The big reactionaries of the business world and their allies and instruments among politicians and newspaper editors took advantage of this division of opinion, and especially of the fact that most of their opponents were on the wrong path; and fought to keep matters absolutely unchanged. These men demanded for themselves an immunity from governmental control which, if granted, would have been as wicked and as foolish as immunity to the barons of the twelfth century. Many of them were evil men. Many others were just as good men as were some of these same barons; but they were as utterly unable as any medieval castle-owner to understand what the public interest really was. There have been aristocracies which have played a great and beneficent part at stages in the growth of mankind; but we had come to the stage where for our people what was needed was a real democracy; and of all forms of tyranny the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of a plutocracy.
When I became President, the question as to the method by which the United States Government was to control the corporations was not yet important. The absolutely vital question was whether the Government had power to control them at all. This question had not yet been decided in favor of the United States Government. It was useless to discuss methods of controlling big business by the National Government until it was definitely settled that the National Government had the power to control it. A decision of the Supreme Court had, with seeming definiteness, settled that the National Government had not the power.
This decision I caused to be annulled by the court that had rendered it; and the present power of the National Government to deal effectively with the trusts is due solely to the success of the Administration in securing this reversal of its former decision by the Supreme Court.
The Constitution was formed very largely because it had become imperative to give to some central authority the power to regulate and control interstate commerce. At that time when corporations were in their infancy and big combinations unknown, there was no difficulty in exercising the power granted. In theory, the right of the Nation to exercise this power continued unquestioned. But changing conditions obscured the matter in the sight of the people as a whole; and the conscious and the unconscious advocates of an unlimited and uncontrollable capitalism gradually secured the whittling away of the National power to exercise this theoretical right of control until it practically vanished. After the Civil War, with the portentous growth of industrial combinations in this country, came a period of reactionary decisions by the courts which, as regards corporations, culminated in what is known as the Knight case.
The Sherman Antitrust Law was enacted in 1890 because the formation of the Tobacco Trust and the Sugar Trust, the only two great trusts then in the country (aside from the Standard Oil Trust, which was a gradual growth), had awakened a popular demand for legislation to destroy monopoly and curb industrial combinations. This demand the Antitrust Law was intended to satisfy. The Administrations of Mr. Harrison and Mr. Cleveland evidently construed this law as prohibiting such combinations in the future, not as condemning those which had been formed prior to its enactment. In 1895, however, the Sugar Trust, whose output originally was about fifty-five percent of all sugar produced in the United States, obtained control of three other companies in Philadelphia by exchanging its stock for theirs, and thus increased its business until it controlled ninety-eight percent of the entire product. Under Cleveland, the Government brought proceedings against the Sugar Trust, invoking the Antitrust Law, to set aside the acquisition of these corporations. The test case was on the absorption of the Knight Company.12 The Supreme Court of the United States, with but one dissenting vote, held adversely to the Government. They took the ground that the power conferred by the Constitution to regulate and control interstate commerce did not extend to the production or manufacture of commodities within a State, and that nothing in the Sherman Antitrust Law prohibited a corporation from acquiring all the stock of other corporations through exchange of its stock for theirs, such exchange not being “commerce” in the opinion of the Court, even though by such acquisition the corporation was enabled to control the entire production of a commodity that was a necessary of life. The effect of this decision was not merely the absolute nullification of the Antitrust Law, so far as industrial corporations were concerned, but was also in effect a declaration that, under the Constitution, the National Government could pass no law really effective for the destruction or control of such combinations.
This decision left the National Government, that is, the people of the Nation, practically helpless to deal with the large combinations of modern business. The courts in other cases asserted the power of the Federal Government to enforce the Antitrust Law so far as transportation rates by railways engaged in interstate commerce were concerned. But so long as the trusts were free to control the production of commodities without interference from the General Government, they were well content to let the transportation of commodities take care of itself—especially as the law against rebates was at that time a dead letter; and the Court by its decision in the Knight case
