Tuesday, June 14, 2011

Administration To Move Against Steel Trust

Following the successful prosecution of the cases against Standard Oil and the Tobacco Trust in the Supreme Court last month, it is looking increasingly likely that the Taft administration will move against the Steel Trust next. According to an article in today's Bisbee Daily Review, the Department of Justice and the Bureau of Corporations are finishing up their investigations into possible Sherman anti-trust law violations by the steel trust and could send the report to Taft within ten days. Attorney General Wickersham and the head of the Bureau of Corporations, Herbert Smith, have already visited the President to explain the substance of the report, but Taft is unlikely to take action, such as sending the report on to the Stanley Committee in the House.

In this matter, the Republican White House and the Democratic House seem to be in accord on taking action against U.S. Steel. The Stanley Committee has also been investigating the allegations that the Steel Trust has violated the Sherman Anti-Trust Act and have so far heard testimony from two executives on the board, Elbert Gary and John Gates. Elbert Gary is one of the key founders of U.S. Steel, along with J. P. Morgan, Andrew Carnegie, and Charles Schwab.

The report from the Justice Department was held back in order to incorporate lessons learned from the Standard Oil and Tobacco Trust cases. The decisions in those cases were delivered last month, and both the Justice Department and the White House have been reading the decision carefully. The federal government in the case of Standard Oil succeeded in having the trust declared an unlawful monopoly, and the Supreme Court ordered the company to be broken up and dissolved within six months. However, the Supreme Court also inserted a "rule of reason" into their decision, declaring that the intent of the Sherman Law was to go after unreasonable monopolies, opening up a subjective element into future cases prosecuted under the anti-trust act.  A similar decision was handed out against the American Tobacco Company.

There is one potential hitch in the government's case. During testimony given to the Stanley committee on June 2, Gary testified that U.S. Steel and then President Roosevelt and Secretary of State Elijah Root had a "gentleman's agreement" regarding the formation of the current massive monopoly. During the banking crisis of 1907, U.S. Steel agreed, at the behest of J. P. Morgan, to buy the Tennessee Coal & Iron Company at a price higher than it was worth in order to stop a growing financial meltdown. Roosevelt consented to the purchase, even though it would make U.S. Steel a virtual monopoly, in order to save the United States financial system. He also stated that the American Iron&Steel Institute was attempting to steer a course between the "archaic" Sherman anti-trust law and "the old-time method of destructive competition, in order to operate for the public welfare."

Link: Three Forces Move Against the Combines [The Bisbee Daily Review]
Link: Sensational Roosevelt Exposure by Gary [The Bisbee Daily Review]

No comments:

Post a Comment