a total capital of over three billions. In 1901 came the organi
zation of the United States Steel Corporation, with a total
capitalization of $1,400,000,000, of which acording to a later
government investigation $ 400,000,000 was water. 1 Be
tween 1900 and 1904 it is generally estimated that the number

of trusts was multiplied
by eight or nine, and
that the capitalization
rose from three billions to
over thirty billions. Of
this immense sum, a huge
portion was in seven com
panies, and these had
manifold and intricate
ramifications ; so that
three or four men, per
haps, held real control.

793. Attempts at State
regulation of trusts to les
sen the evils of monopoly
have taken the form, of
State laws which permit
incorporation only on con
dition (1) that there shall
be no stock-watering, (2)
that publicity of manage
ment shall be secured,
and (3) that officials may be held strictly to account. Such
legislation, though characteristic of nearly every State, was
long rendered of no account by three " trust-owned " States,




WOODROW WILSON. From a photograph
taken during his governorship.



1 An ominous fact was that this " trust " held title to more than four fifths
of all known iron-ore lauds in theAppalachian and Superior districts.



794] AND REGULATION 661

New Jersey, Delaware, and West Virginia. These three merely
opened the door wider than before to incorporations of every
sort. A corporation organized in any State can do business in
all, and can be deprived of its charter only by the home State.
Accordingly, by 1907, 95 per cent of the American trusts
had found refuge in these three States. In 1913 their citadel
in the favorite State of New Jersey was overthrown by the
resolute democracy of the governor, Woodrow Wilson ; l but
their opportunity to pick any one of forty-eight States in which
to corrupt a legislature still makes it almost impossible for
other States to control them.

794. Some States began an attempt to curb the power of monopoly,
and to take back for the public at least a small part of its un
reasonable profits, by taxing great corporations higher than ordi
nary individuals were taxed. This line of operation was also
stopped at once (1882) by the Supreme Court, under authority of
the Fourteenth Amendment. That Amendment forbade a State
to discriminate among persons. In the Case of California vs.
the Southern Pacific Railroad the Court held that a corporation
is a " person " in the meaning of the word in this Amendment,
though no one thought of such a thing when the Amendment
was being ratified. Accordingly no taxation can be applied to
corporations, even to specially favored public-service corpo
rations, other than to other citizens. 2



1 On his last day of office, after a splendid two-years battle, Governor
Wilson signed seven "anti-trust" bills, which made New Jersey perhaps the
most "trust-proof " State in the Union.

2 In no other civilized land is the government so powerless to deal with
aggregated wealth as this decision makes the States of the Union. The Four
teenth Amendment had been robbed of its intent to protect real persons, of
dark skins, by previous decisions of the Court ( 710) . By this decision it was
converted into a shield to protect artificial persons, in the shape of dangerous
monopolies, from needful regulation by the people. The Southern Pacific
Case is to be coupled with the Dartmouth College Case ( 355) as explaining
how the Constitution has been made a shelter to property interests against
public control far beyond anything comtemplated even by the founders of the
Constitution. For the next thirty years the Southern Pacific was " king " in
California,



662 THE PEOPLE VS. PRIVILEGE [ 795

795. Some democratic thinkers recognize that the trust, or at least
consolidation of management, is inevitable in various lines of industry.
Some such thinkers hold that the present evils will be corrected by the
trusts themselves, under the influence of a more intelligent public
opinion ; and they look with hope to the work of the Bureau of Cor
porations, established in 1903, a branch of the government to investi
gate the organization and conduct of corporations engaged in interstate
commerce, and to the Federal Trade Commission of 1916 ( 845).

796. Said Senator Sherman, in the debate on the Anti-trust
act, in 1890 : -

" If the concentrated powers of this combination [the relatively small
trusts of 1890] are entrusted to a single man, it is kingly prerogative,
inconsistent with our form of government. ... If we will not endure a
king as a political power, we should not endure a king over the produc
tion, transportation, and sale of any of the necessities of life. If we
would not submit to an emperor, we should not submit to an autocrat
of trade with power to ... fix the price of any commodity."

