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CHAPTER XIII

STATE TRUST LEGISLATION IN THE UNITED STATES

F

REEDOM has been the American watchword from the founding of the first colonies. Ap

plied to business, it led to the protests against arbitrary royal interferences with trade common to the declarations of the Revolutionary period. It led also to solemn constitutional enactments in the earliest State Constitutions against “perpetuities and monopolies” which had been feared and fought by the English forefathers since the days of dire oppression by the many monopolies granted by Queen Elizabeth. Maryland wrote into the Bill of Rights division of her Constitution in 1776, as Section XXXIX, “that monopolies are odious, contrary to the spirit of free government and the principles of commerce, and ought not to be suffered.”* Substantially the same section is found in the earliest Constitutions of North Carolina, Florida, Tennessee, and Texas.

This hereditary anti-monopoly attitude so solemnly recorded in these early documents has been firmly maintained by the American mind generally all through the Republic's history. The pages of Congressional and Assembly journals are filled with anti-monopoly eloquence. With reference to the public lands, to the National Bank, to the issue of money, to the control of railways, the anti-monopoly spirit was invoked over and again.

*F. N. Thorpe “American Charters, Constitutions, and Organic Laws,” Vol. 3,

pp. 1690.

Imbued, then, with the certitude that came from the consistent generations of popular opposition to monopolies and flushed with the success of the last great fight against the railway monopoly which had culminated in the Inter-State Commerce Law, it is not surprising that the American legislator was ready to hit any monopoly head which showed. The flood of antitrust legislation, State and National, was the perfectly normal reaction of the American lawmaker as soon as he became aware of the monopolistic tendency of manufacturing concentration.

As was shown in Chapter I, industrial concentration had been steadily taking place, perhaps from the very first years of the Republic, but the earlier steps were short and halting. Average individual manufacturing plants had not become large until after 1870. It was not until the late seventies and early eighties that the combination movement began in the manufacturing world. By the end of the eighties individual plants, averaged for whole industries in the United States, had grown toward giant stature. For examples: the nearly 700 manufacturing plants in the iron and steel business had attained an average capital of above half a million dollars each, and the 900 plants manufacturing cotton goods averaged above a third of a million dollars capital each. The large plants in such industries were already listing their capitals in the millions. Thus the mere size of individual plants began to attract general public attention. It needed only that the new Trust plan, uniting many large plants into the Standard Oil Trust in 1882, should be followed by like combinations in other lines to conjure again the anti-trust genii out of the American legislative bottle. The formations of the so-called “whiskey” and “sugar” Trusts in 1887 and the rumored plans for like combinations in other industries started the monopoly cry against manufacturing enterprises.

The party platforms of presidential years had variously and vigorously attacked banking, land, and railroad monopolies for two generations prior to 1890. The Democratic platform of 1848 pledged that party to the task of “continuing to resist all monopolies and exclusive legislation for the benefit of the few and at the expense of the many"; the Prohibition platform of 1872 declared “We are opposed to all discrimination in favor of capital and against labor as well as all monopoly and class legislation"; the Greenback platform of 1880 declared against “gigantic land, railroad, and money corporations and monopolies.” There was even formed an anti-monopoly party, in 1884, which supported Benjamin Butler for President of the United States. It is notable, however, that this Anti-Monopoly Organization of the United States, as it styled itself, denounced the tariff as largely in the interest of monopoly and declared in favor of effective government regulation of “transportation, money, and the transmission of intelligence

now mercilessly controlled by giant monopolies,” but this national organization, dedicating itself especially to a crusade against monopolies, failed even to mention Trusts or industrial combinaThe first declarations against Trusts and industrial combinations came in 1888, the year after the formation of the whiskey and the sugar Trusts. The platforms of each of the seven parties in this presidential campaign declared against monopolies, and the platforms of the four leading parties had each a specific declaration against the new business organizations. Following are these four declarations of the leading parties of 1888:

Republican Platform*: "We declare our opposition to all combinations of capital, organized in Trusts or otherwise, to control arbitrarily the condition of trade among our citizens, and we recommend to Congress and the State legislatures, in their respective jurisdictions, such legislation as will prevent the execution of all schemes to oppress the people by undue rates for the transportation of their products to market.”

Democratic Platform: “Judged by Democratic principles, the interests of the people are betrayed, when, by unnecessary taxation, Trusts and combinations are permitted to exist which, while unduly enriching the few that combine, rob the body of our citizens by depriving them of the benefits of natural competition.'

Prohibition Platform: “Declare for prohibiting all combinations of capital to control and to increase the cost of products for popular consumption.

Union Labor Platform: “The paramount issues to be solved in the interests of humanity are the abolition of usury, monopoly, and Trusts and we denounce the Democratic and Republican parties for creating and perpetuating these monstrous evils."

It is evident, then, that by the middle of the year 1888 the general public had been thoroughly aroused against the new form of monopoly, and anti-trust legislation, state and national, was a swift consequence.

*For all references here to party platforms, see McKee's "National Conventions and Platforms."

During 1888 bills against Trusts were introduced both in Congress and in many state legislatures. The state debates resulted earlier in laws, so that before the first Federal anti-trust statute was passed, July 2, 1890, no less than eight of the states had written antitrust laws on their books. This began the first important wave of state anti-trust legislation.

Kansas, which even in 1887 had passed a law against monopolies in grain, led the procession, passing its general anti-trust act March 2, 1889. In order followed Maine, North Carolina, Tennessee, and Michigan, all in 1889, and South Dakota, Kentucky, and Mississippi in 1890, before the passage of the Federal Act. By the end of 1891 North Dakota, Oklahoma, Montana, Louisiana, Illinois, Minnesota, Missouri and New Mexico had all joined the trust-destroying procession. Wisconsin did not legislate against Trusts until 1893, but should be classed as a laggard in the first series.

As evidence that the campaign was meant to give permanent results and that the people resolved most positively to leave no legal weapon unused, a number of the states even added anti-trust amendments to their constitutions in these earliest days of attack. Idaho, Montana, North Dakota, and Washington all made such constitutional amendments in 1889, and by 1893 Kentucky and Mississippi had followed their example.

In summary, then, the first great wave of state antitrust legislation resulted in amendments to the consti

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