Woodrow Wilson

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Woodrow Wilson Page 33

by John Milton Cooper, Jr.


  At first, Wilson again deferred to the men on Capitol Hill. The House Judiciary Committee, chaired by Henry D. Clayton of Alabama, drew up a bill that made officers and directors of companies subject to criminal prosecution for violating anti-trust laws, but the main thrust of the bill lay in its definition of unfair trade practices, such as predatory pricing, the acquisition of stock to reduce competition, and the creation of interlocking directorates among large firms doing business with one another. The press immediately dubbed the committee’s measure, which was introduced on the House floor on April 14, the Clayton bill. Its legalistic approach enjoyed broad support among Bryanite Democrats and insurgent Republicans. The previous twenty years of prosecutions under the Sherman Anti-Trust Act had elicited disappointment, frustration, and fury among their agrarian and small-business constituencies. Much of the problem, as they saw it, stemmed from the brevity and vagueness of the law, which practically invited the courts to define what prohibited “combinations in restraint of trade” really were. The Supreme Court had handed down a string of decisions that gave great latitude to businesses, and in its Standard Oil ruling in 1911 the Court had promulgated a “rule of reason” that made explicit what had been plainly implicit—namely, that the justices arrogated to themselves near-total discretion in applying the antitrust law. It was understandable, therefore, that Democrats and insurgents demanded that such judicial discretion be curbed with new, sharply defined anti-trust laws.

  Still, the Clayton bill drew a lot of fire. Business groups predictably denounced it as dangerous and hostile, and they pointed to the severe recession that had started at the end of 1913 as proof that measures adopted and proposed by Wilson and the Democrats were ruining the economy. Such charges left Wilson unmoved, and he refused to rein in reform efforts and send Congress home. Attacks also came from anti-trusters who wanted to see more practices prohibited and stiffer penalties imposed, and from Democrats who pushed for an expanded role for the Interstate Commerce Commission in the financing of railroads and the regulation of stock exchanges. In this atmosphere, and with prodding from Wilson, the House Democratic caucus voted on May 12 to bind members to the Clayton bill. After perfunctory debate, the House passed the bill on June 5, by a vote of 275 to 54. Every Democrat but one supported it, joined by forty-one Republicans and fifteen Progressives.30

  By the time the House passed the Clayton bill, the focus of attention and the argument had shifted. Most of the floor debate concerned not trade practices but labor unions. Starting with the 1894 conviction of Eugene Debs and his American Railway Union for “combination in restraint of trade,” which was upheld by the Supreme Court, unions had suffered under a succession of decisions that imposed restrictions on their activities. Exemption from anti-trust laws had been the top legislative goal of the American Federation of Labor for more than a decade, and many Democrats were anxious to grant the AFL its wish. Bryan had courted union support ever since his first run for president in 1896. By his third run, in 1908, his appeal had grown so strong that Samuel Gompers, the resolutely nonpartisan head of the AFL, could not stop his organization from endorsing the Democratic nominee. Wilson had likewise wooed labor in 1912 and had won a big share of the union vote. In response, Gompers and other labor leaders put pressure on him and congressional Democrats to grant them their coveted immunity under the anti-trust laws.

  Since the beginning of 1914, the AFL had engaged in such intense lobbying that some House Democrats were afraid the bill might not pass without labor’s approval. Wilson, however, did not satisfy labor’s demands immediately or fully. He personally sympathized with workers, and in 1913 he had privately deplored employers’ brutal actions against striking miners in West Virginia and Colorado. He also supported laws to protect merchant seamen and had intervened with senators to urge that they move legislation on that matter. Then, when the Clayton bill went to the House floor in April 1914, he confronted the unions’ demands for an antitrust exemption. The president met with members of the Judiciary Committee on April 13 and agreed to conciliate labor, but it was unclear what he would do. He reportedly agreed to provisions requiring jury trials in criminal contempt cases and narrowing the scope of court injunctions in labor disputes, together with language stating that labor unions and farm organizations did not constitute conspiracies in restraint of trade. He also decided to oppose further concessions, evidently because he took umbrage at the AFL’s heavy-handed tactics and doubted the legal wisdom and constitutionality of full exemption.31

