Roosevelt Approves U.S. Steel Acquisition of Tennessee Coal & Iron During Panic, Exposing Reform Limits

On the morning of Saturday, November 2, 1907, during the Panic of 1907 financial crisis, J.P. Morgan convened a meeting at his library proposing that U.S. Steel—which already controlled 60% of the steel market—purchase stock in the insolvent brokerage firm Moore & Schley, which had borrowed heavily using 6 million shares of Tennessee Coal, Iron and Railroad Company (TC&I) as collateral. U.S. Steel CEO Elbert H. Gary and Henry Clay Frick traveled overnight by train to the White House to request that President Theodore Roosevelt set aside the Sherman Antitrust Act and allow the acquisition before markets opened. Roosevelt’s secretary initially refused to see them, but Frick and Gary convinced Interior Secretary James Rudolph Garfield to bypass the secretary and arrange a presidential meeting. Convinced by Gary that U.S. Steel only sought to inject liquidity and shore up investor confidence, Roosevelt granted the transaction antitrust immunity, later recalling he had to “decide on the instant before the Stock Exchange opened” because “any hour might be vital.” When news reached New York, confidence soared and the panic subsided. However, Roosevelt had been deceived: U.S. Steel gained a controlling stake in a valuable competitor, immediately replacing TC&I on the Dow Jones Index where it remained until 1991. This episode exposed fundamental limitations in Roosevelt’s Progressive reform agenda. Despite his trust-busting rhetoric, he maintained “gentlemen’s agreements” with Morgan interests including U.S. Steel and International Harvester, allowing them to avoid prosecution by opening records to the Bureau of Corporations with veto power over public disclosures. In 1911, the Taft administration sued U.S. Steel for the TC&I acquisition, and Roosevelt was derided as a hypocrite. The incident demonstrated how corporate elites could manipulate crisis conditions to extract regulatory concessions, and how even Progressive reformers distinguished between “good trusts” deserving cooperation and “bad trusts” requiring prosecution—a framework that ultimately preserved corporate concentration while creating the appearance of reform.