The presidential and vice presidential candidates for the Republican Party in 1904 were President Theodore Roosevelt and Charles W. Fairbanks and for the Democratic Party, Alton B. Parker and Henry Davis.
Republican Party’s Nomination of Roosevelt (and Fairbanks)
At the Republicans’ June convention in Chicago, Roosevelt was unanimously nominated on the first ballot, and the leaders of the conservative wing of the Party selected Fairbanks, a conservative Senator from Indiana with close ties to the railroad industry, for the running mate. Roosevelt was not pleased with Fairbanks, but did not think it was worth fighting about.
Sagamore Hill
On July 27th, 54 solemn Republicans went to Roosevelt’s home, Sagamore Hill, in Oyster Bay, New York on the north shore of Long Island,[1] to enact their party’s “most hallowed ritual: a formal notification of nomination to its presidential candidate.” [2]
Roosevelt in a 12-minute speech that day accepted the nomination. He, of course, praised the Republican Party and slammed the Democrats. He had two comments regarding business issues. He stated, “In dealing with the great organizations known as trusts, we [need] . . . to point out that [the laws] . . . actually have been enforced, and that legislation has been enacted to increase the effectiveness of their enforcement.” Roosevelt added, “The problems with which we have to deal in our modern industrial and social life are manifold; but the spirit in which it is necessary to approach their solution is simply the spirit of honesty, of courage, and of common-sense.”
His more formal letter of acceptance of September 12th reiterated these points and praised the previously mentioned “successful suit against the Northern Securities Company merger,” the enforcement of “the anti-trust and interstate commerce laws, and the action of the last Congress in enlarging the scope of the interstate commerce law [in the Elkins Act], and in creating the Department of Commerce and Labor, with a Bureau of Corporations, [that] have for the first time opened a chance for the National Government to deal intelligently and adequately with the questions affecting society, whether for good or for evil, because of the accumulation of capital in great corporations.”
The Campaign
Roosevelt’s Secretary of State, John Hay, in a letter to American historian and author, Henry Adams, called this campaign “the most absurd political campaign of our time.” Roosevelt did not actively campaign. Instead he issued statements form his front porch at Sagamore Hill, and the Republican Party received large campaign contributions from wealthy capitalists, including J.P. Morgan, the financial leader of Wall Street and a director of the New York Central Railroad; Edward H. Harriman, the president of the Union Pacific Railroad and also a director of the New York Central; and Henry C. Frick, the steel baron.
Roosevelt’s campaign slogan “The Square Deal” reiterated his comment on the settlement of the 1902 coal miners’ strike. He promised to “see it that every man has a square deal, no less and no more.” This pledge summed up Roosevelt’s belief in balancing the interests of business, consumers, and labor. The Square Deal called for limiting the power of trusts (a person having control of a large corporation so that no others can succeed in the economy), promoting public health and safety, and improving working conditions.
The Election Results
The results of the November 8thelection were not close. Roosevelt and Fairbanks had 7,626,000 votes (56.4%); Parker and Davis, 5,084,000 (37.6%). The Electoral College margin for Roosevelt and Fairbanks was even wider: 336 (70.6%) vs. 140 (29.4%); the following map shows the geographical distribution of the electoral votes (Republican in red; Democrat in blue):
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[1]Sagamore Hill is now a National Historic Site, currently closed for renovation.
[2] Edmund Morris, Theodore Rex at 343-64 (Random House; New York, 2001).
As discussed in a prior post, a major issue for President Theodore Roosevelt in his first term was whether and how to enhance federal regulation of railroads and other companies engaged in interstate commerce.
Two accomplishments on that issue stand out: conducting a successful federal antitrust case against the Northern Securities Company, as covered in another earlier post, and pressing for the enactment of a new statute (the Elkins Act) to increase the power of the Interstate Commerce Commission (ICC) over railroad freight rates.
Now we examine the circumstances relating to the enactment of that statute.
