HOW CAPITAL AND LABOR COMBINE TO SAFEGUARD THE TRUST AND LEGALIZE THE BOYCOTT
BY
BURTON J. HENDRICK
ILLUSTRATED WITH PHOTOGRAPHS
Under the existing laws of the United States, it is a crime to organize a combination of individuals or corporations into a business aggregation in restraint of trade. It is likewise a crime for labor men or labor unions in different States to combine for the prosecution of certain aggressive enterprises popularly described as boycotts. Any person convicted of engaging in either of these prohibited acts may be fined not more than $5,000 for each offense, or imprisoned for one year at hard labor, or both.
According to reliable estimates, there are in the neighborhood of five hundred large trusts or combinations that daily violate this law. There are many thousands of smaller corporations and business firms that indulge in secret practices for which their officers may at any time be lodged in jail. As for the national prohibition of boycotts, labor organizations openly exist for the express purpose of conducting them. The constitution of the most powerful labor organization in this country, the Federation of Labor, specifically provides for engaging in this form of industrial warfare.
The statute that outlaws these combinations of both capital and labor is the famous Sherman Anti-trust Law. It is one of the briefest, most pointed, and most comprehensive measures ever passed by Congress. It contains only about seven hundred words and would fill less than a page of this magazine. In its first three lines, without any modifications or circumlocutions, it declares illegal "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." The next few lines provide the punishment, cited above, for breaking the law. The Sherman Act does not say that "some combinations" are illegal and criminal, but that "every" one is. It does not provide that certain offenders may be punished, but that "every" one "shall be." It leaves absolutely no discretion to prosecuting officers or to the courts. Within its comprehensive folds are gathered, on the one hand, the most commanding captains of industry and the greatest railroad magnates; and, on the other, the most insignificant puddlers in their furnaces and stokers on their trains.
The Sherman Act has thus established a community of interest between labor and capital which has had important practical results. Both capital and labor are openly evading the law. Both have many times been haled into court, convicted of infringing this statute, and enjoined from continuing in their illegal combinations. Both consequently find it an irksome impediment to their present plans and ambitions. In their active opposition to the law the two previously warring elements now meet on common ground.
The platform of the Republican party calls for amendments which, to all practical purposes, will seriously weaken the law, so far as its application to corporate combinations is concerned. The Democratic platform demands such changes as will exempt labor unions from its operation,—which is virtually the same thing as demanding the legalization of the boycott. At the last session of Congress the spectacle was presented of important labor unions and great corporation lawyers working hand in hand to this common end. Though this agitation failed for the time being, it may safely be asserted that the repeal or modification of the Sherman Act will continue to be a fixed article of the policy both of large aggregations of wealth and of large aggregations of labor. This fact makes important a study of its history and of its practical effects upon corporate and labor organizations.
The Sherman Law Not Rushed Through Congress
Hardly any important legislation has been so imperfectly understood or more persistently misrepresented. Although the law was passed only eighteen years ago, a large number of legends have already grown up about it. According to popular belief, the Sherman Anti-trust Act is an imperfect piece of legislation; a measure which was drawn up hastily, without thorough study or knowledge of the economic and social problems which it was intended to solve. The corporations declare that it was never intended to meet industrial conditions as they exist now: labor leaders have repeatedly asserted that the framers of the measure never intended that it should affect organizations of labor.
A study of the congressional debates which preceded the passage of the Sherman Act dissipates these misconceptions. The law was not rushed through Congress. It was seriously proposed as a carefully thought-out attempt to check great and clearly comprehended evils. In essence those evils did not differ from the ones which confront the American people today. In 1890 the trust, or the industrial combination, had almost reached its present state of development. Large aggregations of capital had already secured a monopoly of many of the necessaries of life. The Standard Oil Trust was then, as it is now, the most conspicuous of these combinations, and had already attained an unpopularity almost as great as it enjoys today; the Sugar Trust controlled practically the whole output of refined sugar. The Steel Trust, it is true, did not exist; but many combinations in steel products had already been formed. Combinations on steel rails dictated prices; nails, barbed fence wire, copper, lead, nickel, zinc, cordage, cottonseed oil,—all these products had already been brought largely under trust control. The Salt Trust and the Whiskey Trust had been organized. Combinations of railroads, for the purpose of fixing charges for transportation, had existed for twenty-five years. In 1875 Commodore Vanderbilt called the first great meeting of railroad trunk lines at Saratoga; and this conference adopted a "pooling" arrangement. The accumulated railroad abuses of a generation, especially this practice of "pooling" earnings, had led to the passage of the Interstate Commerce Act in 1887—three years before the enactment of the Sherman Law.
Other combinations, which disdained the name of trusts, but which had already developed certain points in common with them, also flourished. The labor union, for example, was in full flower. The Knights of Labor, under Powderly, had passed through many triumphant years; the Federation of Labor was firmly entrenched, and Samuel Gompers was its President then as he is today. The unions existed then, as they do now, to secure higher wages and greater advantages of employment for their members; and one of their weapons then, as it is at present, was the boycott. Organizations of farmers, which existed for a similar purpose—the Farmers' Alliance, the National League—had also reached a high state of development.
Statesmen who Framed the Sherman Law
Nor were the framers of this law inexperienced legislators who hastily scrambled together a measure to meet certain political exigencies. The men chiefly responsible for the anti-trust law were John Sherman of Ohio, George F. Edmunds of Vermont, George F. Hoar of Massachusetts, George Gray of Delaware, and James Z. George of Mississippi. Senator Spooner recently declared that no greater body of lawyers ever sat in Congress; no one would venture to contend that there is any similar group of five men in Washington today. John Sherman had served almost continuously in Congress since 1854; he had represented Ohio in the Senate throughout the Civil War and the reconstruction period, displaying especial talent in dealing with questions of national finance; and, as Secretary of the Treasury in President Hayes' cabinet, had carried through with masterly success the resumption of specie payments. George F. Edmunds was generally regarded as the greatest lawyer then in the Senate. Starting his career in that body in 1866, when Congress had to handle the intricate constitutional problems involved in the readmission of the Southern States, he immediately became one of an influential group of which the other members were Sumner, Fessenden, Trumbull, and Wade, and took an important part in framing the legislation of the reconstruction period. George F. Hoar had, by 1890, represented Massachusetts in the Senate for thirteen years; his great learning, his comprehensive knowledge of public questions, his independence, his genuine devotion to the best public interests had made him one of the most commanding figures in that body. George Gray of Delaware, at present a judge of the United States Circuit Court, and for many years one of the most conservative forces in the Democratic party—the same George Gray upon whom many of Mr. Bryan's opponents hoped to unite a few months ago as the Democratic presidential nominee—was also recognized as one of the Senate's greatest authorities on the Constitution. Senator George had served for many years as chief justice of the Supreme Court of Mississippi, and was the author and compiler of many works on law which are still widely used.
