The Standard Oil Inquiry
“It was a bad year for the trusts,” wrote Edward Sherwood Meade, Professor of finance in the University of Pennsylvania, at the close of 1907. In support of his comment, Prof. Meade cited the $29,000,000 fine levied against the Standard Oil, of Indiana, by Judge K. M. Landis, and the proceedings instituted to dissolve the Oil and Tobacco trusts. As is well known, Judge Grosscup, of the United States Circuit Court of Appeals, reversed Judge Landis on technicalities and the Company was saved from the imposition of the fine through what was universally execrated as a gross miscarriage of justice. Attorney-General Bonaparte at the time expressed himself freely in demanding of Congress the enactment of “a more comprehensive law permitting appeals by the Government in criminal cases,” instead of the present statutes which “give to the wealthy defendants in such cases an unfair advantage.” So 1907 was not such a bad year for the Standard Oil,—but a most profitable one, as the favor extended it in the Indiana suit enabled the stock of the Company to soar to nearly 700 forthwith.
The proceedings in the latter part of 1908 by the Government to dissolve the Standard Oil are the most important ever instituted against this odious monopoly. It is almost incredible that, after 20 years of immunity, John D. Rockefeller should be forced to “show cause” why he should no longer be allowed to pursue his taciturn, undisputed spoliations. Frank B. Kellog, champion “trust-buster” has charge of the investigations which thus far have presented something the appearance of opera bouffe. The figures juggled with are so enormous, and the “forgetfulness” of Rockefeller, Archbold and other testifiers such conspicuous examples of humorous insolence, that the public mind is unprepared to hope for a satisfactory outcome to the investigation. The present administration has but a couple of months more in which to make its denunciations against the Standard Oil effective, after years of apparently righteous wrath and no one is greatly to be blamed for adopting a cynical attitude as to the expected result.
It has been a bad year, this closing 1908, for the Tobacco folk. The victory of the tobacco growers of the Burley district of Kentucky early in December over the American Tobacco Company proves what a determined stand may accomplish on the part of the producer, without entering the Courts at all. It is safe to say that this Christmas will have been one of the happiest ever spent by the farmers of Kentucky, among whom some $20,000,000 will be circulating for tobacco grown and held over, some of it, for nearly two years. It will make for a peace and good-will in very truth, for the “night-riding” is considered at an end.
Capitulation to the tobacco growers of a limited section, however, is the least of the American Tobacco Company’s troubles just now, it having been declared, in suit brought by the government for its dissolution, to be a “combination in restraint of trade” which is amenable to the provisions of the Sherman Act of July 2, 1890. Appeal from this decision is being taken to the Supreme Court and upon the result of this “last resort” will hinge all that is vital in reference to the ability of the government to control the various kinds of industrial combinations engaged in inter-state traffic.
Judge Lacombe, in voicing the majority opinion of his Court, observes that: “By insensible degrees, under the operation of many causes, business, manufacturing and trading alike, has more and more developed a tendency towards larger aggregations of capital and more extensive combinations of individual enterprise. It is contended that, under existing conditions, in that way only can production be increased and cheapened, stability in reasonable prices secured and industrial progress assured. But every aggregation of individuals or of corporations, formerly independent, immediately upon its formation terminates an existing competition; whether or not some other competition may subsequently arise. The Act, as above construed, prohibits every contract or combination in restraint of competition. What benefits have come from this combination, or from others complained of, it is not material to inquire, nor need subsequent business methods be considered, nor the effects on production or prices.”
Washington Herald
Judge Noyes, who agreed with Judge Lacombe, says, in addition: “It is of much importance to many people at the present time whether the defendants have entered into an unlawful combination. It is OF THE MOST MOMENTOUS IMPORTANCE TO ALL THE PEOPLE FOR ALL THE TIME WHETHER THE NATIONAL GOVERNMENT HAS POWER TO REACH INDUSTRIAL COMBINATIONS DEALING ACROSS STATE LINES.”
In his dissenting opinion, Judge Ward took the position that the purposes of the defendants “should not be made to depend upon occasional illegal or oppressive acts, but must be collected on their conduct as a whole.” That they strove “to increase their business and that their great success is a natural growth resulting from industry, intelligence and economy, doubtless largely helped by the volume of business and the great capital at command.”
What view will the Supreme Court take? That “restraint of trade” is “restraint of trade” or that that it is not “restraint of trade” if only a few laws are broken, only a few competitors hurt and if defendants are not suffering for want of money?