"The Trust Issue" may have been the most seriously discussed subject of the 1912 campaign. Americans worried about the growth of large business firms, and the power they held in American society. They asked important questions about the future of their business system in 1912 especially, and in the Progressive era in general.
Should a democratic society allow one company to become so big it controlled an entire industry (a monopoly)? Should a free nation allow a handful of large companies to control an entire industry (an oligopoly)?
To what extent should a free people empower their government to regulate businesses? In any regulatory system, who should do the regulating? The states? The federal government? The legislative branch? The executive branch? The judicial branch? A fourth branch of government, the independent regulatory commission?
In the United States, "We the people" command all authority. Businesses obtain their right to exist from the people. Should the state government continue to charter businesses through incorporation, or should the federal government charter some businesses, and thereby control them?
Should we adopt the Socialist position and have government ownership of the basic means of production, distribution and transportation, and financing in the economy?
The late nineteenth century saw the rise of "big business" in important areas of economic activity. ("Big" is never defined precisely, but the quantitative term is popularly used to connote something important.) Big business firms were institutions that used management to control economic activity. Big business firms broke themselves into different functions, or "departments," and used managers to coordinate the work of departments, and "middle managers" to coordinate work among departments.
In some lines of manufacturing, there were advantages to have a single organization control raw materials, transportation, fabrication, and distribution. When he sold his steel company in 1901, for example, Andrew Carnegie was the most efficient--and the wealthiest--steel maker in the world. Carnegie steel had control over sources of coal, coke, and iron ore. Carnegie steel exercised control over ships and railroads that brought raw materials to its mills in the Pittsburgh district. Carnegie insisted on his mill remaining the most advanced of their day. Not only did Carnegie Steel manufacture steel, the company also produced finished products like railroad rails and bridge girders. All of these operations were in a single managerial organization. Managers controlled the flow of materials. Carnegie Steel was so efficient that it could undercut all of its competitors and still make large profits.
When an entrepreneur like Carnegie was successful in building an efficient organization to control manufacturing processes, he drove competitors out of business. A steel maker either had to compete by mimicking Carnegie's managerial techniques, or go into a niche, or specialized, market that the big steel companies did not enter.
Attacks on Trust: Anti-Trust
In 1890 Congress enacted the first federal antitrust statute, the Sherman Act. The key part of the law read:
"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."
The Omaha Platform of 1892 said, "The fruits of the toil of millions are boldly stolen to build up the fortunes for a few, unprecedented in the history of mankind; and the possessors of these, in turn, despise the Republic and endanger liberty. From the same prolific womb of governmental injustice we breed the two great classes – tramps and millionaires."
When Silver Democracy was debating among the Republicans, in the election of 1896, Henry Demarest Lloyd said in The Populists at St. Louis that," The People’s Party has 'shot the chutes' of fusion and landed in the deep waters of Democracy as the Independent Republican movement of 1872 did. Nearly all the reform parties of the late generation have had the same fate. Democracy is that bourne from which no reform party returns--as yet. The Independent Republicans organized as a protest against corruption in the administration of the national government and to secure tariff reform of free trade lines. Unlike the People’s Party, theirs began its career under the leadership of some of the most distinguished men in the nation." An anti-Omaha Platform was, therefore, made.
In this cartoon from The Ram's Horn (June 20, 1896), Frank Beard expresses a religious view of the amazing of great wealth. Greed, he suggested, led to ruin for the avaricious person.
Leading to the election of 1912: The Progressive Party
The Democrats especially loved to attack the trusts, as this May 12, 1909 cartoon from Puck demonstrates. Here the trusts, using the mallet of the tariff, hit the consumer to drive up profits. This cartoon held an obvious appeal at a time when prices in general were rising. Although the Democratic party included important business elements in its coalition, in general the businessmen who were Democrats were in the South and West, regions that were generally distrustful of the large corporations headquartered in New York, Chicago, Boston, Philadelphia, Pittsburgh, Cleveland, and elsewhere. One of the main complaints against the trusts is that they were bullys. Big businesses, so this argument went, monopolized opportunities and prevented smaller firms from realizing them. Wilson expressed concern about this situation in the 1912 campaign. In this July 29, 1908 cartoon from Puck (a Democratic magazine) the failure over 25 years to check the growth of monopoly has resulted in this disastrous situation. This cartoon, by McCutcheon, argues that as Governor Wilson or New Jersey was sleeping while the trusts were growing in his state. In this cartoon, the figure on the left is wearing a nightshirt labeling him as a "socialist." The figure on the right is wearing a nightshirt labeling him as a "trust magnate." The slogan on the bed's headboard, "Business Combination is Inevitable" reflected on argument in defense of "the trusts." Socialists argued that capitalism inevitably led to the concentration of wealth and power in the hands of a small upper class of people. Business leaders pointed out that firms grew as a result of superior practices in a competitive market. Roosevelt, in his espousal of the "new nationalism" essentially agreed. Wilson, in his assertion of the "new freedom" was ambivalent. The Supreme Court in 1911 settled on a doctrine of the "rule of reason" that allowed firms to be large if they grew through reasonable and fair competitive practices. The trust issue figured in the 1912 campaign less than the tariff issue. The trust issue, however, gave rise to thoughtful statements that defined Roosevelt's "New Nationalism" and Wilson's "New Freedom." The trust issue also was at the bedrock of Taft's views about the proper relationship between the government and business. And the trust issue was at the heart of the socialist complaints about capitalism. The trust issue related closely to the tariff issue (the protective tariff was, it opponents claimed, "the mother of trusts") and to the cost of living issue. Thus "trusts" were very much in the public eye in 1912. The attention they received resulted from a public discussion extending well back into the nineteenth century. Each platform addressed some aspect of "the trusts," and each candidate spoke to the issue. The 1912 campaign followed closely on the heels of Supreme Court decisions ordering two of America's most visible and most powerful corporations dissolved. In 1911 the Court broke up both the "oil trust" and the "tobacco trust." In 1911 the Taft administration launched a case against the "steel trust." The Democrats especially tried to use the trust issue against their opponents. Scanned from The Verdict, July 10, 1899 Scanned from The Verdict, July 3, 1899 The Democratic party, under the leadership of William Jennings Bryan, had tried to associate itself with the antitrust cause, ever since the 1890s. The Democrats especially loved to attack the trusts, as this May 12, 1909 cartoon from Puck demonstrates. Here the trusts, using the mallet of the tariff, hit the consumer to drive up profits. This cartoon held an obvious appeal at a time when prices in general were rising. Although the Democratic party included important business elements in its coalition, in general the businessmen who were Democrats were in the South and West, regions that were generally distrustful of the large corporations headquartered in New York, Chicago, Boston, Philadelphia, Pittsburgh, Cleveland, and elsewhere. One of the main complaints against the trusts is that they were bullys. Big businesses, so this argument went, monopolized opportunities and prevented smaller firms from realizing them. Wilson expressed concern about this situation in the 1912 campaign. In this July 29, 1908 cartoon from Puck (a Democratic magazine) the failure over 25 years to check the growth of monopoly has resulted in this disastrous situation.
