Rosenfeld Susan. Encyclopedia of American Historical Documents

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whenever they go in for reform, they remember the two

sides, and that they always exact justice from one side as

much as from the other. I have small use for the public ser-

vant who can always see and denounce the corruption of

the capitalist, but who cannot persuade himself, especially

before election, to say a word about lawless mob violence.

And I have equally small use for the man, be he a judge

on the bench, or editor of a great paper, or wealthy and

influential private citizen, who can see clearly enough and

denounce the lawlessness of mob violence, but whose

eyes are closed so that he is blind when the question is

one of corruption in business on a gigantic scale. Also

remember what I said about excess in reformer and reac-

tionary alike. If the reactionary man, who thinks of noth-

ing but the rights of property, could have his way, he

would bring about a revolution; and one of my chief fears

in connection with progress comes because I do not want

to see our people, for lack of proper leadership, com-

pelled to follow men whose intentions are excellent, but

whose eyes are a little too wild to make it really safe to

trust them. Here in Kansas there is one paper which

habitually denounces me as the tool of Wall Street, and at

the same time frantically repudiates the statement that I

am a Socialist on the ground that that is an unwarranted

slander of the Socialists.

National efficiency has many factors. It is a necessary

result of the principle of conservation widely applied. In

the end it will determine our failure or success as a nation.

National efficiency has to do, not only with natural

resources and with men, but it is equally concerned with

institutions. The state must be made efficient for the work

which concerns only the people of the state; and the nation

for that which concerns all the people. There must remain

no neutral ground to serve as a refuge for lawbreakers, and

especially for lawbreakers of great wealth, who can hire the

vulpine legal cunning which will teach them how to avoid

both jurisdictions. It is a misfortune when the national leg-

islature fails to do its duty in providing a national remedy,

so that the only national activity is the purely negative

activity of the judiciary in forbidding the state to exercise

power in the premises.

I do not ask for overcentralization; but I do ask that

we work in a spirit of broad and far-reaching nationalism

when we work for what concerns our people as a whole.

We are all Americans. Our common interest are as broad

as the continent. I speak to you here in Kansas exactly as I

would speak in New York or Georgia, for the most vital

problems are those which affect us all alike. The national

government belongs to the whole American people,

and where the whole American people are interested,

that interest can be guarded effectively only by the

national government. The betterment which we seek must

be accomplished, I believe, mainly through the national

government.

The American people are right in demanding that

New Nationalism, without which we cannot hope to deal

with new problems. The New Nationalism puts the

national need before sectional or personal advantage. It is

impatient of the utter confusion that results from local leg-

islatures attempting to treat national issues as local issues.

It is still more impatient of the impotence which springs

from overdivision of governmental powers, the impotence

which makes it possible for local selfishness or for legal

cunning, hired by wealthy special interests, to bring

national activities to a deadlock. This New Nationalism

regards the executive power as the steward of the public

welfare. It demands of the judiciary that it shall be inter-

ested primarily in human welfare rather than in property,

just as it demands that the representative body shall rep-

resent all the people rather than any one class or section of

the people.

I believe in shaping the ends of government to protect

property as well as human welfare. Normally, and in the

long run, the ends are the same; but whenever the alter-

native must be faced, I am for men and not for property, as

you were in the Civil War. I am far from underestimating

the importance of dividends; but I rank dividends below

human character. Again, I do not have any sympathy with

the reformer who says he does not care for dividends. Of

course, economic welfare is necessary, for a man must pull

his own weight and be able to support his family. I know

well that the reformers must not bring upon the people

economic ruin, or the reforms themselves will go down in

the ruin. But we must be ready to face temporary disaster,

whether or not brought on by those who will war against us

to the knife. Those who oppose all reform will do well to

remember that ruin in its worst form is inevitable if our

national life brings us nothing better than swollen fortunes

for the few and the triumph in both politics and business

of a sordid and selfish materialism.

If our political institutions were perfect, they would

absolutely prevent the political domination of money in

any part of our affairs. We need to make our political rep-

resentatives more quickly and sensitively responsive to the

people whose servants they are. More direct action by the

people in their own affairs under proper safeguards is

vitally necessary. The direct primary is a step in this direc-

tion, if it is associated with a corrupt practices act effective

to prevent the advantage of the man willing recklessly and

unscrupulously to spend money over his more honest com-

petitor. It is particularly important that all moneys received

or expended for campaign purposes should be publicly

accounted for, not only after election, but before election

as well. Political action must be made simpler, easier, and

1222 ERA 7: The Emergence of Modern America

freer from confusion for every citizen. I believe that the

prompt removal of unfaithful or incompetent public ser-

vants should be made easy and sure in whatever way expe-

rience shall show to be most expedient in any give class of

cases.

One of the fundamental necessities in a representative

government such as ours is to make certain that the men to

whom the people delegate their power shall serve the peo-

ple by whom they are elected, and not the special interests.

I believe that every national officer, elected or appointed,

should be forbidden to perform and service or receive any

compensation, directly or indirectly, from interstate corpo-

rations; and a similar provision could not fail to be useful

within the states.

The object of government is the welfare of the people.

