Presidential addresses and state papers, Volume 1 (of 7)

by Theodore Roosevelt

Now of course savings banks are as highly specialized a class of corporations as railroads, and we can not force too far the analogy with other corporations; but there are certain conditions which I think we can lay down as indispensable to the proper treatment of all corporations which from their size have become important factors in the social development of the community.

Before speaking, however, of what can be done by way of remedy let me say a word or two as to certain proposed remedies which, in my judgment, would be ineffective or mischievous. The first thing to remember is that if we are to accomplish any good at all it must be by resolutely keeping in mind the intention to do away with any evils in the conduct of big corporations, while steadfastly refusing to assent to indiscriminate assault upon all forms of corporate capital as such. The line of demarcation we draw must always be on conduct, not upon wealth; our objection to any given corporation must be, not that it is big, but that it behaves badly. Perfectly simple again, my friends, but not always heeded by some of those who would strive to teach us how to act toward big corporations. Treat the head of the corporation as you would treat all other men. If he does well stand by him. You will occasionally find the head of a big corporation who objects to that treatment; very good, apply it all the more carefully. Remember, after all, that he who objects because he is the head of a big corporation to being treated like any one else is only guilty of the same sin as the man who wishes him treated worse than any one else because he is the head of a big corporation. Demagogic denunciation of wealth is never wholesome and is generally dangerous; and not a few of the proposed methods of curbing the trusts are dangerous chiefly because all insincere advocacy of the impossible is dangerous. It is an unhealthy thing for a community when the appeal is made to follow a course which those who make the appeal either do know, or ought to know, can not be followed; and which, if followed, would result in disaster to everybody. Loose talk about destroying monopoly out of hand without a hint as to how the monopoly should even be defined offers a case in point.

Nor can we afford to tolerate any proposal which will strike at the so-called trusts only by striking at the general well-being. We are now enjoying a period of great prosperity. The prosperity is generally diffused through all sections and through all classes. Doubtless there are some individuals who do not get enough of it, and there are others who get too much. That is simply another way of saying that the wisdom of mankind is finite; and that even the best human system does not work perfectly. You don’t have to take my word for that. Look back just nine years. In 1893 nobody was concerned in downing the trusts. Everybody was concerned in trying to get up himself. The men who propose to get rid of the evils of the trusts by measures which would do away with the general well-being, advocate a policy which would not only be a damage to the community as a whole, but which would defeat its own professed object. If we are forced to the alternative of choosing either a system under which most of us prosper somewhat, though a few of us prosper too much, or else a system under which no one prospers enough, of course we will choose the former. If the policy advocated is so revolutionary and destructive as to involve the whole community in the crash of common disaster, it is as certain as anything can be that when the disaster has occurred all efforts to regulate the trusts will cease, and that the one aim will be to restore prosperity.

A remedy much advocated at the moment is to take off the tariff from all articles which are made by trusts. To do this it will be necessary first to define trusts. The language commonly used by the advocates of the method implies that they mean all articles made by large corporations, and that the changes in tariff are to be made with punitive intent toward these large corporations. Of course if the tariff is to be changed in order to punish them, it should be changed so as to punish those that do ill, not merely those that are prosperous. It would be neither just nor expedient to punish the big corporations as big corporations; what we wish to do is to protect the people from any evil that may grow out of their existence or maladministration. Some of those corporations do well and others do ill. If in any case the tariff is found to foster a monopoly which does ill, of course no protectionist would object to a modification of the tariff sufficient to remedy the evil. But in very few cases does the so-called trust really monopolize the market. Take any very big corporation—I could mention them by the score—which controls, say, something in the neighborhood of half of the products of a given industry. It is the kind of corporation that is always spoken of as a trust. Surely in rearranging the schedules affecting such a corporation it would be necessary to consider the interests of its smaller competitors which control the remaining part, and which, being weaker, would suffer most from any tariff designed to punish all the producers; for, of course, the tariff must be made light or heavy for big and little producers alike. Moreover, such a corporation necessarily employs very many thousands, often very many tens of thousands of workmen, and the minute we proceeded from denunciation to action it would be necessary to consider the interests of these workmen. Furthermore, the products of many trusts are unprotected, and would be entirely unaffected by any change in the tariff, or at most very slightly so. The Standard Oil Company offers a case in point; and the corporations which control the anthracite coal output offer another—for there is no duty whatever on anthracite coal.

