As I mentioned previously, the Progressive Era spans the presidencies of Theodore Roosevelt, William Taft and Woodrow Wilson. Roosevelt is regarded as an activist president. He was from an elite patrician family, and had been governor of New York and had served in the Spanish-American War. He believed government should use its power to help solve the problems in society and resolve conflict. A president should not simply be a caretaker or manager, but a leader. He is regarded as the first modern president. One of the areas in which there was a great deal of conflict was of course business.
2. ANTI-TRUST VERSUS REGULATION
The advocates of anti-trust believed that big was bad. Concentrations of economic power were bad in and of themselves. Their proposed solution was to bust up or break the so-called trusts or monopolies, and promote competition. Some even wanted laws that would limit what percentage of the market a given firm could have.
In contrast, Teddy Roosevelt felt that big was not necessarily bad. He preferred regulation to anti-trust or breaking up monopolies. He said, in essence, let the corporations be big, but hold them accountable to the public. Roosevelt also felt it was wrong to just indiscriminately condemn businesses for practices such as rebates if there was no law against these practices. He felt that Congress needed to specify which practices were legal and which were not. Then if a company violated the stated rules, you could punish them. But if you had not established what the rules were, how could you condemn businesses for breaking them?
In December 1901 Roosevelt asked Congress for legislation outlawing certain abuses by corporations. This legislation would spell out that some things were illegal and should not be done. But the business community opposed any restrictions on their freedom of action, and the Republican Party failed to give the president what he wanted. Roosevelt decided he would teach them all a lesson. He was the president, and they would be made to know it. He decided to use the anti-trust stick against business.
3. THE NORTHERN SECURITIES CASE
In February 1902 Roosevelt ordered his attorney general to bring suit against the unpopular Northern Securities Company. This was an enormous holding company, consisting of a merger between the Hill, Morgan-Belmont, and Harriman railroad empires. In 1904, in a 5-4 decision, the Republican Supreme Court ruled in favor of the Republican president. The Supreme Court ruled that this company violated the Sherman Anti-Trust Act of 1890 and ordered the break up of the holding company. This was the first successful anti-trust suit. Roosevelt had resurrected the Sherman Act from the dead, after the fiasco of the Knight case in 1895.
4. ELKINS ACT OF 1903
Meanwhile public outrage against rebates by the railroads put irresistible pressure on Congress to pass the Elkins Act in 1903. It strengthened the Interstate Commerce Commission (ICC) and further defined what discrimination was between shippers. It also provided for the punishment of shippers and railway officials and agents, as well as the railroad corporations, for giving or receiving rebates. The Elkins Act made it a misdemeanor for railroads to depart from published shipping rates, and gave the federal courts the power to issue injunctions against violators. This had been stimulated by the exposes of muckraker Ida Tarbell, publishing The History of Standard Oil in McClure's Magazine.
5. THE SWIFT CASE OF 1905: THE STREAM OF COMMERCE DOCTRINE
In 1905 the Supreme Court ruled in the case of Swift and Company v. the U.S. This case involved the Swift Meatpacking Company, famous for its bacon and other meat products. Swift and the other companies of the so-called "beef trust" avoided competitive bidding for the purchase of livestock, in effect colluding and fixing the price they gave to producers of livestock. In 1905 the Supreme Court ruled against the meatpacking industry. It enunciated the "stream of commerce doctrine," and abandoned the position of 1895 that manufacture was purely intra-state. The Court NOW said that interstate commerce was like a stream. And both livestock and the products of the meatpackers flowed or moved in the stream of interstate commerce. They ended up in inter-state commerce, and so therefore were part of interstate commerce. Therefore they were subject to the jurisdiction of Congress and the Federal Government over interstate commerce.
This was a crucial precedent. By extension, almost any other product also moved in the stream of interstate commerce. The Court would wobble back and forth on this question, but over the decades this stream of commerce doctrine would be expanded. It was decisively upheld in 1937, and since the 1940s virtually all production and commerce in the United States is regarded as inter-state commerce. Today it would be exceedingly difficult to find anything that is purely intra-state commerce.
In the Northern Securities case of 1904 and the Swift
case of 1905 we can see the Supreme Court begin to tilt in the direction
of strengthening the power of government to regulate interstate commerce.
