to assess blame on anyone,” Baker countered. “I am trying to get at the facts and report them as truthfully as I can.”
“It was altogether the most interesting meeting & talk with him that I ever had,” Baker told his father. “I think he likes to get these things first hand.” The president had asked Baker “to consult” with him often during the course of his research, promising to enable the magazine’s effort to clarify the complex problem for the general public. “Facilities have been given me here as never before,” Baker proudly noted, “the Inter State Commerce people even offering me a desk & stenographer, with full admission to all their published documents & letters. It certainly shows how . . . a greater care for truth & fairness, which I have tried to attain in my articles, gets hold of people.”
Two days after meeting with Baker, Roosevelt began his own campaign for railroad regulation with a major speech before the Union League Club in Philadelphia. “Neither this people nor any other free people,” he declared, “will permanently tolerate the use of the vast power conferred by vast wealth, and especially by wealth in its corporate form, without lodging somewhere in the government the still higher power of seeing that this power, in addition to being used in the interest of the individual or individuals possessing it, is also used for and not against the interests of the people as a whole.” Calling again for a public tribunal with “power over rates,” he argued once more that only the national government could “keep the great highways of commerce open alike to all on reasonable and equitable terms.”
The next day, Roosevelt met with Baker for another luncheon discussion. He admonished the journalist once again to beware of demagogues,
emphasizing that the web of corruption linking politicians and corporations was “due quite as much to the blackmailing demands of legislators as to the offered bribes of businessmen.” That evening, Baker wrote a long passage in his notebook enumerating the obstacles to passing desperately needed railroad regulation. While it was certainly possible that some legislators were paid by corporations to oppose unwanted bills, the congressional failure to address the disease was more complex. In recent years, the country had witnessed “an enormous industrial development,” marked by the growth of “railroads, trusts & inventions.” Although these unprecedented changes required new thinking about the relationship of business and government, Baker reasoned, a “legislative lag” clearly existed. Laws generated fifty years earlier, rooted in laissez-faire philosophy, remained on the books. “Once let an idea really penetrate the mind of a people,” as this ethic of non-interference in private enterprise had done, and it would require a massive educational effort to remove it. If he and his fellow journalists could enable the public to re-envision the role of government, Baker noted, there would be “no further difficulty in regulating the trusts & the railroads.”
Yet encouraging a new way of thinking demanded time and hard work, and Baker was still in the early phase of his research when Congress took up the question of railroad regulation during its short session in the winter of 1905. An administration-backed bill granting the ICC power to regulate railroad rates passed the House, but the Senate deliberately scheduled its hearings after Congress had adjourned on March 3, ending any chance for the legislation to pass. Assessing his defeat, Roosevelt concluded that his influence had been stunted: once he relinquished the chance to run for a third term, the opposition concluded he “need not be regarded as a factor hereafter.” Still, he believed that if the necessity for regulation could be “clearly drawn” in the months ahead, the Senate would eventually bow to public feeling.
The Bully Pulpit: Theodore Roosevelt, William Howard Taft, and the Golden Age of Journalism Page 64
