Address at Des Moines, Iowa
Fellow Citizens of Iowa:
I have great pleasure in meeting such a concourse of citizens of one of the most purely agricultural States in the union—one which has enjoyed to the full the prosperity which has come to the man who has invested his money and his labor in the farm for the last decade.
Iowa has come to be a State in which there is great independence of view, and in which the voters exercise intelligent discrimination with reference to candidates and policies that keeps those who are looking for political victories in a constant state of doubt and anxiety.
The last general election was held in November of 1908, and resulted in the success of the Republican party in the national contest. In both chambers of Congress the Republicans have a majority and they have the President. Looking forward to the legislation that ought to be expected from that party, we must refer back to the platform upon which the party was elected. In the extra session recently closed a tariff bill was passed as was promised in the platform. I do not intend to dwell upon the much-disputed question whether that bill complied with the bill promised, for I have considered that at another time and at another place. What I wish to invite your attention to this morning is, with the tariff bill out of the way for the time at least, what there is for the Republican party in Congress under the promises of its platform to do in the coming regular session.
Now, in the first place one of the great issues in the last campaign—one in which I took a deep personal interest because the issue concerned me personally—was the claim that the Republican party was opposed to labor organizations, and had favored the use of the injunction in labor disputes in behalf of the employer, and, therefore, that its candidate should be opposed by all of organized labor and of all other kinds of labor on this account. As you perhaps remember, I had decided a number of the important labor cases in which permanent injunctions were issued, and I was characterized as the "father of labor injunctions." It became necessary for me to go about the country explaining and defending my labor decisions and showing, as I was able to show, that my attitude, while it was in favor of certain punishment of disturbance of the peace and other violations of the law in connection with labor disputes, was that of one favorable to the organization of labor as necessary to enable it to stand upon an equality of resources with capital in the necessary controversies that arise between labor and capital with respect to the fixing of their compensation and arranging the other terms of employment. I discussed this subject at Chicago the other night at length. I do not intend to discuss it here other than to say that I have not forgotten the promise of the platform, and Congress should take up the question of injunctions and labor disputes and should adopt a law embodying the procedure as to issuing of injunctions without notice and framing it in such a way as to prevent such injunctions save in rare and meritorious cases.
More than this, I am prepared to recommend that Congress require the interstate railroads to adopt any other safety device that can be proved as valuable in order to protect the lives and limbs of men engaged in that dangerous employment. While I believe that every man ought to be permitted to work for whom and at what wage he pleases—and I am prepared to go to the extreme limit in defending this right—I am nevertheless one of those who approve the organization of labor and, if I were a workingman, would probably become a member of a trades union if I could gain admission. My attitude on this point is based upon the belief that the organization of labor has secured better terms of employment, higher wages, a safer place to work in, and other advantages which but for the organization and its demands in a form that could not be denied might have been long delayed in coming. The leading men of the labor organizations of this country, many of whom opposed my last election, are greatly to be commended because of the stand that they have taken against the prevalence of socialism in labor unions. They favor the preservation and maintenance of our institutions under the Constitution, which recognizes the right of property as well as the liberty of the individual; and they are entitled to our sympathy in this struggle, which by reason of the socialistic and anarchistic tendencies of European labor organizations, they have much difficulty in maintaining.
But legislation with respect to the laborer is not all the legislation that the Republican party is pledged to. Indeed, when I look forward to the next session and realize how much there is to be considered, I tremble lest the session will not be long enough, and lest it will not be possible to do all that has been promised.
