CHAPTER XXXIII

THE EXTENSION OF GOVERNMENT CONTROL

THE anti-trust legislation of 1903 was accepted as a recognition by the Government of the problems before it, and as an earnest of new laws to come. The Expedition Immigra

Act made it easier for the Government to en- tion problems force existing laws when prosecution was deemed necessary, and the Bureau of Corporations soon provided data for preliminary opinions as to both legislation and prosecution. The Bureau of Labor made a continuous study of the relations of labor to industry. A Bureau of Immigration was brought into the Department of Commerce and Labor, and a new general immigration law was passed in 1907. The close relationship between immigration and labor, recognized in the work of these bureaus, was affected by the changing nature of the immigrant. The "bird-of-passage" was increasing in number, and the proportion from the races of southern Europe was steadily growing. The wholesome migration from northern Europe that had brought the Irish, the Germans, and the Scandinavians to the United States had stopped. Between 1900 and 1914 the annual totals of immigration ranged from 448,572 to 1,285,349, of which northern Europe contributed about thirty-five per cent. The southern immigrant became Americanized less easily than his North Europe predecessors. He remained isolated in racial groups as unskilled labor for a longer period. He showed less tendency to make a career for himself and his family out of the American opportunity, and showed a constant disposition to live a subnormal economic life, accumulate his surplus earnings, and return with them to his original home.

The interest of Roosevelt in the drafting and passage of necessary legislation was continually expressed. The elec

tion of 1904 added to his prestige, and weakened the powers of the opposition. Speaking at the Union League Club in Philadelphia, in 1905, he described the task as one for the preservation of equal opportunity for rich and poor: “There must be no hurry, but there must also be no halt." He had already succeeded, in connection with the Northern Securities prosecution, in proving that the Sherman Law possessed some teeth, and was less moribund than had been believed.

The inauguration of the Northern Securities prosecution in 1902 was pushed steadily by Knox, and under the Ex

Northern
Securities

case

pedition Act was transferred to a special trial court, whose decision in favor of the Government was unanimously concurred in by the Supreme Court in March, 1904. The guilty corporation was ordered to disband and disgorge. Among the claims of the President in the campaign of this year was that of having proved himself a successful "trust-buster." The business interests involved looked at it from a different angle. It was too bad, thought James J. Hill, “to have to fight for our lives against the political adventurers who have never done anything but pose and draw a salary." Within both parties, but chiefly within the Republican, there developed a group of irreconcilable conservatives, many of whom had hoped for Hanna in 1904, who continued increasingly to oppose Roosevelt and all his works.

The Northern Securities case proved that successful prosecutions were possible, but not that the problems of concentration could be solved in this manner. The offense of the company lay in the merging in a single ownership of the control of stock of three great rival railway systems. When the company disbanded by order of the Supreme Court, this stock was distributed among the owners of the Northern Securities stock, each of them receiving shares of the Great Northern, the Northern Pacific, and the Chicago, Burlington & Quincy in proportion to the number of shares he owned in the Northern Securities Company. As a consequence of this the actual ownership of the three rail

roads did not change. The same group of individuals who had controlled them through the Northern Securities Company continued to control them as private individuals. Experience soon showed that by "gentlemen's agreement" it was as easy for these owners to manage their property in harmony as it had been through the vehicle of a holding corporation. The guilty trust was broken up by law, but the fact of consolidation remained as large as ever.

In the discussions of trust and railroad control that ran parallel to the Northern Securities prosecution, from 1902 to 1906, the question emerges as to whether the Economics solution of the trust problem lay in the Sherman of the trust Act method of prohibition or in some other problem method involving the elimination of unfair practices, while recognizing the consolidations themselves as reasonable. The experience of twenty years could point to no sure case in which the anti-trust laws had succeeded in breaking up consolidation and restoring free competition among small units. Practical economists began to question whether the advantages of combination could be repealed by statute. The continued reliance of Government on prosecution, however, was made necessary by an irritable public opinion, excited by the facts of the muckrakers, led on in many cases by irresponsible reformers, and anxious to see somebody punished for what were regarded as the sins of society.

