The United States Since the Civil War

by Charles Ramsdell Lingley

Still more dangerous was the combination of the hard coal operators. By 1873, six corporations owned both the hard coal deposits of Pennsylvania and the railroads which made it possible to haul the coal out to the markets. In the same year and later these companies made agreements which determined the amounts of coal that they would mine, the price which they would charge, and the proportion of the whole output that each company would be allowed to handle. Independent operators—that is, operators not in the combination—found their existence precarious in the extreme, for their means of transportation was in the hands of the six coal-carrying railroads, who could raise rates almost at will and find reasons even for refusing service. The states were powerless to remedy the situation because their authority did not extend to interstate commerce, yet it was intolerable for a small group of interested parties to have power to fix the output of so necessary a commodity as coal, on no other basis than that provided by their own desires.

Other abuses appeared which showed that industrial combinations were open to many of the complaints which, in connection with the railroads, had led to the Interstate Commerce Act. Industrial pools resembled railroad pools and were objected to for similar reasons. Bankers and others who organized combinations were given returns that seemed as extravagant as the prices paid to railroad construction companies; the issues of the stock of corporations were bought and sold by their own officers for speculative purposes; and stock-watering was as common as in railroading. The industrial combinations also had somewhat the same effect on politics that the railroads had. Lloyd declared that the Standard Oil Company had done everything with the Pennsylvania legislature except refine it.

One of the most noted cases of corporation influence in politics was that of the election of Senator Henry B. Payne of Ohio. In 1886 the legislature of the state requested the United States Senate to investigate the election of Payne because of charges of Standard Oil influence. The debate over the case showed clearly the belief on the part of many that the Standard, which controlled "business, railroads, men and things" was also choosing United States senators. Senator Hoar raised the question whether the Standard was represented in the Senate and even in the Cabinet. In denying any connection with the Oil Company, Payne himself declared that no institution or association had been "to so large an expense in money" to accomplish his defeat when he was a candidate for election to the lower house. Popular suspicion seemed confirmed, therefore, that the Company was taking an active share in government. Whether the trust was for or against Payne made little difference.

A complaint that brought the trust problem to the attention of many who were not interested in its other aspects was the treatment accorded independent producers. The rough-shod methods employed by the Standard Oil Company, the Diamond Match Company and the coal operators were concretely illustrated in many a city and town by such incidents as that of a Pennsylvania butcher mentioned by Lloyd. An agent of the great meat slaughtering firms ordered the butcher to cease slaughtering cattle, and when he refused the agent informed him that his business would be destroyed. He then found himself unable to buy any meat whatever from Chicago, the meat-packing center, and discovered that the railroad would not furnish cars to transport his supplies. Faced by such overwhelming force, the independent producer was generally compelled to give way to the demands of the big concerns or be driven to the wall. The helplessness of the individual under such conditions was strikingly expressed by Mr. Justice Harlan of the Supreme Court in a decision in a suit against the Standard Oil Company:

All who recall the condition of the country in 1890 will remember that there was everywhere, among the people generally, a deep feeling of unrest. The Nation had been rid of human slavery … but the conviction was universal that the country was in real danger from another kind of slavery sought to be fastened on the American people, namely, the slavery that would result from aggregations of capital in the hands of a few … controlling, for their own … advantage exclusively, the entire business of the country, including the production and sale of the necessaries of life.

Observers noted that fortunes which outstripped the possessions of princes were being amassed for the few by combinations which sometimes, if not frequently, resorted to illegal and unfair practices, and they compared these conditions with the labor unrest, the discontent and the poverty which was the lot of the many.

In the meanwhile there had arisen a growing demand for action which would give relief from the conditions just described. As early as 1879 the Hepburn committee appointed by the New York Assembly had investigated the railroads and had made public a mass of information concerning the relation of the transportation system to the industrial combinations. In 1880 Henry George had published Progress and Poverty in which he had contended that the entire burden of taxation should be laid upon land values, in order to overcome the advantage which the ownership of land gave to monopoly. In 1881 Henry D. Lloyd had fired his first volley, "The Story of a Great Monopoly," an attack on the Standard Oil Company which was published in the Atlantic Monthly and which caused that number of the periodical to go through seven editions.[2] In 1888 Edward Bellamy's Looking Backward had pictured a socialized Utopian state in which the luxuries as well as the necessities of life were produced for the common benefit of all the people. Societies had been formed for the propagation of Bellamy's ideas, and the parlor study of socialism had become popular.

The platforms of the political parties had given evidence of a continuing unrest without presenting any definite proposals for relief. As far back as 1872 the Labor Reformers had condemned the "capitalists" for importing Chinese laborers; in the same year the Republicans and Democrats had opposed further grants of public land to corporations and monopolies—referring in the main to the railroads; in 1880 the Greenbackers and in 1884 the Anti-Monopolists, the Prohibitionists and the Democrats had denounced the corporations and called for government action to prevent or control them; and in 1888 the Union Labor party, the Prohibitionists and the Republicans had urged legislation for doing away with or regulating trusts and monopolies. By 1890 eight states had already passed anti-trust laws. Among unorganized forces, possibly the independent producers were as effective as any. Although usually overcome by the superior strength of their big opponents, they frequently conducted vigorous contests and sometimes carried the issue to the courts where damaging evidence was made public.

The solution of the problem of trust control was not easy to discover. The amount of property involved was so great that forceful legislation would be fought to the last ditch; while legislation that was obviously weak, on the other hand, would not satisfy public opinion. Public officials were hopelessly divergent in their views. Cleveland had called attention to the evils of the trusts in his tariff message of 1887, but had laid his emphasis on the need of reduced taxation rather than upon control of the great combinations. Blaine was opposed to federal action. Thomas B. Reed had characteristically ridiculed the idea that monopolies existed:

And yet, outside the Patent Office there are no monopolies in this country, and there never can be. Ah, but what is that I see on the far horizon's edge, with tongue of lambent flame and eye of forked fire, serpent-headed and griffin-clawed?