  Wilson’s halfway house between anti-trust prosecutions of unions and full exemption shaped the final provisions of what became the Clayton Anti-Trust Act. Union and farm-organization leaders renewed their lobbying efforts, but to little avail. The only noteworthy change made in the Senate came when a Republican insurgent, Albert Cummins of Iowa, got a sentence added to the section affirming the legality of farm and labor organizations, which read, “The labor of a human being is not an article of commerce.” In all, organized labor got no more in the final bill than such verbal reassurance and the jury-trial and injunction-limiting provisions. Nevertheless, Samuel Gompers put a bright face on the outcome. In July, he saluted the Clayton bill as labor’s “Magna Carta,” and in October he effusively thanked Wilson for sending him one of the pens used in signing the Clayton Act, “the labor provisions of which are indeed a magnificent piece of legislation, according to the working people of our country the rational, constitutional and inherent rights of which they have too long been denied.”32 Gompers was engaging in flummery to make the best of half a loaf, but the moment had great significance. These provisions of the Clayton Anti-Trust Act marked a milestone in the continuing courtship of organized labor and the Democratic Party.

  In contrast to its earlier conduct in dealing with the tariff revision and the Federal Reserve, the Senate now did not linger long over the antitrust measure. Conservatives on the Judiciary Committee struck out the criminal penalties in the Clayton bill and watered down other sections with qualifying language. On the floor, a group of southern and western “radicals,” led by the irascible James Reed, tried to restore those penalties and add draconian provisions outlawing holding companies and limiting the size of businesses. They did not succeed. On September 2, the Senate passed the Judiciary Committee’s version by a vote of 46 to 16. A conference committee labored for three weeks to reconcile the two chambers’ bills and generally adopted the Senate version. On October 5, the Senate passed the final bill by a vote of 35 to 24. The House concurred three days later by a vote of 244 to 54. By then, the anti-trust bill had become a legislative orphan. It came to be known as the Clayton Act even though its namesake had left Congress to become a federal judge before the House passed the bill. Wilson did not involve himself in the Senate’s debate and action, and this time he invited no one to the White House and held no public ceremony when he signed the anti-trust bill into law on October 15, 1914.33

  The president had reasons—tragic reasons—for not involving himself in those last debates and votes. They ranged from the global—the outbreak of the world war in Europe in August 1914—to the personal—the death of Ellen at the same time. But even before those devastating events, other matters had diverted him from the anti-trust measure. By the time the House passed the Clayton bill in June, the focus of attention had shifted to a trade commission bill. In his speech to Congress in January, Wilson had left the door open to two kinds of agencies. One would be a purely investigatory body, such as the Interstate Commerce Commission had been before gaining rate-making powers under Roosevelt. The other would be something like the more recent ICC, a regulatory agency empowered to initiate actions, make rules, and enforce orders. The investigatory body appealed to more conservative Democrats and to Attorney General McReynolds, who did not want another agency infringing on his department’s anti-trust prosecutions.

  In March, the House Commerce Committee produced a measure called the Covington bill, after Representative James Covington of Maryland, whic
h would create a trade commission authorized only to investigate conduct by businesses and recommend procedures to them for complying with existing laws. Meanwhile, the regulatory agency, though associated with Roosevelt, was gaining support among people who deplored his approval of bigness in business, most notably Brandeis. A protégé of Brandeis’s, George Rublee, drafted a measure for introduction by another Democrat on the Commerce Committee, Raymond Stevens of New Hampshire, which would add provisions to the committee bill, giving the commission enforcement powers.34