I am not now discussing the question of the tariff as such; whether from the standpoint of the fundamental difference between those who believe in a protective tariff and those who believe in free trade; or from the standpoint of those who, while they believe in a protective tariff, feel that there could be a rearrangement of our schedules, either by direct legislation or by reciprocity treaties, which would result in enlarging our markets; nor yet from the standpoint of those who feel that stability of economic policy is at the moment our prime economic need, and that the benefits to be derived from any change in schedules would not compensate for the damage to business caused by the widespread agitation which would follow any attempted general revision of the tariff at this moment. Without regard to the wisdom of any one of those three positions it remains true that the real evils connected with the trusts can not be remedied by any change in the tariff laws. The trusts can be damaged by depriving them of the benefits of a protective tariff, only on condition of damaging all their smaller competitors, and all the wage-workers employed in the industry. This point is very important, and it is desirable to avoid any misunderstanding concerning it. I am not now considering whether or not, on grounds totally unconnected with the trusts, it would be well to lower the duties on various schedules, either by direct legislation or by legislation or treaties designed to secure as an offset reciprocal advantages from the nations with which we trade. My point is that changes in the tariff would have little appreciable effect on the trusts save as they shared in the general harm or good proceeding from such changes. No tariff change would help one of our smaller corporations, or one of our private individuals in business, still less one of our wage-workers, as against a large corporation in the same business; on the contrary, if it bore heavily on the large corporation it would inevitably be felt still more by that corporation’s weaker rivals, while any injurious result would of necessity be shared by both the employer and the employed in the business concerned. The immediate introduction of substantial free trade in all articles manufactured by trusts, that is, by the largest and most successful corporations, would not affect some of the most powerful of our business combinations in the least, save by the damage done to the general business welfare of the country; others would undoubtedly be seriously affected, but much less so than their weaker rivals, while the loss would be divided between the capitalists and the laborers; and after the years of panic and distress had been lived through, and some return to prosperity had occurred, even though all were on a lower plane of prosperity than before, the relative difference between the trusts and their rivals would remain as marked as ever. In other words, the trust, or big corporation, would have suffered relatively to, and in the interest of, its foreign competitor; but its relative position toward its American competitors would probably be improved; little would have been done toward cutting out or minimizing the evils in the trusts; nothing toward securing adequate control and regulation of the large modern corporations. In other words, the question of regulating the trusts with a view to minimizing or abolishing the evils existent in them is separate and apart from the question of tariff revision.

You must face the fact that only harm will come from a proposition to attack the so-called trusts in a vindictive spirit by measures conceived solely with a desire of hurting them, without regard as to whether or not discrimination should be made between the good and evil in them, and without even any regard as to whether a necessary sequence of the action would be the hurting of other interests. The adoption of such a policy would mean temporary damage to the trusts, because it would mean temporary damage to all of our business interests; but the effect would be only temporary, for exactly as the damage affected all alike, good and bad, so the reaction would affect all alike, good and bad. The necessary supervision and control, in which I firmly believe as the only method of eliminating the real evils of the trusts, must come through wisely and cautiously framed legislation, which shall aim in the first place to give definite control to some sovereign over the great corporations, and which shall be followed, when once this power has been conferred, by a system giving to the Government the full knowledge which is the essential for satisfactory action. Then when this knowledge—one of the essential features of which is proper publicity—has been gained, what further steps of any kind are necessary can be taken with the confidence born of the possession of power to deal with the subject, and of a thorough knowledge of what should and can be done in the matter.