SAMUEL GOMPERS, FOR TWENTY-FIVE YEARS PRESIDENT OF THE FEDERATION OF LABOR. MR. GOMPERS DEMANDS AN AMENDMENT OF THE SHERMAN ANTI-TRUST ACT THAT WOULD MAKE LEGAL THE INTERSTATE BOYCOTT
Over the question of federal control of large combinations these five men and their colleagues debated for nearly two years. Senator Sherman introduced his first anti-trust act August 14, 1888; the present statute finally became a law on July 21, 1890. During this period six separate trust bills, all modifications of that originally introduced by Mr. Sherman, were laid before the Senate. They were considered by two committees—the Finance and the Judiciary—and debated at great length in the committee of the whole. The discussions occupy one hundred and fifty pages of the Congressional Record.
A striking illustration of the general ignorance of the circumstances under which the Sherman Act was passed is furnished by the present Republican platform. This declares that "the Republican party passed the Sherman Anti-Trust Act over Democratic opposition." The records of Congress, however, show no indications of any opposition at all, Democratic or other. Of the five men most conspicuous in framing the law, three were Republicans and two were Democrats. In the Senate only one senator voted against the passage; in the House two hundred and forty-two votes were cast in favor of the act, and not a single one was cast against it. The whole debate was notable for its seriousness and its dignity; one or two Democrats did suggest that a revision of the tariff might help to curb the trusts; but that was the only partisan note struck. Congress keenly appreciated the issues raised by the trust problem and the necessity of taking action that would be beneficial and permanent. Everybody realized, also, the inherent difficulties of the situation. The debates in the Senate on this issue, far from indicating a scrappy investigation, furnish material for a liberal education in the constitutional questions involved in dealing with monopolies. Senator Hoar, in preparation for the work, studied the history of legislation concerning monopolies from the time of Zeno. One of the sections in the bill—that providing that a successful litigant against a trust can recover three times the damages suffered from it—Mr. Hoar incorporated from a statute on monopolies passed in the reign of James I.
Sherman Act Intended to Apply to Labor Unions
Of all the legends which have grown up about this law, perhaps the most absurd is that it was never intended to apply to workingmen. "As a matter of fact," said Samuel Gompers before the Judiciary Committee of the House last winter, "every man who now lives and is familiar with the legislation of the day knows that the Sherman Anti-trust Law was never intended to include organizations of labor," Chief Justice Fuller, in a recent decision of the United States Supreme Court, flatly contradicts Mr. Gompers' statement. "The records of Congress show," says Justice Fuller, "that several efforts were made to exempt, by legislation, organizations of farmers and laborers from the operation of the act and that all these efforts failed," In fact, the question of the relation of labor unions and the law occupied a conspicuous place in the debates; it was almost as constantly in the minds of the Senators as the question of capitalistic combinations themselves. To meet this situation, Senator Sherman introduced an amendment specifically excepting labor unions and agricultural associations from the operation of his statute. Mr. Gompers, according to his remarks before the Judiciary Committee last winter, was partly responsible for the introduction of this amendment. Senator Edmunds opposed it on the ground that it granted rights to labor which it withheld from capital, and he insisted that both sides should be treated upon an exact equality. In the following words he disposed for all time of Senator Sherman's plea for preferential treatment of laboring men:
The fact is that this matter of capital, as it is called, of business, and of labor, is an equation, and you cannot disturb one side of the equation without disturbing the other. If it costs for labor 50 per cent. more to produce a ton of iron, that 50 per cent. more goes into what that iron must sell for, or some part of it. I take it everybody will agree to that.
Very well. Now, if you say to one side of that equation, "You may make the value or the price of this iron by your combination for wages in the whole Republic or on the continent, but the man for whom you have made the iron shall not arrange with his neighbors as to the price they will sell it for, so as not to destroy each other," the whole business will certainly break, because the connection between the plant, as I will call it for short, and the labor that works that plant, is one that no legislation and no force in the world—and there is only one outside of the world that can do it—can possibly separate. They cannot be divorced. Neither speeches nor laws nor judgments of courts nor anything else can change it, and therefore I say that to provide on one side of that equation that there may be combination and on the other side that there shall not, is contrary to the very inherent principle upon which such business must depend. If we are to have equality, as we ought to have, if the combination on the one side is to be prohibited, the combination on the other side must be prohibited, or there will be certain destruction in the end....
On the one side you say that it is a crime and on the other side you say it is a valuable and proper under-taking. That will not do, Mr. President. You can not get on in that way. It is impossible to separate them; and the principle of it therefore is that if one side, no matter which it is, is authorized to combine, the other side must be authorized to combine, or the thing will break and there will be universal bankruptcy. That is what it will come to.
SENATOR GEORGE F. EDMUNDS, GENERALLY REGARDED AS ONE OF THE GREATEST CONSTITUTIONAL LAWYERS OF HIS TIME. THE SHERMAN ACT, AS IT STANDS AT PRESENT, IS VERY LARGELY HIS WORK
Senator Edmunds' logic absolutely killed any attempt to place capital and labor upon different footings, Instead of adopting this proposed amendment, the Senate referred the whole question of trust legislation to the Judiciary Committee, of which Senator Edmunds was chairman. Mr. Edmunds and his colleagues threw into the waste basket all the pending trust bills and their amendments and struck out on new lines. As a consequence, Senator Edmunds became the chief author of the Sherman Anti-Trust Law. His most active associates, were Senator Hoar and Senator George. The one man who had practically nothing to do with the statute as it stands to-day was Senator Sherman himself. He played an important part in the preliminary discussion and in framing the measures which served as a basis for this discussion; but the bill as it was finally adopted by Congress bore little resemblance to his. The amendment upon which he laid especial stress—that of exempting laboring and agricultural organizations from the operation of the Anti-trust Law—was absolutely ignored.
As finally adopted, the act did not prohibit labor unions per se or combinations of labor unions formed to accomplish lawful ends; it did, however, strike at certain labor union practices. That this was the clear intention of the Senate is evident from a statement made by Senator Edmunds in a newspaper interview as far back as 1892. "The Sherman Law," said Mr. Edmunds, "is intended to cover and I think will cover every form of combination that seeks in any way to interfere with or restrain free competition, whether it be capital in the form of trusts, combinations, railroad pools, or agreements, or labor through the form of boycotting organizations that say a man shall not earn his bread unless he joins this or that society. Both are wrong; both are crimes and indictable under the Anti-trust Law."
