In the previous posting on this subject, we noted that Presbyterian Judge Peter S. Grosscup was very closely focused on a key aspect of Catholic social teaching which Catholic Father John A. Zahm seems to have ignored, even as the latter personally met with Pope Leo XIII regarding Rerum Novarum: the importance of private property in Catholic social thought.
Judge Peter S. Grosscup (enhanced)
Grosscup wrote a series of articles published in major magazines in the U.S. and Great Britain from about 1904 to the start of World War I strongly advocating corporate reform and a program of expanded capital ownership for all U.S. citizens and may even have influenced G.K. Chesterton in the development of what was loosely called distributism. His Honor may also have been one of the prime movers behind the adoption of the Clayton Antitrust Act in 1914.
As a close associate of Theodore Roosevelt, Jr., Grosscup was a member of a commission formed in 1907 to study the problem of trusts and other corporate abuses, and worked with Archbishop John Ireland, widely considered an authority on Rerum Novarum, who was also on the commission. Expanded capital ownership was well on its way to becoming a plank in the progressive (not a party at that time) program.
Kenesaw
Mountain Landis
Then came the Standard Oil rebate case. In November of 1906 the federal government sued Standard Oil for accepting illegal railroad freight rebates. Federal Judge Kenesaw Mountain Landis imposed a $29.24 million fine on the Standard Oil Company of Indiana. In July 1908, the U.S. Seventh Circuit Court of Appeals led by Grosscup unanimously overturned the judgment on the grounds that:
· Judge Landis miscalculated how offenses were counted, treating each individual carload shipment as a separate crime rather than tracking the actual periodic payments or settlements made between the shipper and the railway,
· The $29 million penalty was deemed grossly excessive and legally unsound under the Elkins Act parameters, and
· The lower court targeted the parent corporation (Standard Oil of New Jersey) through a subsidiary that was not properly the defendant of record for specific indictments in that exact prosecution.
Grosscup also criticized the lower court for convicting on assumptions without proving the shipper had specific knowledge the accepted rate was lower than the published legal tariff.
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| Theodore Roosevelt, Jr. |
Roosevelt, who had Standard Oil in his sights as the worst of the worst, was incensed, to put it mildly. He broke with Grosscup, accusing him of legal pettifoggery and worse, and others joined in the feeding frenzy to curry favor with the president; Grosscup was even accused of manslaughter on extraordinarily flimsy grounds.
TR and Grosscup exchanged barbs for a while, although Grosscup’s were more civil and certainly more measured than those of the Rough Rider, who tended on occasion to ride roughshod over others who didn’t follow his program. The real damage, however, was that expanded capital ownership was dropped from the progressive Republican program.
Matters did not improve until 1912. That was when Theodore Roosevelt ran against his former friend and hand-picked successor, William Howard Taft. That was because he felt with a great deal of justice Taft had abandoned progressive policies, sided with conservative business interests, and had undone his environmental and economic reforms. When Taft won the Republican nomination, Roosevelt formed the third-party Progressive (Bull Moose) Party.
William Howard Taft
Frankly, Taft was in the pockets of the Republican Wall Street bosses. He knew it and hated it; he regarded his presidency as a personal nightmare. Woodrow Wilson was probably unwittingly in the pockets of the Democrat Wall Street bosses.
This was not good, because (in a sense), the 1912 election was basically a Wall Street civil war. It followed hard on the heels of the “Bankers’ Panic” of 1907 which had caused shockwaves throughout the world and exposed serious problems in the financial system in the United States. It had been caused by J.P. Morgan going after the Knickerbocker Bank and Trust.
Adding to the problems of the country were the weaknesses in the system associated with the Panic of 1893 and the Great Depression of 1893-1898 that had never been resolved as well as the disaster of the McKinley tariffs that were still causing difficulties with the public revenue. Consequently, Roosevelt tried to persuade Taft to adopt a more progressive stance (in the old sense) more in keeping with his status as his chosen successor and failed.
Herbert Knox Smith (Enhanced)
Even then, as Roosevelt told Herbert Knox Smith, he did not want to be president again, but the situation as Knox described it in hindsight was such that American society was definitely heading down the wrong path (and thanks to Wilson, eventually turned a trot into a gallop). Roosevelt’s platform, thanks in part to his friendship with Archbishop John Ireland and Father John A. Zahm reflected Catholic social teaching, at least to a degree.
Roosevelt and Grosscup made up in 1912 (he and Taft also made up a few years later), but it was too late. William Jennings Bryan — much to his later regret — roped in the progressive Democrats, the populists, and a large chunk of the Catholic vote for Wilson.
Wilson captured the Black vote that should have gone to Roosevelt. He pulled this off by promising to appoint a civil rights commission to resolve racial problems and then went back on it. Wilson not only refused to appoint a commission, unlike Roosevelt (who caused outrage by having Booker T. Washington to dinner at the White House), he favored segregation.
Booker T. Washington (Enhanced)
His biographers and admirers gloss over Wilson’s racism by claiming he prevented the reactionaries from implementing some of their “cruder demands.” The fact remains, however, that he permitted the implementation of segregation in the federal service as official policy.
Formal Jim Crow replaced the unofficial segregation that Republican administrations had been trying, with varying degrees of success, to bring to an end. Workers who objected were fired.
Black Americans had gradually been evolving socially and politically from non-persons to what was admittedly less than first class citizenship. Under Wilson, however, black Americans were cemented into second class status.
The Collector of Internal Revenue in Georgia summed up the administration’s policy succinctly: “There are no Government positions for Negroes in the South. A Negro’s place is in the cornfield.” The attitude of the entire country seemed changed. Government appeared to have turned into a force for imposing predetermined social change and eliminating opportunity, that is, transformed from a servant into the master. The first film shown in the White House was The Klansman, a.k.a., Birth of a Nation.
Believe it or not, Blacks were strongly Republican at that time. They only really shifted as a body to the Democrats in the 1930s thanks to Jim Farley’s efforts on behalf of FDR . . . and who also lived to regret it — but that is another story.
The bottom line is that widespread capital ownership got dropped at a critical point in history and would not gain even a place at the political table until 1973 when Louis Kelso and Norman Kurland persuaded Senator Russell Long of Louisiana to champion the initial enabling legislation for the ESOP in 1973.
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