Split Between Taft and Roosevelt

 

On October 26, 1911, the Taft administration filed suit in federal court against the United States Steel Corporation for violating the Sherman Antitrust Act of 1890.

One important part of the suit was the complaint that the acquisition of the Tennessee Coal and Iron Company by U.S. Steel in 1907 was anticompetitive, done deliberately and unfairly to reduce competition.

The filing of this suit was a violation of the gentlemen's agreement between the Roosevelt Administration and J.P. Morgan in 1907 that the acquisition would not be pursued in an antitrust suit.

By late 1911 the two former friends, Taft and Roosevelt, were already estranged on several important matters.  Breaking this gentlemen's agreement further enraged Roosevelt, and led directly to his decision to try to wrest the Republican presidential nomination away from Taft in 1911.

The suit observed that U.S. Steel and Morgan had obscured their full motives from Roosevelt in 1907.  This charge was true.  However, the charge was politically very embarrassing to Roosevelt.  In effect, it damaged his reputation.  And it belied his belief in that the most desirable federal policy toward the trusts was a system in which the federal government, defining the public interest, decided in advance of a merger whether or not the merger was anticompetitive and in violation of the antitrust law.

Ironically, neither the Taft nor the Wilson administrations were able to persuade a majority of the Supreme Court justices that U.S. Steel, although big, had become big by unfair means, by illegal anticompetitive practices.  On March 1, 1920, the Supreme Court, by a four to three vote, decided that the United States Steel Corporation was not guilty of violating the nation's antitrust laws.

Taft was a Trust-Buster!

For futher reading, see James C. German, Jr., "Taft, Roosevelt, and United States Steel," The Historian 34(1972): 598-613