The Progressive Era Triple Alliance: Government as Cartellizer

0:00But now I'll get to progressivism, which I entitled Progressivism and the Triple Alliance, Government as Cartelizer.

0:12And just as I believe, of course, as I mentioned last night, that I don't believe that big business monopoly, in quotes, grew up out of the free market, government had to combat it. Quite the contrary, business was doing very well on its own, with monopoly collapsing, and big business being very progressive, in the correct sense. And now we have a new system being imposed upon it, the progressive era, with the government functioning as a giant cartelizer. And the reason I consider the progressive period very important is I think really the progressive period is us. We are the enemy, we met the enemy and we are us, the famous joke, we are living in a progressive period really, we're living in a more systematic, more developed form of it, but really the embryo of all the stuff that we're living in, all the regulatory agencies and social warfare and all the rest of it, including war mobilization, really starts in a progressive period and continues on, grows and strengthens and develops into sort of a cancerous growth.

1:17The Middle Way, State Monopoly Capitalism, State Capitalism, Corporate State, Progressivism, Mixed Economy, Welfare, Warfare State, State, New Nationalism, New Freedom, New Deal, Fair Deal, Race Society. I like the word corporate state, I have a certain ring to it. It also fits in very nicely with, of course, the Stato Corporate Divo in Italy in the 20s, 30s. And also, some other phrases, the military educational and Industrial Complex, Garrison State, so forth and so on, neo-mercandilism is all sorts of ways you can look at it.

2:18What you do then, essentially, not only cartelize, but you replace these disorderly functions of the market of voluntary action by a strong central government, big government, Headed usually by a strong leader, known as President of the United States, Duce, an Italian Fuhrer in Germany. All of these are terms for leaders, purely verify analysis. And you have a strong government staff, by all sorts of great experts and technicians, recruiter from the new intellectuals and professional intellectuals who have been proliferating, as we mentioned before, to plan the economy, to subsidize it, regulate it, push people around, tell them what to do, In conjunction with who? Which is the Triple Alliance?

3:12Triple Alliance in my view is various segments of big business interests, those who couldn't make the monopoly on the market, progressive intellectuals who couldn't, who were looking for the status, privileges, and the new law that goes with the state apparatus, and the New Labor Unionism or so-called Responsible Labor Unionism, symbolized by the AFL-CIO, certainly by the AFL, they might have some arguments about the CIO. At any rate, to impose then this system under the guise, as I mentioned before, of anti-monopoly, under the guise of welfare, of humanism, etc. etc. for the Common Good of Public Interest, General Welfare, and so forth.

3:59Incidentally, about mercantilism, it's always been amusing me about mercantilism. I really believe this is a recrudescence of mercantilism in the industrial era. It's amusing me about mercantilism that people, many economists looking at mercantilism say, well, yeah, it's irrational. You look at them and say, here are these guys, they're subsidizing exports, and they're also subsidizing imports.

4:51So you have a joint alliance, so to speak, of the export interests and the domestic interests, both of whom are being subsidized by the system at the expense of the lowly consumer and taxpayer. You know, it's the same thing with the New Deal Farm Program, which, I'm leaping ahead, but this is a beautiful example of so-called irrationality in action. You have a farm program which starts with Herbert Hoover in January and March 1929 and continues on through Roosevelt, of course, and from then on. If you look at the farm program from the point of view of rationality, it seems like total lunacy. Here you have a situation where, for example, the government is paying farmers not to produce wheat or cotton. Paying them to produce less or produce nothing and have a soil bank and lay a line of fallow and so forth.

5:38Paying under a strict production. At the very same time, another division of the Department of Agriculture down the hall is paying the money to irrigate, to subsidize, to have new agricultural machinery, new irrigation, new fertilizer techniques, paying them to produce more. Now, this looks like economic insanity. On one hand, you have the Department of Agriculture, one division, paying farmers to produce less wheat. On the other hand, you have another division, paying them to produce more wheat. Sounds crazy, right? It's not crazy. It's not crazy from two points of view. It's not crazy from the point of view of the Department of Agriculture, which now has two huge bureaucratic divisions, happily, you know, either pay money for this, the contradictory thing, and for the farmers who get paid both ways, of course. They get paid not to produce less, and they get paid to produce more. I mean, they're raking it in. It's fantastic. I wish I could be paid to produce more and to teach less.

6:30So, for the farmers, usually of course the big farmers, they're getting, that's a real bonanza. But the taxpayer and the consumer of course, it is irrational, of course. Does anybody know who is the biggest recipient of soul banking subsidies down to go down to the United States and the United States? What are they being paid not to produce? Wheat or cotton? Well, as I try to point out, they had to replace, well, the old mercantilist, by the way, so I recommend the Edgar Frenes book on mercantilism.

7:38The old mercantilists were very frank. One of the things about the old mercantilism, they didn't have to worry about elections, about the votes, about PR and that sort of stuff, Madison Avenue techniques, they laid it on the line. And their view of the masses, the English working masses for example, was very frank. For example, William Pettit, a distinguished mercantilist, wrote of labor as, quote, a capital material, raw and undigested, committed into the hands of supreme authority, In whose prudence and disposition it is to improve, manage, and fashion it to more or less advantage. That's the more or less advantage of the ruling groups. So there's no problem about common good, general welfare, and that sort of stuff. None of that nonsense in the mercantilist period. Now we have a situation. We have democracy or voting.

8:26We have classical liberalism, which one of the great pitches of classical liberalism was that it would bring prosperity and increase the standard of living, etc., of everybody. So, now you have to appeal to the masses for this new rhetoric. You have to appeal to them as really more humanitarian, more general welfare-y, if that's a word, than laissez-faire. But you need, as I say, you need two things. You need liberal intellectuals, or court intellectuals, to propound the virtues of the system, to weave apologetics for it, and you need responsible labor unions to keep the workers in line, in case they get a little feisty. Fortunately, they had a model. Both groups really had a model, and I think we've touched on this before, which is essentially Bismarck's Germany, pressure on Germany in the late 19th century.

9:15First of all, Bismarck pioneered the state cartelization, the idea of the state forcing industries into cartels, and restricting production and raising prices. The NFL and the others have been doing a really good job of raising prices. When they did that and buying the masses off of social welfare programs with social insurance and all sorts, unemployment insurance, health insurance, and the rest of it. Not only buying them off but also cartilagin because when you raise the cost of all firms in the industry, you cartilagin. You enable them to raise prices on top of it. Please. And then, to protect this, to ensure that Germany, of course, is not going to be outcompeted if you're raising the price of restricting production in the German industrial machine, to protect them against foreign competition, you have to have very high tariffs to insulate the German industry from the foreign competition, which you had under the Bismarck system, And so the protective tariff becomes extremely important to the German cartel system. It's all linked together.

10:28As I say, you have the original welfare state program, which by, again, by increasing business costs, necessitated the cartelization. It helped a lot with the cartelization. Also along with this came the pro-union policy, building up responsibility with unions in Germany, Germany, also raising costs for everybody and allowing this kind of part of the relationship to take place. All of the expensive parts of the German consumer was unorganized. And as I pointed out, the second method of doing this, the way the liberal movement, which is very laissez-faire liberal movement, which was quite strong in Germany at the time, the way that was smashed was by the patriotic Patriotic Military National Front

11:35Schmoller, the great German historian and economist of the University of Berlin, declared the task of professor of the university to be, quote, the intellectual bodyguard of the House of Holland, and so on. I repeat that, and I think it's a beautiful, short summation. And we have a PhDmanship in all the rest. And another thing about the intellectuals at the time that I also touched on, they rejected laissez-faire, these new progressive intellectuals, rejected laissez-faire for reasons we talked about yesterday, and rejected Marxism as being too messy, too revolutionary, too proletarian.