The railway laws of 1903 were preliminary to a general revision of the Interstate Commerce Act of 1887. Like the Sherman Act, the Interstate Commerce Act aimed to maintain free competition among the railroads. For many years the Interstate Commerce Commission continued to add new facts to the American knowledge of the railroad problem, and in these same years, unimpeded by the law, the great railway systems of the eighties had matured, and the still greater systems of 1901 and 1902 had been launched. The law was to be revised and Congress busied itself with the content of the revision.

The President's messages of 1904 and 1905 contained repeated demands for the enlargement of the Interstate

Commerce Commission. The general popularity of these demands is proved by the multitude of railroad laws brought in by Congressmen anxious to please the people of their districts. Most of the bills drafted were conceived in ignorance and bad temper, as the original Granger laws had been, and languished permanently in the committees to which they were referred. Congress was slow in learning the lesson that technical economic problems could be solved only on the basis of technical economic knowledge. In the session of 1904 and 1905 one of the railroad bills received the almost unanimous support of the House of Representatives. This Esch-Townsend Act was passed by a vote of 326 to 17, and gave to the Interstate Commerce Commission the power to fix the rates of transportation. It was received in the Senate in February, 1905, and there met with a delay that exasperated the angry opponents of the trusts, who relieved their feelings by attacking the "treason" and the "menace" of the United States Senate.

The conservatism of the Senate was built into it by the Constitution for the purpose of creating an independent agency willing and able to withstand gusts of public opinion. Whenever the Senate has fulfilled the original intention, it has met with obloquy. It was here charged with being in the employ of the trusts. The process that had sent successful men of affairs to the Senate in the nineties, and brought it under the domination of a group like Aldrich of Rhode Island, Platt of New York, Quay and Penrose of Pennsylvania, Hanna of Ohio, and Spooner of Wisconsin, lent itself readily to the attack that was now pressed. The eager advocates of immediate railroad legislation denounced the conservatism of these Senators as service to big business and to the machine. One of the new Senators, elected in January, 1905, and seated in 1906, assumed the open leadership against this group. This was Robert M. La Follette, who, fresh from a successful program of legislation for corporation control in Wisconsin, began as Senator to attack the corporations in season and out, to propound constructive theories for their control, and to

join with the Democrats in demanding roll-calls on votes whenever possible. In the long vacations, as he traveled on Chautauqua circuits talking to the common people on public affairs, he read these roll-calls with telling effect, strengthening as he did it the popular idea of the existence of a machine, of the power of vested interest, and of infidelity among the people's representatives.

Uninfluenced by the pressure from outside, the Senate directed the Committee on Interstate Commerce to sit during the recess of 1905 and accumulate data upon the problems that needed more adequate control. In the following winter this report was available in five great volumes, the President had renewed his advocacy of legislation, a new flood of private bills indicated the desire of Congressmen to clear their records before their constituents, and some of the bolder legislators claimed that their panaceas had the tacit support of the White House. It was dangerous for Congressmen to go too far in this direction of claiming approval in advance. The political method of the President was swift and effective. Again and The Ananias Club again he defended himself by denying the correctness of statements of his associates. His denunciation of Judge Parker in 1904 was a typical instance. E. H. Harriman was later brought within the group, and the cartoonists derived much pleasure from their literary creation, the "Ananias Club," into which no man was admitted until the President had openly called him a liar. But the desire of Congressmen to appear to be associated with the President in his attacks upon big business kept many of them walking in the danger zone.

The Hepburn Rail

road Law

In the spring of 1906 the Hepburn Bill took shape as the railroad measure that was to be passed. During its last stages, a report from the Bureau of Corporations on the traffic in petroleum brought convincing evidence as to the need for more power in Government, whether the ultimate aim was to be to destroy the trust or to control it. A concluding debate brought up the question of the relation of railway control