Immediately after Mr. Roosevelt's election in 1904, he wrote a message to Congress in which he recommended to Congress that the interstate commerce law be amended so that the Interstate Commerce Commission, finding a rate to be unreasonable and unduly discriminatory, might change the rate and fix one which should be fair. In other words, his recommendation embodied the fixing of the rates by the Interstate Commerce Commission The suggestion of the message was followed by the introduction of a bill in the House which in the first regular session of the newly elected Congress was passed by the House as the Hepburn Rate Bill. It went to the Senate and received a good many amendments, and then after a long and acrimonious fight it was passed almost unanimously. The chief feature of the bill was the new authority of the Commission after determining that an existing rate complained of was unreasonable, to say what would be a reasonable rate; in other words, to fix the rate if the rate complained of was unjust. There were many other features to the rate bill, but the one I have given is perhaps the most important. A provision was made for appeal from the action of the Commission to the court, and this was wisely done for, even if no provision was made, the court would still have jurisdiction to consider whether the rate fixed was confiscatory or not. If the act had attempted to prevent such an appeal to the court, it probably would have rendered it invalid under the Constitution. The rate bill has now been in operation some three years and it must be admitted that it has not furnished the relief against unduly discriminatory rates with the expedition and effectiveness which were expected. The Republican platform promised additional legislation in aid of enforcing the interstate commerce law, and I have been engaged in the consideration of what I ought to recommend to Congress in order to comply with that promise. Those who opposed the provision by which appeal from the order of the Commission might be taken to the court did so because they thought such a right to appeal would offer much opportunity to delay the proceedings. An examination of the decisions of the Commission and the resort to the courts by the way of temporary injunctions, fully justifies the conclusion that one of the defects of the present interstate commerce law is the delay entailed by litigation in the court over the correctness of the order of the Commission. The court appeal can not be abolished because it is a constitutional right. Something must be done to reduce its effect by way of delay, so that the decision of the court shall be prompt, final and effective. It is proposed now by a number of gentlemen of my Cabinet, who have conferred with some members of the Interstate Commerce Commission, to facilitate these appeals from the Commission by the creation of a separate interstate commerce court of five members which shall sit in Washington and which shall be the only court to which petitions to set aside or nullify the orders of the Interstate Commerce Commission can be made; and it is proposed to allow a single judge to make an order staying the proceedings of the Interstate Commerce Commission but sixty days, and thereafter that no injunction shall be allowed against the order of the Commission unless granted by the whole court of five members. I know that objection will be made to the creation of this court. In one of the bills originally introduced such a separate court was provided for, but the provision was defeated. A tariff court has been provided in the new tariff bill to consist of five members whose judgment shall be final on all questions arising under the administration of the tariff. I am strongly inclined to think that a similar court, except that an appeal ought to lie from it to the Supreme Court, will serve the purpose of expedition and the dispatch of business in respect to the orders of the Commission. I know that there is a well-grounded objection to increasing Federal courts and to the provision for the appointment of Federal judges, whose terms and salaries last for life and who become a permanent expenditure of the Government. But there is this to be said, that if the establishment of such a court proves to be a mistake, the demand for judges throughout the country and their increase will furnish an opportunity to use the judges thus appointed for other and general judicial work. The uniformity of decisions, and the promptness of decision, which may be expected from a court whose experience will soon make them experts in the disposition of such cases, would promise to the shipper and railroad litigants quick decision as to their rights.
A second change in the interstate commerce law ought to give to the Commission the power to hear and entertain complaints against unjust classification of merchandise for transportation. The classification of merchandise is just as important in determining the expense of transportation as the fixing of the rates, because rates are fixed according to classes, and if an article is classed in one class this determines the rate at which that article is to be carried. The classification should be as near as possible so that each class includes within it all the various merchandise that can reasonably be carried by the railroad at the same cost and rate. It is perfectly clear that by including articles in the same class which ought to pay different rates, a railroad can commit exactly the same kind of injustice as it would by imposing an exorbitant rate as to any class. Hence, I haven't the slightest hesitation in recommending to Congress that the power of the Commission should be extended to include not only the fixing of rates after complaint, but also the readjustment of classification if it proves on investigating to be unjust.