12:24After all, if you're really strictly pro-Italian, you haven't got much room for bourgeois intellectuals. I mean, you have to really shuffle the cards a lot. You have to adopt the Carl Mannheim thesis that, well, it's okay for it to be an intellectual, even though you're not a worker, because intellectuals are free-floating. They're above class determination. They somehow rise above, they float above, they levitate above the class struggle. But that's really kind of, you know, it's kind of chancy. So if you're a bourgeois intellectual, your Marxism looks pretty messy. And so here we find this third way, this way of the national state, upper house, etc. And we find this fortuitous coincidence, so to speak, of these new intellectuals coming up, influenced by German Partializing ideas, welfare state ideas, and we find businessmen also aiming in this direction, we have this happy fusion of these two groups.

13:22Happy fusion of intellectuals seeking a state and businessmen seeking intellectuals, and this marvelous coming together of these two groups. Also in addition to that, to have a state apparatus, you have to have technicians, you have to have people actually planning, you have to have intellectuals staffing the bureaus, planning the economy and giving money to the poor and all that stuff. You need a lot of intellectuals to do this, and so you need experts or technicians. You begin to have the idea, which of course permeates the progressive period and later on. You don't hear it so much anymore. Maybe in just the last few years it happily is dying out a bit. But the idea is you need experts, and the key thing you have is politics is messy. As we'll see a little later, it permeates the urban progressive and the municipal progressive as well.

14:08Politics is very messy. It's corrupt and it's people buying votes and it's chancing and so on. But we need to replace all this messy political conflict with experts, experts who levitate above the political struggle, who take things out of politics. This, of course, we hear this all the time. If there's a problem in the New York subway system or something, take it out of politics. Remove it from the post office. Take it out of politics. What it actually means, of course, is it's still on the government hands, except now you can't vote about it. You can't even vote to do anything about it. You can't get rid of it if they are the permanent carbuncle on the system. Isolate it, insulate it for any kind of political action. I'm not a fan of politics, but the thing is, the one good thing about politics is at least the voter can have some kind of influence getting rid of it. But now this is eliminated. You say, take it out of politics, put it into the hands of the experts, who turn out to be these progressive types, technicians and so forth and so forth.

15:01And so this, the new intellectual, the progressive intellectual, they're pushing this very hard, the idea of taking things out of politics, taking foreign policy out of politics, bipartisanship, take the streets out of politics, take a postal office out of politics, and pretty soon, of course, there's nothing to vote about except which gang of clowns is going to do this, going to do this. So all the issues are taken out of the public hands. So, this becomes, I say, a continuing theme among all these new intellectuals. But incidentally, one of Coco's triumphal conservatism, which I think is an excellent book, the one criticism that my old friend Marty Sklar, who's a distinguished, rather erratic left historian, Marty Slaw's one criticism of the Cocoa Buck was the title.

15:55He said instead of being the triumph of conservatism, it should have been the triumph of liberalism. And it sort of highlights the fact that there's not really too much difference between conservatism and liberalism, if you get right down to it. And certainly I think he's right. I think the term corporate liberal is a beautiful, it's actually a Williams term, it's a beautiful term for the intellectuals and the businessmen who are pushing major theoreticians, I mentioned the Needham quote about mid-folks. I won't repeat that, but the glory of the ancient China, making poets and scholars into officials. Here's the quote. Needham says, quote, the successive Chinese emperors were served in all ages by a great company of profoundly humane and disinterested scholars.

16:45The Civilization which Professor Wittfogel was so bitterly attacking was one which could make poets or scholars into officials. The intellectual, the planner, etc. The expert, the technician, becomes another great term, beautiful term, which probably comes in this period, maybe later, the social engineer, a really beautiful term also. He's a technician, he's an engineer planning people, shuffling around, like the regular Social engineer, the non-social engineer is shuffling stones around or shuffling leavers or electricity. Social engineer shuffles around people. And this sort of brings me, I'm really leaping ahead a lot, but it brings me to one of my, let's use the term that Professor Rico likes to use, and my second, just about my second favorite person, my first favorite Richard Speck, Charles Manson, Richard Speck, the second favorite person of the 20th century is the Rexford guy Pugwell.

18:00He embodies an enormous amount of this stuff. When I was the enter of the right wing, so to speak, they were always quoting a great poem by Tugwell. I wish I had brought it up with me. I'm sure you've all seen it. It goes something like, I shall, he Tugwell, speaking of course for his class, I shall roll up my sleeves, I shall gather my charts and my compasses, I shall roll up my sleeves, I shall make America over. That really grabs you in the gut. And so it's, so Tuglon has followed social engineers, has followed technocrats, as they're also called, rolling up their sleeves and making everybody over, which is really, of course, what it amounts to. So this, of course, is a heady wine for the new intellectuals. I mean, here, my goodness, before this, what could they do?

18:47They could be ministers teaching humane or moral philosophy in some small college somewhere. James Gilbert has written a very interesting book, just come out about six months ago, called Designing the Industrial State, which I will also mention in my biography, where he deals largely with these progressive intellectuals and their so-called collectivism, and he shows that collectivism ranges from what we call left to what we call right, from industrial people to socialists and so forth. When he talks about the collectivist intellectuals, Gilbert says that what they were engaged in was, quote, the effort to make room for themselves and to mark off a function which would be their own specialty and justification.

19:42Well, this is, you know, economic determinism of the intellectuals, so to speak. And many of these people found that the structure of the corporation was their model, except they wanted to make it compulsory and universal. Charles Steinmetz, the famous engineer working for General Electric, felt that the whole world should be one vast General Electric, constituting the government, sort of the government as General Electric or vice versa. And many other people had very similar views in this period. So we have these experts. We have, I think, I have a note here that a certain Tolman, 1909, first used the phrase social engineers. It might have been earlier. We have the economists changing. We have the new science of sociology, in quotes, popping up with very similar views and so forth and so on. So to the collectivist intellectuals, it would be the intellectuals, they, these intellectuals, who form these social engineers, they form these experts, The State is a class of technicians, technocrats, destined to harmonize all classes.

20:49They're above the classes. You have the idea also that the State is being the umpire of everything, but they after all can see clearly and deeply, being big shot intellectuals. They can roll up their sleeves and make us all over, and they can harmonize big business and big labor and all other groups in this one great harmonic, hierarchical kind of structure. And as social scientists, there's another thing. The idea of social science as determining, as giving you the right and the license and the privilege to mold everybody also, of course, comes in as part of this whole picture. Because you have scientific social engineering. It's not just your values. It's not just the tug wall that's trying to tell us what to do because he's an SOV. It's because he's a scientist. You see it deeply and more clearly in the rest of the book, and therefore he pushes it around. And they were above politics. We shouldn't even consider them tarred with a political brush and subject to voting at the election. They should be a permanent part of the American structure.