Unsuccessful Efforts to Destroy the Law
JUDGE GEORGE GRAY OF DELAWARE, WHO, AS UNITED STATES SENATOR, IN 1890, TOOK AN IMPORTANT PART IN FRAMING THE SHERMAN LAW
For eighteen years the anti-trust statute has represented American policy and American law in federal regulation of combinations in restraint of trade. In that period the act has been repeatedly assailed from many legal standpoints. It has been passed upon more than two hundred and fifty times by the federal courts, and has been considered fifty-five times by the United States Supreme Court. The greatest constitutional lawyers of this generation—such men as Edward J. Phelps, James C. Carter, John F. Dillon, and Francis Lynde Stetson—have attempted to destroy it and have not succeeded. The greatest railroads and corporations, on the one hand, and the largest and most influential labor unions, on the other, have both failed in their attempts to secure exemption from its operation.
The history of the Sherman Act has absolutely justified the wisdom and integrity of the Supreme Court. Scores of times the lower courts have decided against the government; and the most important decisions have been those in which the Supreme Court has reversed the inferior tribunals. The record of federal prosecutions under this law affords an interesting insight into the attitude of the several administrations toward trust regulation. President Harrison, under whose administration the law was passed, accomplished little. His attorney-general brought seven actions—four bills in equity and three criminal indictments. Under the equity proceedings, he obtained three injunctions; the criminal proceedings all ended in failure. One of the cases instituted by President Harrison, however,—that against the Trans-Missouri Freight Association,—was afterward taken to the Supreme Court by President Cleveland's attorney-general, and resulted in securing one of the most important decisions in the history of the law.
President Cleveland showed considerably more activity than his predecessor. Though only eight proceedings stand to his credit, several of them were of the greatest importance. He used the Sherman Law in fighting the Debs cases growing out of the Pullman strike; and in the well-known Addyston Pipe & Steel Company case he dissolved a combination, formed by several manufacturers of gas and sewer pipe, to monopolize the trade of most large American municipalities. President McKinley apparently had little interest in the Sherman Law; throughout his four and a half years only three cases were prosecuted, none of which were of much consequence. With the administration of President Roosevelt, however, the situation changed. Against the seven cases instituted by Harrison, the eight by Cleveland, the three by McKinley, stand thirty-seven started by Roosevelt. That is, he has instituted twice as many cases as all his predecessors combined, and many of the Roosevelt prosecutions have proved successful. Nineteen of these thirty-seven cases have already been decided; the government has won seventeen and lost only two.
As a result of these many proceedings and interpretations, the Sherman Anti-trust Law is now fairly well understood. There has recently been much complaint that the law is not sufficiently "specific"; that business men and labor leaders are groping very much in the dark; that it is impossible to say what this statute prohibits and what it permits. From the judicial literature which has accumulated in the last eighteen years, however, a fairly clear idea of its bearings upon large enterprises, both of labor and capital, can be obtained. Senator Hoar declared, when the bill came up for final passage, that it enunciated no new principle of law. It made illegal "restraints of trade" and "monopolies," but these had been for centuries unlawful in all Anglo-Saxon countries. As far back as the reign of Henry VI. in England, in 1436, a law was passed declaring that "all agreements in restraint of trade are illegal and voide." This principle has ever since been part of the law of England, and is at present part of the common law of many States in the Union.
FRANCIS LYNDE STETSON, CHIEF COUNSEL FOR THE UNITED STATES STEEL CORPORATION AND OTHER MORGAN ORGANIZATIONS. MR. STETSON WAS ONE OF THE DRAFTERS OF LAST WINTER'S TRUST BILL. IF IT HAD BECOME A LAW, THIS MEASURE WOULD HAVE MADE THE UNITED STATES STEEL COMPANY PRACTICALLY IMMUNE FROM FEDERAL PROSECUTION
In the United States itself, however,—that is, in the federal courts—there is no common law; everything must be fixed and regulated by statute. What the Sherman Act did was to make this common law on the subjects of restraints and monopolies the statute law of the United States. Under the common law of practically every State, monopolies and restraining combinations were illegal; Congress made these illegal when they involved inter-State trade. Under the common law boycotts were illegal also; Congress made illegal the inter-State boycott. Congressional action on this subject was demanded, because the larger number of these unlawful combinations could be reached only by federal action, inasmuch as they usually involved more than one State.
Under the rulings of the Supreme Court, combinations and conspiracies which restrain trade and develop monopolies are those which, broadly speaking, deprive the public of the benefits of free competition. This act recognizes the competitive system as the one industrial ideal, and outlaws anything that interferes with a free, unobstructed flow of trade. A trust that gets control of the larger part of a particular product and manipulates the output so as to prevent trade from flowing in its natural course—that is an illegal restraint. Labor unions that combine to divert artificially this same course of trade—as they unquestionably do when they persuade the public not to have business relations with particular persons or corporations against which they have declared a boycott—also engage in an illegal restraint. The Sherman Law aims only to protect the public against these unnatural influences; to restore business to normal conditions. With corporations, the final test as to whether they restrain trade or not is whether their effect is to increase prices. If they do not increase prices, then they do not restrain trade and consequently do not violate the Sherman Act. The Supreme Court has insisted upon one important modification of this principle. The effect upon prices must be immediate and not remote. An arbitrary agreement that definitely fixes the prices of a product is clearly illegal; an agreement which, in the last analysis, might tend to influence prices, would not necessarily be so.
SETH LOW, EX-MAYOR OF NEW YORK, WHO, AS PRESIDENT OF THE NATIONAL CIVIC FEDERATION, ADVOCATES THE AMENDMENT OF THE SHERMAN LAW
Railroads Stopped from Making Rate Agreements
In the first ten years after the passing of the Sherman Act, the government attacked most successfully, not the great solidified aggregations of capital popularly known as trusts, but the more or less loosely organized federations of corporations, formed chiefly for the purpose of regulating and establishing prices. Trade agreements, not monopolistic corporations, became its chief quarry. In proscribing these agreements as illegal, the Sherman Act was found to be extremely effective. The very first case under this law was directed against a combination of coal-mining companies in Kentucky and Tennessee, which existed for the express purpose of regulating output and fixing prices. The courts promptly decided that this agreement violated the Sherman Act. In 1892 eighteen railroads, nearly all operating west of the Missouri River, organized what they called the Trans-Missouri Freight Association. This association included many of the great Western roads, companies of the magnitude of the Santa Fé, the Missouri Pacific, and the Rock Island. Its object, as clearly stated in the articles of association, was "mutual protection by establishing and maintaining reasonable rates, rules, and regulations, in all freight traffic, both through and local." In other words, it proposed to fix arbitrarily the price of transportation throughout the enormous territory covered by the eighteen railroads in question. The old "pooling" agreements, which had existed for many years, had been prohibited by the Interstate Commerce Law passed in 1887; and this Traffic Association was an attempt to accomplish the same end—that is, stop competition among the railroads and maintain rates—in a different way. The Supreme Court, by a vote of five to four, decided that this agreement was prohibited by the Sherman Anti-trust Act, because, as an attempt to fix prices, it restrained trade. The famous Trans-Missouri decision, which settled this case, made the Sherman Law an insurmountable bulwark against all railroad combinations of this kind. Until this decision was finally given in 1897, this act had not been seriously regarded; after the Supreme Court had spoken, however, capitalists suddenly awoke to its significance. The decision settled many important points, which will be referred to subsequently in this article, and it changed as well the whole policy of railroad management.