6. THE ANTI-TRUST STICK
Roosevelt's strategy in all this was to wield the anti-trust weapon as a big stick, as a club, to get the Congress to give him the regulatory legislation he wanted. The Northern Securities case sent a message to Congress. If you don't give me the regulatory legislation I asked for, I will pursue anti-trust prosecutions. You don't want me to bust up the trusts, do you? So you will give me regulatory legislation, won't you? Regulation hurts less than being broken up through anti-trust action. The choice is regulation or anti-trust action. In the end enlightened elements of the business community and their allies in Congress preferred to concede Roosevelt the regulatory legislation he wanted rather than provoke new anti-trust actions. In other words Roosevelt was playing political hardball, and he was using a form of political blackmail and threats. In this he was both shrewd and effective.
7. THE HEPBURN ACT OF 1906
The focus of this political tug of war was the Hepburn Act of 1906. It was designed to strengthen the ICC and correct a weakness exposed by a court case which had occurred in 1897.
7A) THE MAXIMUM FREIGHT RATE CASE OF 1897
In 1897 the Supreme Court had ruled in the Maximum Freight Rate case. The Supreme Court at that time was fighting a die-hard battle to defend laissez-faire. The ICC had set aside the rates charged by some railroads as unfair. And then it ordered that the companies charge a new rate instead, which the ICC said was fair. The railroads challenged this, and said the Interstate Commerce Act of 1887 had given the ICC the power to investigate complaints of rate discrimination and set aside discriminatory rates. But it had NOT given the ICC the power to order a new rate which was fair. So the ICC could disallow rates it found unfair, and throw them out, but could NOT order a new rate in place of the old one. Liberals cried "foul," and asked what was the point of throwing out the old discriminatory rate if not to replace it with a new one that was fair?
7B) THE PROVISIONS OF THE HEPBURN ACT
In 1897 the Supreme Court sided with the railroads. The Hepburn Act was designed to fix this loophole by explicitly giving the ICC the power to set a new rate that it felt was fair once it had thrown out a rate it felt was unfair.
1. The Hepburn Act increased the size of the ICC from 5 to 7 commissioners.
2. It gave the ICC the power to fix maximum railroad rates. (Up to this point, technically, the ICC would ask the courts to issue their orders. Now the ICC itself was given the power. Further, this meant the ICC could now order or set a new rate if it threw out an old rate as unfair or discriminatory).
3.It gave the ICC the power to prescribe uniform methods of accounting.
4. It expanded the jurisdiction of the ICC to include not only freight trains but also express car companies, sleeping car companies, oil pipe lines, ferries, storage facilities such as warehouses, refrigeration facilities, terminal facilities and bridges*.
5. Orders of the ICC were made legally binding, pending any court decision if there were an appeal. (If a company was unhappy with an order, and wanted to challenge it in court, the order would be suspended while the court appeal was made. But the burden of proof that a rate was or was not discriminatory rested with the company.
6. It also sharply reduced free passes by railroads.
(Tindall and Shi, p. 950).
In a single sentence, the significance of the Hepburn Act was that it strengthened the ICC and expanded its power.
8. THE MANN-ELKINS ACT OF 1910
Subsequently, in 1910, during the term of William Taft, Congress passed the Mann-Elkins Act. It expanded the power of the ICC to include telephones, telegraphs, cable and wireless companies. Over the decades the power of the ICC had been expanded to include more and more industries and innovations in technology.
9. CONSERVATION
Roosevelt was also an advocate for conservation. Recall that when the United States purchased the vast Louisiana Territory from France in 1803 and acquired the Southwest from Mexico in 1846 virtually all of the land became the property of the U.S. federal government. The government could then sell this so-called public land, or government owned land. Much of it was used for the Homestead Acts.
A) IRRIGATION
In 1902 Congress passed the National Reclamation Act, or Newlands Act. It set aside most of the proceeds from the sale of public lands in 16 Western and Southern states to finance the construction and maintenance of irrigation projects in arid states.
B) NATIONAL FOREST RESERVES
During Roosevelt's presidency some 148 million acres of government owned timberland was set aside for national forest reserves. (Richard B. Morris, Encyclopedia of American History, p. 269, and Morison, Commager and Leuchtenburg, The Growth of the American Republic, Vol. II, p. 307). This meant that lumber companies could not purchase this land and then harvest or develop it. Harvesting means chopping down the forests. Lumber companies were furious.
C). WILDLIFE REFUGES AND NATIONAL PARKS
In addition, he designated another 24 million acres of timberland as wildlife refuges and national parks. In one form or another, some 172 million acres of timberland could not be harvested or developed. (Tindall and Shi, America, A Narrative History, p. 953).
