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Every other autocracy on earth looks like Venezuela or Uzbekistan. But of course, Western developed countries are prosperous and stable not because of democracy but because of imperialism. Democracies are evil. They rape and loot and pillage their poorer, browner brethren. And they are such hypocrites. Just look at how riot police handled Ferguson. Therefore China is perfectly justified in annexing Tibet and cattle-prodding dissidents. After all, a rising great power should aspire to be slightly crappier than America in every respect.

What a pretentious, hypocritical, stupid fascist prick. Read the south china morning puke at the local library this morning and saw the article by dabing dickless. What a hoot. It does have one use though. Twice indeed. First with the locust over the border and then with his fans here in HK. Best new this week for me.

Vagina Ip in and occasionally since also trotted out the nonsense point that Hitler was elected democratically see — Stanford postgrads can be just as retarded as Harvard alumni. No doubt the little worm probably turned his parents in to the local Red Guards and enjoyed the adulation as mum and dad were being beaten with canes and kicked in the kidneys. I personally believe there are some smart fellows, perhaps overseas-educated, behind-the-scenes PhDs in Beijing who understand that in this world, the power of the idea is paramount. As far as the Hong Kong political and economic elite and government leaders go, the failure to even acknowledge, let alone adapt and take action within the framework of this new reality is now highly evident to the populace of Hong Kong.

All revolutions transformations are, until they happen, then they are historical inevitabilities. Monkeyfish, I like the way you think, but please learn how to use punctuation. Look at that first paragraph … yegods, man! Peking, CY and the whole cronyised, semi-corrupt pack have got down to a fine art flower-pot syndrome, aka incrementalism, aka inch back and forth slowly while the music plays and hope nobody notices.

When cornered, they resort to cruder bait-and-switch, divide-and-conquer, weasel-type forked-wormtongue promises. In sum, the threat being stronger than the action, they may parade the PLA and HKP armoured vehicles up and down a few times, while continuing to tolerate street-level thuggery in the less salubrious areas and instructing Carrie to continue her Cheshire-cat patronising drivel. And everything being in the timing, they may shortly after offer, via one of the Reginas? Stanley: I too have avoided the place for many years, save my very own sojourns.

The best approach therefore is to boycott the place entirely. They were rallying in TST and in the complete absence of any Occupier Traitors to beat up, they turned on the media. Naturally, they call themselves the Alliance for Peace and Democracy. Can they get any more uncool? BTW, Mr. We all know what that means. Veritas forever! Does anyone even read SCMP anymore? Not only do they seem to have bottom of the barrel op-eds, but their wumaos are sub-par as well. Googled it. Found it was a copy and paste comment from another article on SCMP a mere 25 minutes earlier that same day.

I keep hearing the FS being mentioned as a potential replacement, due to his lack of un-popularity. This is all relative, I think the students have not forgotten this foot-in-the-mouth. Your email address will not be published. Big Lychee, Various Sectors. Watching the sun set, little by little, on Asia's greatest city — with a dash of Hemlock. Skip to content. HK: the triumph of cool Posted on October 24, by biglychee. This entry was posted in Blog. Bookmark the permalink. October 24, at pm. That is one bitter little puppy.

Hills says:. Maugrim says:. Cassowary says:. BSL says:. In U. Steel earned 7. Stabilization was clearly yet to be attained. Even more indicative was the fact that during U. Steel ranked third among eight steel com- panies on their operating profits as a percentage of gross fixed assets. Profits, too, seemed disappointing in comparison to the promises.

Per- kins wrote John D. Rockefeller in July, Regulate and steady prices, both in times of good and bad business conditions. Be very far-sighted in its financial policy and management. The formation of U. In late , how- ever, the market for steel began declining. In , steel output was 40 per cent less than in , and U. Steel faced its first real test of "bad business conditions.

Gary was anxious to avoid the impression that he was creating illegal price- lUing agreements or that there was anything secretive in his actions. In the hope of attain- ing price stability, the group agreed not to reduce prices without mutual consultation, and a committee of five, including Gary, was elected to give advice and conciliate differences. He wrote Attorney General C'luiilcs Bonaparte in February, , that the understanding had been made at the initiative of large steel customers with expensive Inventories who wanted the steel industry to maintain prices.

By May, , however, breaks again began appearing in the united steel front. And Perkins complained to Morgan that U. But rumors were circulating that price cuts were being made or were imminent, and in late May the steel men again gathered to reaffirm their loyalty to the Gary understandings. But it was of no use, and several weeks later they met again to reduce prices on a large number of major steel items to counter the secret price-cutters. After June, , the Gary agreement was nominal rather than real. Smaller steel companies began cutting prices and distressed U. Steel sales managers clamored, for steps to meet the competition.

Customers began hedging their buying in the hope that more price cuts would follow, and in February, , the major steel companies met, admitted they had cut prices to meet competition, and formally ter min ated the Gary agreements without setting minimum prices. Steel merger.


