Tuesday, May 17, 2011

New York City and Washington React to Standard Oil Decision

On Monday, the Supreme Court issued a ruling in the Standard Oil case, declaring it a monopoly and ordering it to be dissolved within six months. Yesterday, with the ruling being the top story in all the major papers, official Washington and businessmen in New York reacted.

In New York, leading stocks rose between 1 and 3.5 points as much of the uncertainty appeared to have been lifted for many major corporations. Officials at these companies believe the settlement favors them in the long run as they can now decide how to proceed now that a distinction between "reasonable" and "unreasonable" restraint of trade has been made the law of land thanks to the Supreme Court and the legality of many of the trusts has been settled along the lines that a trust is only illegal if it was setup with the purpose of creating a monopoly of a market. Standard Oil itself initially rose 6 points to $685 a share before slipping to $665 during a reaction in heavy trading, a drop on the day of 2%.

The general counsel for the Standard Oil Company, M. F. Elliott, issued the following statement yesterday:
It may be now said that the Standard Oil Company will obey the decree of the court and that all the companies embraced in the court's decree will carry on business as usual under the direction of their own officers and through the their own organization. Having before us only the press reports of Chief Justice White's oral opinion and the remarks of Justice Harlan, and not yet having seen the opinion of the court in full, it is impossible to make any lengthy statement. The full opinion has to be read by my associates and myself before it can be intelligently dealt with.
William Rockefeller told reporters yesterday that any statements regarding the case would come from Elliot. The Board of Directors met in New York yesterday to discuss the ruling but none spoke with reporters about details of the meeting. Among those attending were John D. Archbold, vice president of Standard Oil of New Jersey, H. C. Folger, Jr., James A. Moffatt, Charles M. Pratt, Walter Jennings, brothers Alfred Bedford and Edward Bedford, and John G. Milburn, one of the special counsel for Standard during the oral arguments at the Court.

On Capitol Hill, lawmakers are expressing their opinions on the case. Wisconsin Senator Robert La Follette shared the opinion of Justice Harlan that the majority opinion went too far, "usurping the functions of the legislative branch of the government by writing into the statute a differentiation between "reasonable" and "unreasonable." La Follette brought up the message to Congress submitted by the President in January 1910 on anti-trust laws:
It has been proposed, however, that the word "reasonable" should be made a part of the statute, and then that it should be left to the court to say what is a reasonable restraint of trade, what is a reasonable suppression of competition, what is a reasonable monopoly. I venture to think that this is to put into the hands of the court a power impossible to exercise on any consistent principle which will insure the uniformity of decision essential to just judgment. It is to thrust on the courts a burden that they have no precedents to enable them to carry, and to give them a power approaching the arbitrary, the abuse of which might involve our whole justice system in disaster.
The White House in a statement yesterday expressed its disappointment that the Court reversed its rulings on two previous occasions and included a "reasonableness" standard.  However, the New York Tribune have pointed out that Attorney General Wickersham's statement seemed to suggest that the administration concurred with the ruling, but he could have just been restating what the court ruled.  Taft, in his January 1910 message, also may have agreed with the Court's current ruling, stating "a mere incidental restraint of trade and competition is not within the prohibition of the [Sherman Anti-Trust] Act."

Link: Stock Goes Up as Suspense is Ended [The New York Tribune]
Link: Mr Taft Long Favored Reasonable Regulation [The New York Tribune]
Link: Court Arouses Progressives Everywhere [The Bisbee Daily Review]
Link: Oil Trust Plan is to Obey Law as Interpreted [The Washington Herald]

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