But the most serious power of such aggregated capital is ex
ercised in indirect ways. It can, at will, withdraw money from
circulation, compel banks, therefore, to contract loans ; force
factories, accordingly, even those not in any way owned by
the combination, to shut down or to cut down output and dis
charge workmen; and so bring on business depression and
starvation. There seems little doubt that such power has
been often used in slight degree and for short flurries, to in
fluence the stock market and favor gambling enterprises there ;
and many thinkers believe that it has been used more than
once to cause a " panic " in order to intimidate timid reformers
in the battle for civic righteousness, which might otherwise
soon interfere with the money trust's ownership of judges and
congressmen. The same tremendous power, without question,
aims intelligently at the control of higher educational institu
tions, buys up the " muckraking " magazines, and dominates
multitudes of newspapers.

FOR FURTHER BEADING. Ida Tarbell, History of the Standard Oil
Company; in fiction, Norris, The Pit and The Octopus. For a brief
general treatment, Paxson's New Nation remains the best guide.



798] PUBLIC SERVICE CORPORATIONS 663

III. PUBLIC SERVICE CORPORATIONS AND CORRUPT
GOVERNMENT

797. After the Civil War, the growth of cities and of new
inventions began to give tremendous importance to gas com
panies, electric lighting companies, water companies, tele
phone companies, and street car companies. The tendency to
ward municipal corruption was frightfully augmented by the growth
of these new "public service corporations." Each had to get the
right to use the public streets for tracks or pipes or wires, in
order to do business. In the early decades of the period, the
company usually tried to get a charter giving it exclusive use of
the streets, for its kind of business, for a long term of years or
in perpetuity. At the same time it sought to escape any real
public control over its rates or over the service it should render,
by making vague the charter clauses bearing on such matters,
or by inserting " jokers " to destroy their apparent force.

Shrewd men saw that such grants would become increasingly
profitable with the growth of city population ; and, to secure
them, some corporations found it profitable to buy up public
officials on a large scale. If a charter was decently just to the
city, the corporation often prevented the enforcement of the
best provisions for years by getting its own tools elected to
legislatures or city councils or judgeships, and by having other
tools appointed to the inspectorships which were supposed to
see that the company's service was as good as called for in its
contract.

798. These forces were largely responsible for an increased
body of political " grafters " in the governing bodies of State
and city, who were then ready to extend their operations un-
blushingly to other parts of the public business, as in extorting
bribes from business men who wished contracts for furnish
ing supplies to the city or for building city improvements.

Public graft became an organized business. City pay rolls
were padded with names of men who rendered no service,
sometimes of men who did not exist but whose salaries were



664 SPECIAL PRIVILEGE [ 799

drawn to fatten the income of some " boss." Important offices
were turned over to incompetents, favored for political service.
The corruption of American city government was exceeded
only by its inefficiency. 1 Commonly, too, it allied itself not
only with public, but also with private crime. Police depart
ments permitted gamblers and thieves and thugs to ply their
trades with impunity, so long as they did not become too
notorious ; and in return the precinct captains collected each
week regular pay envelopes from the criminals, the greater
part of which went ultimately to higher officials, chief of
police, mayor, or political boss.

799. The first case of city corruption to catch the public atten
tion was the infampus Tweed Ring, which robbed New York
City of a hundred million dollars in two years (1869-1870).
This ring was finally broken up, and " Boss " Tweed was sent to
Sing-Sing, largely through the fearless skill of Samuel J. Tilden,
soon after the Democratic candidate for the presidency ( 718).
For long it was a pet delusion of " respectable " Republicans
that the New York scandal was an exceptional case, due to the
deplorable fact that New York was controlled by a Democratic
organization (Tammany) ; but later it developed that Tammany's
methods were coarse and clumsy compared with those by
which a Republican "ring" had looted Philadelphia.