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It represents, as well, the opening of a period of intense competition for steel markets, in which price competition was an important ele- ment, which lasted until World War I and the establishment of a working coordination over prices under the auspices of the American Iron and Steel Institute. In the prices of most important steel products fell sharply according to published data, and even more sharply if individual secret rates are taken into account. It was not until that the prices of the peak years of and were restored in most lines of steel, even though output in and sub - sequent years was as great, if not greater, than in 1 But the demoralization had already gone as far as it could, and now steel makers expressed the fear that they were being forced to embark on expansion programs leading to overproduction and excess facilities.

Presumably the initial dlzc and consequent industrial efficiency of the new giant would have left it with an open field in what was, in fact, a competitive steel market. Despite its several significant mergers and a policy of keeping the price of iron ore high to exclude new competitors — it owned about three-quarters of the Minnesota ore fields — United States Steel during its first two decades held a continually shrinking share of the dtccl market.

In United States Steel accounted for With the exception of the establishment of its Gary, Indiana works and its improvement of its Tennessee Coal and Iron property, U. Steel failed to alter the location of its facilities sufficiently or to improve its technology at a time when its competitors were rapidly moving ahead. Moreover, the market for steel goods began shifting radically to lighter steel products, a field which U.

Steel was slow to enter. The introduction of alloy steels and the continuous rolling mill, and the increasing use of scrap rather than ore — U. Steel, in short, was a technologically conservative, increasingly expensive op- eration that illustrates the inadequacy of the dominant theories on the positive relationship between size and efficiency current since the end of the nineteenth century.

Steel never had any particular technological advantage, as was often true of the largest firm in other industries. Charles M. Schwab admitted in that a monopoly could not be established without exclusive patents. With the exception of the Bessemer proc- ess, patents in the industry were traditionally used for collecting royalties rather than restricting entry. But patents were important to give a firm a lead in a field, as well as royalty income. When Henry Grey offered a new process for making structural steel to U.

Steel, the corporation turned it down. In there were eleven firms other than U. Since this is approximately the figure at which peak industrial efficiency was reached, each of these firms was capable of meeting U. Steel on most terms. Moreover, in there were still companies with blast furnaces, a decline of only 7 per cent since The number of companies with steel works and rolling mills increased by one over the same period, to The number of firms engaged in making tinplate and template fell from fifty-seven to thirty-one over the period of ten years, but the number of wire mills 39 lining purchased rods increased from twenty-nine to fifty-six.

Sled increased its total output 40 per cent during , thus having a growth rate far lower than any of its older competitors. If nothing else, the steel industry was competitive before the World War, and the efforts by the House of Morgan to establish control and stability over the steel industry by voluntary, private eco- nomic means had failed. Having failed in the realm of economics, the efforts of the United States Steel group were to be shifted to politics.

The Oil Industry The alleged triumph of Standard Oil over the oil industry was based in large part, as far as there was a triumph, on its ability to extract rebates from the railroads on its shipments. Indeed, the secretive nature of the re- bating made Standard among the most unpopular of trusts, and the fact that it continued receiving rebates long after the passage of the Interstate Commerce Act in , and even after the passage of the 1 Ik ins Anti-Rebating Act of , did little to enhance its popu- larity. Rebating left Standard naked before public attacks and accu- sations, and the company became the focus, standing almost alone, of a substantial part of the antimonopoly sentiment at the end of the nineteenth and beginning of the twentieth century.

For many, not the least of whom was Theodore Roosevelt, Standard was not merely the reflection or example of the potential evils of trusts, but the evil itself. I lowever onerous the burden of rebates on the railroads — a bur- den which the railroads usually passed to the other shippers and eventually the consumer in the form of higher rates — it is neverthe- less rue that Standard treated the consumer with deference.

Standard never controlled a consequential share of the oil- producing industry, but restricted itself to refining and sales. As a producer of oil Standard accounted for 1 1 per cent of the output in Its somewhat ruthless relationship with the not altogether altruistic producers has often erroneously been projected onto its relations with competitive refiners. Standard attained its control of the refinery business primarily by mergers, not price wars, and most refinery owners were anxious to sell out to it.

Some of these refinery owners later reopened new plants after selling to Standard. During , however, Standard refined 84 per cent of the oil, and in , the year of the dissolution, it refined 80 per cent. The dissolution decree left the component Standard companies in noncompetitive positions with one another, and the combined share of refining of this con- glomeration declined to 50 per cent in and 45 per cent in It is clear that from on Standard entered a progressive decline in its control over the oil industry, a decline accelerated, but cer- tainly not initiated, by the dissolution. And until it faced un- certainty and growing competition.

In 1 there were sixty-seven petroleum refiners in the United States, only one of whom was of any consequence. Over the next decade the number increased steadily to refiners. It concentrated on the heavy lubricants field and grew despite Stand- ard attacks, and after spread into other important phases of refining. The American oil industry passed through a revolution from to 1 , and Standard failed to participate fully in it. The first factor in this revolution was the shift in the oil-producing areas from the East to the West in a few short years.