The Interstate Commerce Commission has found great embarrassment in the proper administration of the law in the fact that it is limited in its action to investigating only those rates which are specifically complained of by a shipper or some other interested person. It has frequently found that in the examination of one rate complained of and the discovery that it is unjust, there are many other rates connected with this rate equally unjust that if it had the power of initiating complaints of itself it could promptly reach and readjust and fix to the benefit of persons who have not seen fit or have not had the courage or money to contest the fairness and correctness of the rates. I am aware that the question was hotly discussed in Congress at the time of the passage of the rate bill, and it was thought wise to limit the power of the Commission to the consideration of rates actually complained of by persons interested. It would now seem from the experience of the Commission that it is the extension of its power so as to institute complaints of its own that is necessary to make its work truly effective. This is the proper method of legislation—to pass the bill and if it does not operate as fully in the direction intended as we had hoped, then amend the bill so as to improve it in that direction. I do not think that until we try this new amendment and see how it works, we ought to put down the bars entirely and give to the Interstate Commerce Commission the absolute power to fix rates in advance and on their own initiative, and without complaint filed and investigation made as is done in some of the States. I think it a great deal better to proceed cautiously in this matter and feel our way to a satisfactory act which shall accomplish the purpose without too drastic or radical action.
Under the interstate commerce law, a new rate or classification is to be filed with the Commission. It is proposed now to authorize the Commission to postpone the date that such new rate or classification is to take effect, provided that within thirty days of the date of the order a complaint be filed that such rate or classification is unreasonable or unjust, or, provided, second, that the commission itself shall institute an inquiry into the reasonableness or justice of such rate or classification. This introduces a somewhat new element into the act by placing the railroad company in the situation when it proposes to make a change in the rate, that it should be prepared to show to the Commission affirmatively that the change to the new rate is justified. I am inclined to think that this is a fair change in the provisions of the law. It gives to the public the same right to have changes which affect them injuriously, investigated before they go into effect as it does changes of rates by the railroad, by appeal to the courts to have the order of the Commission subjected to investigation and hearing. Railroads ought not to be permitted to change rates unless they can give reason for it.
A third amendment to the act should provide that the Commission may by order suspend, modify or annul any changes in the rules or regulations which impose undue burdens on shippers. No doubt ought to be left with respect to the power of the Commission on such a subject, because the rules and regulations of a railway are the means by which injustice may be done to the shipper. There has been a good deal of difficulty encountered by shippers over connecting lines, and the power of the Commission in respect to this has been quite limited. It would seem well to empower the Commission on the application of one carrier, or an individual, or at the instance of the Commission itself, to compel connecting carriers to unite in forming a through route and fix the rate and the apportionment thereof among the carriers. The Commission should also be empowered to prescribe the rules and regulations under which the shippers shall have the privilege to designate the route over which their shipments shall be carried to the destination beyond that of the first carrier.
Another most important amendment of the interstate commerce law—part of which was specifically promised in the platform—is a prohibition against any interstate railroad company acquiring stock in any competing railroad in the future, and a further provision that no railroad engaged in interstate commerce shall after a certain date hold stock in a competing railroad; and the further amendment that after the passage of the amending act, no railroad company engaged in interstate commerce shall issue any additional stock or bonds or other obligations except with the approval of the Commission, based upon a finding by the Commission that the same are issued, first, for purposes authorized by law, and, second, for a price not less than par for stock, and not less than the reasonable market value for bonds, such price being paid either in cash or in property or services, and if in property or services, then at the fair value thereof as determined by the Commission.
By these provisions enforced with reason, and drawn with a view not to be too drastic with railroads in the beginning, we shall gradually abolish that evil which is involved in the union of competing roads by one road's owning the stock of another; and we shall prevent the over-issue of stock and bonds so as to prevent watering, and to keep the railroad efficient for the service for which it was intended. It greatly interferes after a time with the power of the owners to improve a railroad if it is loaded down with securities, the interest upon which it cannot pay because those securities were not represented by actual value put into the railroad; and I think it, therefore, plainly within the power of Congress in dealing with interstate railroad companies that are organized under state corporations to insist that in order to maintain efficient instruments of transportation the watering of stock and bonds on them shall cease.