The material progress and prosperity of a nation are desir-

able chiefly so far as they lead to the moral and material

welfare of all good citizens. Just in proportion as the aver-

age man and woman are honest, capable of sound judg-

ment and high ideals, active in public affairs—but, first of

all, sound in their home life, and the father and mother of

healthy children whom they bring up well—just so far, and

no farther, we may count our civilization a success. We

must have—I believe we have already—a genuine and

permanent moral awakening, without which no wisdom of

legislation or administration really means anything; and, on

the other hand, we must try to secure the social and eco-

nomic legislation without which any improvement due to

purely moral agitation is necessarily evanescent. Let me

again illustrate by a reference to the Grand Army You

could not have won simply as a disorderly and disorganized

mob. You needed generals; you needed careful adminis-

tration of the most advanced type; and a good commis-

sary—the cracker line. You well remember that success

was necessary in many different lines in order to bring

about general success. You had to have the administration

at Washington good, just as you had to have the adminis-

tration in the field; and you had to have the work of the

generals good. You could not have triumphed without that

administration and leadership; but it would all have been

worthless if the average soldier had not had the right stuff

in him. He had to have the right stuff in him, or you could

not get it out of him. In the last analysis, therefore, vitally

necessary though it was to have the right kind of organiza-

tion and the right kind of generalship, it was even more

vitally necessary that the average soldier should have the

fighting edge, the right character. So it is in our civil life.

No matter now honest and decent we are in our private

lives, if we do not have the right kind of law and the right

kind of administration of the law, we cannot go forward as

a nation. That is imperative; but it must be an addition to,

and not a substitution for, the qualities that make us good

citizens. In the last analysis, the most important elements

in any man’s career must be the sum of those qualities

which, in the aggregate, we speak of as character. If he has

not got it, then no law that the wit of man can devise, no

administration of the law by the boldest and strongest

executive, will avail to help him. We must have the right

kind of character—character that makes a man, first of all,

a good man in the home, a good father, a good husband—

that makes a man a good neighbor. You must have that,

and, then, in addition, you must have the kind of law and

the kind of administration of the law which will give to

those qualities in the private citizen the best possible

chance for development. The prime problem of our nation

is to get the right type of good citizenship, and, to get it, we

must have progress, and our public men must be genuinely

progressive.

Source:

Roosevelt Collection, Harvard College.

Standard Oil Company of

New Jersey et al. v. United States, 1911

U.S. Supreme Court decision issued on May 15, 1911, uphold-

ing the dissolution of the Standard Oil Company, a powerful

monopolistic trust, on the grounds that it represented an

“unreasonable” restraint of trade under the Sherman Antitrust

Act. The decision resulted from a lawsuit initiated by the fed-

eral government in 1906, charging Standard Oil and others

with conspiring to restrain trade and commerce in petroleum

and related products. The Supreme Court, in upholding a 1909

U.S. circuit court ruling that the company had to divest itself of

numerous subsidiaries, declared that the Sherman Antitrust Act

should be applied according to the “rule of reason.”

As Justice White points out, the case file was exception-

ally voluminous and the allegations unusually complicated.

However, its prosecution was then, and continues to be, a

landmark event. The excerpts here include Justice White’s use

of history to come to his decision.

________________________

_______________________

Chief Justice White delivered the opinion of the court:

The Standard Oil Company of New Jersey and thirty-

three other corporations, John D. Rockefeller, William

Rockefeller, and five other individual defendants, prose-

cute this appeal to reverse a decree of the court below.

Such decree was entered upon a bill filed by the United

States under authority of Section 4 of the act of July 2,

1890 known as the anti-trust act. . . . The record is inordi-

nately voluminous, consisting of twenty-three volumes of

printed matter, aggregating about 12,000 pages, containing

Progressivism 1223

a vast amount of confusing and conflicting testimony relat-

ing to innumerable, complex, and varied business transac-

tions, extending over a period of nearly forty years. In an

effort to pave the way to reach the subjects which we are

called upon to consider, we propose at the outset, follow-

ing the order of the bill, to give the merest possible outline

of its contents, to summarize the answer, to indicate the

course of the trial, and point out briefly the decision below

rendered.

The bill and exhibits, covering 170 pages of the

printed record, was filed on November 15, 1906. Corpora-

tions known as Standard Oil Company of New Jersey,

Standard Oil Company of California, Standard Oil Com-

pany of Indiana, Standard Oil Company of Iowa, Standard

Oil Company of Kansas, Standard Oil Company of Ken-

tucky, Standard Oil Company of Nebraska, Standard Oil

Company of New York, Standard Oil Company of Ohio,

and sixty-two other corporations and partnerships, as also

seven individuals, were named as defendants. The bill was

divided into thirty numbered sections, and sought relief

upon the theory that the various defendants were engaged

in conspiring “to restrain the trade and commerce in

petroleum, commonly called ‘crude oil,’ in refined oil, and

in the other products of petroleum, among the several

states and territories of the United States and the District

of Columbia and with foreign nations, and to monopolize

the said commerce.” The conspiracy was alleged to have

been formed in or about the year 1870 by three of the indi-

vidual defendants, viz.: John D. Rockefeller, William Rock-

efeller, and Henry M. Flagler. The detailed averments

concerning the alleged conspiracy were arranged with ref-

erence to three periods, the first from 1870 to 1882, the

second from 1882 to 1899, and the third from 1899 to the

time of the filing of the bill.

[Discussions of the bill and jurisdiction are omitted]

We are thus brought face to face with the merits of the

controversy.

Both as to the law and as to the facts, the opposing

contentions pressed in the argument are numerous, and in

all their aspects are so irreconcilable that it is difficult to

reduce them to some fundamental generalization, which,

by being disposed of, would decide them all. For instance,

as to the law. While both sides agree that the determina-

tion of the controversy rests upon the correct construction

and application of the 1st and 2d sections of the anti-trust

act, yet the views as to the meaning of the act are as wide

apart as the poles, since there is no real point of agreement

on any view of the act. And this also is the case as to the

scope and effect of authorities relied upon, even although

in some instances one and the same authority is asserted to

be controlling.