JOHN SHERMAN, A STATESMAN WHO SERVED THE GOVERNMENT FOR MORE THAN FORTY YEARS, AS SENATOR, SECRETARY OF THE TREASURY, AND SECRETARY OF STATE. BETWEEN 1888 AND 1890 HE INTRODUCED SIX SEPARATE BILLS FOR THE REGULATION OF TRUSTS, AND OUT OF THESE GREW THE MEASURE WHICH NOW BEARS HIS NAME
The Sherman Act has stopped, not only railroad combinations, but similar agreements existing among manufacturers for the regulation of prices. The case of the Addyston Pipe & Steel Company is the most celebrated of this kind. In 1894 a large number of manufacturers of sewer and gas pipe, the Addyston Company being one, formed a combination to monopolize business and fix prices in thirty-six States and Territories. All companies which were parties to the agreement reserved the right to compete with each other outside of these thirty-six States as fiercely as before. They significantly called the section in which there was to be no competition "pay territory"; and the States outside of this section were known as "free territory." These manufacturers dealt chiefly with municipalities, which usually let contracts for sewer and gas pipe by public bidding. Whenever such a contract was offered, the Addyston combination would meet secretly, decide upon the price they would charge, and then arrange a program of fictitious bids. They then divided the profits among themselves. In this way they forced practically all purchasers in the sections in which they traded to pay exorbitant prices. Indeed, the subsequent history of this combination beautifully illustrates the practical effect upon the public of agreements of this kind. The Addyston and its associate members sold certain pipe in "pay territory," where the combination was enforced, at twenty-four dollars a ton; in "free territory," where they competed with each other, they frequently sold identically the same product at fourteen dollars. The Supreme Court decided that this agreement violated the Sherman Act—that it was a combination or a conspiracy in restraint of trade. William H. Taft, then United States Circuit Judge, wrote an opinion discussing the merits of this dispute which has since become a legal classic. Mr. Taft spent six months in studying the questions involved.
Nearly all such cases, however, involved merely what may be called trade agreements. In each case there were actual attempts to fix prices by compact, and these agreements were the only things in common among the different corporations that became parties to them. The several corporations preserved their independent existence; they were not trusts in the sense in which the Standard Oil Company, the American Sugar Refining Company, the United States Steel Company, are trusts—that is, single corporations, producing and distributing the greater part of some particular product. Until President Roosevelt's administration, these trusts had, for the larger part, escaped prosecution under the Sherman Law, the few attempts that had been made to assail them; having ingloriously failed.
Meanwhile, in the first twelve years after the passage of the Anti-trust Act, and in the teeth of it, some of the largest monopolistic corporations were formed. Many persons have maintained that the Sherman Law, far from forestalling these corporations, has actually precipitated them. Their point is that, since this act clearly outlawed trade agreements among independent corporations, these corporations, in order to get control of the situation, have been compelled to amalgamate themselves under one ownership. The Sherman Act made illegal, for example, rate agreements among railroads; as a consequence, in order to control railroad policy, the owners of the great trunk lines have purchased large blocks of stock in each other's property—on what is popularly known as the "community of interest" idea.
President Roosevelt, however, has succeeded in applying the Sherman Act to the trusts, as that word is popularly understood. The famous Northern Securities case is his greatest victory along that line. In this instance, Mr. J. J. Hill and J. Pierpont Morgan formed a new corporation, the Northern Securities Company, which acquired the actual stock ownership of nine-tenths of the stock of the Northern Pacific Railroad and three-fourths of that of the Great Northern. The Northern Securities Company thus obtained a virtual monopoly of railroad transportation from the Great Lakes to the Pacific Ocean in the northern section of the United States. The Roosevelt administration, relying solely upon the Sherman Act, destroyed this corporation. The administration has followed up this victory by instituting suits against the Standard Oil Company, the American Tobacco Company, and other powerful monopolies.
GEORGE FRISBIE HOAR, UNITED STATES SENATOR FROM 1877 TO 1904, AND ONE OF THE AUTHORS OF THE SHERMAN ANTI-TRUST ACT
Labor Unions, as Such, Not Prohibited
Meanwhile, the same law has proved an effective weapon in opposing that other form of combination and restraint against which it was framed,—the labor trust. Under it a new code of federal laws affecting labor unions has developed; and to a large extent it has strengthened the cause of legitimate labor organization. No intelligent person now disputes the right of workingmen to organize. A few labor leaders have publicly declared their apprehension that the Sherman Law prohibits peaceable labor organizations; no man, however, has thus far had the hardihood to raise this question legally; and, in the present state of public opinion as to the rights of labor, no one is likely to. The United States Courts, in decisions defining the scope of the Sherman Act, have specifically stated that it does not prohibit the ordinary peaceful activities of labor unions. Justice White, in a decision of the Supreme Court, has declared that an agreement among "locomotive engineers, firemen, or trainmen engaged in the service of an inter-State railroad not to work for less than a certain named compensation" would not be illegal. William H. Taft, in one of the most important decisions affecting the rights of workmen under the Sherman Act, has defined the situation in words which are now widely accepted as a clear statement of what is not only good law but sound public policy:
The employees of the receiver had the right to organize into or join a labor union which would take action as to the terms of their employment. It is a benefit to them and to the public that laborers should unite for their common interest and for lawful purposes. They have labor to sell. If they stand together, they are often able, all of them, to obtain better prices for their labor than dealing singly with rich employers, because the necessities of the single employee may compel him to accept any price that is offered. The accumulation of a fund for those who feel that the wages offered are below the legitimate market value of such labor is desirable. They have the right to appoint officers, who shall advise them as to the course to be taken in relations with their employers. They may unite with other unions. The officers they appoint, or any other person they choose to listen to, may advise them as to the proper course to be taken in regard to their common employment; or if they choose to appoint any one, he may order them on pain of expulsion from the union peaceably to leave the employ of their employer because any of the terms of the employment are unsatisfactory.