21:47So, as Gilbert puts it, I think it wasn't very neatly, quote, occupying a position above the dialectic of social struggle, they felt able to judge the aspirations of the other classes. The idea of the scientific expert, the efficiency expert, etc., fitting in as planner and organizer and theoretician, Forrest mentioned John Cummings, John R. Cummings is one of the key people in The New Welfare State System

22:57Socialism from then on, Wisconsin Idea formulating all sorts of stuff, unemployment insurance, social insurance, social security, the whole stuff, all these things start in Wisconsin and then permeate outward, often becoming doing it themselves. Extremely influential with the AFR valve, because this whole theory of labor unions is essentially the AFR valve theory, you know, erected in science, the idea that you have labor unions carving out monopoly systems, The system's areas, usually craft unions, which of course is the AFL's thing, keeping out lower types. The thing that gives craft unions union power, power to raise wage raise, you're keeping out low types.

23:44Low types being the unskilled, minority races and so forth and so on. So we have, this thing will enter as the AFFL thesis. Cummins is being written by one of the great ideologists, not an ideologist, but an activist, writing, working out legislation of all sorts in Wisconsin and the federal government and so forth. Cummins got himself an distinguished corporatist. In 1899, Cummins delivers a paper for the American Economic Association and sets forth his thesis in some detail. The Congress, we shouldn't have this political Congress. Note the intimations trailing clouds of glory of fascism later on. Congress should not be messy and have voters from geographical districts. Congress should consist of representatives of organized economic classes.

24:31Labor unions should elect their representatives, and bankers like JP Morgan, whom you mentioned specifically, by the way, me being a Morgan diabolist I think is very interesting, should elect their representatives, and the trusts should elect their representatives, and the railroad should elect their representatives, and the farm blocks should elect their representatives, and then we all band together with economists electing their representatives. That's a really cute one. I'll find out a special personal grabber. Economists elect their representatives. Mitchel Ely, of course, is one of the people who should be the first guy to be elected by economists. Obviously, the implicit thing is that he would be the second. And with economists running this whole show, running Congress, this new Congress of American Occupations, we then have broad-minded patriotic compromises between all these groups, engineered by the economists.

25:21I'm sure the economist in the room would be particularly happy with this. and again he keeps on with this in 1908 he talks about three major groups in society workers capitalism and the quote public and then again he's one of the founders of this whole theory of the tripartite commission tripartite organization running everything running specific things and everything and representative unions you have the representative of the capitalists and you have the representative of the so-called public always turns out to be somebody The so-called public representative represents the nation, society, and science, all wrapped up in one big great ball of wax.

26:10The workers and the capitalists are narrow in self-interest. It's okay, it wasn't against self-interest, but they were narrow. They like their representatives, and along with them, harmonizing and running the whole show, as well as the scientific sociologists and economists. So the public in these contrived part-time bureaus and commissions and regulatory agencies are supposed to be embodied in progressive intellectuals, manning the state and its allied institutions as experts, officials, scientists, academics, and academics, reformers, government agents, mediation boards, lawyers, etc. etc. This whole group, proliferation of new professionals coming in. As I said, these intellectuals were the public in quotes because they floated high above the narrow selfish economic interests of these narrower economic classes.

27:05As Gilbert says, quote, in the frozen dialectics of such a state, the intelligentsia of being them and the technical experts seem to be the national rulers.

27:20So, then you have this whole idea of society as an organism. All this comes up around this being used to proliferate, society as an organ, society as a giant machine. Society is a colossal machine of which we are all parts, and men in the most exact sense are members one of another. and the other. Of course, there's somebody heading the machine, that guy is the Rex Tugwell type, the social engineer, the social mechanic, and every one of the social organism kind of metaphor has always a brain, or a head of the social organism, every newly developed organism has a brain, and the head of the brain, of course, is the state apparatus, the government, and these guys staffing it. Steinmetz, whom I mentioned, is a great inventor, of course.

28:12A Powerful, Centralized Government of Deeply Competent Men Remaining Continuously in Office

28:42The Alliance, being a conspiracy theorist and a Morgan diabolist, I can't resist this. Herbert Crowley, who is one of the great theoreticians of the Teddy Roosevelt New Nationalism, and very much in the spirit, a progressive and a collectivist intellectual, was set up, earned his mission life, received his mission life, as editor of a great new weekly journal, which we all love and revere, The New Republic.

29:31and he lucrebrates and infuses men on. In the late 20s, as we'll see later, he becomes a great laudator, a theoretician of Muslim fascism, and for good reason, because it all fits into this kind of setup. The thing I want to point out is that the magazine New Republic was owned and established by Willard Strait, Morgan partner. His son, Michael Strayer, grandson, however, was continued on until very recently as a publisher, owner of the New Republic. I don't see coincidences in all of this. Okay, we come now to a couple of the organizations of the corporatists.

30:17One of the major organizations my old friend James Weinstein has developed and examined in his book, Corporate Ideal in a Liberal State, he knows he calls it a liberal state rather than a conservative state, following along with the Sklar analysis, the National Civic Federation. The National Civic Federation is extremely important, it dies out in the 20s largely because the brilliant organizer of this thing, a certain Ralph Easley, becomes a real hopped Red Bader by the 1920s, it becomes so extreme that they all sort of leave him, and the organization dies out. But before the war, before World War I, it's founded in 1900, before the war and during the war, it's the major organization of what you can call corporate liberalism. It pushes, inaugurates all the great welfare programs, unemployment insurance, various social welfare, monopolistic, the Federal Trade Commission, etc., etc.

31:14National Civic Federation consists of many, all sorts of big shots, the roster reads like a litany of big shots at the time, all sorts of big businessmen, all sorts of trade union, responsible trade union leaders, Gompers, of course, being very high on the list, head of the American Federation of Labor, and public representatives, including corporate lawyers, university presidents, newspapers, publishers, etc. The National Civic Federation had state councils, state federations that handled problems of district level, and so forth. The first president of the National Civic Federation was Marcus Hanna, the famous boss of the Republican Party for many years with the higher Republican machine.

32:00He leaves fairly quickly and is replaced by August Belmont, an international banker extraordinaire from New York. And the rest of the roster of the group, the organization, as I say, includes an enormous number of big shots, several Morgan partners, of course, including George W. Perkins, who will pop up again and again in these lectures, and Judge Gary, and Henry W. Davison is a Morgan partner, and Isaac Seligman is a banker, and Andrew Carnegie, Charles Francis Adams, the National City Bank Cyrus McCormick, and on and on, Jacob Reese, John R. Commons, of course, these guys of course are very strong in this whole. There's also other big shots, William Howard Taft, Grover Cleveland in his late 20 years, Ella Huerute, who's everywhere ubiquitous in corporate and political structure, Morgan-oriented, Nicholas Murray Butler, my revered, for whom I am named, revered president of Columbia University, Charles Elliott, Harvard Elliott, and so forth.

33:05George W. Perkins, by the way, in addition to being a Morgan partner, was also the director of the United States Steel and the International Harvester. Some strange coincidence, as the Morgans put them all together. He was also wound up as the operating head of the Progressive Party of America, which is devoted to bringing freedom and prosperity and public interest to all of us. George W. Perkins noted, for example, that businessmen should be in R, fortunately for him, you know, both a value statement and an existential statement, businessmen should be in R, merging, quote, into the public official, public officials. The National Civil Federation was stronger apparently on the bankers than they were on the industrialists, if you want to weight these things.