So also is it as to the facts. Thus, on the one hand,

with relentless pertinacity and minuteness of analysis, it is

insisted that the facts establish that the assailed combina-

tion took its birth in a purpose to unlawfully acquire

wealth by oppressing the public and destroying the just

rights of others, and that its entire career exemplifies an

inexorable carrying out of such wrongful intents, since, it

is asserted, the pathway of the combination from the

beginning to the time of the filing of the bill is marked

with constant proofs of wrong inflicted upon the public,

and is strewn with the wrecks resulting from crushing out,

without regard to law, the individual rights of others.

Indeed, so conclusive, it is urged, is the proof on these

subjects, that it is asserted that the existence of the prin-

cipal corporate defendant,–the Standard Oil Company of

New Jersey—with the vast accumulation of property

which it owns or controls, because of its infinite potency

for harm and the dangerous example which its continued

existence affords, is an open and enduring menace to all

freedom of trade, and is a byword and reproach to mod-

ern economic methods. On the other hand, in a powerful

analysis of the facts, it is insisted that they demonstrate

that the origin and development of the vast business

which the defendants control was but the result of lawful

competitive methods, guided by economic genius of the

highest order, sustained by courage, by a keen insight into

commercial situations, resulting in the acquisition of great

wealth, but at the same time serving to stimulate and

increase production, to widely extend the distribution of

the products of petroleum at a cost largely below that

which would have otherwise prevailed, thus proving to be

at one and the same time a benefaction to the general

public as well as of enormous advantage to individuals. It

is not denied that in the enormous volume of proof con-

tained in the record in the period of almost a lifetime, to

which that proof is addressed, there may be found acts of

wrongdoing, but the insistence is that they were rather the

exception than the rule, and in most cases were either the

result of too great individual zeal in the keen rivalries of

business, or of the methods and habits of dealing which,

even if wrong, were commonly practised at the time. And

to discover and state the truth concerning these con-

tentions both arguments call for the analysis and weigh-

ing, as we have said at the outset, of a jungle of conflicting

testimony covering a period of forty years—a duty diffi-

cult to rightly perform, and, even if satisfactorily accom-

plished, almost impossible to state with any reasonable

regard to brevity.

Duly appreciating the situation just stated, it is certain

that only one point of concord between the parties is dis-

cernible, which is, that the controversy in every aspect is

controlled by a correct conception of the meaning of the

1st and 2d sections of the anti-trust act. We shall there-

for–departing from what otherwise would be the natural

order of analysis–make this one point of harmony the ini-

1224 ERA 7: The Emergence of Modern America

tial basis of our examination of the contentions. . . . When

we have done this, we shall then approach the facts. . . .

First. The text of the act and its meaning.

We quote the text of the 1st and 2d sections of the act,

as follows:

“Section 1. Every contract, combination in the form of

trust or otherwise, or conspiracy, in restraint of trade or

commerce among the several states or with foreign

nations, is hereby declared to be illegal. Every person how

shall make any such contract, or engaged in any such com-

bination or conspiracy, shall be deemed guilty of a misde-

meanor, and, on conviction thereof, shall be punished by

fine not exceeding $5,000, or by imprisonment not exceed-

ing one year, or by both said punishments, in the discretion

of the court.

“Sec. 2. Every person who shall monopolize, or

attempt to monopolize, or combine or conspire with any

other person or persons to monopolize, any part of the

trade or commerce among the several states, or with for-

eign nations, shall be deemed guilty of a misdemeanor,

and, on conviction thereof, shall be punished by fine not

exceeding $5,000, or by imprisonment not exceeding one

year, or by both said punishments, in the discretion of the

court.” [26 Stat. at L. 209, chap. 647, U.S. Comp. Stat.

1901, p. 3200.]

The debates show that doubt as to whether there was

a common law of the United States which governed the

subject in the absence of legislation was among the influ-

ences leading to the passage of the act. They conclusively

show, however, that the main cause which led to the legis-

lation was the thought that it was required by the eco-

nomic condition of the times; that is, the vast accumulation

of wealth in the hands of corporations and individuals, the

enormous development of corporate organization, the

facility for combination which such organization afforded,

the fact that the facility was being used, and that combina-

tions known as trusts were being multiplied, and the

widespread impression that their power had been and

would be exerted to oppress individual and injure the pub-

lic generally. Although debates may not be used as a mean

for interpreting a statute, that rule, in the nature of things,

is not violated by resorting to debates as a means of ascer-

taining the environment at the time of the enactment of a

particular law; that is, the history of the period when it was

adopted.

* * *

The evils which led to the public outcry against monopo-

lies [in England] and to the final denial of the power to

make them may be thus summarily stated: (1) The power

which the monopoly gave to the one who enjoyed it, to fix

the price and thereby injure the public; (2) The power

which it engendered of enabling a limitation on produc-

tion; and (3) The danger of deterioration in quality of the

monopolized article which it was deemed was the

inevitable resultant of the monopolistic control over its

production and sale. . . .

* * *

And by operation of the mental process which led to con-

sidering as a monopoly acts which, although they did not

constitute a monopoly, were thought to produce some of its

baneful effects, so also because of the impediment or bur-

den to the due course of trade which they produced, such

acts came to be referred to as in restraint of trade. . . .

