Teddy Roosevelt didn’t start “Trust-busting” until he became president in 1901. In 1903, he succeeded in creating a new cabinet level department - The Department of Commerce. Attorney General Philander Knox began a flurry of lawsuits against business tycoons in industries as varied as steel and sugar. Before Roosevelt, government kept hands off big business despite passage of the Sherman Antitrust Act of 1890. No one made any attempt to enforce it though everyone could see that too much money and power was amassing faster and faster into the hands of too few.
Two decades earlier, Roosevelt had his first taste of failure in his quest to save the little people from robber barons. Just 23 years old and a first term member of the New York State Legislature, Teddy demanded an investigation of New York Supreme Court Judge Theodore Westlake. With the judge’s help, money man Jay Gould used lawsuits to force the Manhattan Elevated Railway Company into receivership. Judge Westbrook’s rulings panicked stockholders. Many lost their life’s savings. When the stock price hit bottom, Gould bought. Westbrook pronounced the company sound. Gould and his cronies made millions using immoral tactics that should have been criminal.
It seems that titans of business could do anything they wanted--rob and pillage--with no one to stop them--until Teddy.
In January of 1899, Wall Street was licking its chops over more quick action by the Goulds, the Rockefellers and the Vanderbilts. A transportation revolution was at hand. Rail lines were meeting in the middle of the USA--in Illinois to be specific--to interconnect all the lines in the country. The big three could transport anything to the Gulf, Seattle, San Diego--as well as all the rails crossing the eastern half of the country. The last piece of the puzzle came with William K. Vanderbilt’s purchase of the Alton and Chicago. That piece of track would link the Vanderbilt empire from Chicago through St. Louis to Kansas City and points west.
So, do you want to know how big boys make money? In 1899 the Vanderbilts purchased 95% of the Alton and Chicago stock at $100 per share--then issued bonds sold to the public. The proceeds of the bond sale went to a 30% cash dividend on stock. Quick profits and crooked public officials made it easy for the big boys to crush little lines and buy them up cheap.
From the St. Louis Daily Globe Democrat, January 4, 1899.
“The transcontinental lines will meet in New York on Tuesday, January 10, to consider the rate situation.”
Do you imagine they were planning to cut rates once they had total control of rails to all parts of the United States?
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