Legal Background
In 1887 the Interstate Commerce Act was enacted in response to rising public concern over the growing power and wealth of corporations, particularly railroads. Railroads had become the principal form of transportation for both people and goods, and the prices they charged and the practices they adopted greatly influenced individuals and businesses. In some cases, the railroads were perceived to have abused their power as a result of too little competition. Railroads also had banded together to form pools and trusts that fixed rates at higher levels than they could otherwise command.
This statute created the Interstate Commerce Commission (ICC) and required that railroad rates be “reasonable and just,” but did not empower the ICC to fix specific rates. It also required that railroads publicize shipping rates and prohibited short-haul or long-haul fare discrimination, a form of price discrimination against smaller markets, particularly farmers.
By 1901, however, it was apparent that large shippers were able to obtain discounts or rebates and that the ICC was not effective, and the ICC had notified the administration about abuses within the railroad industry. In addition, a large segment of the population supported efforts to regulate the railroads because so many people and businesses were dependent on them.
Roosevelt vs. The Railroads
President Roosevelt then began advocating for new statutes to remedy these weaknesses:
State of the Union (Annual) Message (December 3, 1901). In his first Annual Message, Roosevelt recommended that the ICC’s 1887 statute be amended to ensure that railroad “rates should be just to, and open to, all shippers alike” and that the ICC had “a speedy, inexpensive, and effective remedy to that end.” Even though the “cardinal provisions of [the 1877 statute] were that railway rates should be just and reasonable and that all shippers, localities, and commodities should be accorded equal treatment,” there are allegations “that established rates are not maintained; that rebates and similar devices are habitually resorted to; that these preferences are usually in favor of the large shipper; that they drive out of business the smaller competitor; that while many rates are too low, many others are excessive; and that gross preferences are made, affecting both localities and commodities.” On the other hand, “the railways assert that the law by its very terms tends to produce many of these illegal practices by depriving carriers of [the] . . . right of concerted action which they claim is necessary to establish and maintain non-discriminating rates.”
Speech in Providence, Rhode Island (August 23, 1902). On August 23, 1902, before a crowd of over 20,000, Roosevelt in a speech said, “The great corporations . . . [or trusts] are the creatures of the State, and the State not only has the right to control them, but it is in duty bound to control them wherever need of such control is shown. . . . The immediate necessity in dealing with trusts is to place them under the real, not nominal, control of some sovereign to which, as its creatures, the trusts shall owe allegiance, and in whose courts the sovereign’s orders may be enforced. In my opinion, this sovereign must be the National Government.”
State of the Union (Annual) Message (December 2, 1902. In his second Annual Message to the Congress, Roosevelt said that “the experience of the past year has emphasized . . . the desirability of the steps” regarding regulation of [interstate] trusts that he discussed in his first state of the union message. In short, “Corporations, and especially combinations of corporations, should be managed under public regulation [by the federal government].”
In early 1903 the U.S. Department of Justice prepared a bill to remedy the perceived deficiencies in the ICC and submitted it to the Congress. By February of that year Senator Stephen B. Elkins, Republican of West Virginia and a member of the Senate Committee on Interstate Commerce, predicted that Congress would adopt a railroad anti-rebate bill that would satisfy the Administration as well as fair-minded railroad executives. Elkins and his wife, by the way, owned coal mines and a coal railroad, the latter of which in 1902 had been sold, and were friends of railroad interests.
That month (February 1903) what became known as the Elkins Act unanimously was passed by the Senate and approved by the House by a vote of 250 to 6. On February 19th Roosevelt signed the Elkins Act (An Act to further regulate commerce with foreign nations and among the States, 32 Stat. 847, ch. 708 (1903).) Although it was called the Elkins Act, it really was drafted by the President of the Pennsylvania Railroad, which resented being pressured by shippers to grant rebates. Other railroads supported the measure for the same reason with an estimated 10% of all railroad revenues being paid out in rebates.
The Elkins Act made it a misdemeanor for a railroad and its directors, officers and agents willfully to fail to file with the ICC and publish its freight rates or failure “strictly to observe” those rates. It also was a misdemeanor “to offer, grant, or give or to solicit, accept, or receive any rebate, concession, or discrimination” in such rates. All such misdemeanors were punishable by a fine between $1,000 and $20,000. The ICC alone was not empowered to make these determinations; instead the ICC had to petition a federal circuit court to do so and to enjoin any such violations.