Copyrighted by C. R. Buck
CONGRESSMAN CHARLES E. LITTLEFIELD OF MAINE, WHOSE KEEN ANALYSIS OF LAST WINTER'S CIVIC FEDERATION TRUST BILL WAS LARGELY RESPONSIBLE FOR ITS DEFEAT
It is clearly indicated, therefore, what labor leaders, under the Sherman Act, can do. They have the right to organize, to combine—that is, to form unions; they have the right to refuse to work for wages or terms of employment unsatisfactory to themselves—that is, to strike. Under the Sherman Act, indeed, mere organizations of laboring men are regarded as no more outlawed than ordinary social clubs or college fraternities.
How the Chicago Strike of 1894 Restrained Trade
On the other hand, labor leaders know what, under the Sherman Act, they can not do. They cannot enter into combinations that restrain trade. This vital point has been settled in several important proceedings—those involving the Chicago disturbances in 1894, and, more recently the decision just handed down in the matter of the Danbury Hatters. These cases so clearly show the bearing of the Sherman Act upon illegal labor practices, that they may profitably be reviewed here.
In 1894 the employees of the Pullman Palace Car Company of Chicago struck for higher wages. These employees were not railway men; they were workmen engaged in the manufacture of railway cars. In spite of this, about four thousand had been admitted to membership in the American Railway Union, an organization of railroad operatives, which, under the vigorous management of Eugene V. Debs, had acquired a membership of 250,000, and a correspondingly great power in the field of railroad labor. In order to help the Pullman workmen in their struggle with the Pullman Company, the American Railway Union declared what was in effect a boycott upon all railroads using Pullman cars. Nearly all the larger American railroads had entered into contracts with the Pullman Company, by which parlor and sleeping cars were to be used on their trains. Debs now demanded that these railroads should break their contracts, and thereby, of course, become responsible for heavy damages to the Pullman Company. In other words, he demanded that all American railroads cease patronizing the Pullman Company because of its "unfair" attitude toward union labor; that is, he started a boycott against the Pullman Company. When the railroad companies refused to meet his demand, he ordered out all American Railway Union men employed on these lines. He even declared war upon several of the Vanderbilt roads, which had no Pullman sleepers, operating instead the Wagner cars. In effect, in order that several thousand workmen in Chicago might profitably settle their private grievances with their employers, Debs proposed, practically to end railroad communication in the larger part of the United States.
"The gigantic character of the conspiracy," said William H. Taft in a well-known decision resulting from these proceedings, "staggers the imagination. The railroads have become as necessary to the life and health and comfort of the people of this country as are the arteries to the human body." The larger part of our food supply, for example, is furnished by means of the railway; the interruption of railroad transportation for any considerable period would, among other calamities, bring famine upon large sections of the country. In Chicago, in Cincinnati, and in other large cities, Debs despatched his lieutenants with orders to tie up all railroads using Pullman cars. He gave particular instructions to interfere with freight trains, since freight was the main source of railroad revenue. In many places riots followed; in Chicago, strikers began wrecking trains, blowing up bridges, burning freight yards, tearing up tracks—indeed, nearly all the twenty-three railroads centering in that city ceased operations. The fundamental principles of the constitution, guaranteeing the safety of life and property, had apparently given way to lawlessness and anarchy. In the opinion of Grover Cleveland, then President of the United States, these proceedings constituted a "conspiracy in restraint of trade" among the States, and as such were prohibited by the Sherman Act. That the purpose and effect of Debs' proceedings was to restrain trade is sufficiently clear; indeed, no more complete restraint than the cessation of railroad communication could be imagined. Trade in this case was not only restrained; it was entirely stopped. That the means by which this was to be accomplished had all the essential elements of the inter-State boycott has also been shown. In several cities, acting under the President's instructions, United States district attorneys obtained injunctions on the ground that the strike leaders were violating the Sherman Act, and also interfering with the carriage of United States mails. In Chicago Eugene V. Debs was enjoined, and, when he disobeyed the injunction, was arrested and afterward sentenced to six months' imprisonment. In Cincinnati his associate, Frank W. Phelan, was likewise enjoined and likewise imprisoned for contempt. It was his act as judge in sending Phelan to prison for violating the Sherman Law that first made William H. Taft a national figure. The circuit courts[J] decided, in several cases, that the combination formed by Debs against nearly all the trunk lines was a boycott, "a conspiracy in restraint of trade," and punished the leaders, under the Sherman Act. William H. Taft declared that "the combination is in the teeth of the act of July 2, 1890."
The Danbury Hatters Attempt to "Restrain Trade"
This boycott involved violence as an incident; the Supreme Court, however, has recently taken still more advanced ground, and decided that a peaceable boycott also violates the Sherman Act. In the last fifteen years a terrific warfare has raged between the American Federation of Labor and nearly all American manufacturers of hats. The American Federation has a membership variously estimated at from 1,500,000 to 2,000,000, including workmen in practically every State and Territory. It is, as its name implies, a central association organized for the purpose of bringing into one effective machine all the local labor organizations scattered throughout the country. It is an association of associations, and, as indicating its national scope, has its headquarters in Washington. It keeps constantly in touch with its membership through its monthly publication, the American Federationist, as well as through the many journals of the unions with which it is affiliated. It regularly employs nearly one thousand agents who continually push the interests of its members in the larger part of the United States and Canada. Mr. Samuel Gompers constantly uses this organization for the prosecution of inter-State boycotts. In his petition to intervene in the Danbury Hatters case, Mr. Gompers stated, over his own signature, that "the constitution of said American Federation of Labor makes special provision for the prosecution of boycotts, so-called, when instituted by a constituent or affiliated organization." In a public speech on May 1, 1908, Mr. Gompers declared that the Supreme Court might "as well dissolve and destroy the organization of labor as to enforce these decisions"—that is, the decisions against boycotts. Obviously, the Federation of Labor has an advantageous organization for work of this kind. A local union, with membership extending not beyond the limits of a town or State, could make little headway against a manufacturer against whose goods it had declared a boycott, inasmuch as his trade usually extends over a large area. The American Federation of Labor, however, by embracing the local unions' cause can make the boycott effective in practically every part of the country. In the last twelve years, Mr. Gompers' organization has declared four hundred and eight boycotts.