But in this area was producing less limn 40 per cent of the crude oil, and by the new California Ileitis and the midcontinent fields were each producing more oil than the Appalachian, Lima-Indiana, and Illinois fields combined. Stand- mi d had important investments in both of these new areas, but its basic strength was in the East. Moreover, in the Gulf and Texas mens, as well as in the California and the midcontinent fields, large Independent producers had made sufficiently large fortunes to move inti refining.

Between and the number of auto registra- tions increased forty times, and gasoline and its distribution became the central core of the industry. In this area the independent oil companies led the field, pioneering in gas stations in the same way that they had surpassed Standard in developing improved tank cars and trucks as well as most of the major innovations in petroleum chemistry.

In a spiralling market for oil such as existed from the turn of the century on, Standard, conservative and technologically uncreative, was no match for the aggressive new competitors. The dissolution decree of tended to knock Standard out of its lethargy, and its component companies began merging with many of the new independents to diversify and integrate in all regions. The oil industry, as well, had failed to establish stability and integration via voluntary economic means in the period before World War I. The Automobile Industry The automobile industry is an excellent example of a fundamen- tal technological innovation that led to a proliferation of wealth in new hands and the creation of new centers of power in the economy.

And, in the Progressive Era, it was a source of additional intense competition. Technological innovation and managerial skill, not 43 capital, were the key to success, though ample capital did not hinder progress and it saved at least one wild speculation. Many of the early auto manu- facturers first started in the bicycle, carriage, or marine motor indus- try and diversified into automobiles. Most auto makers were really assemblers of parts produced by independent machine shops, and by requiring customer deposits on orders and cash on delivery they were able to shift the capital burden onto their parts suppliers.

Only one of die successful major auto firms — General Motors — was able to attract significant investments from established investment centers before By seven of the eight major auto producers had managed to obtain virtually all of their invested capital out of their piolits, and to thereby establish a new center of economic power in Ddroit. The output of autos increased from 19, in to ,- in and 1,, in , and in this type of market, with demand high and brand loyalties as yet weak, new companies might expect to survive, profit, and grow despite the furious competition.

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Estimates on the number of companies entering the automobile field vary sharply, but even the conservative data indicate a high entry rate and competition. According to Motor in , com- panies entered the auto business during , of these lailed and 29 entered still other fields. In there were auto builders, according to census data, and in there were The most conservative figures, compiled by Ralph C.

Epstein, indicate fiat in there were companies actually making and selling autos, as opposed to merely planning to do so. By , of this number died, leaving 59 in the field — still a rather substantial number. It is only after that new entries into the industry drop oil sharply. The mortality rate was high even among the major firms. After the mortality rate declined and significant concentration began taking place within the industry. At the same lime, the standardization of parts and integration within each com- pany resulted in comparative stability for the major firms.

The Electric Vehicle Company, among other things, acquired the Seldon patent on gas cars, hoping to collect a royalty on every gas car produced on the theory that they all infringed on its patent. The relatively power- ful Packard Motor Company and Olds Motor Works were attracted to the patent as a means of destroying existing fly-by-night companies and preventing the creation of new ones. Ford was refused a license by the association, and in late it opened a suit against him.

Ford, in the meantime, ignored the patent and in helped form a new competitive association. In Ford lost his patent suit, but an appeal brought him victory in January, , and broke up the Sel- don association. In the National Auto- mobile Chamber of Commerce was formed by one hundred pro- ducers to freely cross-license routine patents among themselves. This policy lasted until , and helped keep the industry competitive.

After the possibility of patent exclusion and market growth became too great an attraction to resist, and the system largely col- lapsed. General Motors is an excellent example of the interaction be- tween major finance and the auto industry. He started with Buick in and made sufficient profit to acquire twenty more firms, most of which were failures. Until , despite earlier discussions with J. Morgan and Company, Durant largely financed his own expansion.

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Seligman and Co. Henry Seligman wrote in September, Durant, in the meantime, continued Ills speculations, picked up Chevrolet and formed an alliance with Du Pont to buy back General Motors, which they took over in late In J. After Alfred Sloan, an engineer, took over as G. But competition mid overexpanded production and sales facilities within the industry hud existed for many years, and repeated efforts by the McCormick Company and the Deering Manufacturing Company to merge led to repeated failures.

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It was only when the Deering organization began buying iron ore lands and building its own rolling mill in , and 46 failure to rationalize industry the interests of Morgan and the new U. Steel merger were threat- ened, that progress was made, Gary directed the problem to the attention of George W. Perkins, and he, in turn, brought the full weight of the House of Morgan behind the existing merger senti- ment. With dissension in the firm, inadequate profits, and many of the former brands still competing with each other in the industry at great cost of duplication, the company was forced to adopt radical organizational changes in late by eliminating the older managers inherited from the various firms.

