The Complete Works. Henry Cabot Lodge
did not establish the right method of exercising that power. We had gained the power. We had not devised the proper method of exercising it.
Monopolies can, although in rather cumbrous fashion, be broken up by law suits. Great business combinations, however, cannot possibly be made useful instead of noxious industrial agencies merely by law suits, and especially by law suits supposed to be carried on for their destruction and not for their control and regulation. I at once began to urge upon Congress the need of laws supplementing the Anti-Trust Law—for this law struck at all big business, good and bad, alike, and as the event proved was very inefficient in checking bad big business, and yet was a constant threat against decent business men. I strongly urged the inauguration of a system of thoroughgoing and drastic Governmental regulation and control over all big business combinations engaged in inter-State industry.
Here I was able to accomplish only a small part of what I desired to accomplish. I was opposed both by the foolish radicals who desired to break up all big business, with the impossible ideal of returning to mid-nineteenth century industrial conditions; and also by the great privileged interests themselves, who used these ordinarily—but sometimes not entirely—well-meaning "stool pigeon progressives" to further their own cause. The worst representatives of big business encouraged the outcry for the total abolition of big business, because they knew that they could not be hurt in this way, and that such an outcry distracted the attention of the public from the really efficient method of controlling and supervising them, in just but masterly fashion, which was advocated by the sane representatives of reform. However, we succeeded in making a good beginning by securing the passage of a law creating the Department of Commerce and Labor, and with it the erection of the Bureau of Corporations. The first head of the Department of Commerce and Labor was Mr. Cortelyou, later Secretary of the Treasury. He was succeeded by Mr. Oscar Straus. The first head of the Bureau of Corporations was Mr. Garfield, who was succeeded by Mr. Herbert Knox Smith. No four better public servants from the standpoint of the people as a whole could have been found.
The Standard Oil Company took the lead in opposing all this legislation. This was natural, for it had been the worst offender in the amassing of enormous fortunes by improper methods of all kinds, at the expense of business rivals and of the public, including the corruption of public servants. If any man thinks this condemnation extreme, I refer him to the language officially used by the Supreme Court of the nation in its decision against the Standard Oil Company. Through their counsel, and by direct telegrams and letters to Senators and Congressmen from various heads of the Standard Oil organization, they did their best to kill the bill providing for the Bureau of Corporations. I got hold of one or two of these telegrams and letters, however, and promptly published them; and, as generally happens in such a case, the men who were all-powerful as long as they could work in secret and behind closed doors became powerless as soon as they were forced into the open. The bill went through without further difficulty.
The true way of dealing with monopoly is to prevent it by administrative action before it grows so powerful that even when courts condemn it they shrink from destroying it. The Supreme Court in the Tobacco and Standard Oil cases, for instance, used very vigorous language in condemning these trusts; but the net result of the decision was of positive advantage to the wrongdoers, and this has tended to bring the whole body of our law into disrepute in quarters where it is of the very highest importance that the law be held in respect and even in reverence. My effort was to secure the creation of a Federal Commission which should neither excuse nor tolerate monopoly, but prevent it when possible and uproot it when discovered; and which should in addition effectively control and regulate all big combinations, and should give honest business certainty as to what the law was and security as long as the law was obeyed. Such a Commission would furnish a steady expert control, a control adapted to the problem; and dissolution is neither control nor regulation, but is purely negative; and negative remedies are of little permanent avail. Such a Commission would have complete power to examine into every big corporation engaged or proposing to engage in business between the States. It would have the power to discriminate sharply between corporations that are doing well and those that are doing ill; and the distinction between those who do well and those who do ill would be defined in terms so clear and unmistakable that no one could misapprehend them. Where a company is found seeking its profits through serving the community by stimulating production, lowering prices, or improving service, while scrupulously respecting the rights of others (including its rivals, its employees, its customers, and the general public), and strictly obeying the law, then no matter how large its capital, or how great the volume of its business it would be encouraged to still more abundant production, or better service, by the fullest protection that the Government could afford it. On the other hand, if a corporation were found seeking profit through injury or oppression of the community, by restricting production through trick or device, by plot or conspiracy against competitors, or by oppression of wage-workers, and then extorting high prices for the commodity it had made artificially scarce, it would be prevented from organizing if its nefarious purpose could be discovered in time, or pursued and suppressed by all the power of Government whenever found in actual operation. Such a commission, with the power I advocate, would put a stop to abuses of big corporations and small corporations alike; it would draw the line on conduct and not on size; it would destroy monopoly, and make the biggest business man in the country conform squarely to the principles laid down by the American people, while at the same time giving fair play to the little man and certainty of knowledge as to what was wrong and what was right both to big man and little man.
Although under the decision of the courts the National Government had power over the railways, I found, when I became President, that this power was either not exercised at all or exercised with utter inefficiency. The law against rebates was a dead letter. All the unscrupulous railway men had been allowed to violate it with impunity; and because of this, as was inevitable, the scrupulous and decent railway men had been forced to violate it themselves, under penalty of being beaten by their less scrupulous rivals. It was not the fault of these decent railway men. It was the fault of the Government.
Thanks to a first-class railway man, Paul Morton of the Santa Fe, son of Mr. Cleveland's Secretary of Agriculture, I was able completely to stop the practice. Mr. Morton volunteered to aid the Government in abolishing rebates. He frankly stated that he, like every one else, had been guilty in the matter; but he insisted that he uttered the sentiments of the decent railway men of the country when he said that he hoped the practice would be stopped, and that if I would really stop it, and not merely make believe to stop it, he would give the testimony which would put into the hands of the Government the power to put a complete check to the practice. Accordingly he testified, and on the information which he gave us we were able to take such action through the Inter-State Commerce Commission and the Department of Justice, supplemented by the necessary additional legislation, that the evil was absolutely eradicated. He thus rendered, of his own accord, at his own personal risk, and from purely disinterested motives, an invaluable service to the people, a service which no other man who was able to render was willing to render. As an immediate sequel, the world-old alliance between Blifil and Black George was immediately revived against Paul Morton. In giving rebates he had done only what every honest railway man in the country had been obliged to do because of the failure of the Government to enforce the prohibition as regards dishonest railway men. But unlike his fellows he had then shown the courage and sense of obligation to the public which made him come forward and without evasion or concealment state what he had done, in order that we might successfully put an end to the practice; and put an end to the practice we did, and we did it because of the courage and patriotism he had shown. The unscrupulous railway men, whose dishonest practices were thereby put a stop to, and the unscrupulous demagogues who were either under the influence of these men or desirous of gaining credit with thoughtless and ignorant people no matter who was hurt, joined in vindictive clamor against Mr. Morton. They actually wished me to prosecute him, although such prosecution would have been a piece of unpardonable ingratitude and treachery on the part of the public toward him—for I was merely acting as the steward of the public in this matter. I need hardly say that I stood by him; and later he served under me as Secretary of the Navy, and a capital Secretary he made too.
We not only secured the stopping of rebates, but in the Hepburn Rate Bill we were able to put through a measure which gave the Inter-State Commerce Commission for the first time