These suggested amendments to the interstate commerce law will entrust to the Interstate Commerce Commission considerably more power than that tribunal has at present. But we have entered upon a course of regulating railroads, and as the laws which we passed have not been as effective for the purposes as it was hoped, we must continue to introduce amendments to bring about a law which will serve the purpose which we have.
You in Iowa have been perhaps more successful than elsewhere in the country in regulating your railroads. The difficulties of the interstate commerce regulation are, however, very much greater than those in a State, and present much more difficult questions; but as we are now entering upon a period of the greatest prosperity, in which the railroads are sure to share, it seems wise to remedy as promptly as we can the defects in the present regulation in order that we shall not under the influence of prosperity forget to insist that we are not to return to former abuses.
One great trouble with railroad management was the allowance by railroads of illegal and discriminatory rebates. Those have now largely ceased, and that was one of the great accomplishments of Mr. Roosevelt's administration. But the question of rates and their justice still remains. The scope of the authority of the Interstate Commerce Commission has not been wide enough to make the regulation as effective as it ought to be, and to bring under consideration as many of the rates as it should within a reasonable time.
In addition to these amendments to the law which are looking to a rather more drastic regulation of railroad rates than heretofore, another provision should be added by which railroads may be permitted to agree upon traffic rates, and make contracts with respect to rates that shall not be pooling contracts, but shall constitute agreements as to rates—provided always that such agreements shall receive the approval of the Interstate Commerce Commission. In this wise the operation of the anti-trust law against traffic agreements between railroads will be abolished; and against their absolute prohibition would be substituted a requirement that such agreements shall meet the approval of a properly constituted tribunal.
This last section brings me to the question of the antitrust law. While we have not threshed the whole matter out so as to reach a definite conclusion, I am strongly inclined to the view that the way to make the anti-trust law more effective is to narrow its scope somewhat, so that it shall not include in its prohibition and denunciation as a crime anything but a conspiracy or combination or contract entered into with actual intent to monopolize or suppress competition in interstate trade. At the common law all contracts in restraint of trade, except those which were called reasonable, the courts would decline to enforce and leave the parties in the condition in which they were found. The anti-trust law denounces such contracts when in restraint of interstate trade as criminal—and that whether made with intent to monopolize or to suppress competition or without intent to do either. The theory seemed to be that a contract in restraint of interstate trade tended to a monopoly, and therefore should be denounced because of its tendency, whether there was any actual purpose on the part of the person making it to monopolize or suppress competition or not. This feature of the present anti-trust law has, it seems to me, weakened its force because it has seemed to bring within the condemnation of the law contracts and other arrangements which were actually innocent in their character, and which were not included in those vicious combinations which it was the real intent of the law to suppress. This wider scope of the law, which I would narrow, has been seized upon by those who do not favor the law at all as a ground for ridiculing its provisions and as a means of demonstrating its absurdity. If the crimes denounced in the law were confined to combinations, conspiracies and contracts made with intent to monopolize or partially monopolize interstate trade, or to suppress competition in interstate trade, then the real object of the law would come within its denunciation, and no one could declare its operation to be unreasonable in that it included a lot of innocent contracts or arrangements.
