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Peter Coy

This Debate from 1912 Helps Us Understand What to Do About Today’s Corporate
Giants
Oct. 28, 2022

By Peter Coy
Opinion Writer

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Theodore Roosevelt wasn’t the trust buster that many people believe he was. He believed that giant companies
could be more efficient than small ones. Rather than breaking them up, for most of his time in Washington he
favored using the power of the presidency to make sure they served the nation.

“Combinations in industry are the result of an imperative economic law which cannot be repealed by political
legislation,” Roosevelt said, referring to the concept of economy of scale, in a speech in Osawatomie, Kan., in 1910,
when he was out of office. He added: “The effort at prohibiting all combination has substantially failed. The way out
lies, not in attempting to prevent such combinations, but in completely controlling them in the interest of the public
welfare.”

T.R.’s lack of appetite for antitrust enforcement isn’t just a bit of historical trivia. He was a smart man, a public
intellectual, really. The argument he made more than a century ago remains relevant to today’s debates about what
to do about corporate giants: Break them up, or regulate them? Instead of Standard Oil and U.S. Steel, we’re talking
about Apple, Microsoft, Alphabet and Amazon — but many of the questions are the same.

The debate over bigness came to a head in 1912 when Roosevelt, who as a Republican had served as president from
1901 to 1909, sought to get back into the White House as the Progressive Party (“Bull Moose”) candidate. He
challenged the incumbent Republican president, William Howard Taft; the Democratic candidate, Woodrow Wilson;
and the Socialist candidate, Eugene Debs. It may have been the last presidential election in U.S. history in which
antitrust policy was a critical issue.

There’s a 2015 Iowa Law Review article about the 1912 election with the delightful title, “All I Really Need to Know
About Antitrust I Learned in 1912.” During the campaign, Roosevelt called Taft a “fathead” and “puzzlewit” and Taft
called Roosevelt a “dangerous egoist,” wrote the article’s author, the law professor Daniel Crane of the University of
Michigan.

Speaking in San Francisco that September, Roosevelt made the case for control: “There once was a time in history
when the limitation of governmental power meant increasing liberty for the people. In the present day the limitation
of governmental power, of governmental action, means the enslavement of the people by the great corporations who
can only be held in check through the extension of governmental power.”
Roosevelt was shot in the chest in Milwaukee on Oct. 14, 1912, but proceeded to give a speech, while bleeding, that
lambasted Wilson’s record on trusts as governor of New Jersey. Said Roosevelt: “The chapter describing what Mr.
Wilson has done about trusts in New Jersey would read precisely like a chapter describing snakes in Ireland, which
ran: ‘There are no snakes in Ireland.’”

Insults aside, the four candidates’ positions on trusts broke down as follows: Debs, the Socialist, wanted to
nationalize them. Taft, according to Crane, “shifted during the campaign toward a staunch defender of the common
law, favoring courts rather than expert agencies and preferring a case-by-case method to decide antitrust cases.”
Wilson, according to Crane, “staked a ground somewhere between Roosevelt’s regulatory nationalism and Taft’s
common-law incrementalism.” A trust, Wilson once said, “is an arrangement to get rid of competition.” He added
that “the only way to enrich America is to make it possible for any man who has the brains to get into the game.”

As for T.R., as president he had gained a reputation as a trust buster. In 1902 he went after the Northern Securities
Company, a railroad holding company (or “trust”) that threatened to monopolize rail traffic across the western
United States. The Supreme Court broke it up in 1904. His Justice Department also sued for the breakup of the
Standard Oil trust in 1906 and the American Tobacco Company in 1907. But over the years he had begun to prefer
regulating the giants through the Interstate Commerce Commission and the Bureau of Corporations, which evolved
into the Federal Trade Commission.

“I believe that it is worse than folly to attempt to prohibit all combinations as is done by the Sherman antitrust law,
because such a law can be enforced only imperfectly and unequally, and its enforcement works almost as much
hardship as good,” he said in his State of the Union address to Congress in December 1908.

Roosevelt completed his presidency in 1909, went on an African safari in which he bagged eight elephants and nine
lions, and then ran again in 1912. “Privately unhappy with the breakup of Standard Oil in 1911, Roosevelt asserted the
inevitability of the rise of the trusts, the foolishness of trying to break them up and the need for executive branch
regulatory control over large interstate corporations rather than through ad hoc antitrust interventions,” Crane
wrote.