  Wilson initially leaned toward the investigatory body, but in April he received a letter that may have helped to change his mind. It came from Norman Hapgood, a well-known progressive journalist who was friendly with both him and Brandeis, who commended Rublee as “one of the best minds for this kind of thinking.” Hapgood told the president that “a half hour spent with Mr. Rublee would not seem to you wasted.” Rublee would later fancy himself the father of what became the Federal Trade Commission because he believed that when they met, he converted Wilson to his concept of the regulatory agency. In fact, as with Brandeis’s influence at the outset of the 1912 campaign, this was a case of helping Wilson down a path he already meant to follow.35

  Wilson had decided to back the regulatory agency before he met Rublee, and he had another reason for the switch, besides the attractiveness of the idea and the Brandeis connection: political calculation. On June 2, he told a Democratic senator, Henry Hollis of New Hampshire, that he and his colleagues could not hesitate and hold back because Progressives were going to attack them on anti-trust regulation, “as Mr. Roosevelt has kindly apprised us.” Brandeis and his associates seemed to him to have come up with “a better way of dealing” with regulation: “The rest of it seems to me rather plain sailing.” The remark about Roosevelt referred to the ex-president’s opening salvos in the campaign for the congressional elections in November 1914. Wilson’s great rival was once more charging him and his party with making halfhearted, ineffective stabs at solving major problems, while the sharpest criticisms of the Covington bill in the House were coming from the leader of the tiny band of Progressives, Victor Murdock of Kansas. By backing the regulatory agency, Wilson could kill several birds with one well-aimed stone. In the upcoming campaign, he could blunt attacks by Roosevelt and the Progressives. In Congress, he could reach across party lines and gain support from Progressives and insurgent Republicans such as La Follette. In the longer run, he might induce Progressives and insurgents to support him in 1916.36

  On June 10, Wilson called to the White House Hollis, Stevens, Brandeis, and Rublee, whom he was meeting for the first time. Rublee presented the main argument, and Brandeis backed him up. By the end of the meeting, Rublee recalled, “it was clear to all of us that the president had accepted the idea. He seemed much interested and quite worked up.” Brandeis went immediately to the Capitol and talked with members of the Senate Commerce Committee, most of whom, Democrats and Republicans alike, favored a strong agency, and they quickly approved their version of the Stevens bill, now called the Federal Trade Commission bill, on June 13. Then the troubles started. When floor debate began in July, a motley collection of Republican conservatives and insurgents and Bryanite Democrats mounted a fierce attack, concentrating their fire on the section of the bill that empowered the commission to identify and move against unfair trade practices, and they tried to attach amendments that imposed narrow definitions of such practices and restricted action against them. The bill’s supporters wavered but stood their ground. Wilson wrote the chairman of the Commerce Committee to demand “elasticity without any real indefiniteness, so that we may adjust our regulation to actual conditions.”37 Presidential firmness carried the day. On September 2, the Senate passed the Federal Trade Commission bill, 46 to 16. All Democrats present voted in favor, as did seven insurgent Republicans and the sole Progressive.

  Wilson exerted similar pressure in the House to get the measure approved. On August 5—the day before Ellen died—he wrote to the chairman of the Commerce Committee to argue for retaining the enforcement section: “It seems to me a feasible and very wise means of accomplishing the things that it seems impossible in the complicated circumstances of business to accomplish by any attempted definition.” It thereby admirably advanced “the effort to regulate competition without making terms with monopoly.” The president’s view prevailed, although the House passed an amendment that broadened court review of commission rulings. The conference committee largely followed the House version. On September 8, the Senate passed the conference bill, 43 to 5, with all Democrats present again in favor. Two days later, the House concurred in a voice vote. Wilson quietly signed the bill into law on September 26.38