D). MINERAL LANDS
Further, under Roosevelt more than 80 million acres of mineral lands were withdrawn from public sale,
E). WATER-POWER SITES
and 1.5 million acres of water-power sites were withdrawn. (Richard B. Morris, Encyclopedia of American History, p. 269).
10. CONSUMER PROTECTION
In addition, as I mentioned previously, Roosevelt read The Jungle by Upton Sinclair. Sinclair had written that the storage rooms were dark, and (Tindall and Shi, p. 951) that there were rats in the storage rooms of the meatpacking houses, and the workers put poisoned bread out for them. The rats would die, and when workers got meat from the dark storage room the meat, the dead rats, and dried rat dung would all go into the hopper together. Roosevelt sent two inspectors to Chicago to investigate. They confirmed that "We saw meat shovelled from filthy wooden floors, piled on tables rarely washed, pushed from room to room in rotten box carts, in all of which processes it was...gathering dirt, splinters, floor filth, and the expectorations of tuberculous and other diseased workers."
A) MEAT INSPECTION ACT
Roosevelt reacted at once, and in June 1906 the Meat Inspection Act was passed requiring federal inspection of meat and empowering the Dept. of Agriculture to set and impose standards of sanitation. (LOOPHOLE?) Likewise in 1906 the Ladies Home Journal and Colliers magazine had run a series of exposes on the false claims of patent medicines. One such medication, Lydia Pinkham's Vegetable Compound, was supposed to work wonders for "female complaints." It was 18% alcohol. (Tindall and Shi, p. 951).
B). PURE FOOD AND DRUG ACT
The same day (June 30) that Congress passed the Meat Inspection Act it also passed the Pure Food and Drug Act, which set up the FDA (Food and Drug Administration). It placed restrictions on the makers of prepared foods and patent medicines, and forbade the manufacture or sale or transport of adulterated, misbranded or harmful foods, drugs and liquors.
THE TAFT PRESIDENCY
The Taft presidency was marked by a growing rift within the ranks of the Republican Party. Part of the battle was over tariffs. Northeastern manufacturers wanted to lower the tariffs on foreign raw materials such as cattle, leather, hides, wool, grain and lumber. Midwestern producers of cattle, livestock and grain wanted to keep high tariffs on these goods. There was a conflict of interest between two wings of the Republican Party. In 1911 Taft sided with the Northeastern manufacturers against the Midwestern producers whern he signed the Canadian Reciprocity Treaty. Midwestern producers now had to compete with Canadian cattle and grain. By 1912 the Eastern Old Guard Republicans, who supported Taft, and the Insurgent Midwestern Republicans were irreconcilably split. A plain old-fashioned family fight ensued. Roosevelt was disappointed in Taft, and entered the race for the Republican nomination. The party bosses controlled the convention, and packed it with Taft loyalists. Conservative business interests in the Republican party had been horrified by Roosevelt's regulatory policies and his activism. Following the nomination of Taft by the Republican convention, in August 1912 Roosevelt accepted the invitation of the Progressive Party to run as a third party candidate. Insurgent Republicans flocked to the standard of Roosevelt.
The race was a four-way contest between Taft, Roosevelt, the Domocrat Woodrow Wilson and the Socialist Eugene Debs of Pullman strike fame. The split in the Republican party paved the way for a Democratic victory. The results were:
CANDIDATE % OF VOTE ELECTORAL VOTE POPULAR VOTE
Wilson 42% of vote 435 6,293,000
Roosevelt 27% 88 4,200,000
Taft 23% 8 3,485,000
Debs 6% 0 900,000
(Tindall and Shi, p. 964-965, popular vote rounded off).
Wilson carried the Solid Democratic South, Oklahoma, Arizona, Colorado and New Mexico. However he also won in New Jersey, New York, most of New England, Ohio, Indiana, Illinois and most of the Midwest and the Great Plains. Roosevelt won in PA, Michigan, Minnesota, South Dakota, and Washington state, and he got 11 of the 13 electoral votes of California. The incumbent Taft carried Vermont and Utah.
If the Republicans had been unified behind either Taft or Roosevelt, they would have won the election with 7.6 million votes and 50% of the vote.
It is also the case that the Republicans who defected were from the most liberal and reform-minded wing of the party. This meant that the Republican Party was now left in the hands of the more conservative and pro-business wing.
After Taft lost the election Yale offered him a professorship,
to teach constitutional law, and subsequently, in 1921, President Warren
Harding named him as Chief Justice of the Supreme Court. Taft held that
position until his death in 1930.