Why did President Roosevelt believe it necessary for the federal government and not state governments to regulate business corporations? What, in his view, stood in the way of the federal government regulating business corporations?
Compare President Roosevelt’s argument that “we need, through executive action, through legislation, and through judicial interpretation and construction of law, to increase the power of the federal government” with President Calvin Coolidge’s argument that “more centralization ought to be avoided”. What accounts for the different positions taken by these two early-twentieth-century presidents regarding the benefits of expanding federal authority?
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Introduction
In this address, President Theodore Roosevelt (1858–1919) argued that the powers delegated to the federal government by the Constitution should be interpreted in an expansive fashion. He sought to ensure that the federal government possessed sufficient power to restrain corporate trusts and regulate the actions of business corporations generally, and the rates charged by railroads in particular. In the months prior to giving this speech, Roosevelt had secured passage of the Hepburn Act, which expanded the authority of the Interstate Commerce Commission to regulate railroad rates, and the Pure Food and Drug Act and Meat Inspection Act. He viewed these laws, as well as other recently enacted laws, as necessary and appropriate exercises of federal power.
Roosevelt was concerned that the Supreme Court had relied on a narrow interpretation of the commerce power in prior rulings. For instance, in U.S. v. E. C. Knight Co. (1895), the Court ruled that the Sherman Anti-Trust Act of 1890 could not be a vehicle for restraining the monopolistic practices of manufacturing companies (in this case the sugar refinery industry) because manufacturing was distinct from commerce and was not encompassed by the Constitution’s commerce clause (Article 1, section 8, clause 3). In this speech, Roosevelt called for the Supreme Court to adopt a broad interpretation of the power over commerce and other grants of power given to the federal government by the Constitution, in the tradition of James Wilson, Alexander Hamilton, and John Marshall.
One of Roosevelt’s chief concerns was that U.S. Supreme Court decisions limiting federal authority did not necessarily result in state governments stepping into the breach, because other Supreme Court decisions prevented state governments from acting in these areas. Even when judicial doctrines did not actually deprive both federal and state governments of authority to regulate certain areas, in practice states were unlikely to be effective in enacting regulations. In Roosevelt’s view, this was a job for the federal government.
—John Dinan
Source: Theodore Roosevelt, Works: Presidential Addresses and State Papers, Dec. 3, 1901, June 1910, and European Addresses, 8 vols. (New York: Review of Reviews Publishing Company, 1910), 827, 831, 832–836, https://play.google.com/books/reader?id=RrUZAAAAYAAJ&pg =GBS.PA708&hl=en
... Each generation has its special and serious difficulties; and we of this generation have to struggle with evils springing from the very material success of which we are so proud, from the very growth and prosperity of which, with justice, we boast. The extraordinary industrial changes of the last half century have produced a totally new set of conditions, under which new evils flourish; and for these new evils new remedies must be devised.
Some of these evils can be grappled with by private effort only; for we never can afford to forget that in the last analysis the chief factor in personal success, and indeed in national greatness, must be the sturdy, self-reliant character of the individual citizen. But many of these evils are of such a nature that no private effort can avail against them. These evils, therefore, must be grappled with by governmental action. In some cases this governmental action may be exercised by the several states individually. In yet others it has become increasingly evident that no efficient state action is possible, and that we need, through executive action, through legislation, and through judicial interpretation and construction of law, to increase the power of the federal government....
... I cannot do better than base my theory of governmental action upon the words and deeds of one of Pennsylvania’s greatest sons, Justice James Wilson.1 ... He believed in the people with the faith of Abraham Lincoln; and coupled with his faith in the people he had what most of the men in his generation believed the people did not have; that is, the courage to recognize the fact that faith in the people amounted to nothing unless the representatives of the people assembled together in the national government were given full and complete power to work on behalf of the people. He developed even before Marshall2 the doctrine (absolutely essential not merely to the efficiency but to the existence of the nation) that an inherent power rested in the nation, outside of the enumerated powers conferred upon it by the Constitution, in all cases where the object involved was beyond the power of the several states and was a power ordinarily exercised by sovereign nations.
