Theodore Rex (8 page)

THE ALLEGHENY FOOTHILLS
turned black and greasy near Olean. Discarded oil drums dribbled into Cuba Lake. The very ground seemed to ooze. Here, in 1627, Franciscan explorers had discovered a spring of “thick dark water that burned like brandy.” Later settlers found this same crude seeping out of rocks all over the Alleghenies. They had cursed it as poison for the soil, until Indians persuaded them it was medicinal. Roosevelt himself came from
a generation of children who had been rubbed with evil-smelling “rock oil” whenever they had chest colds.

Olean Valley now was a landscape inconceivable to its discoverers. The slopes bristled with filthy derricks and flaming chimneys. Double-headed pumps toggled crazily, sucking tarry sludge out of the earth. High in the sky floated an oily miasma that seemed to drain the world of color.

Apocalyptic though the scene was, Roosevelt was aware of something more disturbing above and beyond it all, “a new and dark power” that shadowed every prospect in American life. The power had its source in a contract between executives of the industry he looked upon, and the carrier transporting him.

Nearly thirty years before, the Standard Oil Company and the Pennsylvania Railroad had pledged:

Those simple words introduced a new concept—un-American to some—of privilege in commerce, bestowing rewards upon the large at the expense of the small. Both parties excused the contract by saying it would prevent “loss or injury by competition.” If they thus blasphemed against the gospel of free enterprise, Standard Oil, at least, was unrepentant. What, John D. Rockefeller wanted to know, was so holy about competition? Did it not lead to unrealistic rate-cutting, cycles of overproduction and depression, and needless duplication of services? What interdependent industries needed was less competition, and more “cooperation.”

Rockefeller’s rebate privilege had been too flagrant to survive under law. But it was followed, over the years, by sophisticated arrangements to the same effect. Standard Oil had engulfed its smaller rivals, while the Pennsylvania Railroad made similar deals with other industries, and became one of the richest transport systems in the country.

Presidents Cleveland, Harrison, and McKinley paid little attention to the phenomenon of Combination. To them, it seemed a natural economic trend. If industries produced vital supplies, if railroads functioned as semipublic utilities, why restrict their profitable development? Only slowly, and locally, had ordinary Americans—workers, consumers, and small businessmen—begun to feel the “dark power” growing. For Combination’s irresistible tendency was toward Monopoly; and whatever corporate executives might say about increased efficiency and reduced waste, the historic inclination of Monopoly was to raise prices and lower wages.

Standard Oil had taken early steps to protect itself against common-law suits—and, in doing so, had perverted one of the most sacred words in the
legal vocabulary. It reorganized its component corporations into a “trust,” whereby all stocks were delivered to an independent board, which then operated the entire combination in unison. Congress had no power to quash this move. Within nine years, John D. Rockefeller had “entrusted” himself with 90 percent of the oil-refining business of the United States.

His profits were so fabulous that other industrial giants had rushed to organize interstate “trusts” of their own. Congress, responding to public concern, had passed the Sherman Antitrust Law of 1890. It declared illegal “every contract, combination in the form of trust, or conspiracy in restraint of trade or commerce among the several States.” But the Law was too comprehensive to be particular. Corporate lawyers (Elihu Root prominent among them) elaborated the trust concept into that of a “holding-company” chartered in one hospitable state, yet monopolizing related corporations throughout the nation. Holding-company directors concerned themselves with questions of finance, so the lawyers argued they were unengaged in “trade or commerce.” The Supreme Court had agreed reluctantly with this argument, and had ruled in
U.S. v. E. C. Knight Co
. (1895) that a trust controlling 98 percent of the nation’s sugar-refining business was legal, since refining was not itself an interstate activity.

The depression of the mid-nineties had cramped trust growth. But combination, aided by the spread of the telephone-telegraph web, resumed with a vengeance after the war with Spain.
In 1898, there had been twenty multimillion-dollar industrial trusts; now, there were one hundred and eighty-five. The proliferation evoked an image, in many minds, of a constrictive organism stretching out to every extremity of American civilization. Hence the title of Frank Norris’s new antitrust novel:
The Octopus
.

These trackside mourners of Olean Valley, staring blindly at Roosevelt as he whizzed by—how enmeshed were they? The oil trust paid their wages. Other trusts carpeted their houses, papered their walls, piped their water, sluiced away their sewage. Trust ice cooled them in summer, trust wool warmed them in winter—as did trust whiskey. These men chewed trust tobacco, and checked trust watches. These women baked trust flour and cooked trust beef in trust stoves full of trust coal. These children chewed trust gum and scribbled on trust slates. Roosevelt himself had trusts to thank for the starch in his shirt, the type on his newspapers, the glass of his window, the rails under his wheels. Poor dead McKinley, two cars back, was jiggling in a trust coffin: what might a cynic make of
that!

