• Location: Winnipeg
• Mood: geeky
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Presidents and the Law: Theodore Roosevelt - Trust Buster

If you're watching the PBS documentary series by Rick Burns entitled The Roosevelts which is airing this week, you may have heard about Theodore Roosevelt and his reputation as a "Trust Buster". Trusts were another name for what we might today call monopolies. Trusts were very large corporations which controlled an inordinately large share of the market in a given field. In his first years as president, on December 3, 1901, Theodore Roosevelt delivered a 20,000-word speech to the House of Representatives asking Congress to curb the power of trusts "within reasonable limits." It was part of his plan for what he called the "Square Deal" between business and labor.



Roosevelt believed in a movement known as progressivism and in the first decade of the 20th century, he was its most articulate spokesman. Progressivism to him meant using expertise and scientific methods to identify the nation's problems, and finding ways to eliminate waste and inefficiency and to promote modernization. Roosevelt considered himself a man of science. His brand of Progressivism also encompassed a burning hatred of corruption and of political machines, the corrupt segment of labor unions and especially the new large corporations (known as "trusts"). Trusts were a growing concern for average Americans at the time, with public opinion fearing that large corporations could impose monopolistic prices to cheat the consumer and squash small independent companies. By 1904, 318 trusts controlled about 40% of the nation's manufacturing. Powerful trusts also existed in other sectors such as railroads, local transit, and banking.

Roosevelt worked to increase the regulatory power of the federal government as a means of combatting trusts. In 1890 the Sherman Antitrust Act had been past to combat monopolies. Roosevelt brought in additional regulatory legislation. Regulation of railroads came about through the Elkins Act in 1903 and the Hepburn Act of 1906. The Hepburn Act set maximum rates for shipping by rail and gave the government the right to inspect the financial records of railroads. Roosevelt also had his Attorney General bring forty-four lawsuits against businesses that were claimed to be monopolies, most notably J.P. Morgan's Northern Securities Company, a huge railroad combination, and J. D. Rockefeller's Standard Oil Company. Both suits were successful.

John D. Rockefeller had used economic threats against competitors and secret rebate deals with railroads to build a monopoly in the oil business. In the case of Standard Oil Co. of New Jersey vs. United States, the Supreme Court held that Standard Oil had violated the Sherman Act. It broke the monopoly into three dozen separate companies that competed with one another, including Standard Oil of New Jersey (later known as Exxon and now ExxonMobil), Standard Oil of Indiana (Amoco), Standard Oil Company of New York (Mobil, which later merged with Exxon to form ExxonMobil), Standard Oil Company of California (Chevron), and others. The court said that to be harmful, a trust had to somehow damage the economic environment of its competitors.



Apparently in 1901 presidents didn't require large corporate donations to run their campaigns. Either that or Theodore Roosevelt didn't care. Roosevelt was influenced by a group of crusading journalists known as the "Muckrakers" that included Ida Tarbell, Jacob Riis, Lincoln Steffens, Ray Stennard Baker, and others who worked at McClure's Magazine for S.S. McClure. The story of their relationship with Roosevelt is told in Doris Kearns Goodwin's wonderful 2013 book The Bully Pulpit, reviewed here.