800. Slowly we have learned that corruption has no party.
The biggest "boss" naturally allies himself with whichever
party is usually in control in his district ; but he has a perfect
understanding with corrupt leaders of the other party, upon
whom he can call for help against any revolt within his own
organization, so " playing both ends against the middle." The
surest weapon at the service of these sly rogues is an appeal to
the voters to be loyal to the party, so dividing ^ood men and
obscuring real issues in local government. Nor does one house-

i About 1890 Andrew D. White visited many of the most important Euro
pean cities. At Constantinople, he wrote, the rotting docks and general evi
dence of inefficiency made him homesick : nowhere else had he been so reminded
of American cities (!).



801] AND CORRUPT POLITICS 665

cleaning and the punishment of a few rascals end the matter.
Gains are too great. In a few years, New York and Philadel
phia were again dominated by rings quite as bad as the first
ones. With an occasional spasm of ineffectual reform, such
conditions remained characteristic of practically every impor
tant city until the rising of the mighty tide of reform about the
opening of the new century ; and the fight for clean govern
ment is not yet won.

801 . The graduation of corrupted scoundrels from city and State
politics into National politics is one cause of the degradation that
befell the latter ( 714 ff.). But National politics had also its own
troubles. What a street car company or a gas company was to
a city council or to a State judiciary, a railroad or a Standard
Oil Company was to Congress and the Federal bench. Corpora
tions which wish to keep on good terms with the party machinery
in State and Nation have been the main sources of campaign
funds. 1 Usually such a corporation has kept on the safe side
by contributing to both parties, somewhat more liberally to
the one in power, from which favors are the more likely to
come. The immense contributions from such sources have
been a chief means of political corruption in campaigns. Mean
time, the people have to pay these contributions indirectly in
higher prices, since the amounts are charged up to " operating
expenses " by the corporations.



iThe law of 1911 to compel publicity by the National Committees of all
political parties as to the source of all their funds is helping to correct this
evil, though it needs much amendment (1918). During the election of 1912, a
congressional investigation proved conclusively, by the sworn testimony of the
heads of the great " trusts," that there really had existed a close alliance be
tween certain privileged interests and guiding forces in the government, such
as the general public had only dimly suspected. Mr. H. O. Havemeyer,
President of the Sugar Trust, was asked whether his Trust made political con
tributions in the campaigns. "Yes," he said frankly; "we always do that.
In New York [controlled by Democrats] we throw [our contribution] their
way. In Massachusetts, where the Republicans are dominant, they ' have the
call.' Wherever there is a dominant party . . . that is the party that gets
the contribution, because it is the party that controls local matters" [election
of congressmen, governors, State judges, etc.].



666 SPECIAL PRIVILEGE [ 802

802. This public corruption does not come in any considerable degree
from ordinary competitive business. Public corruption comes from the
desire to secure special privilege. The public service corporation in the
city is the source of municipal corruption : the ordinary business man,
who pays a bribe perhaps to secure a city contract, is rather a victim
than a first cause. So in the Nation, the railroads, with their land
grants or their desire to evade legal control, and, later, the fattened
trusts which wish to preserve some tariff "protection," are the source of
National corruption. The city or State "boss" who "delivers the
goods " to these privileged corporations seems at first sight the front and
substance of the corruption ; but, in real fact, he is merely an agent,
permitted to pay himself in loot, but set in motion and protected by
"the man higher up," the respectable head of great business interests. 1
These large interests draw after them smaller business men, sometimes
by brutal coercion, but more commonly by merely playing artfully upon
the phrase that any attempt at reform " hurts business." Almost every
genuine reform movement in America so far has found its chief foe, after
a brief run, in this despicable phrase. (Cf. 671.)

FOR FURTHER READING. The books mentioned on page 611 all have
value for this chapter. There are also many interesting autobiographies
of leading actors for this period and this topic, especially, La Follette's
Personal Narrative; Roosevelt's Fifty Years; Tom L. Johnson's My
Story ; and Brand Whitlock's Forty Years of It. In fiction, Ford's
Peter Stirling is a striking study of municipal problems about 1890 with
a hero who was popularly supposed to be modeled upon Grover Cleveland,
though the author denied any such intention. The improvement in the
attitude of many heads of "big business" toward labor problems is
pictured with faithfulness in Ida Tarbell's The Golden Rule in Business.