34:01Henry Ford certainly was very much opposed to this group and the various others. Ralph Easley put it beautifully, it's one of the great statements, one of the great sentences in the Weinstein book, Our enemies, that means the enemies of the National Federation consensus, this great centrist consensus, state monopoly capitalist consensus which is developing, our enemies are the socialists among the labor people, that means the left wing, Marxist left, Marxist socialist, among the labor people, and the anarchists among the capitalists, unquote. By the anarchists among the capitalists, he meant essentially the National Association of Manufacturers, which in those days represented largely small business, and were anti-union and generally laissez-faire, roughly, laissez-faire, I'm not going to push that, but roughly. They were, of course, called anarchists by these, by the new corporate state theoreticians.

34:56One of the things they were pushing quite early was the welfare state kind of set up, early welfare state set up. And also they were pushing unionism. The idea of raising up unions as an important and responsible part of this triple partnership, a junior partnership in this triple alliance, this is something for us that many businessmen could not swallow, having born and bred anti-unionism is very difficult for many of them to accept the idea of suddenly welcoming the end of the end of the picture, but the National Civic Federation definitely did, The idea that various issues also should be taken out of politics, handled by experts non-politically.

35:45And one of the things they were pushing, that all problems are really technical, resolved by extra political means, was the collaboration of business unions and government. One of the things they were pushing were uniform state laws on workman's compensation before they got to the national scene, which they got to fairly quickly. In the early 1900s or so, they were pushing the idea of minimum wage laws, workman's compensation laws, and public utility regulation, and outlawing of child labor. Why do these big businessmen like minimum wage laws?

36:34Well, for one thing, as I said, this is part of a categorizing process. You're imposing higher costs on everybody, including many of your nasty, rascally competitors, like small southern firms, for example, pay lower wage rates. If you force their wage rates up, you're imposing higher costs on them, much more severely than you're imposing higher costs on yourself. As a matter of fact, the national minimum wage law, just to sort of skip to the current period for a bit, for a minute, one of the main, who are the guys who are lobbying for constantly higher minimum wage rates? Obviously unions are, for very good economic reasons, because they're getting, they're increasing their pay, even though the expense of increasing the unemployment of marginal, unskilled workers, who we don't really care much about, The other guys are a lot, they're theoreticians, liberal theoreticians of all sorts, and another group, an interesting group that are lobbying constantly for higher minimum, federal minimum wage rates, northern textile manufacturers from New York and New England, and printers too,

37:31who, being inefficient, high cost, worrying about the competition of southern low-cost plants, want to impose, since they know, of course, prevailing wages are usually lower in the South than they are here, One reason, you know, the cost of living is lower in the South, they want to impose higher wage rates on their southern competitors. This is the way they do it. They like to have a protective tariff. They love to have a high tariff wall at the Potomac and keep out southern products. It's still unconstitutional to do that. So this is the indirect route by which they do it, imposing higher costs on their southern competitors. So the minimum wage is not necessarily an anti-business proposal. It all depends on which businesses, I think Forrest mentioned, depends on which businesses are doing it. and what their interests happen to be. And so the National Civic Federation, you know, creates, I guess, the model legislation written by people like Commons and others, and then they push it, lobby for it, and so forth, and so on.

38:26Woodman's Compensation Law is another thing they were pushing. A common law has stated that an employee, if he suffers an accident, cannot receive compensation from an employer unless, if there are, if he's assumed a knowledgeable risk, this is part of a knowledgeable assumption of risk of the job, if he contributes to the negligence, if he provides a contributor to the negligence, he helped cause the accident, or if a fellow The Federal Employee was really responsible for serving the doctrine. What the labor unions wanted at the time was to have a new kind of employer liability laws which would weaken these defenses in the common law courts so they could collect, employees could collect for damages.

39:19So labor unions in those days were opposed to work months compensation laws because they felt this would be a way out, this would be a work months compensation law that for all being paid for off to a larger extent by the workers themselves, by paycheck, but they wanted us to have a free field and collect through the courts. The National Civic Federation has an end run around this and a cunning end run around this by promoting work months compensation legislation. And some of the people who were pushing this fairly early, by 1911, for example, were August Belmont and other industrialists, George W. Perkins, Andrew Carnegie, Otis Elevator Company and so forth, etc. The Perkins said about this and many other things, one other quote from Perkins, cooperation In business, meaning cartels and all these other things and government intervention, government cartelization, is taking and should take the place of ruthless competition.

40:23We had many private business compensation plans being developed. The smaller businesses didn't have the resources for voluntary plans, and the smaller businesses were sucked in or induced, I should say, to go along with the idea of working with compensation laws. So even the NAM then came out in support of it, and organized business, and only a few quote, narrow-minded, unquote businessmen continued to oppose it, and so by 1911 we had a state-workman's conversation that was going to sweep all the states. The National Civic Federation took up the drive in earnest by 1908 or 1909, including especially August Belmont, who was pushing it very heavily. In 1909, they persuaded the AFL to remove their previous opposition, and then on, it was an easy street.

41:12We also had another interesting group, which starts around this period, it starts in 1904, around 1900 or so. The American Association of Labor Legislation, it's one of my sort of little pet outfits, it consists of all these intellectuals, All these economists, corporatist economists, sociologists, social workers, etc., and all these big businessmen and a couple of union leaders. They were pushing, they began to push permanently, they were devoted permanently, all during the teens and twenties, social welfare legislation, minimum wage laws, compulsory unionization of all sorts, etc. In 1911, as sort of a slight hitch developed, the New York State Workman's Compensation Law was declared unconstitutional by the pesky courts.

42:10The courts were one of the last vestiges of true laissez-faire, not corporatism. The Survey Magazine, one of the leading magazines of progressive intellectuals, said, talking about this decision, it would have been different if it had been made by big businessmen. The problem is, in other words, big businessmen would have approved Workman's Compensation Law as their only problem. The problem is these reactionary, old-fashioned judges. But they said if we really had broad-gauge businessmen with responsibility for vast property interests on their shoulders, such as J.P. Morgan, Jacob Schiff, E.H. Gary, Andrew Carnegie, and John J. Hill, it would have been much better. They would have approved it.

43:09And the major critic of this IVE decision, which is what it was, was a case of IVE versus South Buffalo Railway Company. The major critic of this was Francis Lynn Stutson, who was a more-time Morgan lawyer, who criticized the IVE's decision bitterly and tried to get a federal compensation law into Congress. He submitted a brief to Congress to try to overturn this federal action. The FTC began, the origins of the Federal Trade Commission, they start with a bill such as the Hepburn Bill, which introduced the Congress in 1908, which wasn't passed yet, but it was prefigured the greatness to come.

43:56Some of the leaders in that were Francis Lynn Stetson, a Morgan lawyer, Victor Morowitz, and Bill Beach mentioned as a distinguished Morgan railroad lawyer, a lawyer associated with Morgan-owned railroads. The Hepburn Bill, which is the predecessor to the Federal Trade Commission, was opposed by the National Association of Manufacturers, the Merchants Association of New York, and the Board of Trade of New York, but they didn't cut the ice that the Morgans cut. Frank Muncie made a revealing statement, Frank Muncie being a newspaper publisher, and the Morgan Embitt, wrote a letter to Teddy Roosevelt in January 1912, sort of summing up the outlook of him and his colleagues, he said, quote, It is the work of a state to think for the people and plan for the people, to teach them how to do, what to do, and to sustain them in the doing.