But the dupli- cation of products continued until at least In the com- pany finally began paying dividends on its common stock. Its rate of earnings on its capital stock increased from 4. In the company sold 96 per cent of the binders in the United States; it sold 87 per cent in Its share of the mower market declined from 91 per cent to 75 per cent over the same period. And its share of the harvester market fell from 85 per cent in to 80 per cent in and 64 per cent in At the time that Inter- national Harvester was formed, Deere and Co. Case and Co. Although the number of manufacturers of agricultural implements declined slightly over the preceding decade, in there were still f 40 in the United States, And after , when Allis-Chalmers di- versified into tractors, auto companies also began entering the in- dustry.

In , with many of the key patents longer in effect, vast areas of the United States were without serv- ice, and local capital was quite ready to finance independent com- panies. It refused, in addition, to allow its subsidiary, Western Kleclric, to sell equipment to the new firms. T his policy failed largely because many of the new competitors Inul important patents of their own and were aggressive in research and development.

At the same time, new firms, such as Kellogg Switchboard, Stromberg-Carlson, and Automatic Electric Company, apt img up to supply equipment to the new independents. The tele- phone market, especially in the West and in rural areas, was avail- able to virtually anyone ready to take it. But the telephone independents had no access to ample supplies nf capital. The independents recognized that mutual cooperation was I'lticial if any were to survive, and in organized a national asso- ciation designed to establish long distance service between their cities.

Unfortunately for the new venture, J. Morgan be- came interested in the Bell System, though he did not control it at this time, and was in a position to help the Widener interests in an important gas utility war then going on in New York City. Widener, W. Elkins, and Dolan were induced to withdraw from the new telephone company, and it collapsed. Despite massive capital support and the weaknesses of the inde- pendents, A.

In there were 9, independent telephone systems, and by there were 22, The number of phones in the independent system expanded so rapidly that in , the year of peak relative strength for the independents, A. The pressure of competition increased A. Morgan was an impor- tant minority faction within the board of directors; saw his victory over Boston control. Theodore N. At the same time, however, A. The independents complained that A. By Vail was freely admitting that the policy of the com- pany was to merge with independents. Reversing the earlier centraliza- tion of its organization, which Vail granted was largely based on accident, A.

Thus able to compete more successfully with the independents, or to merge with them, A. In early Attorney General Wickersham 49 forced the company to dispose of Western Union, which it acquired in , to agree to cease its merger policy, and to connect with the Independents for toll service — an order that was effective only until It is true that many of the independent telephone companies were poorly run, inadequately financed, and based largely on the power of local franchises. But the independents were primarily responsible for the rapid growth of the telephone system, and even the growth of Ihc Bell System.

More- over, by many of the independents were extremely well run And profitable firms. In , a year of business decline, all but a few of the independents in Ohio, Indiana, and Illinois paid dividends of 4 to 12 per cent on their stock. Even more important, how- ever, is the fact that independents forced telephone rates down and treated a mass market for their services and for the industry. Com- parative rate data is scarce, but every indication is that independent rates were substantially lower than A.

Vail admitted in that average A. In A. Until engineering and research was consciously relegated o n secondary role in A. Loading coils, the mercury-arc repeater, and the three-element vacuum tube, for example, were all developed by independent inventors, and A. The essential characteristic of the telephone industry in the first decade of this century was its competition and rapid change. The Copper Industry The history of the copper industry in this period is, in outline, one of attempted consolidations and pools, and a continuous unsuc- cessful effort to establish control over the industry.

In a world copper pool organized by French interests involved many of the major American producers, but smaller American firms took advantage of the higher prices it created to increase their out- put, and the pool failed by Another effort was made in , but it also failed. Since voluntary means proved inadequate, in six new combinations, stimulated by the doubling of the price of copper, were formed to exploit approximately two dozen older mines.

Five of these combinations crashed. Rogers, William Rockefeller, and the Anaconda copper interests. The efforts of private interests to control or consolidate the 51 copper industry were singularly fruitless. It produced 23 per cent of the HU Ion's copper in , 13 per cent in , seven per cent in , Mini 1 1 per cent in The American copper industry is an excellent example of the Hue of instability and compedtion during this period — instability due In he rapid shifts in the location of major deposits and the inability Ilf nay one group to control all the factors of production.

Among other things that Russell claimed for the trust was the power of absolute price-fixing and ownership of nearly all pack- ing houses. In Cudahy and Ml I. In May, , the pool disbanded under a Department of Justice injunction. For the most part, the pool was largely a way for the packers to maintain peace among themselves and to prevent imbalanced inventories of a perishable product in cer- tain regions and during special times of the year.

Since they had no way of regulating the output and supply of meat, which was the exclusive responsibility of thousands of stock raisers, it is doubtful the pool had any significant control over meat prices. Armour, Swift, and Morris proceeded during to plan a merger of their own firms and other major packers, and collectively purchased thirteen packing companies. But lack of capital, the nega- tive advice of Kuhn.