All these references remain good for the remainder of the volume.

1 Every student should read Judge Ben B. Liudsey's The Beast and the
Jangle, the best and most dramatic portrayal in literature of the truth
above stated (Doubleday, 1910, $1.50).



CHAPTER LXVI
FORWARD MOVEMENTS

803. The new moral earnestness of 1890, we have said ( 776), wan
dered blindly for a while in politics. But about 1900 it began to see
that the first step toward industrial freedom was to restore self-government to
the people and to enlarge it by the enfranchisement of women and through
new political machinery the referendum, the initiative, the recall, the
direct nomination of all elected officials, and the more direct control of
the Federal courts. The three great forward movements treated in this
chapter have all placed these matters foremost in their immediate
programs.

I. THE LABOR MOVEMENT

804. The ten years preceding the Civil War, with the new
conveniences for communication and combination ( 705), saw
a few trades organize on a national scale (instead of for localities
only) ; but these first national " unions " were confined to trades
whose total membership was small. The sixties witnessed a
remarkable spread of the movement. The Brotherhood of Loco
motive Engineers organized in 1863, the cigar makers in '64,
the brickmakers in '65, railway conductors in '68, railway fire
men in '69 all strong unions. By 1870 forty trades had
achieved national organization, and the movement continued
until all skilled trades became so organized.

Nearly every union has its weekly or monthly organ, The Carpenter,
The Fireman's Magazine, etc. ; and, apart from industrial matters, these
organizations have exerted a notable influence and training. Many a
local " Assembly " conducts its business and debates with a promptitude
and skill that would be highly instructive to college faculty or State
legislature.

805. But organization of single trades, even on a national
scale, was not enough. In 1869 a few workingmen in Phila*

667



668 FORWARD MOVEMENTS TO-DAY [ 806

delphia founded The Noble Order of the Knights of Labor, to
include all workers, skilled or unskilled, with the motto,
" The injury of one is the concern of all." The strike year of
'77 ( 807) popularized the movement ; and in '78 it held its
first National Assembly, made up of delegates from local and
district assemblies. For years this Order exercised vast in
fluence for good, and was the fount of much wholesome legis
lation in State and Nation ( 813). Especial gratitude is due
it for its early recognition of the right of women to equal pay
with men for equal service, and for its hearty welcome to
world-peace movements. It joined the Populists in the Free
Silver campaigns ( 755), and virtually fell with the failure of
that movement.

806. The American Federation of Labor rose, phcenixlike, from
the ashes of the Knights. Its units are the national unions of
'single trades ; it does not recognize unskilled labor in its
organization It counts some two million men, besides three
quarters of a million more organized in railway unions. It has
encouraged the formation of Trades' Assemblies (the " Trades-
union " of the thirties) in all large places, composed of delegates
from the local unions and standing to them somewhat as the
National Federation stands to the national unions. The
annual convention and the executive council of the American
Federation exercise tremendous influence over the separate
unions, but have no binding power over them, except
authority to levy assessments to sustain a strike approved by
the central council. 1 Samuel Gompers has been annually
reflected president for some twenty-five years (1917), and
has proven himself a notable leader.

807. As with the earlier organizations of the thirties, so too
the modern unions at once asserted hostility between labor and
capital. Said the brickmakers, in the preamble to their con
stitution, in '65 : " Capital has assumed the right to own and
control labor for its own selfish ends." The first violent clash

i Contrast this organization with the labor organizations of 1830



809] THE STRIKE OF 1877 669

came, naturally, in the railway world, because organization
on both sides was first complete there. The railway panic of
'73 led many roads to cut wages. The powerful organizations
of " skilled " engineers and conductors proved able to ward off
such reductions, or at least to secure fair hearing, in most cases,
by mere threats of a strike ; but the places of firemen and
switchmen could be filled more easily, and on these classes fell
the most serious reductions of pay. In '77 the fourth cut
within five years drove these employees on the Baltimore and
Ohio to a strike which spread like a prairie blaze to many
other roads.