Generalizing these considerations, the situation is

this: 1. That by the common law, monopolies were unlaw-

ful because of their restriction upon individual freedom

of contract and their injury to the public. 2. That as to

necessaries of life, the freedom of the individual to deal

was restricted where the nature and character of the deal-

ing was such as to engender the presumption of intent to

bring about at least one of the injuries which it was

deemed would result from monopoly—that is, an undue

enhancement of price. 3. That to protect the freedom of

contract of the individual, not only in his own interest, but

principally in the interest of the common weal, a contract

of an individual by which he put an unreasonable restraint

upon himself as to carrying on his trade or business was

void. And that at common law the evils consequent upon

. . . those things to be treated as coming within monopoly

and sometimes to be called monopoly, and the same con-

siderations caused monopoly, because of its operation and

effect, to be brought within and spoken of generally as

impeding the due course of, or being in restraint of,

trade.

* * *

In this country also the acts from which it was deemed

there resulted a part, if not all, of the injurious conse-

quences ascribed to monopoly, came to be referred to as a

monopoly itself. In other words, here as had been the case

in England, practical common sense caused attention to be

concentrated not upon the theoretically correct name to

be given to the condition or acts which gave rise to a harm-

ful result, but to the result itself and to the remedying of

the evils which it produced. . . .

It is also true that while the principles concerning con-

tracts in restraint of trade, that is, voluntary restraint put

by a person on his right to pursue his calling, hence only

operating subjectively, came generally to be recognized in

accordance with the English rule, it came moreover to pass

that contracts or acts which it was considered had a

monopolistic tendency, especially those which were

thought to unduly diminish competition and hence to

enhance prices–in other words, to monopolize–came also

Progressivism 1225

in a generic sense to be spoken of and treated as they had

been in England, as restricting the due course of trade,

and therefore as being in restraint of trade.

* * *

In view of the common law and the law in this country as

to restraint of trade, which we have reviewed, and the illu-

minating effect which that history must have under the

rule to which we have referred, we think it results:

a. That the context manifests that the statute was

drawn in the light of the existing practical conception of

the law of restraint of trade. . . .

b. That in view of the many new forms of contracts

and combinations which were being evolved from existing

economic conditions, it was deemed essential by an all-

embracing enumeration to make sure that no form of con-

tract or combination by which an undue restraint of

interstate or foreign commerce was brought about could

save such restraint from condemnation. . . . .

c. . . . Thus not specifying, but indubitably contem-

plating and requiring a standard, it follows that it was

intended that the standard of reason which had been

applied at the common law and in this country in dealing

with subjects of the character embraced by the statute was

intended to be the measure used for the purpose of deter-

mining whether, in a given case, a particular act had or

had not brought about the wrong against which the statute

provided.

And a consideration of the text of the 2d section serves

to establish that it was intended to supplement the 1st, and

to make sure that by no possible guise could the public

policy embodied in the 1st section be frustrated or evaded.

. . . By reference to the terms of Section 8 it is certain that

the word “person” clearly implies a corporation as well as

an individual.

* * *

Undoubtedly, the words “to monopolize” and “monopo-

lize,” as used in the section, reach every act bringing about

the prohibited results. . . .

Second. The contentions of the parties as to the mean-

ing of the statute, and the decisions of this court relied

upon concerning those contentions. [Omitted]

Third. The facts and the application of the statute to

them.

Beyond dispute the proofs establish substantially as

alleged in the bill the following facts:

1. The creation of the Standard Oil Company of Ohio.

2. The organization of the Standard Oil Trust of

1882, and also a previous one of 1879, not referred to in

the bill, and the proceedings in the supreme court of

Ohio, culminating in a decree based upon the finding

that the company was unlawfully a party to that trust; the

transfer by the trustees of stocks in certain of the compa-

nies; the contempt proceedings; and, finally, the increase

of the capital of the Standard Oil Company of New Jer-

sey and the acquisition by that company of the shares of

the stock of the other corporations in exchange for its

certificates.

The vast amount of property and the possibilities of

far-reaching control which resulted from the facts last

stated are shown by the statement which we have previ-

ously annexed concerning the parties to the trust agree-

ment of 1882, and the corporations whose stock was held

by the trustees under the trust, and which came therefore

to be held by the New Jersey corporation. But these

statements do not with accuracy convey an appreciation

of the situation as it existed at the time of the entry of the

decree below, since, during the more than ten years

which elapsed between the acquiring by the New Jersey

corporation of the stock and other property which was

formerly held by the trustees under the trust agreement,

the situation, of course, had somewhat changed—a

change which, when analyzed in the light of the proof, we

think establishes that the result of enlarging the capital

stock of the New Jersey company and giving it the vast

power to which we have referred produced its normal

consequences; that is, it gave to the corporation, despite

enormous dividends and despite the dropping out of cer-

tain corporations enumerated in the decree of the court

below, an enlarged and more perfect sway and control

over the trade and commerce in petroleum and its prod-

ucts. . . .

Giving to the facts just stated the weight which it was

deemed they were entitled to, in the light afforded by the

proof of other cognate facts and circumstances, the court

below held that the acts and dealings established by the

proof operated to destroy the “potentiality of competition”

which otherwise would have existed to such an extent as to

cause the transfer of stock which were made to the New

Jersey Corporation and the control which resulted over the

many and various subsidiary corporations to be a combina-

tion or conspiracy in restraint of trade, in violation of the

1st section of the act, but also to be an attempt to monop-

olize and monopolization bringing about a perennial viola-

tion of the 2d section.

