12.10 Food and Drug Industry Notes

Government Regulation of Trusts and the Food and Drug Industry

Theodore Roosevelt's "Bully Pulpit"

• President Roosevelt viewed his position as a platform to influence media and legislation.
• He believed in fair treatment for all Americans and addressing issues harming the public.
• Advocated for a "square deal" for all citizens.
• Used his influence to challenge big businesses and trusts, prioritizing public safety and well-being.

The Rise of Trusts

• By 1900, trusts controlled approximately four-fifths of industries in the United States.
• Many trusts developed negative reputations due to their business practices.
• Examples include Standard Oil (John D. Rockefeller) and U.S. Steel (Andrew Carnegie), which employed ruthless tactics to eliminate competition and maximize profits.
• Trusts consolidated numerous companies in a single line of business into monopolies, controlled by a single board of directors.
• This board made decisions impacting all companies within the trust, suppressing competition and allowing for price manipulation.
• Trusts generated substantial profits while often paying workers minimal wages.

The Sherman Antitrust Act (1890)

• Congress passed the Sherman Antitrust Act in 1890 to curb monopolistic practices.
• However, the law proved largely ineffective due to vague language and legal challenges.
• Companies often evaded prosecution by disbanding and re-emerging in other states or by winning court cases.
• The lack of clarity in the law made it difficult to prove monopolistic behavior and suppression of competition.

Roosevelt's Approach to Trusts

• Roosevelt distinguished between "good" and "bad" trusts.
• He believed good trusts operated ethically, while bad trusts exploited the public.
• He advocated for government intervention to regulate trusts that harmed public interests.
• Roosevelt recognized the importance of big businesses for America's growth.
• He cautioned against destroying trusts through measures that would cripple the nation's industries.
• He stated that any measure to paralyze industry would make one a “quack” or “an enemy of the republic.