Remarks at the First Regiment Armory Organized by the Hamilton Club in Chicago, Illinois
I am indebted exceedingly to the mayor of Chicago for cordial expressions of welcome on behalf of the people of this good and great city.
I am obliged exceedingly to the lieutenant governor for his expressions of good will on behalf of the people of Illinois. I am to be with you three full days, and I am advised by the press that I am to move here, for the time, the government of the United States.
Well, the government of the United States is here all the time. There may be a change of persons, but the government of the United States is in the people of the United States and there are a good many of the people of the United States in Chicago.
This is the forty-second day of a trip of nearly fifty days that, without knowing it, I contracted to make some three or four months ago, before congress adjourned. I did not know then congress would give me so short a time for vacation and for the trip but the executive proposes and congress disposes.
So it is I am here, after having traversed I don't know how many states and visited I do not know how many cities, and inflicted on the devoted people of the United States I do not know how many speeches, to come again to the poor people of Chicago and hurl one at them.
Jesting aside, I think a trip of the chief executive through the country for the purpose of acquiring knowledge of the attitude of the people of different states towards general issues as they may be affected by local conditions is not without its uses.
I do not know whether you know it or not, and I do not know how it is in the executive of a great city or of a great state, but I do know how it is in the executive of the nation, that when he enters upon his office, his education has only begun.
And anything in the way or thoroughness of teaching that he can develop during that term helps him on to some sort of solution of the difficulties which present themselves.
Therefore it is an opportunity for the executive to educate himself by meeting the people, and an opportunity also for him to discuss the issues of the day as they may have presented themselves to him at Washington, to explain such action as he may have taken, find, on the other hand, to give some views us to the future troubles and issues and questions that arc likely to arise.
The government of the United States touches the business interests of this country in a good many different ways, and at a good many different points, and the method by which and the occasion for which It affects the business of the country changes from time to time as this country grows.
Under the constitution of the United States congress has the right to regulate interstate commerce, but for years that power lay unused, because while interstate commerce was important, it had not assumed the importance that it now has, and has had within the last fifty years of being the commercial arterial circulation of the whole country.
It was not until twenty-five or thirty years after it had become such that congress began to realize, as the people began to realize, that unless it was regulated and subjected to supervision, it could be made to be a vehicle of great injustice and of great evil.
Accordingly, in 1887, the Interstate Commerce Act was passed. At first the prestige of the commissioners who were appointed, with Judge Cooley at their head, made the Commission one of some authority with the railroads.
Subsequently, because the act was not full of machinery for the enforcement of the regulations which the commission made, it fell into disrepute with the railroads, or at least it fell into their contempt, I may say. And for years—for decades—their orders were not regarded with any particular respect, and secret rebates, and that discrimination against which that act was aimed, went on in full bloom, and almost knowledge, of the public.
But Congress, taking its cue, and understanding the meaning of the public, began to draw the law tighter, and session after session introduced amendments and, finally, in the last session of the last congress, or the regular session of the last congress, they passed a law which has made the machinery which the commission now operates effective to remedy every defect and to enforce the absence of discrimination and the absence of rebates.
The railroads have indicated a full desire now to acquiesce in that popular demand, and, while I do not mean to say that there may not be discriminations still, and there may not be defects in the operations of the railroads, and there may not be injustice done, there is the machinery by which they can be all eradicated, and all that is necessary is a regular complaint and a prosecution and it will be taken up and disposed, of with dispatch.
Now, I hope that it has taken the railroads out of politics. I hope they will continue, as they now give every evidence of continuing, to serve the public and each individual justly and equally and to discharge effectively the great function that in their charter they assumed to discharge toward the public.
If they are thus removed from politics, if they are thus performing the great and indispensable duties which they do perform, well, then, we ought to encourage them and see to it that they receive adequate compensation for the services they render.
We ought to resist every effort at unjust legislation and we ought to condemn in unmeasured tones those who by unjust attack upon them would climb into power as demagogues.
