During his presidency, Theodore Roosevelt emerged as a formidable opponent of trusts, large corporations that controlled a significant portion of an industry. Roosevelt believed that these trusts stifled competition, exploited consumers, and undermined the principles of a free market economy.
Key Facts
- Roosevelt believed that the wealthy class of Americans, including Wall Street financiers and powerful trust titans, were acting foolishly and exploiting the public.
- The Sherman Antitrust Act was initially a paper tiger, as United States courts routinely sided with businesses when any enforcement of the Act was attempted.
- Roosevelt knew that no new legislation was necessary and that he could use the existing Sherman Antitrust Act to take action against trusts.
- The first trust giant to fall victim to Roosevelt’s assault was J. Pierpont Morgan, who controlled the Northern Securities Company, a railroad company.
- Roosevelt’s actions against trusts were based on his belief in right versus wrong and good versus bad. He targeted trusts that jacked up rates and exploited consumers, while leaving trusts that provided good service at reasonable rates alone.
- Roosevelt’s trust-busting efforts gained popularity among the American public, and the Supreme Court, in a narrow 5 to 4 decision, agreed with his actions and dissolved the Northern Securities Company.
The Sherman Antitrust Act
Roosevelt’s primary weapon in his fight against trusts was the Sherman Antitrust Act, passed by Congress in 1890. This law declared illegal all combinations “in restraint of trade.” However, for the first twelve years of its existence, the Sherman Act was largely ineffective, as courts often sided with businesses in antitrust cases.
Roosevelt’s Activism
Roosevelt recognized the need for a more aggressive approach to antitrust enforcement. He instructed his Attorney General to bring lawsuits against trusts that violated the Sherman Act. The first major target of Roosevelt’s trust-busting campaign was J. Pierpont Morgan’s Northern Securities Company, which controlled a large portion of the railroad industry in the northern United States.
The Northern Securities Case
In 1902, Roosevelt’s Attorney General filed a lawsuit against the Northern Securities Company. The case went to the Supreme Court, which ruled in 1904 that the company was in violation of the Sherman Act and ordered its dissolution. This landmark decision marked a turning point in antitrust enforcement and established Roosevelt as a formidable trust buster.
Roosevelt’s Philosophy
Roosevelt’s trust-busting efforts were driven by his belief in the importance of a fair and competitive economy. He argued that trusts concentrated economic power in the hands of a few individuals, which could lead to abuse and exploitation. Roosevelt believed that the government had a responsibility to protect consumers and ensure that the benefits of economic growth were shared by all.
Impact of Roosevelt’s Actions
Roosevelt’s trust-busting campaign had a significant impact on the American economy. It helped to break up several large trusts and promote competition in various industries. Roosevelt’s actions also sent a strong message to businesses that they could not operate with impunity and that the government would not tolerate anti-competitive practices.
Conclusion
Theodore Roosevelt’s trust-busting efforts were a defining feature of his presidency. By enforcing the Sherman Antitrust Act and taking on powerful trusts, Roosevelt demonstrated his commitment to protecting consumers and promoting a fair and competitive economy. His actions had a lasting impact on American antitrust policy and helped to shape the economic landscape of the United States.
Sources
FAQs
What law did Roosevelt use to break up trusts?
Roosevelt used the Sherman Antitrust Act, passed by Congress in 1890, to break up trusts. This law declared illegal all combinations “in restraint of trade.”
Why did Roosevelt target trusts?
Roosevelt believed that trusts stifled competition, exploited consumers, and undermined the principles of a free market economy. He argued that trusts concentrated economic power in the hands of a few individuals, which could lead to abuse and exploitation.
What was Roosevelt’s most significant trust-busting case?
Roosevelt’s most significant trust-busting case was the Northern Securities case, in which he successfully broke up J. Pierpont Morgan’s Northern Securities Company, which controlled a large portion of the railroad industry in the northern United States.
What was the impact of Roosevelt’s trust-busting efforts?
Roosevelt’s trust-busting efforts had a significant impact on the American economy. It helped to break up several large trusts and promote competition in various industries. Roosevelt’s actions also sent a strong message to businesses that they could not operate with impunity and that the government would not tolerate anti-competitive practices.