The strikers sought to prevent the running of freight trains.
Riot and bloodshed were widespread, from Baltimore to San
Francisco. Pittsburg was in the hands of a mob for days.
The crowds of idle and desperate men in the cities, and the
thousands of " tramps " in the country (both new features
in American life with the '73 panic) added to the violence
and disorder. Millions on millions of dollars of railway
property were destroyed, and the injury to private business
was much more disastrous. Violence was finally repressed,
and peaceful strikers sometimes intimidated, by Federal
troops. On the whole, however, the strikers won important
concessions.

808. The Bureau of Labor computes 34,657 strikes for the following
twenty-five-year period, 1881-1905. Over eight million men were directly
involved ; and the direct cost apart from the greater indirect cost to
the public was half a billion of dollars. More than one third of these
strikes are classed as "successful"; one sixth more as "partially suc
cessful" ; and nearly half, "unsuccessful." More than a third of them
all took place in the last fifth of the period, and some of the most signifi
cant ones in our history have come in even more recent years. Only
two or three more can be mentioned here.

809. In 1894 the employees of the Pullman Car Company struck
to avoid reduction of wages. The American Railway Union,
sympathizing with the strikers, demanded that the quarrel be
submitted to arbitration. The Company refused, and the



670 THE LABOR MOVEMENT [ 810

Union refused to handle Pullman cars on any road. Twenty-
three leading roads were involved. The companies had con
tracts, in most cases at least, making them liable for damages
if they did not use these cars ; and, apart from this fact, they
were bitterly resolved to crush the " sympathetic strike " idea.

The disorders extended from Cincinnati to San Francisco ;
but Chicago was the storm center. Hundreds of freight cars
were looted and burned by the city mob, which found its op
portunity for plunder in the situation ; and the loss and crime
were charged upon the strikers by many respectable elements
of society. The governor of Illinois (Altgeld) sympathized
with the strike, and declared that the railway companies were
paralyzed, not by strike violence, but by a legitimate situation,
since they could not secure men to run their cars without
Federal assistance. President Cleveland, however, broke the
strike by sending Federal troops to Chicago to insure the
running of trains on the ground of preventing interference
with the United States mails, and of putting down "con
spiracies" which interfered with interstate commerce. The
business interests of the country heartily indorsed the Presi
dent's action, but that action was one of the chief reasons
why the more radical wing of Democrats were driven into
opposition ( 757, note).

810. In May, 1902, the coal miners of Pennsylvania struck for
an increase of wages and the recognition of their union. The
strike lasted five months and caused a general coal famine.
John Mitchell, the head of the miners' union, by his admirable
handling of the situation, won recognition as one of the ablest
men America has produced. The operators, consisting of a
few railway presidents who enjoyed a complete monopoly of
the anthracite coal trade, lost public sympathy by an insane
"divine right" claim from Mr. Baer, one of the presidents,
that the public ought to be content to leave the matter to
" the Christian men to whom God, in his infinite wisdom, has
given the control of the property interests of the country."

Finally President Roosevelt brought the operators and John



811] THE PULLMAN STRIKE 671

Mitchell into a conference (October 3). Mitchell offered to
submit his case to a board of arbitrators to be appointed by
the President, and promised that the miners would return to
work at once, without waiting for the investigation, if such a
course should be agreed to ; but the operators refused arbitra
tion, and called loudly on the President for troops. Privately,
Roosevelt determined " to send in the United States army to
take possession of the coal fields " if necessary ; but, two
weeks later, he succeeded in bringing pressure to bear on the
mine owners from J. Pierpont Morgan, the financial backer
and real master of the coal trust. Then the owners agreed to
arbitration. Five months later (March, 1903), the board of
arbitrators made its report, sustaining the demands of the
miners in almost every point. The action of President Roose
velt was acclaimed by the sympathizers of labor everywhere
as a happy contrast to the action of Cleveland nine years be
fore at Chicago. Incidentally it is well to note that the
mining companies simply added to the price of coal much
more than the arbitration had cost them.

811. During the Pullman strike (July 2, 1894), a Federal
District Court issued a "blanket injunction," ordering all
members of the American Railway Union to cease interfering