In particular, it has prosecuted with considerable success boycotts against the manufacturers of fur hats. About ten years ago, Mr. Gompers, working with the United Hatters of North America, inaugurated an elaborate program to compel all such manufacturers to unionize their shops. By using their well-known methods, they have brought to terms seventy out of the eighty-two manufacturers in this country. The firm of D. L. Loewe & Co. of Danbury, Connecticut, however, had persistently refused to comply with these demands. Mr. Loewe was not a large manufacturer; he had, however, built up a prosperous business, and, though he had never shown any hostility to union labor, had insisted on maintaining an open shop. In 1901 the United Hatters' Union practically ordered him to discharge his non-union men and unionize his factory. Mr. Loewe again refused to do this, and a strike immediately followed. Mr. Loewe, however, promptly engaged new non-union men, and soon his factory was running as busily and as profitably as before.
Mr. Gompers then brought the whole machinery of his organization to bear upon this recalcitrant hatter. On July 25, 1902, the Federation of Labor and the United Hatters declared a boycott against his products. They denounced this concern in their several publications as "unfair," and notified nearly all the wholesale and retail hat dealers throughout the United States that they must not handle the Loewe goods, under pain of being boycotted themselves. It is said that their agents kept espionage, in Danbury, over all freight consignments from the Loewe factory, and thus obtained a fairly complete list of their customers; committees of labor men in many cities waited upon these customers, and, in several instances, persuaded them to drop the Loewe hats. Some firms who refused to obey this dictation were themselves boycotted; and, in San Francisco, Philadelphia, Baltimore, and Richmond, the boycott was pursued with particular virulence. The Federation went so far as to grant a special dispensation to its members to purchase hats made by other non-union labor, rather than patronize the Loewe brand. Mr. Loewe, though he suffered enormous loss as a result of these proceedings, pluckily kept up the fight. Under the Sherman Law, an aggrieved citizen is authorized to bring private suit against persons engaged in a conspiracy to restrain his trade, and, if he successfully maintains his case, may recover three-fold damages. Mr. Loewe quietly went to work and had made an inventory of all property-holders actively engaged in boycotting his goods. He then brought suits for $340,000 damages against a large number of labor men, filing in the District Court 240 separate attachments. The Supreme Court of the United States made short work of this case. Chief Justice Fuller, who wrote the decision, declared that "the combination described in the declaration is a combination 'in restraint of trade or commerce among the several States' in the sense in which these words are used in the act, and the action can be maintained accordingly." An interesting feature of the case is that the decision of the Supreme Court was unanimous. In nearly all the other proceedings involving the Sherman Law—the Trans-Missouri case, the Northern Securities—the government has won by a bare majority; every member of the Supreme bench, however, at once concluded that Mr. Gompers' activities against the firm of D. L. Loewe & Co. restrained inter-State trade, and thus violated the Sherman Law.
Thus, in eighteen years, the Sherman Act has proved an effective weapon against the two forms of trust and conspiracy with which the public is most familiar—combinations of capitalists to restrain inter-State trade and arbitrarily fix prices, and combinations of labor unions organized for the prosecution of inter-State boycotts. It strikes impartially the Northern Securities Company and the American Federation of Labor; it does not discriminate between the activities of Mr. J. Pierpont Morgan and of Mr. Samuel Gompers. At the last session of Congress, the two forces which it opposes bent all their energies to destroy this law; in all probability they will renew and redouble their efforts this winter.
National Civic Federation Attempts to Amend the Law
For many years the National Civic Federation has been collecting data bearing upon the trust and labor problem. In 1899 it held a trust conference; and again, in October, 1907, it called a large meeting at Chicago for the consideration of the trust situation. Delegates appointed by the governors of forty-two States and representatives of more than ninety commercial, agricultural, and labor organizations contributed to these discussions. Referring to these Chicago proceedings, Mr. Theodore Marburg, one of the participants, said before the Judiciary Committee in Washington last winter: "Mr. Nicholas Murray Butler sounded the note of attack upon the Sherman Anti-trust Law.... I take it that the gentlemen will agree with me that it was a dominant note of that conference." As a result, a bill radically amending the Sherman Anti-trust Act was introduced in Congress at the last session. Its most active sponsors in Washington were Seth Low, president of the National Civic Federation, Professor Jeremiah W. Jenks of Cornell, and Samuel Gompers, president of the Federation of Labor. Well-known men who had participated in the conference that preceded the framing of the bill were E. H. Gary, chairman of the Board of the United States Steel Corporation, Henry L. Higginson, Isaac N. Seligman, and James Speyer and August Belmont, bankers. Francis Lynde Stetson, chief counsel for the United States Steel Corporation and other Morgan corporations, and Victor Morawetz, counsel for the Santa Fé Railroad, wrote the drafts. This latter fact was publicly stated by Mr. Low and Mr. Jenks in the course of the hearings before the Judiciary Committee. The authorship of the bill was early brought out in the following colloquy between Congressman Charles E. Littlefield and Mr. Low:
Mr. Littlefield: Right there, Mr. Low, if there is no objection, who are the people that actually participated in the preparation of the bill? Who are the men who actually drew it?
Mr. Low: We conferred with Judge Gary, of the United States Steel Corporation.
Mr. Littlefield: E. H. Gary, president of their board of directors?
Mr. Low: E. H. Gary. The lawyers actually engaged in the drafting of the bill were Mr. Stetson——
Mr. Littlefield: That is, Francis Lynde Stetson?
Mr. Low: Francis Lynde Stetson; and Mr. Morawetz.
Mr. Littlefield: Victor Morawetz?
Mr. Low: Victor Morawetz.
At another time, Mr. Low described Mr. Stetson and Mr. Morawetz as "the drafters" of the bill. Herbert Knox Smith, commissioner of corporations, also had a hand in framing the measure. President Roosevelt openly indorsed it and sent in an emergency message urging, among other things, its passage. Extensive hearings, extending through several months, were held before the Judiciary Committee. Many representatives of capital and labor appeared in favor of the measure. Although Congressman Littlefield, who presided over these hearings, many times expressed his wish to examine Mr. Stetson and Mr. Morawetz, these gentlemen never appeared. Although Mr. Low promised that they would submit a brief, explaining several disputed legal points, they never did so. The burden of discussing the many intricate legal points that constantly arose rested entirely upon the shoulders of Mr. Low and Professor Jenks, neither of whom had had any legal training. Through the efforts of Congressman Littlefield, James A. Emery, counsel for the National Association for Industrial Defense, and Daniel Davenport, counsel for the Anti-Boycott Association, the proposed law was defeated, but the proceedings are of great interest and importance as illustrating the changes desired by both labor and capital in the present anti-trust law.