Immediate Reaction to the Elkins Act
President Roosevelt in his Annual State of the Union Message on December 7, 1903, applauded the progress over the last year in the “exercise of supervision over the great [interstate] corporations and combinations of corporations.” This included congressional approval of the Elkins Act that has “secured equal treatment to all producers in the transportation of their goods, thus taking a long stride forward in making effective the work of the [ICC].”
The ICC itself in its Annual Report of December 15, 1903, emphasized that the Act was targeted “to prevent or more effectually reach those infractions of law, like the payment of rebates and kindred practices.” The Act also simplified the method of proving discrimination or rebates by making the violation the charging of a rate less than the published rate. In short, the Act is a “wise and salutary” statute correcting “serious defects in the original [Interstate Commerce Act of 1890] and greatly aided the attainment of some of [its] purposes.” However, the ICC noted that it had “no power to determine what rate is reasonable, and such orders as it can make [about rates] have no binding effect.”
Others criticized the Elkins Act’s failure to grant the ICC power to determine reasonable freight rates and the Act’s elimination of imprisonment for violations whereas the supporters of the measure thought that elimination would encourage firms to testify against each other and thereby encourage compliance with the law. Many merchants started agitating for new legislation granting the ICC power to suspend freight rates on complaint.
I have not found any commentary about the Elkins Act by W. C. Brown, my maternal great-great-uncle and then a Vice President of the New York Central Railway.
However, in an April 18, 1907, speech at the Buffalo, New York Chamber of Commerce, he said, “I am firmly and unalterably in favor of regulation of railroads by the Nation and States.”[2] This comment came after he had stated that “the railroads were being operated intelligently, skillfully, vigorously to the last limit of capacity. Yet almost any other business has offered higher and more certain returns than railroads, and it will be impossible for railroads to raise needed capital unless such investment will be reasonably attractive and secure resulting from assurance of reasonable cooperation and protection. This will be difficult in light of extreme hostility and indiscriminate agitation that has resulted in unjust and harmful legislation in many states.”
Brown returned to this theme in February 1908, when he said, “The principle of the control and regulation of railroads by the nation and the several States has been accepted in good faith by the railroads, and they have entered upon the task of adjusting their operations to the changed conditions resultant upon laws recently enacted.” His only caveat was railroads’ needing “a fair and impartial hearing and the . . . right to appeal to the courts to prevent injury or to secure redress of injustice.” [3]
In the New York Central’s annual report for 2009, Brown said, “Governmental regulation of railroads, within proper limitations, is of benefit to the public, to the railroads, and to those who hold their securities.” [4]
Therefore, it was not surprising for Brown to say in a September 26, 1910, letter to “My dear Col. Roosevelt,” after Roosevelt was out of office, “During your term as President, as you know, I steadfastly supported your ideas in regard to Corporations.”[5]
[1] This discussion is based upon the Elkins Act; Edmund Morris, Theodore Rex at 206, 429 (Random House; New York; 2001); Kolko, Railroads and Regulation, 1877-1916, at 90-92, 94-102 (Princeton Univ. Press; Princeton; 1965); ICC, Seventeenth Annual Report (Dec. 15, 1903); Theodore Roosevelt Center, The Elkins Act.
[2] William C. Brown, Remarks at Chamber of Commerce, Buffalo, New York, April 18, 1907.
[3]Praises Rebate Law, N. Y. Times (Feb. 2, 1908).
[4]Regulations Help Railroads Along, N. Y. Times (Mar. 13, 1910).
[5] This letter (Image (# 93-0659) was provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org.The letter’s salutation of “Col. Roosevelt” was a reference to his having served as a Colonel in the U.S. Army’s Rough Rider Regiment in the Spanish-American War, where he was hailed as a hero for leading a charge up San Juan and Kettle Hills in Cuba, and to Roosevelt’s preference to be called “Colonel” by those close to him. Why did he prefer to be called “Colonel” instead of “Mr. President”? I suspect it was his desire to emphasize his personal physical bravery in armed combat.