Now, I come to another point where the government touches business, and I come to it at a time when the matter is boiling. I mean the question of the enforcement of the anti-trust law. I hope it will not be far distant when one can take his place on the platform and make the same statements with respect to the great combinations that are carrying on interstate trade that I have made with respect to the railroads. But for the time being it is not so.
Two decisions were handed down less than six months ago which held the Anti-trust Act to declare unlawful the combinations by which the Standard Oil company was constituted and the combination by which the American Tobacco company was constituted.
That court laid down the rule that any combination in restraint of interstate trade which had for its purpose to control prices to suppress competition, or to establish and enforce a whole or partial monopoly was a violation of that statute, and, applying that rule to what had been done by the Standard Oil Company and the Tobacco Company they held those two companies to have violated the law and they entered a decree for their disintegration.
Now. the question has been put, is mere bigness of a corporation a violation of that law? Well, there is nothing in the decisions of the Supreme Court and there is nothing in the statute that says so. What the Supreme Court says is that under that statute the men engaged in the business of the Standard Oil company united together for the purpose of establishing a monopoly for the purpose of suppressing competition, for the purpose of controlling prices, and it was the combination with that purpose, effected as it was, that made the Standard Oil Company a combination in violation of that statute. And so, too, with the American Tobacco company.
It was not its mere bigness; it was that it went out and gathered in on every side companies that were engaged in the same burliness for the purpose of suppressing competition, for the purpose of controlling prices, for the purpose of establishing a monopoly.
Hence, mere bigness of a plant, or a company. or a corporation in doing Its business, if it does not so do its business as to try to exclude and suppress competition, as to try to control prices, as to try to establish a monopoly, is not a violation of the statute. But it is the history of these combinations with the purpose for which the combinations were made that constitutes a violation of the statute.
Now it is said that in enforcing this statute the executive is going to disturb the business.
The Supreme Court has said these combinations were made for the purpose—and successfully made—of establishing a monopoly, of controlling prices. The only thing that we can do when we find a combination that is engaged in doing that, and that was made for that purpose, is to disintegrate it.
The Supreme Court says we are going to do it and we are going to do it under the direction of an injunction which shall forbid the parts into which it shall be divided from combining together again for the purpose which is inhibited by the statute.
Now, that is effective. Men have said: "What are you going to do? You cannot divide them up because they have united." Well, the Supreme Court seems to think they can be divided up, and it has directed that there shall be a division, and it has put, in obstruction to any renewed combination, a permanent injunction.
Those gentlemen who are familiar with the operation of a permanent injunction and what follows its violation by the Supreme Court will understand that the gentleman who proposes to run over that injunction or to evade it is—to use the ex- pression of the street—"up against it."
Now, all my life long I have conducted myself as far as I could to promote business and to promote prosperity. If there is anything that arouses disgust in me it is the calamity howler and the man who attacks good business and thrifty business and seeks to arouse prejudice against it.
I know that prosperity is the one thing that we all need. We are all in the same boat, and if we have prosperity then we can give shoes to our children and clothes and good meals and have good homes—wage earners, capitalists, professional men, clerks, and every one else. It means the greatest good to the greatest number and it means happiness to the individual. I would rather cut off my right hand than do anything to disturb the business of this country. And especially to disturb it with the motive to cultivate political success. [Applause.]
But we have a condition of lawlessness. We have had it for twenty years. Men have gone on combining against the antitrust statutes with a knowledge that it was on the face of the statute book and with a knowledge they were violating the law, on the theory that that law was not to be enforced and could not be enforced.
Now, I am not saying that the decision of the Supreme Court early in the history of that statute was not unfortunate, I refer to the decision of the Knight case, in which it would seem as if, while what was charged there was not held to be innocent, but was held to be beyond federal jurisdiction, that the decision discouraged the enforcement of the law and made them think trusts could not be reached except by state jurisdiction.
The effect of that decision was to lead on to combinations, and it has taken twenty years to get over that first mistaken notion, and now to have final decision construing that statute which shows what the lawlessness is and which requires that that lawlessness should be stamped out.