It has been suggested that the law ought to limit its denunciation to those contracts in restraint of trade that are unreasonable. I do not favor any such limitation for the reason that in the common law the reasonable restraint of trade came to have a very different meaning. It was a narrow one, and one which would have but exceptional application. A reasonable restraint of trade was one made ordinarily in the sale of the good will of a business in which the vendor agreed not to go into business within the territory covered by the business, the good will of which he was selling, and this was to enable him to sell what he had acquired and to enable the buyer to maintain in its integrity the good will which he had bought; but if the restraint went beyond the territory covered by the business, it was regarded as an unreasonable restraint of trade and was unenforcible [sic]. But the proposal of introducing the word "reasonable" into the act goes much farther than this exceptional case in the common law. It seems to be proposed to leave to the judges to decide what combinations and contracts in restraint of trade ought to be permitted to exist and to be enforced on general grounds of public policy—in other words, to have the court attempt to establish some line between what are called good and bad trusts, as if the suppression of competition in some cases was a good thing and in other cases was bad. I can not agree that any such distinction can properly be made. All combinations to suppress competition, or to maintain a monopoly in whole or in part, of interstate trade, is and should be in violation of the anti-trust law and should be punished as such; and there is no room for the expression "reasonable" or "unreasonable" in this general view of the statute. If the statute were limited to combinations, conspiracies and contracts to restrain trade with the intent to monopolize interstate trade, or with intent to suppress competition therein, it would probably not include within its denunciation a boycott against goods going into interstate trade, because such a boycott is a restraint against interstate trade with the intention to restrain it, but it is not a restraint of interstate trade with intent either to suppress competition or to maintain a monopoly of the goods with respect to which the contract is made. I am entirely opposed to excepting from the operation of any law of general application a class of persons like laborers or workingmen or farmers or ministers or teachers or lawyers. Take the present anti-trust law, therefore, and insert a special exception to the application of that law by providing that it should not apply to the trades unions class and it would be legislation of the most vicious character; but when you make the law apply only to conspiracies seeking to suppress competition or to monopolize the trade, then the labor boycott is probably not included, simply because the statute would not seem wide enough to include it in its scope, and this result is obtained without class legislation at all.
I am in favor of this change because I believe that the ordinary action in equity by injunction in any place where the boycott is operative can accomplish effectively all the purposes that ought to be accomplished in the suppression of such an evil. On the other hand, to employ the antitrust law for the purpose of suppressing evils growing out of the labor organizations is to take advantage against such unlawful labor organizations of the literal terms of statute which were probably not intended to include that which judicial construction could not avoid including within its words.
It would probably seem wise to establish an accusatory bureau in the Department of Justice to institute prosecutions for violations of the interstate commerce law and of the anti-trust law, while it will be wise to continue the Bureau of Corporations, enlarging its scope somewhat perhaps to maintain the registration of corporations and the investigation into their operation so far as interstate trade is concerned.
It has been found most difficult to separate the administrative from the quasi-judicial functions of the Interstate Commerce Commission, but it is thought that it would be wise to take away from them any responsibility in regard to the investigation of the validity of their orders before the Interstate Commerce Commission court and to leave the maintenance of those orders to the Department of Justice when the appeal comes on to be heard in the court.
The two statutes which must claim the attention of our Congress in its next session are the interstate commerce law and the anti-trust law, and I have outlined in a tentative way what I am inclined to recommend to Congress as proper amendments. I do so for the purpose of promoting public discussion of them in order that when Congress shall meet the subjects shall not be entirely new and arguments pro and con shall not be lacking. I believe it will facilitate consideration of matters in Congress itself.
Another series of questions for Congress is with reference to the conservation of resources. These I shall not discuss now, but shall do so later in my journey. As I look forward to the coming session of Congress, it seems to me that the work to be done will involve close attention and much discussion, which I hope will be temperate, entered into with a view of reaching a clear and satisfactory conclusion.
The monetary commission will probably report so that its final conclusion may be considered at the end of the coming session or at the beginning of the next. In any event, as we look forward to the work which this Congress has to do, we must be conscious that the measures I have proposed will consume all the time there is.
All this is in the line of performing the promises of the Republican platform, and we can certainly be discharging no higher or more sacred duty. If by the legislation we shall have defined with exactness the proper course for railroads to pursue and also the proper course for great industrial corporations to pursue and make clear the path of lawfulness, we shall have vindicated the good sense of the people in placing the Republican party in power.
William Howard Taft, Address at Des Moines, Iowa Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/365234