Wilson, of course, won the 1912 election. His two terms as a modernizer saw the passage of the Clayton Antitrust Act
as well as the creation of the Federal Trade Commission, the Federal Reserve and a progressive income tax. “But
the contestation of ideas that peaked in 1912 set the stage for continued debate about the regulation of competition in
the New Deal, the postwar era and for decades to follow,” Crane wrote.

This week I interviewed two experts on antitrust to find out how 1912 has echoed down to 2022. One expert sides
with Roosevelt and Herbert Croly, a magazine editor whose Progressive manifesto of 1909, “The Promise of
American Life,” inspired Roosevelt’s New Nationalism platform. The other expert sides with Wilson and Wilson’s
close adviser, Louis Brandeis, whom Wilson appointed to the Supreme Court in 1916.

In Teddy’s corner is Michael Lind, a writer who is a professor at the Lyndon B. Johnson School of Public Affairs at
the University of Texas, Austin. He told me that trusts benefited the public because their size and ability to do
business across state lines allowed them to undercut small, local businesses that charged high prices. He told me he
was speaking to me while sitting in a rocking chair inherited from his great-great-grandfather, who was one of those
prosperous local merchants. “The original antitrust movement was small, independent general stores that were
threatened by low prices,” Lind said. “If you had the general store, you were one of the wealthiest people in the
county.”

Roosevelt was determined to bring captains of industry to heel, Lind said, but not by breaking up their companies.
Lind said he would break up conglomerates because they’re inefficient, but not any company that dominates its
market: “My objection is we are trying to stop mergers because of market concentration, just mechanically. That’s
unscientific.”
In Wilson’s corner is Barry Lynn, the executive director of the Open Markets Institute. He is a longtime intellectual
sparring partner of Lind; for more than a decade they had offices near each other at New America. Lynn is a fan of
President Biden’s antimonopoly agenda, which includes naming aggressive enforcers to run the Federal Trade
Commission and the Justice Department’s antitrust division.

The purpose of antitrust law in its early days — before the influence of the so-called Chicago School economists in
the 1970s — wasn’t just to keep prices low for consumers but also to defend democracy, Lynn said.

Monopolies are “inconsistent with our form of government,” Senator John Sherman, Republican of Ohio, the
namesake of the Sherman Antitrust Act, said in 1890. “If we will not endure a king as a political power, we should not
endure a king over the production, transportation and sale of any of the necessaries of life.”

Lynn said Roosevelt had a “command and control vision of how the economy was structured,” with Roosevelt
himself doing the commanding and controlling. Interestingly, Benito Mussolini, the Fascist prime minister of Italy,
expressed admiration for T.R. in a 1927 interview for Cosmopolitan magazine. “‘Do you know, Your Excellency, what
a great many Americans call you? They call you the Italian Roosevelt,’” the journalist Irvin Cobb wrote, recalling
the interview. “By this he was obviously gratified. ‘For that,’ he said, ‘I am very glad and proud. Roosevelt I greatly
admired.’ He clenched his fist. ‘Roosevelt had strength — had the will to do what he thought should be done. He had
greatness.’”

To be clear, Roosevelt was no fascist, nor are his admirers. Likewise, today’s admirers of Wilson’s antitrust policy
have no truck with his racism. Some aspects of the past simply can’t be translated into the present. But other
aspects can. The values and methods that were contested in the presidential election of 1912 are the same ones that
are being debated now.

The Readers Write

As a rejoinder to the argument on Monday that governments should regulate banks the way dogs catch Frisbees: In
the case of bank regulation, the Frisbee is maneuvering to avoid the dog. That is, the complexity of regulation
results from trying to anticipate the way the bank might vary its strategy in light of the “simple” rule.

Jeffrey Gordon

New York

The writer is the Richard Paul Richman Professor of Law at Columbia University.

Readers: I received numerous emails saying I shouldn’t have used the phrase “rule of thumb” in my Monday
newsletter because, the writers claimed, it comes from a rule concerning the thickness of a stick men were once
allowed to use to beat their wives. This widely repeated story has been debunked, but I’m nevertheless sorry that
readers who associate the phrase with spousal abuse were upset.

Quote of the Day

“I am a fanatical, card-carrying middle-of-the-roader.”

— Alice Rivlin, “Reviving the American Dream: The Economy, the States, and the Federal Government” (1992)

Have feedback? Send a note to coy-newsletter@nytimes.com.