It is not within my discretion as an executive officer to suspend any statute that stands upon the statute books. I am here under my oath taken to defend the constitution and laws of the United States, to enforce the law, and when I find It violated to prosecute or direct prosecution of those who violate It. [Applause.]
My own hope is that now that these decisions have been given—now that they can be studied and understood—all the business men who touch the decision in any way will conduct their business hereafter according to the law, and that only a short time may elapse before we shall be doing business on a proper and legal basis in accordance with the principles of free competition.
I know it is customary to go about and lecture and say free competition is impossible and that we have got beyond that and that under modern conditions we must have combinations. Of course we must have combinations, but they need not be in unlawful restraint of trade.
Of course, we have to have great plants and great corporations to wield the capital necessary to reduce the cost of production; but that is one thing. It is another thing to combine the plants for the purpose of controlling prices and destroying competition and establishing a monopoly.
And no business man can tell me it is a question for a jury. A jury would settle it in two minutes—the difference between the purpose of uniting plants for the purpose of reducing the cost of production and that of uniting plants and all of them and putting some out of commission for the purpose of establishing a monopoly. [Applause.]
It is an issue of fact as to intent and purpose, and the law is to be enforced according to that line, and it is a man's own conscience that is to tell him whether he is violating that statute or not when he understands the simple construction that the Supreme Court has given it.
And that presents one of the amusing and ridiculous and ludicrous phases of this discussion. Here I am charged on the one side with destroying business and bringing disaster upon the country by directing the law officers of the government to enforce the law, and then I am charged on the other hand with having set up the Supreme Court to make these decisions in order to emasculate the law in the interest of the trusts.
Well, I hate to refer to the latter charge. It is made so utterly without foundation, and it reveals in the person who makes the charge such a little realization of the iniquity of that which he charges. Of course it is not true.
Of course those men—honest, high-minded judges, whom I am proud to have put on the bench—would never have consented to be appointed under any such misunderstanding, even though I might be wicked and low enough to seek to make it.
I have put to those gentlemen that have said that that statute was emasculated a question. I have asked them to cite to me a single instance which any one would condemn as coming within that statute which would not come within it under the construction put upon it by the Supreme Court. Now, when a man says the statute has been emasculated and rendered futile by the decision, would not you think he ought to be able to tell me some instance that the construction of the Supreme Court does not cover that he would wish to have covered? No that is not the answer made to my invitation to state such a case. It is that "You set up the Supreme Court,"
Well, I submit that is about as evasive as the answer of the Irishman who was told —you remember the old story—to give an evasive answer when his master was asked for. And he asked the visitor whether her grandmother was a hoot owl. [Laughter.] It comes just about as near in point of relevancy.
So I say I am hopeful this period of strain may end. I am hopeful that the business of the country may square itself--and I don't think there is a great deal of the business that needs to square itself to that statute and the construction of it by the Supreme Court. [Applause.]
But I realize that only a few of such combinations with such large capital may become interlaced with the legitimate business of the country so that they cannot be disturbed without bringing a halt to general business in a way. But when general business is thus suffering from contagion and disease the only way—at least the only way that I am permitted as the enforcer of the law to remove the trouble with business—is to eradicate the disease. [Applause.]
And so statements as to what I may be responsible for in the way of business trouble, however regretful I may be that there may me some foundation for the statements, cannot turn me from the duty which lies just as plainly before me as that aisle, to enforce the law up to the letter until the lawlessness ceases. Now, I hope that is understood.
There are other points in which the general government touches the business of the country. One most important point, and that is in the change of tariff law. When the Payne bill was passed there arose a bitter discussion as to what its effect was, whether it was upward or downward, and the great difficulty that the business community found was that they did not know, that they hadn't the means of determining. And there arose a demand all over the country that we should have some instrumentality by which we could tell what the facts were with respect to the future operation of proposed amendments of the tariff.
So they formed a tariff commission as- sociation and sent it on to Washington and urged congress to adopt a measure creating a tariff board of five, with a known partisan membership, and with powers to make investigations and to report upon the different schedules of the tariff, the difference in the cost of production here and abroad, and all other facts that might enable congress to judge of the operation of any proposed amendment of the tariff laws.