Ideologically, Roosevelt was committed to a conservative view of the trusts. Personally, he felt a certain ambivalence.
He saw “grave dangers” in unrestricted combination, yet he could not deny that the economy functioned better now that the trusts were, in effect, running it. The price of kerosene, for example, had been declining for thirty years, courtesy of Standard Oil.
America was no longer a patchwork of small self-sufficient communities. It was a
great grid of monopolistic cities doing concentrated business with one another: steel cities and rubber cities, cities of salt and cloth and corn and copper. Just beyond these hills was a place that actually called itself Oil City! American exporters did not need a book of vouchers to dispatch one consignment across a rickety grid of independent railroads, each with its own timetable, rates, and reliability quotient. Now one ticket sped a million tons to either coast on flawlessly synchronized trains. At every port, trust-operated ships were ready to ferry the consignment on. If freight charges were higher than they used to be, so was turnover, and so were profits.

According to a recent survey, at least 65 percent of the national wealth was attributable to the trusts. That statistic did not even include the newest and most gigantic combination of all, Andrew Carnegie’s merger of his steel company with nine others. United States Steel, capitalized at almost one and a half billion dollars and feeding more than one million people, was virtually a nation in itself. Its income and expenditures approximated those of the Second Reich. It, too, had a Kaiser, an emperor of finance, and if today’s newspapers were to be believed, Wilhelm II might soon cede him a portion of his realm: “Mr. John Pierpont Morgan is trying to get control of the German steamship lines.”

ROOSEVELT LIKED MORGAN.
The solitary, bottle-nosed banker had been a friend of his father, and on that score alone merited affection. Even so, he did not know him well. Few did. Only Morgan’s immediate family, and the half-dozen handsome young aides who stood between him and the world (as if to screen his legendary ugliness) claimed that privilege. Governor Roosevelt had once denied Morgan tax exemptions on two railroads. He had tried to make amends with a testimonial dinner (“an effort on my part to become a conservative man, in touch with the influential classes”), but the financier remained unmollified. Roosevelt’s last letter to Morgan had been answered by a secretary.

So far, 1901 had been Morgan’s
annus mirabilis
. Along with his new billion-dollar trust, he controlled several banks, including the international House of Morgan, the Western Union Telegraph Company, the Pullman Car Company, Aetna Life Insurance, General Electric, Britain’s
Leyland Steamship Lines, and twenty-one railroads.
Control, indeed, was his passion—not the constant, clashing competition of the free market. As chairman of J. P. Morgan and Company, he handled more wealth than any other man on earth, and was capable of plunging the United States into a depression overnight—or rescuing it from one. Yet his greatest power derived from his integrity of character. One nod of the massive head was security for fifty million; one snort of the carbuncled nose was enough to sweep all opposition from his path.
Review of Reviews
saluted him as “the most masterful personality in the country, perhaps in the world.”

But now there was a challenger to that title, riding to Washington on one of the few Northeastern railroads Morgan did not control. Sooner or later, their personal trajectories must intersect, as surely as this Alleghany track was destined to run into those of the Susquehanna Valley. Roosevelt hoped that the confluence would be smooth.
To his mind, the real threat posed by financiers such as Morgan lay not so much in their combination policies as in their virtual freedom—thanks to
U.S. v. E. C. Knight
—from federal regulation. Even President McKinley had talked of doing “something about the trusts.” Roosevelt himself had publicly warned:

He now stood committed to those words, uttered only two weeks ago at the Minnesota State Fair. Morgan’s philosophy was also on record: “
I owe the public nothing.”

If they were indeed set on a collision course, Roosevelt was determined not to be the one derailed. Morgan may be master of United States Steel, but
he
was master of the United States Government—surely the greatest combination of all. National stability required that he maintain eminent right-of-way.

ELSEWHERE IN THE TRAIN
, Senator Hanna was slumped, cursing the day that William McKinley accepted Theodore Roosevelt as his running mate. “Now look—that damned cowboy is President of the United States!”

Herman Kohlsaat came back to tell Roosevelt about Hanna’s despair. He suggested that the Senator be treated with utmost delicacy, for he had the power to block all White House initiatives during the coming session of Congress.

Roosevelt reacted blankly. “What can I do?” Kohlsaat suggested a flattering supper
à deux
in the presidential car.