45:09The Progressive Legislation of Progressivism in general was the result not of any impersonal mechanistic necessity, but of the conscious needs and decisions of specific men and institutions. He also says that progressivism was a movement for the political rationalization of business and Intellectual and Industrial Conditions. The regulation itself, quote, was invariably controlled by leaders of the regulated industry and directed toward ends they deemed acceptable and desirable, unquote. One of the things about Coco, for example, one of the things that he brings to this is that almost everybody admits now, if you look at the Interstate Commerce Commission, if you look at the CAB, everybody says, well, they're controlled by the major firms in the industry.

45:57The CAB is controlled by the big four airlines. And even the most devoted adherents of these regulations agree to this, but what they say is, well, the problem was it's deteriorated. Back in the good old days, in the golden age, when these regulations were first founded, such as 1900, 1912 period, then they were great. Then they were put in by real liberal progressive general welfare types and really anti-big business, but somehow it got corrupted.

46:53Morganas Koko puts it, he calls this political capitalism, which is another good word, I should have added this to the other, I've lived in the year about 20 before. It consists, quote, of the utilization of political outlets to attain conditions of stability, predictability and security, to attain rationalization in the economy. I would call that caudalization, another little gutsier word for it, a more precise word for the same thing.

47:23And the fact he says, when he talks about the Morgan and the Warren steel industry and all the rest of it being in favor of all these things, he says the fact that an Alabama grocers might be opposed to some of these things is really not important because the guys with the political influence and power were not the Alabama grocers but the people who have been mentioning. Because he says, quote, the group that supported it consistently were, quote, the men in the top echelons of finance and industry. In other words, the key power centers.

47:59Well, I think this is a good point to stop. I will continue on tomorrow night with more specifics and different specific industries, and different specific laws, and hopefully also the municipal progressive. Thank you. Okay, I'm now going to go into a little wider application of my Morgan theabolism and explain why I differ as far as on the William Howard Taft question. I recognize, of course, that Taft has a sort of dumb-dumb legalism in his approach. I mean, that's the law and it has to be enforced. So that's a question of emphasis as to his approach.

48:46It seems to me that one of the key points of political history in this whole period goes something like this. In that John D. Rockefeller is an Ohio Republican, he's based in Cleveland, his whole operation is in Cleveland, and the Ohio Republican party is essentially a Rockefeller party. I don't go quite as far as those muckrakers who say, you know, so-and-so parenthesis Morgan or so-and-so parenthesis Rockefeller, but there was a close symbiosis, let's say, between the Ohio Republican Party and Rockefeller and the Standard Oil Ambit. And we realized the Ohio Republican Party was extremely important in this whole period, McKinley was an Ohio Republican, Mark Hanna was the political boss of the entire party, as well as Ohio was an Ohio Republican, Warren Harding was an Ohio Republican, and William Howard Taft was an Ohio Republican.

49:39I look at the McKinley, Taft, Harding, et cetera, essentially in the Rockefeller embit. A little bit more factual information here. In the McKinley administration, for example, McKinley was highly indebted to Senator Hannah, the great boss of the whole party. Mark Hanna turned out to have been an old high school classmate and close friend of John D. Rockefeller Sr.

50:28This is sort of a continental kind of, it's the first of many coincidences along this line. The speaker of a house, an extremely powerful speaker, he was sort of the boss, not like now, the speaker is sort of, you know, first among equals. An extremely powerful speaker during this period was speaker Thomas Reed, who turns out to have been an old friend of Henry H. Rogers, who was in the Rockefeller Embankment. One of the Rockefeller families I mentioned before, Flagler's Rockefellers, Prats, etc. One of those was the Rogerses. Tom Platt, who was the Republican boss of New York State, turned out to have been an old schoolmate of John D. Rockefeller Senior at Owego High School, somewhere around here somewhere, as the other classmate somehow popping up.

51:13Senator Nelson W. Aldrich, whom Forrest mentioned this morning, also turns out to have been the father-in-law of John D. Rockefeller Jr. It was a kinsman, in other words, of the Rockefeller family. Oldrich, this is another footnote on Oldrich. He entered the Senate in 1881 as a moderately well-off wholesale grocer. He died 30 years later of something like $12 million on his $8,000 salary, as far as mentioned. The McKinley is also an important Ohio Republican Senator, Senator Joseph Foraker, who was on the payroll of Rockefeller, so direct payroll. In the McKinley cabinet there was Secretary of State John Sherman, who was an Ohio Republican.

52:03He can't exactly be called a Rockefeller person, he's an old-timer, but still he's an Ohio Republican, which means something. Secretary of Treasury Lyman J. Gage, who was very close to the National City Bank, which was William Rockefeller, essentially, William Rockefeller, his ambit. Now, William Rockefeller was the brother of Johnny Rockefeller, and it's true there were some certain splits there, but I, you know, I figure, and for good, for our purposes, we can sort of lump them together a bit. The ambassador to Great Britain and the McKinley administration was Joe Choate, the attorney for Stanton Oil Company in New Jersey. And so we have a certain heavy propensity from other groups, too, in the McKinley cabinet, but basically the weight, it seems to me, is on the side of the Rockefeller interests.

52:49The, McKinley has this, McKinley wanted, excuse me, the Rockefellers did not want Teddy Roosevelt to be vice president in the McKinley administration, it was considered in the Morgan eminent, considered I think quite properly, and they wanted, but they were forced to accept him, I figured

53:47George W. Perkins, Morgan in this whole period, who is the Wall Street lawyer of Thomas Fortune Ryan, who you can consider from New York, who is more or less in the Morgan ambit, at least an ally in the Morgan ambit, who has become Secretary of War and then Secretary of State, it's very difficult to keep up with, and extremely important.

54:38I like how Ruth, during this period, worked for Morgan, for example, to reorganize Equitable Life Insurance Company, so we can consider him, I think, pretty well in the Morgan ambit. He also was Morgan's agent for Chinese investments during this whole period, during part of this period. He becomes Secretary of State in 1905, and he appoints as Assistant Secretary of State Robert Bacon, who was a friend of Teddy Roosevelt, who was also a Morgan partner. Now you see, there are two interpretations at all, it seems to me, as we're going along. Either that all these guys are picking the best men available, sort of out of a big hat, by coincidence all these Morgan types are picked in one administration and Rockefeller types are picked in another administration it seems to me the statistical probabilities of this happening are almost zero or you can feel some more personal direct connections that's the hypothesis I'm going on also, postmaster general in the Teddy Roosevelt administration was a certain George Fon L. Meyer

55:40coming from the hailing from the old colony trust company in Boston, essentially an agent of Morgan Secretary of the Navy was Paul Morton from Equitable Life, which I've already talked about as being in the Morgan-M Herbert L. Satterley, Assistant Secretary of the Navy, turned out to be Morgan's son-in-law, even closer to the Morgan orbit and the handpicked successor, until something went wrong To Teddy Roosevelt, Teddy Roosevelt's handpicked successor, before he selected Taft was Elihu Root, and Elihu Root was very bitter at not having gotten it. He felt he had deserved it. The Attorney General under Teddy Roosevelt who launched whatever trust bustings were undertaken was Philander C. Knox, who was coming from Western Pennsylvania as a Carnegie Steel lawyer, and who was essentially Frick Mellon.