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Loeb and Co. The thirteen com panics were then formed in into the National Packing Com- pany, with Swift owning 47 per cent of the stock, Armour 40 per cent, and Morris 13 per cent. Using National Packing as an um- brella, the three firms regulated their own affairs in much the same way as under the old pool. In the company was ordered dis- solved, and the property was divided among the owners. In most of the founders of the meat industry were dead and their children were in charge of their companies. The results were not altogether happy. Armour, Morris, and Schwarzschild all suffered in the hands of the second generation, and this tended to open the markets of the industry to additional competition.

By competition within the industry was intense, and efforts to mitigate it by creating the American Meat Packers Association, failed to change the situation. The price of meat rose consistently from to , and this fact was often cited as proof of monopolistic control in the industry; but so did the prices of many other foods and the prices of all foods and farm products combined.

It was easier for the large packers to obtain railroad rebates on large shipments than to try to have the consumer pay for allegedly greater than average profits. Profits were certainly substantial, but not because of higher than competitive prices. As Edward F. Therefore they Would gradually take away the business from the large packers, ihoiild the latter attempt to buy their cattle unreasonably low or sell heir beef unreasonably high.

The major difference in profits was the exploita- tion of the byproducts of meat. Local slaughterers had less expense pet head for refrigeration and freight, and usually had lower admin- IHriilion, sales, and accounting expenses as well. For identical grades Ilf meat, local meat often commanded higher prices than Western Aleut. Liabilities were many as well, ranging from the cost of slaugh- tering to economies of mass purchases of animals, but the assets were lullleiently important to create serious competition. Packing firms other than the largest three com- pmiics accounted for 65 per cent of the meat output in , and 7H per cent in The number of slaughtering and meat packing fMnhlishments increased sharply during our period — from 1, in IH99 to 1, in This increase in the number of packers by ,VJt per cent in one decade later had the greatest significance for the political role of the meat industry in the Progressive Period.

Numerous other examples of the trend toward competition and llic failure of mergers can be found in other important fields. In Industries where rapid technological innovation was the key to suc- Wiw, as in electrical manufacturing and chemicals, the major com- panies began losing their share of markets and new entrants swarmed III luring the first decade of the century.

And even when entries were not great, the reallocation of market shares tended to deprive giant, well-capitalized mergers of their supremacy. In several industries, tobacco being the most notable, revolutionary changes in consumer tastes upset the dominance of key firms. The trend is altogether clear: the manu- facturing sector of the economy after the period of numerous mergers in was growing increasingly competitive.

Private efforts to establish stability and control within the various manufacturing industries had largely failed. The economic and industrial development of the United States from until World War I assured a fluidity of conditions that made economic rationalization and stability by voluntary means sub- stantially impossible. America was too diverse, the economic resources and opportunities too decentralized, to prevent the creation of an American economic frontier. The idea that economic opportunities were closed to middle-level wealth is not in accord with the facts.

There was sufficient product and service development — the distribu- tion and service industries increase sharply in this period — to dispel that notion. Rapid technological innovation in this period often meant, as Schumpeter suggested, innovation embodied in new firms. This was certainly true in totally new industries, such as the automobile and electrical manufacturing industries, where older wealth was loath to speculate, and generally true within established industries as well.

New products, new methods of production, new markets, new sources of supply, and new business combinations always affected the exist- ing distribution of power and shares in older industries. Established firms participated in this growth, but were rarely able to prevent in- truders from grabbing their share as well.

All grew, but the smaller entries generally grew more rapidly. Internal financing out of profits or rapidly decentralizing sources of cash made it possible for many 55 of llicse new entries to prosper quite independently of the larger lluuncicrs whose major efforts went into the merger movement. It In.

Many of our new business leaders came from those wealthier educational and occupational backgrounds capable of pro- viding the prerequisite for that genuine, decisive mobility which is Nignilicant in power and income terms. And the dynamics of eco- nomic growth were such in the period that those individuals with the educational criteria, social manners, and minimum capital could and ol'lcn did obtain radically magnified positions of economic impor- limcc without necessarily altering their precise family educational nt jit is or formal occupational designations. The con- solidations were formed not because of technological considerations but primarily to create profits for promoters and incidentally be- cause of the desire to eliminate competition.

But such considerations are insufficient to prevent the entry of competitors who often can operate successfully at levels of production well below I hose of the larger combinations, and can exploit new opportunities lor profit more ably. In these circumstances the power of a giant corporation is based on transitory or variable factors, and the decen- tralization movement within many large corporations is a concession to the efficiency of the successful smaller competitors. Consolidations and mergers were the next logical step, and also failed.

The proliferation of new competitors undermined the possibility of attaining economic rationalization, with profit, by voluntary economic means. But whether the passage of the control of an industry from one firm to ten or twenty is relevant to the social, as opposed to the political, role of business is quite another matter.