We see no cause to doubt the correctness of these

conclusions, considering the subject from every aspect;

that is, both in view of the facts established by the record

and the necessary operation and effect of the law as we

have construed it upon the inferences deducible from the

facts, for the following reasons:

a. Because the unification of power and control over

petroleum and its products which was the inevitable result

1226 ERA 7: The Emergence of Modern America

of the combining in the New Jersey corporation by the

increase of its stock and the transfer to it of the stocks of so

many other corporations, aggregating so vast a capital,

gives rise, in and of itself, in the absence of countervailing

circumstances, to say the least, to the prima facie pre-

sumption of intent and purpose to maintain the dominancy

over the oil industry, not as a result of normal methods of

industrial development, but by new means of combination

which were resorted to in order that greater power might

be added than would otherwise have arisen had normal

methods been followed, the whole with the purpose of

excluding others from the trade, and thus centralizing in

the combination of a perpetual control of the movements

of petroleum and its products in the channels of interstate

commerce.

b. Because the prima facie presumption of intent to

restrain trade, to monopolize and to bring about monop-

olization, resulting from the act of expanding the stock of

the New Jersey corporation and vesting it with such vast

control of the oil industry, is made conclusive by consid-

ering (1) the conduct of the persons or corporations who

were mainly instrumental in bringing about the extension

of power in the New Jersey corporation before the con-

summation of the result and prior to the formation of that

trust agreements of 1879 and 1882; (2) by considering the

proof as to what was done under those agreements and

the acts which immediately preceded the vesting of

power in the New Jersey corporation, as well as by weigh-

ing the modes in which the power vested in that corpora-

tion has been exerted and the results which have arisen

from it.

* * *

Fourth, The remedy to be administered.

* * *

As penalties which are not authorized by law may not be

inflicted by judicial authority, it follows that to meet the sit-

uation with which we are confronted the application of

remedies two-fold in character becomes essential: 1st. To

forbid the doing in the future of acts like those which we

have found to have been done in the past which would be

violative of the statute. 2d. The exertion of such measure

of relief as will effectually dissolve the combination found

to exist in violation of the statute, and thus neutralize the

extension and continually operating force which the pos-

session of the power unlawfully obtained has brought and

will continue to bring about.

In applying remedies for this purpose, however, the

fact must not be overlooked that injury to the public by the

prevention of an undue restraint on, or the monopolization

of, trade or commerce, is the foundation upon which the

prohibitions of the statute rest, and moreover that one of

the fundamental purposes of the statute is to protect, not

to destroy, rights of property.

Let us, then, as a means of accurately determining

what relief we are to afford, first come to consider what

relief was afforded by the court below, in order to fix how

far it is necessary to take from or add to that relief, to the

end that the prohibitions of the statute may have complete

and operative force.

. . . Section 5 of the decree forbade the New Jersey

corporation from in any form or manner exercising any

ownership or exerting any power directly or indirectly in

virtue of its apparent title to the stocks of the subsidiary

corporations, and prohibited those subsidiary corpora-

tions from paying any dividends to the New Jersey corpo-

rations, or doing any act which would recognize further

power in that company, except to the extent that it was

necessary to enable that company to transfer the stock. So

far as the owners of the stock of the subsidiary corpora-

tions and the corporations themselves were concerned

after the stock had been transferred, Section 6 of the

decree enjoined them from in any way conspiring or com-

bining to violate the act, or to monopolize or attempt to

monopolize in virtue of their ownership of the stock trans-

ferred to them, and prohibited all agreements between

the subsidiary corporations or other stockholders in the

future, tending to produce or bring about further viola-

tions of the act.

By Section 7, pending the accomplishment of the

dissolution of the combination by the transfer of stock,

and until it was consummated, the defendants . . . were

enjoined from engaging in or carrying on interstate com-

merce. . . . So far as the decree held that the ownership

of the stock of the New Jersey corporation constituted a

combination in violation of the 1st section and an attempt

to create a monopoly or to monopolize under the 2d

section, and commanded the dissolution of the combi-

nation, the decree was clearly appropriate. And this also

is true of Section 5 of the decree, which restrained

both the New Jersey corporation and the subsidiary cor-

porations from doing anything which would recognize or

give effect to further ownership in the New Jersey corpo-

ration of the stocks which were ordered to be retrans-

ferred.

* * *

Our conclusion is that the decree below was right and

should be affirmed, except as to the minor matters con-

cerning which we have indicated the decree should be

modified. Our order will therefore be one of affirmance,

with directions, however, to modify the decree in accor-

dance with this opinion. The court below to retain juris-

Progressivism 1227

diction to the extent necessary to compel compliance in

every respect with its decree.

And it is so ordered.

Source:

Supreme Court Reporter, Vol. 31, pp. 502–534.

Woodrow Wilson,

First Inaugural Address, 1913

Speech delivered by Woodrow Wilson on March 4, 1913, at

his inauguration as 28th president of the United States, calling

for a series of national reforms. In it Wilson, a Democrat, reaf-

firmed his commitment to the New Freedom program on

which he had campaigned, later elaborated in a book,

The

New Freedom

(1913). In his “New Freedom” speeches he

maintained that new economic conditions in the United

States, notably the growth of large, impersonal corporations

and new relations between labor and capital, required a new

social organization. He criticized corruption and the control of

government by big business and special interests at the

expense of individuals and free enterprise. He proposed new

rules to protect workers, to define the rights and obligations of

employers and employees, to encourage new enterprises, and

to regulate corporations.

