Theodore Roosevelt - Bringing industrialism under control

As in other matters, in his plan to place American industry under national supervision, Roosevelt proceeded cautiously. He well knew that government intervention in the private sector had profound roots in the American tradition and equally profound justification. But the tumultuous politics of the late nineteenth century had aroused a great fear of "mobocracy." The Greenback, Granger, and Populist movements, with their demands that government redress a dangerous imbalance of power between "the trusts" and "the people," had evoked a fierce counterattack not only against the particular regulatory and public-ownership measures proposed by the rural "radicals" but against the legitimacy of government intervention in the economy as a general principle. For decades, court and legislative actions had promoted and protected the growing industrial and transportation companies against foreign competition and against civil and criminal claims pursued by small business, farm, and labor interests. They had done so in the name of the public's interest in rapid industrial growth. But when, especially after 1875, shifting political majorities in several states led to legislation designed to mitigate some of the more conspicuous costs of industrialization, the groups that had grown powerful in the sunlight of government favor now cried foul. The ferocity of the counterattack had the effect of defining the terms of the contemporary debate—that is, of confining the debate to whether the federal government should do anything about restraining the private uses of economic power or even about ascertaining the measure to which the private uses of power had come to confound a consensus on the national interest.

In his first message to Congress, Roosevelt gently suggested that the corporations were, after all, creatures of the state and could therefore be made to serve a public purpose. In his second address, in December 1902, Roosevelt spoke more strongly: "This country cannot afford to sit supine on the plea that under our peculiar system of government we are helpless in the presence of the new conditions. The power of Congress to regulate interstate commerce is an absolute and unqualified grant, and without limitations other than those prescribed by the Constitution." There was, however, a major controversy over how one defined the legal reach of the phrase "interstate commerce" and over just what limitations the Constitution did place on government action. In 1895, for example, the Supreme Court had ruled that a sugar-processing corporation that controlled more than 80 percent of the processed sugar in the country, that purchased all its raw materials from outside the state in which it did its processing, and that sold its finished product across state and international boundaries was nevertheless primarily engaged in manufacturing within the confines of a state and was therefore beyond Congress' reach under the commerce clause. In the face of such obtuseness, a conventional, strictly legal approach to policymaking could only be pathetic.

In fact, on the eve of the twentieth century, the judiciary dominated American policymaking on economic matters. This is not altogether surprising. The American nation rested on no consistent theory of the state. The main features of the Constitution had been shaped to minimize the state, to restrain and deter the exercise of power, essentially to prevent the state from acting arbitrarily or, for that matter, decisively. Through most of the nineteenth century, the state played a small and diminishing role in determining how individuals related to one another and to their society. That was given over largely to private bargaining, with the courts developing, through case law, elaborate doctrines on contracts, liability, trespass, and property. The general antistatist political environment in America meanwhile tended to neutralize both the legislative and executive branches in fixing social and economic priorities as the basis for resolving day-to-day conflicts of interest and ambition. It was the courts, responding to the multitude of mundane claims of right and privilege, that structured the law that gave definition to the "liberty" to which the nation avowed commitment. That is, the doctrines that the courts shaped defined what kinds of social and economic actions enjoyed freedom from sanctions, what kinds ran greater risks, what kinds of access to and use of property were protected against public, community, or second-party claims, and what terms of contracts the state would be prepared to enforce.

Toward the end of the nineteenth century, after a quarter century of industrialization and corporate growth had impaired the marketplace and had turned the struggles for advantage among a multitude of small economic strivers into a massive conflict of groups and classes, the many legislatures of the country moved to intervene. Americans continued to favor economic growth, but the costs borne by traditional business and agriculture, and by insurgent nonbusiness interests as well, gave rise to a sometimes violent politics of protest. The violence reflected a widespread loss of faith in the market's capacity for fairly and impersonally allocating the resources and rewards that the society had to offer. The intervention took many forms and included the creation of state railroad and public-utility regulatory commissions. The commissions were intermediary government agencies, part administrative and part legislative, designed to replace the flawed marketplace with a mechanism characterized by science and technical expertise. They were designed to become the new impersonal and just allocators of advantages. To these agencies, the state legislatures—and Congress, in creating the Interstate Commerce Commission (ICC) in 1887—delegated considerable discretionary power, in effect creating an alternative to the courts for a flexible, law-adjusting response to day-to-day conflicts in the economic order.

Unhappily, to this alternative the courts reacted as to a challenge. Employing a novel interpretation of the due process clause of the Constitution, contriving an exquisitely narrow construction of the commerce clause, and inventing innovative uses of equity proceedings, state and federal judges—and, most important, those on the United States Supreme Court—repeatedly overrode the declared intentions of the legislative branches of American government in antitrust matters, labor relations, employment policies, and the regulation of selected practices of private industry. The number of cases was not large, but the deterrent effect of judicial vetoes had long-lasting and far-reaching impact.

It was these circumstances that Roosevelt confronted when he took office. In addition to the courts, he faced a congressional coalition of Republicans who represented (sometimes rather directly) the new corporate consolidations of economic power that Roosevelt sought to control together with southern Democrats, whose political instincts rebelled fiercely against any enlargement of federal power. So the president moved cautiously. Although more impatient reformers came to doubt Roosevelt's earnestness, although many likened his vigor to that of a rocking chair ("all motion and no progress"), and others charged him outright with "selling out to the interests," the conservatives were so deeply entrenched that one might be as readily impressed by Roosevelt's achievements as by how little was achieved.

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