56:35and we've heard about Frick being sort of an ally to the Morgans in this period in the U.S. steel situation and so forth. So, we have these things. Meantime, we have the Roosevelt administration. Okay. And the Sherman Antitrust Act, as we know, had hardly been used at all during this whole period. So the dead letter. Incidentally, just before I get to that, sort of like forward to that, My view of the antitrust act, you say, well, if I'm saying that the appropriate state of the cartilaging device, how come the antitrust law is even kept in a formal sense? Because that seems to be in opposition to it. What I'm saying is, and I think Forrest hinted at that this morning also, is that the antitrust act becomes a device, not an anti-business device per se, but a device by which one businessman or groups of businessmen clobber the other group, competing group.

57:28In other words, it's a device used by one set of businessmen to engage in monopolistic privileges or subsidies and to cripple the competition. We see now, of course, this is done all the time, even openly, we have these private antitrust suits where, for example, a recent IBM case, IBM was, a suit was brought against IBM, an antitrust division, as a monopoly. This case was brought by the Controlled Data Corporation, competing computer outfit, and other allied computer, and it fits in an obvious attempt to cripple a large and successful competitor. So, and Lowell Mason's great book, The Language of Dissent, I think it's called, is talking about his experiences with the Federal Trade Commission as a constant one-man laissez-faire minority. The Federal Trade Commission in the 50s and 60s, I think it was, keeps talking about all these cases, and most of these cases are brought by competing businessmen who want to clobber a successful opposition.

58:19They don't like the fact this guy's having rebates, this guy has this, that, and the other thing. So, outlaw it, stop it. What I'm saying here is that the TAF, I mean the Teddy Roosevelt launching, the modern anti-trust policy, so to speak, is part of the same pattern, except on a larger scale. Because, as far as I said, Teddy Roosevelt was not a trust buster, but what he did is, it seems to me, he tried to bust, and did successfully bust, one trust. That trust happened to be a standard oil company in New Jersey. So in other words, we break this sort of fairly happy situation, peaceful coexistence in the business world, politically. It's suddenly ruptured by a savage attack launched on standard oil by Teddy Roosevelt.

59:10Why did he do it? Here I think, I feel on firm ground by saying that this is what he did. This is essentially a Morgan attack on Rockefeller, opening up a great titanic struggle for quite some time between the Morgan interests and the Rockefeller interests, which I feel goes down for many years thereafter. Why was this launched? I don't know, I can only hear, I can really be very speculative. I don't think too much has been done on this. Let me say, it seems to me not purely a coincidence that around this time, around the early 1900s, we begin to have a titanic struggle on a worldwide scale for international oil markets and international oil investments and oil concessions between Standard Oil Company New Jersey on one hand, Rockefeller Interest on one hand, and Royal Dutch Shell on the other.

59:58Royal Dutch Shell is a fusion between the British Shell Transport and Trading Company and the Royal Dutch Company, which were existing before 1907, then they were merged formally in 1907, which was essentially a giant organization fueled in the ambit of the famous and extremely powerful Rothschild interest. So what we have is essentially the Rothschild interest with its Royal Dutch shell on the one hand and the Standard Oil and Rockefeller interest on the other, waging a fantastic struggle beginning around this period and continuing on for a long time. In the late 1920s, several books were written by reputable journalists around 1920 and 1930, actually predicting war between the United States and Britain, physical war, military conflict, because of this great oil struggle, standard oil versus oil that shall struggle.

1:00:54Now, what I am speculating here is that the Morgan attack, the Morgan Teddy Roosevelt blistering attack on Standard Oil to break it up might have had something to do with the Rothschild. The Rothschild and the Royal Dutch Shell war with Standard Oil on the international front. In other words, what I'm postulating is essentially a Morgan Rothschild tie-in, at least to this extent. At any rate, Teddy Roosevelt launches this blistering attack on the Rockefellers. The Morgans are very happy with Teddy Roosevelt, of course, throughout. When Teddy Roosevelt runs for the election, the Morgans and everybody in their ambit boost him and so forth, give money to his campaign, and they're very happy with the whole situation.

1:01:46Poor old Rockefeller, of course, was not very happy, and Rockefeller broke his long-standing ties with the Republican Party, at least for one campaign, to support poor old Judge Olden H. Parker, the Democratic candidate for president in 1904. Judge Parker was hardly a good competitor with Teddy Roosevelt's charismatic style and stuff, and was clobbered.

1:02:16What we have is the Morgans, I think, much stronger than the Rockefellers in pushing the National Civic Federation kind of thing, the Perkins and the FDC and all that, as I think I sort of mentioned in passing, the Rockefeller wasn't very happy with the entry into World War I, just about the only large business corporate leader who was at least benevolently not neutral, or malevolently neutral to the idea of intervention. What then with Taff? Through some kind of fluke, Ella Heweroot, the designated successor of Teddy Roosevelt, not the designated successor of William Howard Taff, takes over. William Howard Taff, I postulate, is essentially a Rockefeller person being an Ohio Republican, and starts launching a huge antitrust campaign against whom?

1:03:09The anti-trust campaign has two giant Morgan companies, the biggest anti-trust campaign, the United States Steel Corporation and International Harvester. So I interpret the Taft anti-trust campaign as not only a sort of legalistic dumb-dumb legalism, but also the great Rockefeller revenge against the Morgan. using antitrust, say, okay, you did this to me, I'm going to smash you, boy, and, you know, and lashing out, perfectly reasonable, understandable, it's an approach. Taft, when Teddy Roosevelt started objecting very vociferously, and there was a split, split of big business with Taft comes as soon as he starts launching these attacks Tax and U.S. Steel and International Harvester, and Taft in kind of a dumb-dumb way, I must admit, accuses Teddy Roosevelt of selling out the Morgan and the Steel Trust because Teddy Roosevelt is opposing this antitrust action, presumably he should have known that Teddy Roosevelt sold out a long time ago.

1:04:14At any rate, Taft, in launching this attack on international harvester, denounces this Teddy Roosevelt Morgan Alliance. So comes the 1912 campaign. Taft had had one term in office. and what does it react, first as far as I mentioned this morning, the usual interpretation of the historians is that Taff is a terrible, Teddy Roosevelt is a great liberal progressive and Taff is a horrible big business reactionary. Who supports Taff re-election? Not big business, that's for sure. It's not only that they don't support Taff re-election, they launch a new party, and this is a big headache, they launch a new party on a nationwide scale, costs a lot of money, costs a lot of energy.

1:05:04They launched a new party, the Progressive Party, for the express purpose of smashing William Howard Taft, sending him back to the showers and ensuring the re-election would roll loose. Big business and big business in the Morgan M. Bitton particularly was very enthusiastic about the Teddy Roosevelt campaigns, this great progressive campaign in 1912. George W. Perkins, of course, was the head of the whole Progressive Party, Morgan partner. Frank Munzey, a newspaper publisher on the Morgan M bit, was another big shot in the Teddy Roosevelt campaign. Also lots of McCormick's, a whole bunch of McCormick people in the McCormick family. Judge Gary, naturally. And we have in the Progressive Party, the leadership of the Progressive Party, an enormous number of large businessmen, corporate lawyers, a few professors and editors.