We need additional power; and we need knowledge. Our Constitution was framed when the economic conditions were so different that each State could wisely be left to handle the corporations within its limits as it saw fit. Nowadays all the corporations which I am considering do what is really an interstate business, and as the States have proceeded on very different lines in regulating them, at present a corporation will be organized in one State, not because it intends to do business in that State, but because it does not, and therefore that State can give it better privileges, and then it will do business in some other States, and will claim not to be under the control of the States in which it does business; and of course it is not the object of the State creating it to exercise any control over it, as it does not do any business in that State. Such a system can not obtain. There must be some sovereign. It might be better if all the States could agree along the same lines in dealing with these corporations, but I see not the slightest prospect of such an agreement. Therefore, I personally feel that ultimately the nation will have to assume the responsibility of regulating these very large corporations which do an interstate business. The States must combine to meet the way in which capital has combined; and the way in which the States can combine is through the National Government. But I firmly believe that all these obstacles can be met if only we face them, both with the determination to overcome them, and with the further determination to overcome them in ways which shall not do damage to the country as a whole; which on the contrary shall further our industrial development, and shall help instead of hindering all corporations which work out their success by means that are just and fair toward all men.

Without the adoption of a constitutional amendment, my belief is that a good deal can be done by law. It is difficult to say exactly how much, because experience has taught us that in dealing with these subjects, where the lines dividing the rights and duties of the States and of the Nation are in doubt, it has sometimes been difficult for Congress to forecast the action of the courts upon its legislation. Such legislation (whether obtainable now, or obtainable only after a constitutional amendment) should provide for a reasonable supervision, the most prominent feature of which at first should be publicity; that is, the making public, both to the governmental authorities and to the people at large, the essential facts in which the public is concerned. This would give us exact knowledge of many points which are now not only in doubt, but the subject of fierce controversy. Moreover, the mere fact of the publication would cure some very grave evils, for the light of day is a deterrent to wrongdoing. It would doubtless disclose other evils with which, for the time being, we could devise no way to grapple. Finally, it would disclose others which could be grappled with and cured by further legislative action.

Remember, I advocate the action which the President can only advise, and which he has no power himself to take. Under our present legislative and constitutional limitations the national executive can work only between narrow lines in the field of action concerning great corporations. Between those lines, I assure you that exact and even-handed justice will be dealt, and is being dealt, to all men, without regard to persons.

I wish to repeat with all emphasis that desirable though it is that the nation should have the power I suggest, it is equally desirable that it should be used with wisdom and self-restraint. The mechanism of modern business is tremendous in its size and complexity, and ignorant intermeddling with it would be disastrous. We should not be made timid or daunted by the size of the problem; we should not fear to undertake it; but we should undertake it with ever-present in our minds dread of the sinister spirits of rancor, ignorance, and vanity. We need to keep steadily in mind the fact that besides the tangible property in each corporation there lies behind the spirit which brings it success, and in the case of each very successful corporation this is usually the spirit of some one man or set of men. Under exactly similar conditions one corporation will make a stupendous success where another makes a stupendous failure, simply because one is well managed and the other is not. While making it clear that we do not intend to allow wrongdoing by one of the captains of industry any more than by the humblest private in the industrial ranks, we must also in the interests of all of us avoid cramping a strength which, if beneficently used, will be for the good of all of us. The marvelous prosperity we have been enjoying for the past few years has been due primarily to the high average of honesty, thrift, and business capacity among our people as a whole; but some of it has also been due to the ability of the men who are the industrial leaders of the nation. In securing just and fair dealing by these men let us remember to do them justice in return, and this not only because it is our duty, but because it is our interest; not only for their sakes, but for ours. We are neither the friend of the rich man as such, nor the friend of the poor man as such; we are the friend of the honest man, rich or poor; and we intend that all men, rich and poor alike, shall obey the law alike and receive its protection alike.