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CHAPTER FOUR

Of Theodore Roosevelt And his Time Volume 2

INCIDENT OF THE TENNESSEE COAL AND IRON COMPANY: 

the panic in New York reached its height in November, 1907. The Knickerbocker Trust Company failed and there were heavy runs upon trust companies and other financial institutions. The President was in constant communication with the leaders in the financial world in the city, and both personally and through the Secretary of the Treasury sought by all legitimate means to arrest the panic before it extended to other sections of the country. Various methods of relief were granted by the Secretary of the Treasury on the President's authority, and finally an opportunity arrived when he was able to act in accordance with his pet doctrine of the "square deal" for everybody. He seized it with characteristic promptness and courage.
On November 4, 1907, Judge E. H. Gary and Henry C. Frick, on behalf of the Steel Corporation, sought and obtained an interview with the President, Secretary Root being present at the President's request. What occurred was at once communicated to the Attorney General in the following note which the President dictated in the presence of Messrs. Gary and Frick:
November 4, 1907. My dear Mr. Attorney-General:
Judge E. H. Gary and Mr. H. C. Frick, on behalf of the Steel Corporation, have just called upon me. They state that there is a certain business firm (the name of which I have not been told, but which is of real importance in New York business circles), which will undoubtedly fail this week if help is not given. Among its assets are a majority of the securities of the Tennessee Coal Company. Application has been urgently made to the Steel Corporation to purchase this stock as the only means of avoiding a failure. Judge Gary and Mr. Frick informed me that as a mere business transaction they do not care to purchase the stock; that under ordinary circumstances they would not consider purchasing the stock, because but little benefit will come to the Steel Corporation from the purchase; that they are aware that the purchase will be used as a handle for attack upon them on the ground that they are striving to secure a monopoly of the business and prevent competition —not that this would represent what could honestly be said, but what might recklessly and untruthfully be said. They further informed me that, as a matter of fact, the policy of the company has been to decline to acquire more than sixty per cent of the steel properties, and that this purpose has been persevered in for several years past, with the object of preventing these accusations, and, as a matter of fact, their proportion of steel properties has slightly decreased, so that it is below this sixty per cent, and the acquisition of the property in question will not raise it above sixty per cent. But they feel that it is immensely to their interest, as to the interest of every responsible business man, to try to prevent a panic and general industrial smash-up at this time, and that they are willing to go into this transaction, which they would not otherwise go into, because it seems the opinion of those best fitted to express judgment in New York that it will be an important factor in preventing a break that might be ruinous; and that this has been urged upon them by the combination of the most responsible bankers in New York who are now thus engaged in endeavoring to save the situation. But they asserted that they did not wish to do this if I stated that it ought not to be done. I answered that, while of course I could not advise them to take the action proposed, I felt it no public duty of mine to interpose any objections.
Sincerely yours, (Signed) theodore roosevelt. hon. charles J. bonaparte, Attorney-General.
The Attorney-General responded at once in person, saying that the legal situation had been in no way changed and that no sufficient ground existed for prosecution of the Steel Corporation.
The Steel Corporation purchased the stock on the following day and the panic was arrested. While no details of the interview were published, the fact that it had been held was given to the press and its purpose and result were easily inferred from the purchase which was made on the following day and openly announced. There was no adverse comment on the President's action at the time but general and hearty praise from all quarters. After the lapse of a year or more, opponents of the President gave currency to assertions that he had been misled by Messrs. Gary and Frick, that the transaction had given the Steel Trust a monopoly of the steel industry and that by his action the President had been bound not to prosecute that trust. These assertions were repeated with increasing emphasis for several years, and in 1911 a committee of the House of Representatives conducted an inquiry on the subject. They summoned Mr. Roosevelt, who had returned in 1910 from his hunting expedition in Africa, to appear as a witness and he went before the committee with cheerful alacrity on August 5, 1911. He presented the note that he had dictated to the Attorney-General, and at the outset of a written statement which he had prepared, he said: "I wish it distinctly understood that I acted purely on my own initiative, and that the responsibility for the act was solely mine." His statement on this occasion was filed later in the suit which was brought under the Taft Administration against the Steel Trust in the United States District Court of New Jersey, in October 1911. In it he said:
"I was dealing with a panic and a situation where not merely twentyfour hours, but one hour might cause widespread disaster to the public. . . .

"I ought to say that from New York I had been told by banker after banker that the Tennessee Coal and Iron securities were valueless as securities that counted in that panic. . . .