In his inaugural address, the new president sought “jus-

tice, not pity” and argued for reforms in a tariff system that

favored private interests, in an obsolete banking and currency

system, in an industrial system that exploited labor and natu-

ral resources, and in an inefficient agricultural system. He

favored the conservation of human and natural resources and

the protection of American health through laws regarding san-

itation, pure food, and conditions of labor.

________________________

_______________________

There has been a change of government. It began two

years ago, when the House of Representatives became

Democratic by a decisive majority. It has now been com-

pleted. The Senate about to assemble will also be Demo-

cratic. The offices of President and Vice-President have

been put into the hands of Democrats. What does the

change mean? That is the question that is uppermost in

our minds to-day. That is the question I am going to try to

answer, in order, if I may, to interpret the occasion.

It means much more than the mere success of a party.

The success of a party means little except when the Nation

is using that party for a large and definite purpose. No one

can mistake the purpose for which the Nation now seeks to

use the Democratic Party. It seeks to use it to interpret a

change in its own plans and point of view. Some old things

with which we had grown familiar, and which had begun to

creep into the very habit of our thought and of our lives,

have altered their aspect as we have latterly looked criti-

cally upon them, with fresh, awakened eyes; have dropped

their disguises and shown themselves alien and sinister.

Some new things, as we look frankly upon them, willing to

comprehend their real character, have come to assume the

aspect of things long believed in and familiar, stuff of our

own convictions. We have been refreshed by a new insight

into our own life.

We see that in many things that life is very great. It is

incomparably great in its material aspects, in its body of

wealth, in the diversity and sweep of its energy, in the

industries which have been conceived and built up by the

genius of individual men and the limitless enterprise of

groups of men. It is great, also, very great, in its moral

force. Nowhere else in the world have noble men and

women exhibited in more striking forms the beauty and

the energy of sympathy and helpfulness and counsel in

their efforts to rectify wrong, alleviate suffering, and set

the weak in the way of strength and hope. We have built

up, moreover, a great system of government, which has

stood through a long age as in many respects a model for

those who seek to set liberty upon foundations that will

endure against fortuitous change, against storm and acci-

dent. Our life contains every great thing, and contains it in

rich abundance.

But the evil has come with the good, and much fine

gold has been corroded. With riches has come inexcusable

waste. We have squandered a great part of what we might

have used, and have not stopped to conserve the exceed-

ing bounty of nature, without which our genius for enter-

prise would have been worthless and impotent , scorning

to be careful, shamefully prodigal as well as admirably effi-

cient. We have been proud of our industrial achievements,

but we have not hitherto stopped thoughtfully enough to

count the human cost, the cost of lives snuffed out, of

energies overtaxed and broken, the fearful physical and

spiritual cost to the men and women and children upon

whom the dead weight and burden of it all has fallen piti-

lessly the year through. The groans and agony of it all had

not yet reached our ears, the solemn, moving undertone of

our life, coming up out of the mines and factories, and out

of every home where the struggle had its intimate and

familiar seat. With the great Government went many deep

secret things which we too long delayed to look into and

scrutinize with candid, fearless eyes. The great Govern-

ment we loved has too often been made use of for private

and selfish purposes, and those who used it had forgotten

the people.

At last a vision has been vouchsafed us of our life as a

whole. We see the bad with the good, the debased and

decadent with the sound and vital. With this vision we

1228 ERA 7: The Emergence of Modern America

approach new affairs. Our duty is to cleanse, to reconsider,

to restore, to correct the evil without impairing the good,

to purify and humanize every process of our common life

without weakening or sentimentalizing it. There has been

something crude and heartless and unfeeling in our haste

to succeed and be great. Our thought has been “Let every

man look out for himself, let every generation look out for

itself,” while we reared giant machinery which made it

impossible that any but those who stood at the levers of

control should have a chance to look out for themselves.

We had not forgotten our morals. We remembered well

enough that we had set up a policy which was meant to

serve the humblest as well as the most powerful, with an

eye single to the standards of justice and fair play, and

remembered it with pride. But we were very heedless and

in a hurry to be great.

We have come now to the sober second thought. The

scales of heedlessness have fallen from our eyes. We have

made up our minds to square every process of our national

life again with the standards we so proudly set up at the

beginning and have always carried at our hearts. Our work

is a work of restoration.

We have itemized with some degree of particularity

the things that ought to be altered and here are some of the

chief items: A tariff which cuts us off from our proper part

in the commerce of the world, violates the just principles of

taxation, and makes the Government a facile instrument in

the hand of private interests; a banking and currency sys-

tem based upon the necessity of the Government to sell its

bonds fifty years ago and perfectly adapted to concentrat-

ing cash and restricting credits; an industrial system which,

take it on all its sides, financial as well as administrative,

holds capital in leading strings, restricts the liberties and

limits the opportunities of labor, and exploits without

renewing or conserving the natural resources of the coun-

try; a body of agricultural activities never yet given the effi-

ciency of great business undertakings or served as it should

be through the instrumentality of science taken directly to

the farm, or afforded the facilities of credit best suited to its

practical needs; watercourses undeveloped, waste places

unreclaimed, forests untended, fast disappearing without

plan or prospect of renewal, unregarded waste heaps at

every mine. We have studied as perhaps no other nation has

the most effective means of production, but we have not

studied cost or economy as we should either as organizers

of industry, as statesmen, or as individuals.

Nor have we studied and perfected the means by

which government may be put at the service of humanity,

in safeguarding the health of the Nation, the health of its

men and its women and its children, as well as their rights

in the struggle for existence. This is no sentimental duty.