That bill went through both houses, but it failed in the lower house, where it was sent to concur in an amendment of the Senate, by filibustering. Meantime I had been given authority under the clause in the Payne bill to create a board of three, or at least I made it of three, with appropriation enough to enable me to tell that board to go to work and write out an encyclopedia, or a glossary, or something which would enable people of common knowledge to read the tariff bill and understand it.
I don't know whether you have ever read the tariff bill. It is about as interesting as the multiplication table and about as confusing or hard to understand as the Greek testament if you don't know Greek. [laughter] It is full of technical terms of specific duties, and it is almost impossible to tell what it means unless you have an expert with you— and you have to have an expert for every separate schedule of the tariff.
The commission went on—or the board—and they have nearly completed that glossary. Meanwhile they have made a report and a very full report, and a report that is very enlightening as to what they may make in other respects and upon other schedules, upon the wood and pulp and print paper schedule of the tariff. That is of 134 pages and it shows you with great accuracy the difference in the cost of production between the cost of print paper in this country and the cost of print paper in Canada.
They have proceeded on the theory that the manufacturers were willing to give them an opportunity to learn the truth, and that theory has been sustained. They have 120 men in their employ experts. They are themselves not experts on tariff, but they are expert investigators.
Prof. Emory, the head of the board, I selected by applying to a number of universities and asking them to furnish me lists containing six or eight names of those best competent as economists to analyze cost, to make investigations, and to make report, and his name was on all the lists and at the head of six of them, so I took him.
I was determined that the tariff did not lie between parties—that the commission should be nonpartisan. In these days when it is difficult to tell what a Democrat is and what a Republican is, it was rather a difficult task to perform, but I went ahead to do the best I could. All I know about the board is that whether they be Republicans or Democrats they are neither enough to hurt. [Laughter.]
I selected a professor of economy. Prof. Page, from the University of Virginia. He says he's a Democrat and he comes from south of Mason's and Dixon's line. I suppose that makes him a Democrat. Congressman Howard had been eight times in congress from Georgia—and I took that as indicating that he was a Democrat, although it is by no means certain.
Then Mr. Alvin Saunders, editor of the Breeders' Gazette, a great expert on agricultural subjects, and Mr. Reynolds, who had been for four years the assistant secretary of the treasury in charge of the customs.
That makes up the board, and they are directed to make the investigations into Schedule K and Schedule I. That was because congress in its appropriation bill, which gave me the money to run the board, provided that if a tariff commission was appointed it should make the report on the 1st of December on Schedule K: so I directed them to do that, and on Schedule I—the cotton schedule—as well.
They have not been confirmed by the Senate, but there was not any authority to have them confirmed. I should have been glad to have submitted them to the Senate for their examination and confirmation.
I believe them to be a most high-minded board, actuated only by a desire to reach the facts and to report those facts without respect to what effect they may have upon the tariff or political parties or anything else except the truth.
Now, I made a little agreement with Canada In January last through the State Department. I agreed I would do everything I could to secure an early confirmation of that agreement. I haven't any doubt the government of Canada, with a majority of forty in the parliament, would confirm before we did, but the best laid plans of mice and men aft gang agley.
At any rate, I was obliged to call the extraordinary session, in honor bound under that agreement. I was told I would open Pandora's box with an adverse majority in the lower house, that I would have a time if I dared to call an extraordinary session. But it was not open to me to consider that as a matter of discretion. I was under obligation and so I called it.
Well, they confirmed the Canadian treaty. At any rate, we did that. Whether it was defeated in Canada or not, it had honorable burial in that we carried on our part of the agreement.
Congress, you know, is not limited by the call of the executive to consider only the question upon which the extraordinary session is summoned. It is in some states, I believe, but in Washington it is not so. And so it proceeded to consider the tariff and it took up Schedule K, wool and woolens. A bill was introduced, a free trade bill, imposing 20 per cent tax on wool, reducing it from 11 cents a pound, and 50 per cent. I think it was on woolens.