  Together, the Clayton Anti-Trust Act and the Federal Trade Commission Act comprised Wilson’s anti-trust program. By mid-October, the president could muster enough emotional resilience to say something publicly about those acts for use in the campaign for the congressional elections that was then under way. Thanks to the FTC, he maintained, unfair methods of competition could not be used to build up monopolies. Thanks to the Clayton Act, interlocking directorates could not sustain monopolies. Democrats had remained true to their cardinal principle: “that we should have no dealings with monopoly, but reject it altogether, while our opponents were ready to adopt it into the realm of law and seek merely to regulate it and moderate it in its operation. It is our purpose to destroy monopoly and maintain competition as the only efficient instrument of business liberty.” Wilson likewise lauded the Clayton Act for doing justice to the worker: “His labor is no longer to be treated as if it were merely an inanimate object of commerce to be dealt with as an object of sale and barter.”39

  Fine words exalted legislation that fell short of its stated goals. The labor provisions helped unions less than either the president and his party or the AFL pretended. The insistence of the House on broader court review of FTC rulings would significantly weaken the agency’s powers, and a series of questionable early appointments would further hobble its effectiveness. The FTC would not emerge as a truly strong regulatory body with an anti-trust thrust until the 1930s. Then, under the next Democratic president, new legislation would strengthen its powers, and stronger commissioners would come on board.40

  Those shortcomings in the labor provisions of the Clayton Act and in the functioning of the FTC have led some interpreters to agree with Roosevelt. Wilson really was, they have claimed, a halfhearted progressive who still harbored a conservative’s distaste for “class legislation” and preference for limited government. Such claims are wrong. Twenty-three years later, that next Democratic president would likewise be loath to give organized labor everything it demanded and would pronounce on big business and big labor “a plague on both your houses!” The first Roosevelt similarly disappointed ardent advocates of regulation when he had agreed to broader court review of rate setting by the ICC. Fatigue and emotional strain almost certainly affected Wilson’s acquiescence in comparable court review of FTC rulings. Such personal factors probably also played a part in his early choices for the commission, although he often showed weakness in making first-rate appointments. At all events, the FTC was a brand-new agency venturing into uncharted waters. It could not help getting off to what its historian has called “a rocky start,” and it would take time to find its way no matter who was at its helm.41

  There has been a further twist to the view of Wilson as a reluctant, halfhearted progressive. That is the claim that his seemingly on-again, off-again espousal of the FTC showed that he was fitfully moving away from the less statist, more legalistic stance embodied in the New Freedom and toward eventual espousal of Roosevelt’s New Nationalism. One usually incisive observer at the time thought so. In his new magazine, The New Republic, Herbert Croly, Roosevelt’s chief intellectual adviser, declared, “In this Trade Commission act is contained the possibility of a radical reversal of many American notions about trusts, legislative power, and legal procedure. … It seems
to contradict every principle of the party which enacted it.” Croly and the interpreters who have followed him misread the political situation and Wilson’s thinking. He might have been courting Progressive support in Congress and votes in the future, but an agency and an approach favored by Brandeis in no way endorsed the vision of collective bigness in Roosevelt’s New Nationalism. As for Wilson himself, approval of strong, activist, centralized government, coupled with rejection of formalism and legalism in favor of organicism and administrative adaptation, had been a hallmark of his thought long before he entered politics. The historian of the FTC has characterized the president’s changing attitude in 1914 as “expedient and ambivalent, but not unprincipled.” Wilson might not have liked being called ambivalent, but otherwise he would have cheerfully accepted that judgment.42

  Curiously, the neglected stepchild of the New Freedom anti-trust program, the Clayton Act, would have greater lasting impact. Anti-trust prosecutions would wax and wane after 1914. The need for cooperation between government and business during World War I would dampen the Wilson administration’s anti-trust ardor. In the 1920s, pro-business Republican administrations would pursue few prosecutions under either the Sherman Act or the Clayton Act. With the Democrats’ resurgence in the ‘30s, however, the two acts would take on new life as a disciplinary tool, much as the FTC was originally intended to be. Thereafter, even Republican administrations would find this act and its predecessor useful measures of public policy. Here was another surprising sequel to something that at the time looked like less of a legislative triumph than its more glamorous companion.

 

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