Such legislation was not easy to get; for the forces of reaction were strong in Congress. But several significant steps in this direction were taken before Roosevelt went out of office. The new Federal Department of Commerce and Labor was created, and its head became a member of the Cabinet. The Bureau of Corporations was established in the same department. These new executive agencies were given no regulatory powers, but they did perform excellent service in that field of publicity on the value of which Roosevelt laid so much stress.
In the year 1906 the passing of the Hepburn railway rate bill for the first time gave the Interstate Commerce Commission a measure of real control over the railways, by granting to the Commission the power to fix maximum rates for the transportation of freight in interstate commerce. The Commission had in previous years, under the authority of the act which created it and which permitted the Commission to decide in particular cases whether rates were just and reasonable, attempted to exercise this power to fix in these specific cases maximum rates. But the courts had decided that the Commission did not possess this right. The Hepburn act also extended the authority of the Commission over express companies, sleeping-car companies, pipe lines, private car lines, and private terminal and connecting lines. It prohibited railways from transporting in interstate commerce any commodities produced or owned by themselves. It abolished free passes and transportation except for railway employees and certain other small classes of persons, including the poor and unfortunate classes and those engaged in religious and charitable work. Under the old law, the Commission was compelled to apply to a Federal court on its own initiative for the enforcement of any order which it might issue. Under the Hepburn act the order went into effect at once; the railroad must begin to obey the order within thirty days; it must itself appeal to the court for the suspension and revocation of the order, or it must suffer a penalty of $5000 a day during the time that the order was disobeyed. The act further gave the Commission the power to prescribe accounting methods which must be followed by the railways, in order to make more difficult the concealment of illegal rates and improper favors to individual shippers. This extension and strengthening of the authority of the Interstate Commerce Commission was an extremely valuable forward step, not only as concerned the relations of the public and the railways, but in connection with the development of predatory corporations of the Standard Oil type. Miss Ida Tarbell, in her frankly revealing "History of the Standard Oil Company", which had been published in 1904, had shown in striking fashion how secret concessions from the railways had helped to build up that great structure of business monopoly. In Miss Tarbell's words, "Mr. Rockefeller's great purpose had been made possible by his remarkable manipulation of the railroads. It was the rebate which had made the Standard Oil trust, the rebate, amplified, systematized, glorified into a power never equalled before or since by any business of the country." The rebate was the device by which favored shippers—favored by the railways either voluntarily or under the compulsion of the threats of retaliation which the powerful shippers were able to make—paid openly the established freight rates on their products and then received back from the railways a substantial proportion of the charges. The advantage to the favored shipper is obvious. There were other more adroit ways in which the favoritism could be accomplished; but the general principle was the same. It was one important purpose—and effect—of the Hepburn act to close the door to this form of discrimination.
One more step was necessary in order to eradicate completely this mischievous condition and to "keep the highway of commerce open to all on equal terms." It was imperative that the law relative to these abuses should be enforced. On this point Roosevelt's own words are significant: "Although under the decision of the courts the National Government had power over the railways, I found, when I became President, that this power was either not exercised at all or exercised with utter inefficiency. The law against rebates was a dead letter. All the unscrupulous railway men had been allowed to violate it with impunity; and because of this, as was inevitable, the scrupulous and decent railway men had been forced to violate it themselves, under penalty of being beaten by their less scrupulous rivals. It was not the fault of these decent railway men. It was the fault of the Government."
Roosevelt did not propose that this condition should continue to be the fault of the Government while he was at its head, and he inaugurated a vigorous campaign against railways that had given rebates and against corporations that had accepted—or extorted-them. The campaign reached a spectacular peak in a prosecution of the Standard Oil Company, in which fines aggregating over $29,000,000 were imposed by Judge Kenesaw M. Landis of the United States District Court at Chicago for the offense of accepting rebates. The Circuit Court of Appeals ultimately determined that the fine was improperly large, since it had been based on the untenable theory that each shipment on which a rebate was paid constituted a separate offense. At the second trial the presiding judge ordered an acquittal. In spite, however, of the failure of this particular case, with its spectacular features, the net result of the rebate prosecutions was that the rebate evil was eliminated for good and all from American railway and commercial life.
When Roosevelt demanded the "square deal" between business and the people, he meant precisely what he said. He had no intention of permitting justice to be required from the great corporations without insisting that justice be done to them in turn. The most interesting case in point was that of the Tennessee Coal and Iron Company. To this day the action which Roosevelt took in the matter is looked upon, by many of those extremists who can see nothing good in "big business," as a proof of his undue sympathy with the capitalist. But thirteen years later the United States Supreme Court in deciding the case against the United States Steel Corporation in favor of the Corporation, added an obiter dictum which completely justified Roosevelt's action.
