Fifty years in Wall Street

by Henry Clews

The political influence of large corporations has so far not received as much consideration as it deserves. But it is a factor in our State and national business life that is more and more making itself felt in an unobtrusive but none the less effective way.

We have seen this manifested in the strong and numerous protests, emanating from this source, against the national government and the interstate commerce commission consenting to the general rise of freight rates conditionally agreed upon by the Eastern and other railways. In making these protests to President Roosevelt the corporations are well aware that he can control the action of the interstate commissioners in the matter, and by a word cause them to either give or refuse permission to raise railway rates. They know too that his keen political observation and insight will cause him to weigh and consider with the greatest care the effect of the administration’s course in consenting, or refusing to consent, to this inconsistent proposal to raise railway freight rates in such a period of trade depression as this, when more than 413,000 cars are idle. In view of the Presidential Campaign, and the issue to be decided at the polls next November, not merely by the politicians, but by the people, he will not underrate the importance of the railway corporation question as a political factor.

We saw that the President’s communication to the interstate commissioners a short time ago directing an investigation by them in relation to the need of the proposal of the Southern railways to reduce wages, resulted in an immediate abandonment of their announced plan to reduce them, and in fact all the railways were similarly influenced by that act of his. He knew that the reduction in one section would be the entering wedge for a general reduction, and perhaps a strike.

So the railways switched off the reduced wages line to the increased freight line, thinking that the President, from what he had said, as he surveyed the situation from his political observatory, would prefer the alternative of higher freight rates to lower wages. Here comes the rub. It is a two-edged political sword that President Roosevelt, above all others, will see requires to be very cautiously handled.

Without great care in this difficulty the administration might find itself between the upper and the nether millstone of a very ugly question, and in active antagonism with either the large corporations and the whole mercantile community, on the one hand, or the railways, on the other, with both sides bringing all their political influence and artillery into play.

Here would be an acrimonious contest that could not fail to affect political results in November. The President would very naturally be anxious to avert it, but how to reconcile the two opposite courses of saying yea or nay to the railways, and secure harmony between them and Labor, is a problem hard to solve.

In connection with the proposition agreed to by the officers of the Eastern trunk railways to advance freight rates from ten to fourteen per cent, it is well to consider that the gross earnings of all reporting lines in February showed a decrease of twelve and one half per cent from those of last year, and that in March the decrease was 14⅜ per cent, the result of the prevailing industrial depression, particularly in the iron, steel and coal trade and the New England cotton and woolen milling industry.

The proposed increase would, of course, have to be added to the cost of the commodities carried, and saddled upon the consumers. It was therefore to be expected that a flood of indignant protests would come from these, as well as from large shippers and the rank and file of the mercantile community. They have urged the injustice of such an advance in these hard times, and in the teeth of an average contraction of fully twenty-five per cent in the demand for goods. But the railways in reply point to the refusal of the U. S. Steel Corporation and other large trade combinations to lower their prices for railway materials, as well as to the political and other work of the Labor Unions, at Washington and elsewhere, in support of their determination to keep wages up to the highest figures of prosperous times, refusing meanwhile to listen to any terms of wage readjustment to the situation as it is. These are extenuating circumstances, but two wrongs do not make a right; and the best way of adjusting these differences is a difficult corporation and labor problem of itself.

It may surprise some to learn that the great power concentrated in the President’s hands by Congress has made the great corporations, including the railway companies and banking institutions, ambitious and eager to control the Federal Government itself, and they are resolutely working to control it as far as they can by the force of capital, but as unobtrusively as possible. They know that their designs to make the money power supreme would arouse popular indignation, so they are engaged in a still hunt, and Samuel J. Tilden used to say that this is what wins in politics and a political campaign.

The Government control of the Trusts, the railways and other corporations has become so great that it is hardly to be wondered at that the great object that they have now in view should be to control the government’s policy, and already they are sub rosa powerful political machines. In this connection it is significant that some large railway and banking interests have identified themselves with the Presidential movement. Every fresh extension by Congress of the President’s power over corporate interests has made the large corporations—industrial, railway and financial—with their enormous capital and resources, more and more bold and determined in their efforts to control the Presidency, if indeed that is possible; and this motive underlies a great and growing amount of corruption in our National politics.