1:06:01The big business support on the other hand for William Howard Taft is almost nil. He has, of course, the Republican Party machine. He's our president. We re-elected him. It was a normal response. And just about the only big businessmen who were for Taft were Elihu Root, who was disgruntled because Roosevelt had not selected him to be his successor, and Senator Nelson W. Aldrich and Rockefeller Ambit. Poor old Rockefeller had been boosting Mark Hanna for the presidency as against Teddy Roosevelt, before Hanna was elected, and Mark Hanna died and there was no candidate.

1:06:49So, we have a campaign where Taff had virtually no support among big business leadership. Some of the interesting things about the progressive party of 1912, Teddy Roosevelt was backed by 90% of the Union League of Chicago, I keep returning you that. George W. Perkins was, as we'll see, was very much ardently in favor of the Federal Trade-Type Commission. And Frank Munsey, a newspaper publisher, had invested very heavily personally in U.S. Steel International Harvester and other Morgan companies.

1:07:36Two-thirds of the leadership of the progressive party going to cocoa were big businessmen and corporate lawyers. and generally is a very high concentration of upper-class urban lost Republicans, white Anglo-Saxon Republicans. Teddy Roosevelt calls during the campaign for a national industrial commission similar to the ICC. This theme, of course, pops up continually now. To do for big business in general what the ICC did for the railroad, not to the railroad, but for them. To prevent overcapitalization, in other words, restrict competition. Progressive Party Platform Demands Strong National Regulation of Corporations, a Federal Commission similar to the ICC to attack what? To attack unfair competition. Whenever businessmen talk about unfair competition, what they mean is effective competition. In other words, you can cross out the unfair and put it into the effective.

1:08:26Professor Party Platform said, with this new kind of Federal Trade Commission, the businessman will have certain knowledge of the law, the investor will find security for his capital, dividends will be rendered more certain. Under such a system of constructive regulation, legitimate business, freed from confusion, uncertainty and fruitless litigation, will develop normally. The Progressive Party cited Germany openly as the ideal example, for in Germany, quote, their policy of cooperation between government and business has in comparatively few years made them a leading competitor for the commerce of the world, unquote, end quote. The time has come when the Federal Government should cooperate with manufacturers and producers in extending our fall in commerce, unquote.

1:09:18The Republican Party also called for a Federal Trade Commission with considerably less enthusiasm The Morgans have their revenge for this aberration of William Howard, half a smash, an incredible clobbering of a major party presidential candidate. We have the election of the good gray Woodrow Wilkinson, who sort of ranks, in my view, somewhere Wilson has always been held up as an anti-business, progressive, Jeffersonian type, who were his main sponsors in this, well they weren't as illustrious as the sponsors of Teddy Roosevelt, but they still lay, they cut a pretty good swath, for example, there was this classmate of mine, who was the classmate of the classmate of the classmate of the classmate of the classmate Cleveland Dodge, very important, Magnate and Copper and various other things, there was Cyrus H. McCormick, an old pal of Woodrow Wilson, there was George W. Harvey, president of Harper Brothers and Harper's Weekly, great publishers, which was essentially controlled by Morgan M. But Thomas Fortune Ryan was heavily involved here, and then we come to his fortuitous thing around this time, we have his new son-in-law, William

1:10:47James McAdoo, who was very important from now through the 20s, who was a longtime associate of the Ryan interest in New York City utilities, and again, at least the Morgan ally. McAdoo had a strange career after the war. During the war he was extremely important. Also in the favor of Wilson in 1912 was Jacob Schiff, Hugh Loeb & Company, Henry Lee Higginson, the great Boston magnate. Cleveland Dodge, by the way, was associated with the National City Bank of New York. And Brennan and Baruch, David B. Jones and Thomas Jones, an international J.P. Morgan was elected, J.P. Morgan writes to somebody and expresses his great friendship and so forth. Woodrow Wilson is a very sound fellow. So it seems to me here we have a great ploy where the big business magnates, originally and usually Republican, band together to smash this anti-Morgan upstart and pack him away and ensure the election of Wilson.

1:12:03Wilson, quite early, I think it's interesting that Wilson was the first great professor to become president, and that should be a warning to all of us. He was, in 1912 in the campaign, expressed himself in favor of government regulation and competition of reasonable combination, In his most precise speech, full of speech on the subject of business regulation during the campaign, he came out in favor of the government preventing price-fixing and control of war materials and, what, in our old friends, cutthroat competition. In this case, cutthroat is the same as unfair, i.e. effective.

1:12:52It gets cut from competition and overcapitalization, which means it's in favor of restricting the government cartelizing the system so as to reduce, restrict production and keep competition moderate, so to speak. These are very similar views, which he admits are very similar views to what Perkins has been advocating for quite some time. After the election, Professor Jeremiah W. Jencks of the International Civic Federation, distinguished economist at this current university, a big money corporatist, says, well, now that the campaign is over, liberalism is like that we should get on with the constructive work of stabilizing the system.

1:13:39The COCO has this section of material on the origins of the Federal Trade Commission, which I'll sort of summarize a bit here. As early as 1908, two people have been pushing the idea of the Federal Trade Commission or Interstate Trade Commission. Francis Lynn Stetson, who I mentioned before, is J.P. Morgan's personal attorney, and Victor Marlwitz, Bill Beech's pal, a railroad attorney from Morgan Railroads. They drafted a bill called the Hepburn Bill. I mentioned the Hepburn Bill.

1:14:25This is not the Hepburn Act, in which he is a specialist. This is the Hepburn Bill for the Federal Trade Commission. The bill will allow corporations to register with the Federal Government to be informed whether any proposed action or merger is legal or illegal.

1:14:47Stetson and Moore were aided in their effort by Judge Gary, George W. Perkins, Isaac Seligman, Augustus Belmont,

1:15:24The bill goes into abeyance for a while, and under Taff, of course, the whole thing, you know, the whole Morgan ambit disappears. We have to go, we have to wait until Wilson becomes president. Meantime, one of the most interesting people in this whole world was Arthur J. Eddy, Chicago corporation lawyer, who was one of the great theoreticians of trade associations, eliminating unfair competition, competition period, Creating cartels, allocating markets, allocating quotas for each firm, fixing prices, in other words, raising prices, and so forth. In 1912 Eddie wrote a very important book called The New Competition, sort of the manifesto of this movement. Whereas I said before, I think, competition, he says competition is war, because he blazes this all throughout the book in italics.

1:16:13Competition is war, war is hell, and therefore we should, you know, end competition, more or less. He wanted to repeal the Sherman Act outright and to pass a federal licensing law for corporations, enact the Federal Trade Commission to govern trade associations, to enforce price and market agreements by industrial self-government, enforce cartel agreements to raise prices and restrict production. It's a very detailed outline of a corporate-state kind of setup. And interestingly enough, he uses sort of what we often would consider to be left-wing altruist rhetoric. He says competition is selfish and we should therefore restrict it in favor of the altruistic world of cooperation. And cooperation is sort of the other word, the code word for cardinalization.