That went to the Senate and there met a substitute introduced by a senator who said his was a protection bill. The substitute and this free trade bill were amalgamated and confirmed the 35 per cent ad valorem and 55 per cent on woolens. Then It went back to the House, there was a conference, and then there was a further compromise and a further squeezing together, and they made a bill with 29 per cent on raw wool and 49 per cent on woolens.
Now, if I had been elected on a free trade platform or a tariff-for-revenue-only platform, it would have been my duty to sign that bill, because I believe the present tariff on wool and woolens is too high. It ought to be reduced. But I was elected on a protectionist platform, as a moderate protectionist, and was pledged to secure to every industry needing protection that measure of protection represented by the difference between the cost of production here and the cost of production abroad.
It is one thing to say, therefore, that a schedule ought to be reduced. It is another thing to say how much it ought to be reduced in order to preserve the measure of protection I have stated.
There was no adequate information furnished by any investigation or committee to moderate or substitute. The protectionist substitute was introduced and passed without reference to a committee, and it came to me in this way, half-protection, half free trade, with rates lower, so far as the woolen manufacturers were concerned, lower considerably than the Gorman-Wilson bill of 1894 and 1805.
At the time that bill was passed and after it the wool industry and the woolen industry suffered severely. I know there was partisan discussion as to whether there was cause and relation between the one and the other, and I am here to take that up.
I am only here to say that fact put me necessarily on inquiry as to what the reduction was and whether it would injure those industries, and I had no adequate means of information and none was published which congress availed itself of, as far as I know.
Meantime, this tariff board which had been appointed, and for which $500,000 has been appropriated and is being expended, was making just such an investigation, and will report on the 1st of December.
This bill provided it should go into effect on the 1st of January next, both in the House and the Senate. If it had gone through that day it would have given rise to the question that if the exigency was such that you could delay until the 1st of January, why couldn't you wait until you got the adequate information on the 1st of December?
Having been put Into effect for the 1st of January 1912, in both houses, they changed it to the 16th of October, 1911. I don't think that deprives me of the right to use that as an argument to show the exigency was not so great but that they might have waited until the 1st of December to get this information, so we could have all acted intelligently.
When the first of December comes that report will be in, and I shall make a recommendation based on it asking Congress to pass a bill reducing duties in accordance with that report, and I shall do the same thing with respect to the cotton schedule.
Then they passed the farmers' free list. I can only say that was a bill thrown together most hastily, thrown together without any regard to the symmetry of the various schedules which it affected.
It proposed to do a good many things which were in the statute already, as for instance to put agricultural implements on the free list, when they are now on the free list, practically, because they are on the free list for many countries that make and import; they put our agricultural implements on the free list, and the only importer in this country of agricultural implements is England. They have attempted to import, and I think their importations reach the amount of $50,000.
The truth is that our agricultural implements are cheaper and better adapted to our uses than any other agricultural implements. Therefore, that concession to the farmers was rather in the print than in the substance.
So there were a number of features In that bill which justified its veto, but it was passed, it was said, as a sop to the farmers, because of the injustice done them by the Canadian reciprocity agreement. Well, if that be so, then let us bury them both gently in the same grave, because as the one died, the other was unnecessary.
There was another bill to reduce cotton duties, that actually calls for a slight comment, in order to characterize the whole legislation which was put through at that session. The bill to reduce cotton duties was a free trade bill, and introduced avowedly as such. If it had gone through both House and Senate as such, I would have vetoed it, not because it was Improperly prepared. I think it was so prepared, and, being a free trade bill, and as I am not a free trader, I would have vetoed it. But when it got to the Senate there were some gentlemen in favor of it—or. rather, some gentlemen there from the cotton manufacturing states, who hesitated to be in favor of it because it cut the cotton duties pretty low.
They went to their fellows and asked them about it, and they were told they might have some corresponding reductions of duties or things that entered into the manufacture of cotton.
One was cotton machinery. That could be reduced 45 per cent and 25 per cent and that amendment was put in. Another was powder and coloring matter. In order to get that in he was permitted to make a motion to amend the whole chemical schedule of eighty-five items, covering millions of dollars, and reduce that 25 per cent.