"There were two matters to which my attention was especially directed. One was the condition of things in New York, the relief that the action would bring, not merely to New York, but throughout the entire country—just as much in Louisiana and Minnesota and California as in New York. That was one thing. The other thing to which my attention was particularly directed was the percentage of holdings the Steel Corporation had, and had had and would have after the Tennessee Coal and Iron properties were acquired. . . .
"The knowledge that I had was that the Steel Corporation had some years previously possessed nearly sixty per cent of the holdings of the steel industry in the country; that its percentage had shrunk steadily; that the addition of the Tennessee Coal and Iron Company, which was something in the nature of four per cent,—somewhere between two and four per cent, I have forgotten the exact amount, somewhere around there,—did not bring up the percentage of holdings of the Steel Corporation to what it had been a few years previously. . . .
'' My knowledge was simply this, that it was a matter of general opinion among experts that the Tennessee Coal and Iron people had a property which was almost worthless on their hands, nearly worthless to them, nearly worthless to the communities in which it was situated, and entirely worthless to any financial institution that had the securities the minute that any panic came, and that the only way to give value to it was to put it in the hands of people whose possession of it would be a guaranty that there was value to it. ...
"I believed at the time that the facts in the case were as represented to me on behalf of the Steel Corporation, and my further knowledge has convinced me that this was true. I believed at the time that the representatives of the Steel Corporation told me the truth as to the change that would be worked in the percentage of the business which the proposed acquisition would give the Steel Corporation; and further inquiry has confirmed to me that they did so. I was not misled. The representatives of the Steel Corporation told me the truth as to what the effect of the action at that time would be, and any statement that I was misled, or that the representatives of the Steel Corporation did not thus tell me the truth as to the facts of the case, is itself not in accordance with the truth.''
On June 3,1915, the court rendered a decision adverse to the Government, dismissing as unproved the application for the dissolution of the corporation on the ground that it was a combination in restraint of trade. In its decision the court said the purchase of the stock of the Tennessee Coal and Iron Company had been as stated by Roosevelt and was "made in fair business course," and, in the language of the Supreme Court, was the "honest exertion of one's right to contract for his own benefit, unaccompanied by a wrongful motive to injure others." This decision was a complete vindication of Roosevelt's course and put a permanent stop to all criticism of it.
The Government took an appeal from the decision to the Supreme Court of the United States and on March 1, 1920, that court rendered a majority decision sustaining that of the New Jersey District Court. In this decision the Supreme Court Justice said:
"There is, however, an important circumstance in connection with that of the Tennessee Company which is worthy to be noted. It was submitted to President Roosevelt and he gave it his approval. His approval, of course, did not make it legal, but it gives assurance of its legality, and we know from his earnestness in the public welfare he would have approved of nothing that had even a tendency to its detriment. And he testified he was not deceived and that he believed that 'the Tennessee Coal and Iron people had a property which was almost worthless in their hands, nearly worthless to them, nearly worthless to the communities in which it was situated, and entirely worthless to any financial institution that had the securities the minute that any panic came, and that the only way to give value to it was to put it in the hands of people whose possession of it would be a guarantee that there was value to it."
Thus the highest tribunal in the nation ratified finally the complete vindication that the New Jersey tribunal had pronounced nearly five years earlier. In its decision the Supreme Court used the phrase: "The law does not make mere size an offense." This was the position which Roosevelt took toward corporations and trusts when he was Governor of New York, namely, that they must be judged not by size but by conduct,—a position which he held unswervingly ever afterwards.
During the year 1907 the President made many addresses in various parts of the country and went on two tours through the West and South, one in the Spring and one in the Fall. In all his addresses he emphasized his unwavering adherence to the chief policies of his administration, showing that the financial disturbances that were current had not in the slightest degree influenced him in regard to them. In an address that he made at the opening of the Jamestown Exposition on April 26, 1907, he said:
"Our purpose is to build up rather than to tear down. We show ourselves the truest friends of property when we make it evident that we will not tolerate the abuses of property.''
"This great Republic of ours shall never become the government of a plutocracy, and it shall never become the government of a mob."
An address that he made at Indianapolis, on Decoration Day, May 30, 1907, aroused unusually bitter comment in capitalistic circles because of its vigorous defense of his railway and corporation policies and his avowed determination to pursue them without deviation or modification. "Every Federal law dealing with corporations or with rail roads," he declared, "that has been put upon the statute books during the last six years has been a step in advance in the right direction. . . . There can be no swerving from the course that has thus been marked out in the legislation actually enacted and in the messages in which I have asked for further legislation. We best serve the interests of the honest railway men when we announce that we will follow out precisely this course. It is the course of real, of ultimate conservatism. There will be no halt in the forward movement toward a full development of this policy; and those who wish us to take a step backward or to stand still, if their wishes were realized, would find that they had incited an outbreak of the very radicalism they fear."
Speaking at Keokuk, Iowa, on October 2, 1907, he said: "A year or two ago certain representatives of labor called upon me and in the course of a very pleasant conversation told me they regarded me as the 'friend of labor.' I answered that I certainly was, and that I would do everything in my power for the laboring man except anything that was wrong. I have the same answer to make to the business man. I will do everything I can do to help business conditions, except anything that is wrong.''
He made similar speeches in Illinois, Missouri, Mississippi and Tennessee.
His annual message to Congress, December 3, 1907, was even longer than usual, for all his annual messages were long, and gave more space than in previous messages to the subject of governmental regulation of corporations. "Until the National Government," he said, "assumes proper control of interstate commerce, in the exercise of the authority it already possesses, it will be impossible either to give to or to get from the railroads full justice. . . . The antitrust law should not be repealed, but it should be made both more efficient and more in harmony with actual conditions. It should be so amended as to forbid only the kind of combination which does harm to the general public, such amendment to be accompanied by, or to be an incident of, a grant of supervisory power to the Government over these big concerns engaged in interstate commerce business. This should be accompanied by a provision for the compulsory publication of accounts and the subjection of books and papers to the inspection of Government officials."
In his letter to Congressman Sherman, quoted in the preceding chapter, the President had spoken of Harriman as "at least as undesirable a citizen as Debs, or Moyer, or Haywood.'' This called forth a letter from a labor leader in Chicago, to which the President replied in a letter which won hearty approval throughout the country. In it he said:
the white house, washington,
April 22, 1907. 