Gompers Asks that the Boycott be Legalized
Mr. Gompers' demands were entirely simple and direct. He wished labor unions entirely exempted from the operations of the Sherman Act. That law, if properly respected and enforced, would practically put an end to Mr. Gompers' occupation. Referring lately in a public speech to the effect of a recent court decision against inter-State boycotts, Mr. Gompers quoted, as applicable to his own organization, Shylock's speech in "The Merchant of Venice," "You might as well take from me my life as take from me the means whereby I live." Mr. Gompers' chief interest in the Civic Federation bill, therefore, was a clause which specifically declared that the Anti-trust Act should not be so interpreted "as to interfere with or restrict any right of employees to strike for any cause or to combine or to contract with each other or with employers for the purpose of peaceably obtaining from employers satisfactory terms of their labor or satisfactory conditions of employment." Mr. Low and Mr. Jenks denied that this language legalized the boycott; Congressman Littlefield, however, and many other opponents of the measure, emphatically asserted that it did. Such sweeping concessions as "to strike for any cause" and "to combine or to contract with each other or with employers for the purpose of peaceably obtaining from employers satisfactory terms," it was maintained, clearly authorized such boycotts as that prosecuted against the Danbury Hatters. That proceeding, it was pointed out, was entirely peaceable—there was no law-breaking, no rioting, no bloodshed. It would also legalize, it was said, many of those arrangements between labor unions and employers—by which employers' associations contract to employ only members of certain labor unions, the latter, on their part, contracting to work only for certain employers—which were brought to such perfection by the late Sam Parks. Mr. Gompers demanded that, if the clause in question did not authorize boycotts, another should be substituted which did; to make the case sure, therefore, he proposed an amendment which did so in no uncertain tone. The following extract from the record clearly defines Mr. Gompers' position:
Mr. Littlefield: Now, Mr. Gompers, a word. Would this amendment you suggest, if it became a law, authorize the prosecution of such a boycott as was attempted in the Danbury Hatters' case, which was in violation of the Sherman Anti-trust Law? Is that the purpose?
Mr. Gompers: One of the purposes; yes, sir. That case was brought under the Sherman Anti-trust Law.
Mr. Littlefield: Yes. And the purpose of the amendment you have offered is to relieve you from the operation of the Sherman Anti-trust Law as construed by the court in that case?
Mr. Gompers: Yes, sir.
Mr. Littlefield: And to authorize that kind of an inter-State boycott?
Mr. Gompers: Yes, sir.
Mr. Littlefield: Do you, as the representative of organized labor, favor the boycott, both as an inter-State and a local proposition?
Mr. Gompers: I do, sir.
Mr. Littlefield: And your organization stands for that?
Mr. Gompers: It does, sir.[K]
Government to Discriminate Between Good and Bad Trusts
As to monopolistic corporations, the proposed act placed them entirely under the supervision of the executive branch of the government. If you wished to form a trust, or enter into a restraining contract, and, at the same time, to escape the prohibition of the Sherman Act, you would first, under the provision of this bill, submit the proposed arrangement to the Commissioner of Corporations and answer such questions as he saw fit to ask. If he gave approval, you could go ahead and carry out the deal, practically secure against further interference. If he disapproved, you would be liable to attack under the Sherman Act. In fact, the administration was to be given arbitrary power to discriminate between good and bad trusts, to separate the corporation sheep from the corporation goats. "You are all right," it could say to one combination; "you are all wrong," it could say to another. The federal government, in other words, was to rule absolutely the business activities of nearly 80,000,000 of people; merely by a word it could authorize a gigantic combination like the United States Steel Company, and prohibit another like the Standard Oil.
"Reasonable" and "Unreasonable" Combinations
The above statement gives the effect and not precisely the form of the proposed legislation. What its authors really hoped to accomplish was executive discrimination between those combinations and those restraints of trade which were reasonable and those which were unreasonable. They based their measure upon the theory that certain combinations, even many whose tendency is to restrain trade and increase prices to the consumer, may still work for the public interest. The word "reasonable" has played an important part in the history of the Sherman Act. In several cases the corporations, in contesting the law, have made the claim that this act did not prohibit all combinations in restraint of trade, but only those which were "unreasonable." They set up this defense most strongly in the famous Trans-Missouri case, already described. Eighteen railroads, it may be repeated, had formed an association for the purpose of fixing freight rates. James C. Carter, who argued the case, strongly asserted that such an agreement was beneficial both to the railroads and to the public; the history of railroads having conclusively proved that cut-throat competition inevitably led to bankruptcy and demoralization in railroad service. He therefore claimed that the proposed restraint in trade was "reasonable" and consequently not prohibited by the Sherman Act. The Supreme Court, by a majority of five to four, rejected this theory. The Sherman Act, it pointed out, in express language made illegal "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade"; and made "every person" who was a party to such contract a criminal. It left absolutely no leeway—it did not discriminate in the remotest degree between those which were reasonable and those which were not. Since then all demands for the modification of the act have hinged upon this one point.
Andrew Carnegie on Combinations
This demand, of course, has precipitated a very nice problem in definition. What is a reasonable combination? What is an unreasonable one? What is a good trust? What is a bad one? Upon this all-important question the many weary hearings extending through four months before the Judiciary Committee last winter shed practically no light. The Civic Federation bill was based upon this fundamental distinction; and a large number of distinguished citizens appeared in favor of it. Congressman Littlefield, as each speaker appeared before the Committee, asked him to give a concrete illustration of a combination, forbidden by the Sherman Act, which really promoted the public interest and was therefore "reasonable." Mr. Seth Low frankly admitted that he could name no concrete case of the kind. He caused some amusement, however, when he read a letter from Andrew Carnegie touching upon this very subject. "One point seems to me essential," wrote Mr. Carnegie, "without it, little general progress can be made; namely, when new combinations are proposed, the first question must always be 'what is the object sought?' In ninety-nine cases out of a hundred, it will undoubtedly be to rob the community of its right to the benefits of free competition, disguise it as one may; therefore the Commissioner's duty is to obtain satisfactory proof that the application is to cover an exceptional case. The conditions must be peculiar, as those of common carriers and steel-rail agreements are." Mr. Carnegie's statement that ninety-nine per cent of trade agreements are made for the purpose of "robbing the community" and his implication that the exceptional one per cent are the agreements involving the manufacturers of steel rails, naturally provoked much hilarity.