In the fall of 1907 the United States was in the grip of a financial panic. Much damage was done, and much more was threatened. One great New York trust company was compelled to close its doors, and others were on the verge of disaster. One evening in the midst of this most trying time, the President was informed that two representatives of the United States Steel Corporation wished to call upon him the next morning. As he was at breakfast the next day word came to him that Judge Gary and Mr. Frick were waiting in the Executive Office. The President went over at once, sending word to Elihu Root, then Secretary of State, to join him. Judge Gary and Mr. Frick informed the President that a certain great firm in the New York financial district was upon the point of failure. This firm held a large quantity of the stock of the Tennessee Coal and Iron Company. The Steel Corporation had been urged to purchase this stock in order to avert the failure. The heads of the Steel Corporation asserted that they did not wish to purchase this stock from the point of view of a business transaction, as the value which the property might be to the Corporation would be more than offset by the criticism to which they would be subjected. They said that they were sure to be charged with trying to secure a monopoly and to stifle competition. They told the President that it had been the consistent policy of the Steel Corporation to have in its control no more than sixty per cent of the steel properties of the country; that their proportion of those properties was in fact somewhat less than sixty per cent; and that the acquisition of the holdings of the Tennessee Company would raise it only a little above that point. They felt, however, that it would be extremely desirable for them to make the suggested purchase in order to prevent the damage which would result from the failure of the firm in question. They were willing to buy the stocks offered because in the best judgment of many of the strongest bankers in New York the transaction would be an influential factor in preventing a further extension of the panic. Judge Gary and Mr. Frick declared that they were ready to make the purchase with this end in view but that they would not act without the President's approval of their action.
Immediate action was imperative. It was important that the purchase, if it were to be made, should be announced at the opening of the New York Stock Exchange at ten o'clock that morning. Fortunately Roosevelt never shilly-shallied when a crisis confronted him. His decision was instantaneous. He assured his callers that while, of course, he could not advise them to take the action, proposed, he felt that he had no public duty to interpose any objection.
This assurance was quite sufficient. The pure chase was made and announced, the firm in question did not fail, and the panic was arrested. The immediate reaction of practically the whole country was one of relief. It was only later, when the danger was past, that critics began to make themselves heard. Any one who had taken the trouble to ascertain the facts would have known beyond question that the acquisition of the Tennessee properties was not sufficient to change the status of the Steel Corporation under the anti-trust law. But the critics did not want to know the facts. They wanted—most of them, at least—to have a stick with which to beat Roosevelt. Besides, many of them did not hold Roosevelt's views about the square deal. Their belief was that whatever big business did was ipso facto evil and that it was the duty of public officials to find out what big business wanted to do and then prevent its accomplishment.
Under a later Administration, Roosevelt was invited to come before a Congressional investigating committee to explain what he did in this famous case. There he told the complete story of the occurrence simply, frankly, and emphatically, and ended with this statement: "If I were on a sailboat, I should not ordinarily meddle with any of the gear; but if a sudden squall struck us, and the main sheet jammed, so that the boat threatened to capsize, I would unhesitatingly cut the main sheet, even though I were sure that the owner, no matter how grateful to me at the moment for having saved his life, would a few weeks later, when he had forgotten his danger and his fear, decide to sue me for the value of the cut rope. But I would feel a hearty contempt for the owner who so acted."
Two laws passed during the second Roosevelt Administration had an important bearing on the conduct of American business, though in a different way from those which have already been considered. They were the Pure Food law, and the Meat Inspection act. Both were measures for the protection of the public health; but both were at the same time measures for the control of private business. The Pure Food law did three things: it prohibited the sale of foods or drugs which were not pure and unadulterated; it prohibited the sale of drugs which contained opium, cocaine, alcohol, and other narcotics unless the exact proportion of them in the preparation were stated on the package; and it prohibited the sale of foods and drugs as anything else than what they actually were. The Meat Inspection law required rigid inspection by Government officials of all slaughterhouses and packing concerns preparing meat food products for distribution in interstate commerce. The imperative need for the passage of this law was brought forcibly and vividly to the popular attention through a novel, "The Jungle", written by Upton Sinclair, in which the disgraceful conditions of uncleanliness and revolting carelessness in the Chicago packing houses were described with vitriolic intensity. An official investigation ordered by the President confirmed the truth of these timely revelations.