Dear Sir:
I have received your letter of the 19th instant, in which you enclose the draft of the formal letter which is to follow. I have been notified that several delegations, bearing similar requests, are on the way hither. In the letter you, on behalf of the Cook County Moyer-Haywood conference, protest against certain language I used in a recent letter which you assert to be designed to influence the course of justice in the case of the trial for murder of Messrs. Moyer and Hay-wood. I entirely agree with you that it is improper to endeavor to influence the course of justice, whether by threats or in any similar manner. For this reason I have regretted most deeply the action of such organizations as your own in undertaking to accomplish this very result in the very case of which you speak. For instance, your letter is headed'' Cook County Moyer-Haywood-Pettibone Conference," with the headlines: "Death—can not—will not—and shall not claim our brothers!" This shows that you and your associates are not demanding a fair trial, or working for a fair trial, but are announcing in advance that the verdict shall only be one way and that you will not tolerate any other verdict. Such action is flagrant in its impropriety, and I join heartily in condemning it.
   
But it is a simple absurdity to suppose that because any man is on trial for a given offense he is therefore to be freed from all criticism upon his general conduct and manner of life. In my letter to which you object, I referred to a certain prominent financier, Mr. Harriman, on the one hand, and to Messrs. Moyer, Haywood and Debs on the other, as being equally undesirable citizens. It is as foolish to assert that this was designed to influence the trial of Moyer and Haywood as to assert that it was designed to influence the suits that have been brought against Mr. Harriman. I neither expressed nor indicated any opinion as to whether Messrs. Moyer and Haywood were guilty of the murder of Governor Steunenberg. If they are guilty they certainly ought to be punished. If they are not guilty they certainly ought not to be punished. But no possible outcome either of the trial or the suits can affect my judgment as to the undesirability of the type of citizenship of those whom I mentioned. Messrs. Moyer, Haywood and Debs stand as representatives of those men who have done as much to descredit the labor movement as the worst speculative financiers or most unscrupulous employers of labor and debauchers of legislatures have done to discredit honest capitalists and fair-dealing business men. They stand as the representatives of those men who by their public utterances and manifestoes, by the utterances of the papers they control or inspire, and by the words and deeds of those associated with or subordinated to them, habitually appear as guilty of incitement to or apology for bloodshed and violence. If this does not constitute undesirable citizenship, then there can never be any desirable citizenship. The men whom I denounce represent the men who have abandoned that legitimate movement for the uplifting of labor, with which I have the most hearty sympathy; they have adopted practices which cut them off from those who lead this legitimate movement. In every way I shall support the law-abiding and upright representatives of labor; and in no way can I better support them than by drawing the sharpest possible line between them on the one hand, and, on the other hand, those preachers of violence who are themselves the worst foes of the honest laboring man."
(The letter is published in full in Roosevelt's 'Autobiography' and also in his 'Addresses and State Papers'— P. F. Collier & Sons.)