The Movement for Federal Incorporation

One way to have the government control "the trusts" was to require corporations doing business across state lines to obtain their charter from the federal government, not one of the states.  Theodore Roosevelt supported this idea of federal incorporation while he was President.

Federal incorporation appealed to President Roosevelt because it seemed to give the executive branch the necessary power to regulate business in the public interest.   Federal incorporation promised to remove the trust issue from immediate partisan politics.  By giving corporations prior government approval of mergers, federal incorporation would enable them to grow with assurances that at some later date a politically motivated President might not prosecute them under the Sherman Act.

Federal incorporation seemed to provide for

• the prevention of stock market abuses
• making the government the arbiter of corporate combinations and growth
• to assure enough competition to encourage efficiency and innovation
• to assure enough competition to provide for fair prices and reasonable profits.

For further reading, see Martin J. Sklar, The Corporate Reconstruction of American Capitalism, 1890-1916.  The Market, the Law, and Politics (New York: Cambridge University Press, 1988), esp. pp. 179-333.