The firm basis of government is justice, not pity. These are

matters of justice. There can be no equality or opportunity,

the first essential of justice in the body politic, if men and

women and children be not shielded in their lives, their

very vitality, from the consequences of great industrial and

social processes which they can not alter, control, or singly

cope with. Society must see to it that it does not itself crush

or weaken or damage its own constituent parts. The first

duty of law is to keep sound the society it serves. Sanitary

laws, pure food laws, and laws determining conditions of

labor which individuals are powerless to determine for

themselves are intimate parts of the very business of jus-

tice and legal efficiency.

These are some of the things we ought to do, and not

leave the others undone, the old-fashioned, never-to-be-

neglected, fundamental safeguarding of property and of

individual right. This is the high enterprise of the new day:

To lift everything that concerns our life as a Nation to the

light that shines from the hearthfire of every man’s con-

science and vision of the right. It is inconceivable that we

should do this as partisans; it is inconceivable we should do

it in ignorance of the facts as they are or in blind haste. We

shall restore, not destroy. We shall deal with our economic

system as it is and as it may be modified, not as it might be

if we had a clean sheet of paper to write upon; and step by

step we shall make it what it should be, in the spirit of

those who question their own wisdom and seek counsel

and knowledge, not shallow self-satisfaction or the excite-

ment of excursions whither they can not tell. Justice, and

only justice, shall always be our motto.

And yet it will be no cool process of mere science.

The Nation has been deeply stirred, stirred by a solemn

passion, stirred by the knowledge of wrong, of ideals lost,

of government too often debauched and made an instru-

ment of evil. The feelings with which we face this new age

of right and opportunity sweep across our heartstrings

like some air out of God’s own presence, where justice

and mercy are reconciled and the judge and the brother

are one. We know our task to be no mere task of politics

but a task which shall search us through and through,

whether we be able to understand our time and the need

of our people, whether we be indeed their spokesmen

and interpreters, whether we have the pure heart to com-

prehend and the rectified will to choose our high course

of action.

This is not a day of triumph; it is a day of dedication.

Here muster, not the forces of party, but the forces of

humanity. Men’s hearts wait upon us; men’s lives hang in

the balance; men’s hopes call upon us to say what we will

do. Who shall live up to the great trust? Who dares fail to

try? I summon all honest men, all patriotic, all forward-

looking men, to my side. God helping me, I will not fail

them, if they will but counsel and sustain me!

Progressivism 1229

Source:

Inaugural Addresses of the Presidents of the United States,

1789–1965. Washington, D.C. Government Printing Office,

1965.

Federal Reserve Act, 1913

Also known as the Glass-Owens Act, this legislation drafted by

Representative Carter Glass of Virginia and Senator Robert L.

Owen of Oklahoma and enacted on December 23, 1913,

established the Federal Reserve System. It resulted from a

report on the concentration of control of money and credit in

the United States issued February 28, 1913, by the House of

Representatives Committee on Banking and Currency. The

committee, headed by Arsene P. Pujo, found evidence of a

“money trust,” a “vast and growing concentration of control of

money and credit in the hands of a comparatively few men.”

This concentration was achieved through the consolidation of

banks and trusts, the purchase of competitors’ stocks, inter-

locking directorates, extension of control into diverse indus-

tries, and joint purchase of security issues.

The Federal Reserve Act significantly reformed the

national banking system and its credit procedures, as well as

assuring an elastic currency and more effective supervision.

Twelve regional Federal Reserve banks, under the central Fed-

eral Reserve Board, were established. All national banks were

required to join the system, and state banks were allowed to

do so if they met certain requirements. The Federal Reserve

banks function as bankers’ banks, holding deposits and mak-

ing loans to member banks. The Federal Reserve Board of

Governors, consisting of seven members appointed by the

president, adjusts the discount rate—the interest rate at which

member banks borrow—and thus influences the availability of

credit for individual borrowers.

________________________

_______________________

An Act

To provide for the establishment of Federal reserve banks,

to furnish an elastic currency, to afford means of redis-

counting commercial paper, to establish a more effective

supervision of banking in the United States, and for other

purposes.

Be it enacted by the Senate and House of Represen-

tatives of the United States of America in Congress assem-

bled, That the short title of this Act shall be the “Federal

Reserve Act.”

Wherever the word “bank” is used in this Act, the

word shall be held to include State bank, banking associa-

tion, and trust company, except where national banks or

Federal reserve banks are specifically referred to.

The terms “national bank” and “national banking asso-

ciation” used in this Act shall be held to be synonymous

and interchangeable. The term “member bank” shall be

held to mean any national bank, State bank, or bank or

trust company which has become a member of one of the

reserve banks created by this Act. The term “board” shall

be held to mean Federal Reserve Board; the term “dis-

trict” shall be held to mean Federal reserve district; the

term “reserve bank” shall be held to mean Federal reserve

bank.

Federal Reserve Districts. [omitted]

Federal Reserve Banks

Upon the filing of such certificate with the

Comptroller of the Currency as aforesaid, the said Federal

reserve bank shall become a body corporate and as such,

and in the name designated in such organization certifi-

cate, shall have power—

First. To adopt and use a corporate seal.

Second. To have succession for a period of twenty

years from its organization unless it is sooner dissolved by

an Act of Congress, or unless its franchise becomes for-

feited by some violation of law.

Third. To make contracts.

Fourth. To sue and be sued, complain and defend, in

any court of law or equity.