To ignore the social function of business, and its relation to the remainder of society, by concen- trating on internal organizational and structural changes within in- dustries would be a great error. Whether there are a few or many companies does not change the basic control and decision-making power of the institution of business in relation to the other important classes of society, but only the detailed means by which that power is exercised and certain of the ends toward which it is directed.

Monopoly and business cooperation were raised to the pinnacle of desired goals at the very time that popular and aca- demic advocates of conservative Social Darwinism were attempting to utilize the doctrines of Herbert Spencer and William Graham Sumner ns u justification of the existing distribution of economic power and Inissez faire. Laissez faire provided the businessman with an ideologi- cal rationale on an intellectual plane, but it also created instability mul insecurity in the economy.

If economic rationalization could not be attained by mergers and voluntary economic methods, a growing number of important busi- nessmen reasoned, perhaps political means might succeed. At the same time, it was increasingly obvious that change was inevitable in a politi- cal democracy where Grangers, Populists, and trade unionists had significant and disturbing followings and might tap a socially danger- ous grievance at some future time and threaten the entire fabric of the status quo, and that the best way to thwart change was to channelize it.

If the direction of that change also solved the internal problems of the industrial and financial structure, or accommodated to the increas- ingly obvious fact that the creation of a national economy and market demanded political solutions that extended beyond the boundaries of states more responsive to the ordinary people, so much the better. Nor was it possible for many businessmen to ignore the fact that, in addi- tion to sanctions the federal government might provide to ward off hostile criticisms, the national government was still an attractive po- tential source of windfall profits, subsidies, and resources.

Only if we mechanistically assume that government regulation of the economy is automatically progressive can we say that the federal regulation of the economy during to was progressive in the commonly understood sense of the term. In fact, of course, this as- sumption has dominated historical writing on the period, and histo- rians have replaced the mythology of laissez faire with the mythology of the federal government as a neutral or progressive intermediary in the economy.

This theory of the nature of political democracy and the distribution of power in America has shaped our understanding of the American political experience, our understanding of who directed it, and toward what ends. At the same time, I will maintain, this perspec- tive has overlooked the informal realities, has failed to investigate the nature, motives and detailed character of each phase of the regulatory process, and has led to a facile misunderstanding not only of the full nature of the American political experience but also of the character of American economic development.

If the criterion is not the presence or absence of government intervention but the degree to which motives and actions were designed to maintain or preserve a particular distribution or locus of power, the history of the United States from Theodore Roosevelt through Woodrow Wilson is consist- 59 ontly conservative. Nor is the extension of federal regulation over the economy a question of progressive intent thwarted by conservative ad- ministration and fulfilment.

Important business elements could always be found in the forefront of agitation for such regulation, and the fact that well-intentioned reformers often worked with them — indeed, were often indispensable to them — does not change the reality that federal economic regulation was generally designed by the regulated interest U meet its own end, and not those of the public or the commonweal. The course of business action in the federal political sphere was motivated by a number of crucial factors that too often have been Ignored by historians.

First in importance was the structural condition within the economy, described in Chapters One and Two, which im- posed the need for rationalization on many American industries. The second is the fact that, in the long run, business has no vested interest In pure, irrational market conditions, and grew to hate the dangerous consequences inherent in such situations. Moreover, the history of the relationship between business and government until was one that could only inspire confidence in the minds of all too many business- men.

The first federal regulatory effort, the Interstate Commerce Com- mission, had been cooperative and fruitful; indeed, the railroads them- selves had been the leading advocates of extended federal regulation after The ties between many political and business leaders were close, not merely because Mark Hanna ran the Republican Party or irover Cleveland had been the partner of J.

As I shall show in the fol- lowing pages, the business and political elites of the Progressive Era hud largely identical social ties and origins. And, last of all, the fed- eral government, rather than being a source of negative opposition, always represented a potential source of economic gain. The railroads, of course, had used the federal and local governments for subsidies and land grants.

But various other industries appreciated the desira- bility of proper tariffs, direct subsidies in a few instances, government- owned natural resources, or monopolistic privileges possible in certain federal charters or regulations. For all of these reasons the federal government was a natural ally. Business reliance on the federal government may have been vari- able in its emphasis, but it was consistent in its use. Labels are irrelevant, the phenomenon is not — and the facts still remain whether we like them or not, or even if we are unaware of them.

It was never a ques- tion of regulation or no regulation among businessmen during the Progressive Era, or of federal control versus laissez faire; there was, rather, the question of what type of legislation at what time. If American business did not always obtain its legislative ends in the precise form it wanted them, its goals and means were clear.

And the dominant trend in the political decisions that were made, with few exceptions, preserved the type of distribution of power and deci- sion-making that also insured the power of regulated industries. Such a procedure assumes that there are no operational power centers and that one opinion is as influential as another — a proposition almost disproven by stating it in a manner which allows one to realize what it really alleges. What is crucial is the opinion of key power groups, first of all, and the majority of all inter- ests within a specific industry in which state or federal regulation is an issue.