Only two other illustrations were furnished of benevolent combinations. Mr. Herbert Knox Smith, commissioner of corporations, instanced a proposed agreement among lumber men to cut only a certain amount of timber each year, the ostensible purpose being to prevent the wanton destruction of the forests. It appeared, however, that the real purpose of such an agreement was not to preserve the forests, but to restrict the output, and increase prices, and consequently the profits of the lumber men. Another illustration offered was the combination of patent medicine dealers to fix prices and prohibit price cutting—the object, it was said, being to prevent the unfair competition of large department stores with retail druggists. But this, in the last analysis, was generally believed to be a concerted attempt to destroy competition and enhance the profits of patent medicine makers. Congressman Littlefield insisted, throughout the entire proceedings, that the fundamental purpose of forbidden combinations was to control the product and thereby increase the price to the consumer. If there were any combinations that did not have that purpose or result, then the Sherman Act, according to Mr. Littlefield's analysis, did not prohibit them. Thus in all attempts to define practically reasonableness and unreasonableness, as applied to trade agreements, the statement was repeatedly made that the large part of the business of this country was done in violation of law; that business men lived constantly in a state of terror from the fear of its enforcement; that its presence on the statute books largely explained existing business depression. When it came to defining precisely what they wished to do, however, none of those who favored the bill became specific. The thing finally simmered down to a statement by Mr. Low that the law was "a very important element in the psychological condition of business men to-day."
Indulgences to be Granted to Corporations
This particular power of defining reasonableness and unreasonableness, however, the proposed law centered in the President, acting through the Commissioner of Corporations. It provided a limited system of federal registration for corporations, and, in a modified form, for federal license and publicity—the two circumstances which probably led President Roosevelt to support the measure. In effect it granted indulgences to corporations to combine, provided they would do certain things. The Sherman Law, as it stands to-day, was not specifically to be repealed; it was simply to be waived in favor of those combinations and trusts which paid the price of these indulgences. In order to obtain absolution, the offending corporation must do two things: register with the Bureau of Corporations and answer such questions as might be propounded to it. The bill authorized the President to determine precisely what information should be exacted, and also to change from time to time the requirements regarding data. That is, for registered corporations, it gave the executive branch of the government absolute inquisitorial power. Registered corporations had the right to file with the Bureau any agreement or contract or combination to which it became a party—the precise kind of transactions made illegal by the Sherman Act. The Commissioner had thirty days in which to examine such contracts; if, within that period, he declared them in reasonable restraint of trade, then they became practically legal.[L] If not, then they could be proceeded against under the Sherman Law. The chief point of criticism in this arrangement was the stipulation for a thirty-day period during which the Commissioner must pass upon these contracts. This, it was asserted, was the loop-hole by which the corporations were to secure immunity. The Commissioner must declare these contracts reasonable or unreasonable within thirty days; if he failed to act upon them in that time, they became reasonable, precisely as if he had declared them to be so. How, it has been asked, could the Bureau possibly act intelligently within that period upon many of the exceedingly intricate questions which would come up for judgment? Whether a contract is reasonable, of course, largely depends upon the way it affects prices. An examination would therefore frequently involve an economic study of the particular trade, as well as the organization of the particular corporation involved. It would be necessary to go deeply into capitalization, values behind this capitalization, cost of production, wages, transportation charges and so on. There are said to be more than 200,000 corporations in existence. Supposing half or a quarter should register,—how could the Bureau possible examine them within thirty days? Would it be possible to investigate the United States Steel Corporation within that period? Under the suggested law, however, unless the Commissioner passed judgment within this time, all these contracts and combinations would automatically receive a certificate of good character. In their interest, the Sherman Act would practically be repealed.
In the main, this provision referred to contracts made and combinations to be formed in the future; another section practically extended immunity to all contracts and combinations now in existence. Nearly all trusts organized in the last forty years, and all restraining agreements, were to become valid. The government was to have a year in which to institute proceedings against such corporations as declined to register. If it failed to do so within this time, then these combinations could never be attacked on any ground whatever, and became regularly fixed institutions. As there are about five hundred corporations popularly known as trusts and myriads of trade agreements now forbidden, the law department, it was suggested, would have its hands full if it attempted to bring suit against them all within twelve months. Moreover, after the passage of the proposed act, the government could not proceed against any combination except on one ground—that it was an unreasonable restraint of trade. Under the Sherman Act, it will be remembered, it can prosecute without any reference to the question as to whether the restraint is reasonable or not. If the act had passed, in other words, the position of the government would have been this: within a year it could have assailed the trusts only on the grounds of unreasonableness; after the expiration of a year it could assail them on no ground whatever. A saving clause, however, provided that the government could prosecute all actions already begun. That is, it could follow up to the end the pending cases against the Standard Oil, the American Tobacco Company and other corporations against which it has already started suit. It could not prosecute, however, the United States Steel Corporation, for it has instituted no proceeding in that direction. It was the Attorney of the United States Steel Corporation, Mr. Francis Lynde Stetson, who had a large hand in framing the bill.
These facts have led many observers to believe that the bill in question represented an underhanded attempt, by large corporations, especially the United States Steel, practically to remove the Sherman Anti-trust Law from the statute book. Mr. E. H. Gary and Mr. George W. Perkins spent many days in Congress while the bill was under discussion, though they did not once openly appear before the committee. No criticism affecting the good faith of Mr. Low and Professor Jenks, the most active open advocates of the bill, was put forth. The discussion disclosed the fact, however, that the Sherman Act, as it stands at present, has many friends. Organizations interested in curbing the unlawful activities of labor unions insisted that that law, as interpreted by the Supreme Court, is practically the only protection American industry has against the boycott. Repeal or seriously modify it, they declared, and a régime of labor union terrorism far surpassing any hitherto known in any country, would at once begin. The plan of Mr. Gompers and his associates to shelve this law, they insisted, was merely part of their general scheme to remove all legal restraints from the operations of labor unions. Opinions did not seem quite so unanimous as to the wisdom of the Sherman Act in its bearings upon corporations. Though many declared that this measure is too sweeping and drastic, and should be amended, no one has yet suggested any practical way of framing a new law. No one who has studied the problem of trust regulation, it is believed, has thus far hit upon a plan that, while it gives greater leeway to the corporations, protects the public from arbitrarily high prices and other exactions. There is thus a growing conviction that the act passed by the great constitutional lawyers of 1890 represents the best attainable result in this direction. It has not stopped the growth of trusts, it is true; but whether that is because it does not furnish the means or because it has not been sufficiently enforced, is the disputed question. "What is needed," recently said ex-Senator Edmunds, the man who was the real author of the Sherman Act, "is not so much more legislation as competent and earnest administration of the laws that exist."