ECONOMIC THEORY AND THE POSITIVE STATE
AFTER THE SECOND INAUGURATION of McKinley in 1901, events gave a cumulative demonstration of the soundness of the observations of economist Arthur T. Hadley that monopoly and the concentration of economic power in the hands of the few were an inevitable development of the capitalist system. A series of episodes dramatized for the mass of Americans the existence of uncontrolled and politically irresponsible economic overlords. The first was the creation in 1901 of the vast United States Steel Corporation. Then followed, at irregular intervals, the Northern Securities case, and the legal assaults upon the Standard Oil and the Tobacco "trusts," all instituted by President Roosevelt. The Mann- Elkins Act and the Hepburn Act led to Congressional battles to establish curbs on the common carriers. Finally in 1913 the Pujo committee of the House of Representatives undertook an investigation of American business conditions. Its report affirmed the existence of a "money trust" and declared that there existed "a well- defined identity and community of interest between a few leaders of finance . . . held together through stock holdings, interlocking directorates, and other forms of domination over banks, trust companies, railroads, public service, and industrial corporations, and which has resulted in a vast and growing concentration of control of money and credit in the hands of comparatively few men."
The effect upon the public of these events was enhanced by the crusade of the muckrakers, earnest journalists and humanitarians who with sordid realism exposed to view not only the relations between business and politics, but those between big business, little business, and the consumer. The muckrakers told a sorry tale of meat prepared with scant regard for the public health, of the duping