And, as so often happens, even if groups in different industries disagree on the broader theoretical propositions implicit in the general regulation of the economy by the federal government, it is the opinion of key power groups with interests in many fields that is the dominant concern to anyone studying general trends. It is possible to state that many businessmen — the drugstore operator being equated with the steel company president — opposed government regulation most of the time, even though most businessmen supported it at least when it was to their interest to do so.

The group that supported it consistently, the men in the top echelons of finance and industry attempting to attain economic centralization and stability, and with important political con- nections, are the men who will primarily concern us here. Outside of the realm of legislative and political activity there re- mained the larger intellectual issue of accepted social values.

The view 61 that government and business were equally valued in the Progressive bra, or that government was given higher value, is incorrect. For busi- ness held the ultimate reins of accepted ideology and defined the outer limits of potential reforms; all major parties paid tribute to the basic Institutional rights and interests of business, and to the mythology of social values which allowed it to survive all onslaughts.

More impor- tant, the net effect of federal legislation, and usually the intent, was to implement the economic-political goals of some group within an indus- try. The Antitrust Legacy The antitrust legacy handed to Theodore Roosevelt was little more than an amorphous social sanction — vague and subject to broad inter- pretation, or to inactivity. Ignoring the pro-laissez faire predisposition of the majority of intellectuals and academicians, the belief in competi- tion as an abstract proposition was shared by the average middle-class businessman.

The Sherman Antitrust Act, written by Senators Sherman, Ed- munds, Turpie, George, and others, was the only politically concrete heritage of the antitrust movement bestowed on Roosevelt. It is diffi- cult enough to give a legal definition of monopoly power, short of per cent control, acceptable to any large group of economists.

It does not unnounce a new principle of law, but applies old and well-recognized principles of the common law to the complicated jurisdiction of our State and Federal Government It is the unlawful combina- tion, tested by the rules of common law and human experience, that is aimed at by this bill, and not the lawful and useful combination. And if the Supreme Court, deeply com- mitted to laissez faire and a literalist interpretation of the law, saw the Sherman Act as a justification for thwarting big business desires for con- centration and cooperation — as in the Addyston Pipe decision and the Trans-Missouri decision — the law could be as disturb- ing to business leaders as to labor unionists.

In the politi- cal sphere, however, the trends were more definite. People will now think 63 lie Protected Manfrs. Cleveland U pretty good fellow. Off for Venice tomorrow. This they did, as William Itndicott, Jr. By the end of the century the issue could no longer be Ignored, if only because it was becoming politically inexpedient to continue to do so in the face of mounting concern over the growth of big business.

In June, , Congress created the U. Industrial Com- mission to study the entire economic structure and to take testimony from those interested in the problem. Composed of House and Senate members, but primarily of representatives of a variety of economic organizations, the commission functioned for three years, and its nine- loon volumes of testimony and reports are a goldmine of information on every aspect of the American economy at the beginning of the century. The majority of the sentiment was for national regulation of some type in some specific area, and no in- terest was as strong in this demand as Standard Oil.

John D. Rocke- feller, John D. Archbold, and H. Rogers of Standard called for a national incorporation law and the federal regulation of accounts and financial publicity. There should be. Federal legislation under which corporations may be created and regulated, if that be possible. In lieu thereof, State leg- islation as nearly uniform as possible encouraging combinations of persons and capital for the purpose of carrying on industries, but per mitting State supervision.

Gates and Max Pam of American Steel and Wire, who wanted strict federal incorporation laws and a national manufacturing commission to supervise incorporation, and by James B. Dill, the promotion lawyer, who also favored federal incorporation. There was, of course, si gnifi cant opposition to federal incorporation from John R.

Dos Passos, the promoter, and Francis Lynde Stetson, but it is clear that important, if not dominant, big business sentiment was very much in favor of federal regulation. Penrose did not want the job, however, for the co mmi ssion never interested him, and Archbold switched his support to Albert Clarke, not a member of Congress, and rounded up the votes to elect him.

By the politicians could no longer ignore the trust issue. A New President During the first year of his presidency, Roosevelt moved as cau- tiously on the trust issue as McKinley would have. Moreover, the Republican Party was still dominated by Hanna. But, most important of all, Roosevelt had no firm convic- tions on the question of antitrust policy.

He had never written on the question, his under- Mnnding of economics was conventional if not orthodox, and his ex- pressions on larger questions of social and economic policy were de- cidedly conservative. As Governor of New York he had cooperated handsomely with George Perkins and the New York Life Insurance Company in quashing a bill passed by the Legislature limiting the amount of insurance which could be carried by any state-chartered company.

Perkins, in return, was very active at the Republican national convention in winning the vice-presidential nomination for Roosevelt, n conscious step, as John Morton Blum rightly suggests, in advancing I lie political career of Roosevelt. Hanna was as pro-union as one could be without giving up a commitment to the open shop. He, like McKinley, favored moderate action — or state- ments — on the trust issue, and he defended the economic advantages of corporate concentration in much the same terms as Roosevelt later did.