Fifth. To appoint by its board of directors, such offi-

cers and employees as are not otherwise provided for in

this Act, to define their duties, require bonds of them and

fix the penalty thereof, and to dismiss at pleasure such offi-

cers or employees.

Sixth. To prescribe by its board of directors, by-laws

not inconsistent with law, regulating the manner in which

its general business may be conducted, and the privileges

granted to it by law may be exercised and enjoyed.

Seventh. To exercise by its board of directors, or duly

authorized officers or agents, all powers specifically

granted by the provisions of this Act and such incidental

powers as shall be necessary to carry on the business of

banking within the limitations prescribed by this Act.

Eighth. Upon deposit with the Treasurer of the

United States of any bonds of the United States in the

manner provided by existing law relating to national

banks, to receive from the Comptroller of the Currency

circulating notes in blank, registered and countersigned

as provided by law, equal in amount to the par value

of the bonds so deposited, such notes to be issued

under the same conditions and provisions of law as relate

to the issue of circulating notes of national banks secured

by bonds of the United States bearing the circulating

privilege, except that the issue of such notes shall not

be limited to the capital stock of such Federal reserve

bank.

But no Federal reserve bank shall transact any busi-

ness except such as is incidental and necessarily prelimi-

nary to its organization until it has been authorized by the

1230 ERA 7: The Emergence of Modern America

Comptroller of the Currency to commence business under

the provisions of this Act.

Every Federal reserve bank shall be conducted under

the supervision and control of a board of directors.

The board of directors shall perform the duties usually

appertaining to the office of directors of banking associa-

tions and all such duties as are prescribed by law.

Said board shall administer the affairs of said bank

fairly and impartially and without discrimination in favor of

or against any member bank or banks and shall subject to

the provisions of law and the orders of the Federal Reserve

Board, extend to each member bank such discounts,

advancements, and accommodations as may be safely and

reasonably made with due regard for the claims and

demands of other member banks.

* * *

No Senator or Representative in Congress shall be a mem-

ber of the Federal Reserve Board or an officer or a direc-

tor of a Federal reserve bank.

* * *

Directors of Federal reserve banks shall receive, in addi-

tion to any compensation otherwise provided, a reasonable

allowance for necessary expenses in attending meetings of

their respective boards, which amount shall be paid by the

respective Federal reserve banks. Any compensation that

may be provided by boards of directors of Federal reserve

banks for directors, officers or employees shall be subject

to the approval of the Federal Reserve Board.

* * *

Stock Issues and Division of Capital [Omitted]

* * *

Division of Earnings.

Sec. 7. After all necessary expenses of a Federal

reserve bank have been paid or provided for, the stock-

holders shall be entitled to receive an annual dividend of

six per centum on the paid-in capital stock, which dividend

shall be cumulative. After the aforesaid dividend claims

have been fully met, all the net earnings shall be paid to

the United States as a franchise tax, except that one-half of

such net earnings shall be paid into a surplus fund until it

shall amount to forty per centum of the paid-in capital

stock of such bank.

The net earnings derived by the United States from

Federal reserve banks shall, in the discretion of the Secre-

tary, be used to supplement the gold reserve held against

outstanding United States notes, or shall be applied to the

reduction of the outstanding bonded indebtedness of the

United States under regulations to be prescribed by the

Secretary of the Treasury. Should a Federal reserve bank

be dissolved or go into liquidation, any surplus remaining,

after the payment of all debts, dividend requirements as

hereinbefore provided, and the par value of the stock, shall

be paid to and become the property of the United States

and shall be similarly applied.

Federal reserve banks, including the capital stock and

surplus therein, and the income derived therefrom shall be

exempt from Federal, State, and local taxation, except

taxes upon real estate.

Sec. 8. Section fifty-one hundred and fifty-four,

United States Revised Statutes, is hereby amended to read

as follows:

Any bank incorporated by special law of any State or

of the United States or organized under the general laws of

any State or of the United States and having an unimpaired

capital sufficient to entitle it to become a national banking

association under the provisions of the existing laws may,

by the vote of the shareholders owning not less than fifty-

one per centum of the capital stock of such bank or bank-

ing association, with the approval of the Comptroller of the

Currency be converted into a national banking association,

with any name approved by the Comptroller of the Cur-

rency:

Provided, however, That said conversion shall not be

in contravention of the State law. . . .

State Banks as Members [Omitted]

Federal Reserve Board.

Sec. 10. A Federal Reserve Board is hereby created

which shall consist of seven members, including the Sec-

retary of the Treasury and the Comptroller of the Cur-

rency, who shall be members ex officio, and five members

appointed by the President of the United States, by and

with the advice and consent of the Senate. In selecting the

five appointive members of the Federal Reserve Board,

not more than one of whom shall be selected from any one

Federal reserve district, the President shall have due

regard to a fair representation of the different commercial,

industrial and geographical divisions of the country. The

five members of the Federal Reserve Board appointed by

the President and confirmed as aforesaid shall devote their

entire time to the business of the Federal Reserve Board

and shall each receive an annual salary of $12,000, payable

monthly together with actual necessary traveling expenses,

and the Comptroller of the Currency, as ex officio member

of the Federal Reserve Board, shall, in addition to the

salary now paid him as Comptroller of the Currency,

receive the sum of $7,000 annually for his services as a

member of said board.

The members of said board, the Secretary of the Trea-

sury, the Assistant Secretaries of the Treasury, and the

Comptroller of the Currency shall be ineligible during the

time they are in office and for two years thereafter to hold

any office, position, or employment in any member bank.

Progressivism 1231