1:17:01Competition he refers to as inhuman and piratic and destructive to stable prices, in other words, destructive to high prices. Quote from Eddie, competition free and unfettered is absolutely destructive to all stability of prices. Before the interstate commerce law, see for the railroads, regulating railway rates, competition reigned. To a certain extent the railroads from time to time cooperated to control conditions by pools and associations, but not until the government stepped in and called a halt to vicious competition where rates regulated in any permanent manner. which sets forth the so-called COCO thesis of the function of the Interstate Commerce Commission and then he adds that he wants legislation, he adds in a letter, he says something, he says he wants legislation at least as effective for the general industry as the ICC was for the railroads He also, in the course of a book, hailed what he called the more philosophical socialists.

1:18:04By this he meant the right-wing socialists, the Bernstein types, and in the United States the more conservative socialists who would surface during the Wilson administration later, who were in favor of the trust as a forerunner of socialism. They have the trust. The trust is great because all we have to do is have the government take it over The only class in the country that benefits from free competition are the non-producers who have fixed incomes because they want low prices.

1:18:54In the 1915 edition of the book, the book came out originally in 1912, in the 1915 edition, Eddie Hale, the new Federal Trade Commission, and Warren Whitehouse is even one of the people who contributed to writing it, Hales the new Federal Trade Act, especially Section 5, which outlawed, quote, unfair methods of competition, unquote. and he says this will lead to uniform prices in the reign of cutthroat competition and will lead to things like fair trade or resale price maintenance, which comes in of course later in force.

1:19:33When the Federal Trade Commission is finally passed, it turns out that one of the very few people attacking it on individualist grounds And Wilson's 1914 message to Congress calls for this, calls for something like the Federal Trade Commission, which will ensure no further antagonism between government and business. And generally, most business groups hailed and watered the Federal Trade Commission, including the Chicago Association of Commerce and the National U.S. Chamber of Commerce. One of the people especially enthusiastic about this was Thomas Cray, who was the attorney for Cudahy Meatpacking Company.

1:20:22One of the few business groups that strongly opposed the Federal Trade Commission was The New York State Chamber of Commerce and the Philadelphia Bourse The NAM was split, uncertain, divided, and we take the strong stand one way or the other

1:20:42Comes the Federal Trade Commission, as Koko points out The law was vague enough for outlawing unfair competition The Clayton Act, which comes along with it, outlawing price discrimination

1:21:25Joseph Davies, who had been head of the Bureau of Corporations, and Joseph Davies pops up much later in American foreign policy as ambassador of Soviet Russia in the author of the famous book Mission to Moscow, for which he was attacked by the right wing as being a communist, I don't think that his general outlook changed much from one decade to another, these are different conditions, at any rate, So he was the head of the Federal Trade Commission. Thomas Cray, whom I mentioned before, from Cudahy was a member of it. Another member was George Ruble, who was a corporation lawyer and one of the major drafters of the bill, and Gilbert Montague of the Merchants Association in New York.

1:22:14The Federal Trade Commission has said outlawed unfair competition and the Clayton Act, price discrimination. And also in the Clayton Act it said unions were not illegal. It didn't exactly exempt unions from the Antitrust Act, but it was sort of a step in that direction. And it was felt that the Clayton Act would make it possible for trade associations to voluntarily stabilize prices and not be harassed for that. Again, hailing the act in addition to the people I mentioned was Samuel Gompers in the American Federation of Labor, of course this fits right in with their point of view. point of view, Francis Lynn Stutzen, Morgan Moyer is one of the original theoreticians of all of this, author of J. Eddie mentioned, and comes the Commission, as I say, excuse me, these were not the Federal Trade Commission, these were some of the people favoring pushing it, Montague, Rubley, Cray, etc., Federal Trade Commission comes in and Joe Davies was the Chairman, Vice Chairman was a key figure on the Commission,

1:23:14by Dan Hurley of Chicago, was a manufacturer in Illinois, president of the Illinois Manufacturers Association and one of the founders of the pneumatic tool industry. Ridley was on it, was nominated by the Chicago Association of Commerce, also had been a lawyer, leader of the Progressive Party, also big in the United States Chamber of Commerce. William Perry, a shipbuilder, and William Harris, a Georgia businessman, these were the commissioners. Also the secretary of commerce during the Wilson administration, a very important figure, William C. Redfield, who had formerly been president of the American Manufacturers Export Association, as a New York iron and steel manufacturer and a long-time advocate of corporate business-government cooperation kind of system, especially in foreign trade, and also a long-time advocate of encouraging trade associations.

1:24:10Davies, in working out the guidelines and the specific details for the Federal Trade Commission, is aided and abetted by Arthur J. Eddy, again right in their hip-deep. Booker D. Hines, railroad executive, becomes important later on, and Victor Marlwitz, our old friend, railroad attorney and C.R. van Huy's of the U.S. Chamber of Commerce. Business was generally highly enthused about the whole thing, enthused about the appointments and about the law now. Wilson said this was helping business, this was a great thing. Davey says there's a great opportunity for this new agency and government to be a practical aid to the business of this country. That is indeed one of the purposes for which it was created.

1:24:58Davies pretty soon shifts to the foreign affairs, after about a year or so, shifts to the great task of preparing for the war with Germany. And this leaves Hurley as sort of the key figure in the Federal Trade Commission. Hurley is beloved, and it comes with what Coco describes as a great love affair between the organized business and then Hurley. Hurley, for example, told the Association of National Advertisers in December 1915, Through a period of years, the government has been gradually extending its machinery of helpfulness. Then he mentions the railroads have, the shippers have the ICC, the bankers have the Federal Reserve System, the farmers have the Department of Agriculture, and now, to do for general business that which these other agencies do for the groups to which I have referred, was the thought behind the creation of the Federal Trade Commission.

1:25:49Willson read this and fully supported this interpretation of the origins and nature of the Federal Freikamish As a matter of fact, we got one of these things which pops up a lot. It might have popped up earlier in American history, but I just glimmed onto this here. Hurley, for example, by 1916 is grafting Willson's speech praising Hurley and Hurley's actions of the Federal Freikamish. Herbert Hoover did a lot of this later on. He was drafting stuff for Wilson to praise, what a great guy Hoover is. And Hurley tells the National Industrial Conference Board in July 1916, quote, I do not know anything about the law, and that applies to the Clayton Act and the Federal Trade Commission Act. In my position on the Federal Trade Commission, I'm there as a businessman. When I was offered a place, I told the president that all I knew was business, that I knew nothing about the new laws or the old ones, that I would apply the force that I might have in the interest of business.

1:26:42I think that the businessmen of this country will bear me out when I say that I try to work totally in the interest of business, which of course is a great applause.

1:26:56The Federal Trade Commission is now pushing also directly for shortly after it gets started, for cartels, for price fixing, especially for export trade associations, for foreign competition. It was one of the major forces behind the Webb-Pommering Act of April of 1918, which allowed export trade associations, gave essentially the federal government and promoter behind them. And Wilson put it, in 1916, the Federal Trade Commission has transformed the government of the United States from being an antagonist of business into being a friend of business. Coco says it's a little bit of an exaggeration because they weren't really an antagonist of business before that anyway, but this is the way Wilson chose to see it.