In a remarkable letter in which he advocated setting forth in early and clear fashion the powers of the national government, he laid down the proposition that it should be made clear that there were neither vacancies nor interferences between the limits of state and national jurisdiction, and that both jurisdictions together composed only one uniform and comprehensive system of government and laws; that is, whenever the states cannot act, because the need to be met is not one of merely a single locality, then the national government, representing all the people, should have complete power to act. It was in the spirit of Wilson that Washington, and Washington’s lieutenant, Hamilton,3 acted; and it was in the same spirit that Marshall construed the law.
It is only by acting in this spirit that the national judges, legislators, and executives can give a satisfactory solution of the great question of the present day—the question of providing on behalf of the sovereign people the means which will enable the people in effective form to assert their sovereignty over the immense corporations of the day. Certain judicial decisions have done just what Wilson feared; they have, as a matter of fact, left vacancies, left blanks between the limits of possible state jurisdiction and the limits of actual national jurisdiction over the control of the great business corporations. It is the narrow construction of the powers of the national government which in our democracy has proved the chief means of limiting the national power to cut out abuses, and which is now the chief bulwark of those great moneyed interests which oppose and dread any attempt to place them under efficient governmental control.
Many legislative actions and many judicial decisions which I am confident time will show to have been erroneous and a damage to the country would have been avoided if our legislators and jurists had approached the matter of enacting and construing the laws of the land in the spirit of your great Pennsylvanian, Justice Wilson—in the spirit of Marshall and of Washington. Such decisions put us at a great disadvantage in the battle for industrial order as against the present industrial chaos. If we interpret the Constitution in narrow instead of broad fashion, if we forsake the principles of Washington, Marshall, Wilson, and Hamilton, we as a people will render ourselves impotent to deal with any abuses which may be committed by the men who have accumulated the enormous fortunes of today, and who use these fortunes in still vaster corporate form in business.
The legislative or judicial actions and decisions of which I complain, be it remembered, do not really leave to the states power to deal with corporate wealth in business. Actual experience has shown that the states are wholly powerless to deal with this subject; and any action or decision that deprives the nation of the power to deal with it, simply results in leaving the corporations absolutely free to work without any effective supervision whatever; and such a course is fraught with untold danger to the future of our whole system of government and, indeed, to our whole civilization.
All honest men must abhor and reprobate any effort to excite hostility to men of wealth as such. We should do all we can to encourage thrift and business energy, to put a premium upon the conduct of the man who honestly earns his livelihood and more than his livelihood and who honestly uses the money he has earned. But it is our clear duty to see, in the interest of the people, that there is adequate supervision and control over the business use of the swollen fortunes of today, and also wisely to determine the conditions upon which these fortunes are to be transmitted and the percentage that they shall pay to the government whose protecting arm alone enables them to exist. Only the nation can do this work. To relegate it to the states is a farce, and is simply another way of saying that it shall not be done at all.
Under a wise and farseeing interpretation of the interstate commerce clause of the Constitution, I maintain that the national government should have complete power to deal with all of this wealth which in any way goes into the commerce between the states—and practically all of it that is employed in the great corporations does thus go in. The national legislators should most scrupulously avoid any demagogic legislation about the business use of this wealth, and should realize that it would be better to have no legislation couched either in a vindictive spirit of hatred toward men of wealth or else drawn with the recklessness of impracticable visionaries. But, on the other hand, it shall and must ultimately be understood that the United States government, on behalf of the people of the United States, has and is to exercise the power of supervision and control over the business use of this wealth—in the first place, over all the work of the common carriers4 of the nation, and in the next place over the work of all the great corporations which directly or indirectly do any interstate business whatever—and this includes almost all of the great corporations....
Footnotes
- 1. James Wilson (1742–1798) served in the Continental Congress, signed the Declaration of Independence, participated in the Constitutional Convention, and was an associate justice of the Supreme Court.
- 2. John Marshall (1755–1835) was Chief Justice of the Supreme Court.
- 3. Alexander Hamilton (1755–1804) was secretary of the treasury under George Washington.
- 4. Businesses that transport passengers or goods for a fee and are open to the general public.
Next Document
Annual Message to Congress (1906)
December 04, 1906
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