Well, he went down to the Treasury Department and got a statistician to work. There were sixty-six items of specific duties that required a great expert knowledge to know how to transmute into ad valorem duties, but he went ahead.
He introduced an amendment and said in so many words, 'I don't know anything about it except I got this from the Treasury statistician.' And then it went through the Senate. They also reduced the metal schedule 30 per cent without any reference in it. Then it went through the Senate and through the House. I set the experts of the tariff board to work to find out what the bill really meant.
But this statistician and this senator got to work at that chemical schedule and were oblivious of the delicacy with which alcohol ought to be handled. As a consequence they eliminated altogether the specific duties and put only the ad valorem duty of 40 per cent. Well, I don't know whether you do know, but I know that alcohol only costs to make about 20 cents a gallon, intrinsic value, and 40 per cent on that is just 8 cents a gallon.
If I signed that bill there might have been introduced into this country, through these items providing for the introduction of alcoholic compounds, alcohol at the rate of 8 cents a gallon. I need not say what confusion that would have introduced in the collection of Internal revenue or of the customs taxes. Congress did not intend it, nobody intended such an unpatriotic interference with the whole system of taxation, but I refer to that. Of course it was a blunder, it was a mistake, and I am not criticising it as an intentional one or anything of that sort, but I am stating this as one—an extreme case, I admit—but as one which gives the utmost point to my contention that no matter whether you are a free trader, or a tariff-for-revenue-only man, or a protectionist, you ought to know what you are doing with the tariff before you change it.
There are other points I should like to discuss, but I am not going to keep you longer. The general government touches the interests of the people at large in all important questions, with reference to the workman's compensation act, the employers' liability, railroads, and safety appliances. It touches especially west of the Missouri river general business in the matter of the disposition of the public domain. I am glad to say that Mr. Fisher, one of your fellow townsmen, and I have been learning. I think we have got some light--I won't say it is new light—but we have acquired some information as to the attitude of the people in the west on this general subject of conservation.
While we have been given by the press the view that ought to obtain in respect to that, we have also the other side and have learned some of the views that have grown up out there due to the delay in failing to settle any policy with respect to the disposition of the public domain.
We are in the attitude in the East of laying down moral principles to govern some other people. Now, there isn't anything that is more delightful in its way than to prescribe a moral code for somebody else to live up to, and they have a feeling out there that that is what we are doing. That inasmuch as we have wasted our own substance east of the Missouri river, they have a right, if they choose, to waste the substance they find lying around in their neighborhood in order to develop the country.
Well, of course, that is not the right attitude. We have learned something by our experience, and we are part of the people of the United States and should have a right to say how the domain shall be disposed of.
But I think we are right in saying also that everything that comes from that domain in the way of profit, where the domain lies west of the Missouri river, ought to be turned back into the development of that country for the benefit of those who live in that neighborhood.
We ought in some way to retain ultimate disposition of coal mines, of phosphate lands, and to order for it, in so far as it is within the control of the federal government.
I think nobody will, certainly we do not, deny that. I believe, however, that we are nearer a solution. They are pressing for a solution and we ought to give it to them. And we ought to decide the matter at once. Expedition is necessary in justice to those people, and they have discussed it so long now we can treat it without regarding the word conservation as a fetish, and we can dispose of it on farsighted business principles.
I think that completes the list of what I had to talk to you about. I thank you sincerely for your patience in listening to a man who has got so used to talking that he can't help it.
APP NOTE: Even though this transcription includes only a few indications of applause, the Chicago Tribune reported that "enthusiastic applause marked nearly every utterance by the chief magistrate of the nation." These remarks were made on the first of three days the President spent in Chicago. Subsequent to this speech, he attended a ball given by the Irish Choral Society. The next day he addressed the American Mining Congress; the Chicago Bar Association, and the Banquet of the Chicago Association of Commerce.
SOURCE: The Chicago Tribune, October 28, 1911, p. 1.
William Howard Taft, Remarks at the First Regiment Armory Organized by the Hamilton Club in Chicago, Illinois Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/364616