Publication Order of Royal Cordova Family Books

The relationship between business and government was essen- tially a pragmatic one. Both men took that rela- tionship for granted. Roosevelt discussed the matter with George Perkins, now a Morgan partner, at the beginning of October, and gave him a first draft for his comments and recom- mendations. Perkins regarded the draft as perfectly acceptable, and was particularly pleased by the section endorsing national rather than state regulation; but Roosevelt apparently mistook a few critical com- ments for opposition.

His state- ment was a defense, if not a eulogy, of big business. It is not true that as the rich have grown richer the poor have grown poorer. The captains of indus- try who have driven the railway systems across this continent, who have built up our commerce, who have developed our manufactures, have on the whole done great good to our people. Such caution was indeed gratifying. Philander Knox, certainly no radical before or after the Northern Securities Case, opened the case against the Northern Securities Company on behalf of the federal government.

The details of the incident have been discussed in every standard his- tory of the period. The actual owner- ihip of the railroad by the two power blocs was not altered, nor did they have to give up their railroad holdings, which still faced competi- tion for three-quarters of their traffic. Preparation of the case was be- gun secretly by Knox, and not even Elihu Root was consulted. Perhaps It is true that Roosevelt wanted to assert the power of the Presidency over Wall Street, or aggrandize his ego, but neither precedent nor the subsequent events justify such a view.

The agitation for action against the company was intense in the Midwest, but this alone does not ex- plain the event. The Northern Securities Case was a politically popular act, and it hus strongly colored subsequent historical interpretations of Roosevelt hi a trustbuster. It did not change the railroad situation in the North- west, the ownership of the railroads in that region, nor did it end coop- eration among the Hill-Morgan and Harriman lines.

Roosevelt never Hiked for a dissolution of the company, or a restoration of competi- tion. Knox certainly never intended to restore competition among the involved railroads, and his concept of alternatives never reached a sufficiently articulate condition to allow either him or Roose- velt to shape the course of events toward some significant change. The Northern Securities Case caught Wall Street by surprise, less because it actually damaged concrete interests than because it seemed to threaten the autonomy of the business decision-making process.

This is not to say that business did not desire government regulation in certain areas, but this was surely not one of them. Morgan, who allegedly re- garded the President as little more than a businessman in politics, visited Washington on March 10, , to discuss the threatened change in Washington-Wall Street relations with Roosevelt.

The significance of the discussion has never beer, fully appreciated. Morgan made an offer, and whether he consciously de- cided for it at the time or not, Roosevelt operationally accepted it. Knox refused to comment on the scheme Perkins presented, but it is avldcnt that the House of Morgan was quite serious about obtaining a government dispensation for its undertakings — especially since, in this I'nxr, a subsidy from Congress for the new shipping company was also tlPNlrcd. The idea was not par- ticularly controversial and was especially welcomed by advocates of ex- panded foreign trade; only lethargy and a desire to reduce expenditures prevented earlier action.

Big business sentiment for comprehensive federal regulation eliminating troublesome state regulation also stimu- lated interest in a federal agency that might lead to this end. Dill, phrased it. To aid him in his efforts for regulation, Roosevelt turned to the conservative Republican and business elements. Bring pressure to bear on Speaker David B. James R. His legislative agent in Washington, William C. Beer, kept him fully informed of the progress of their joint efforts.

At the same time, Perkins had Senator Joseph B. It made no progress getting through the House Committee on Interstate and Foreign Commerce until January, , shortly after Perkins took up the task. The Administration directed its efforts in January, toward the pas- sage of the Nelson amendment and toward the defeat of the Littlefield resolution.

Roose- 71 veil, in effect, could decide at his own discretion which corporations lo attack through publicity. The Littlefield resolution, which passed he House, would have required all corporations engaged in interstate commerce to file annual financial reports with the Interstate Com- merce Commission. Its major provision barred from interstate com- merce any corporation which used discriminatory rates or sought to destroy competition. Roosevelt and Knox made their opposition to the meusure known in early January: they preferred publicity to destruc- tion, and the Littlefield Bill was stopped in the Senate.

Roosevelt gave nil of his support to the passage of the Nelson amendment to the Department of Commerce Bill. Passage of the bill was inevitable, but was given a sudden burst of support by a faux pas committed by John D. Rockefeller, Jr. Roosevelt seized upon the opportunity and called in the press, transforming Rockefeller, Jr. On February 10 the House passed the bill to 10, and the next day the Senate casually approved the bill without debate or a roll call. Perkins had actively campaigned for it, and the Department of Commerce aspect of the bill was welcomed by all businessmen. Despite Standard Oil efforts to dissuade him, Senator Nelson Aldrich worked with Roose- velt in the passage of the bill, and Roosevelt relied on him at various times.

Roosevelt, after all, had destroyed the radical Littlefield pro- posal, and nothing in his presidency justified serious apprehension as to what he might do with the new bureau.