Corabiualiows KouopoUes q^^wnfd; l-,M'Ja m LIBRARY OF THE UNIVERSITY OF CALIFORNIA. Class Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/combinationstrusOOnolarich UNIVcKSITY or Ol0mbtnatt0n0 oFruBta lA Discussion of the Origin, Development, and Treatment of the Modern Indus- trial Combination. Sr^aluuag PubliatFtns CInmitmtg 835 Broadway, New York Copyrighted, 1904, BY EDWARD J. NOLAN, LL.B* AU Rights Restrvtd, CONTENTS. CHAPTER I. Preliminary Observations. r^ PAGE The present situation 1 The Elkin's amendment to the interstate commerce act 2 The Bureau of Corporations 2 Analysis required 4 Eemedies must come from the people 6 CHAPTER II. The Competitive System. Its origin and development 8 In the commercial world 9 The introduction of partnerships 12 The creation of corporations 12 The evolution of competition in the productive in- dustries 13 Deceits in trade and adulteration of products 15 The beginning of combination 15 iv Contents. PAGE Competition defined 16 Beneficial effects of competition 16 Equality of opportunity required 17 Individuality is the life of competition 18 Competition has long been favored by the law.... 19 It has been supported by statutes, etc 19 Summary 20 CHAPTER III. Objects of Combination. Causes which led to the formation of combinations. 22 Extreme sharpness of competition 22 Exhaustion of speculative fields of investment.... 22 The lowering of the rates of interest 23 The panic of 1893 23 Advantages of combination enumerated 23 Salaries paid to officials, etc 25 Dispensing with the services of traveling salesmen. 26 ; Reduction of rent charges 27 / Decrease in the cost of light, heat, and ventilation. 28 S Employment of plants to their full capacity 29 S Saving in freight charges 29 / ■* Economy in the purchase of raw materials 29 I Improved facilities for advertising 31 I Development of foreign markets 31 > Table of exports of manufactures 32 CHAPTER IV. FoBMs OF Obganizatiott. The working agreement 35 Agreement for the division of territory 37 Pools 38 Contents. y. Trusts 39 The great corporation 42 Securities holding corporations 44 CHAPTER V. PowEBS AND Effects of Monopolies. Monopoly defined 46 History of monopoly 46 Control of quantity of production 48 Quality of production 49 Regulation of price 61 Monopoly price 54 Purpose of industrial combinations Table of prices of leading articles 61 — 82 Effect of combination upon prices 84 ■ Influence upon wages 84-' The introduction of new industries 87 The displacement of labor 89 Selfishness of combinations 9C Permanency of the industrial combinations 96 Change in ownership of combinations 97 Effects of combinations upon employers 98 Displacement of employers 99 Political influence of combinations 104 CHAPTER VI. Growth of Combinations. The introduction of the factory system 108 Tendency towards concentration 108 Rate of increase in the number of combinations 114 List of recently organized combinations 116 Percentage of products controlled by combinations. . 119 ^ vi Contents. PAGE Maximum efficiency 121 Mass of capital 124 Disposition of large concerns to combine 120 Evils recognized by the people 127 CHAPTER VII. Legislation and Judicial Construction. Old English law and decisions 130 Contracts in restraint of trade 132 Anti-trust statutes 134 Extracts from the decisions of the Supreme Court of Illinois 134 Ohio 135 Pennsylvania 136 Severity of corporation laws 139 Liberality of certain states towards corporations... 143 New Jersey the home of foreign corporations.... 144 The filing of certificates by foreign corporations.. 148 Need of revision of corporation laws 151 The Sherman Anti-Trust Act 152 Interstate commerce defined 155 Jurisdiction of the state and federal government defined 155 The act for the suppression of lotteries 15^ Constitutionality of the act considered 160 Power of Congress to regulate interstate commerce. 168 CHAPTER VIII. Quasi-Public Monopolies. Classification of monoplies 177 Quasi-Public Monopoly defined 180 Development of the rights of the public ISO Contents. vii PAQE Kights of the individual Ig5 Perpetual franchises 194 Control of public services by private corporations. 199 Private interest the source of evil 209 Municipal control demanded 210 Lack of faith in the people 213 Control of a service distinguished from that of property 217 The case of Munn versus Illinois discussed 218 The true doctrine as announced by Lord Ellenbor- ough 223 CHAPTER IX. Monopolies and the Tariff. Monopoly depends upon its ability to control the product 228 Control of the production of the raw materials. . . 228 Tariff duties serve to limit the supply 229 Difficulties of controlling the world's production . . 230 Average duty paid upon imports 234 Table of industrial combinations 236 Protection afforded to combinations 248 The purpose of protection 249 Ability to compete with foreign producers 250 Exports of American manufactures 251 Table of exports of manufactured articles 252 Combinations as exporters 255 Lower prices to foreign markets 25d Protection no longer required by combinations 260- Manufacture of surplus products for foreign markets 260 Profits on foreign sales 264 Combinations unwilling to surrender protection... 268 Independent producers not protected 269 Combinations not dependent upon tariff protection. 271 viii Contents. PAOC CHAPTER X. Kesiedies. Duty of government to protect the rights of its citizens 273 Power to remedy every evil always resides in the people 274 Crood faith and fair dealing desired *. 280 -Public supervision of corporations 281 Powers of Congress discussed 282 ^ Proposed amendments to the Constitution 283 Difficulties of providing for federal supervision 286 State supervision necessary 289 Objections to state supervision considered 293 The public invited to investigate corporate se- curities 295 Trade secrets 297 Publicity necessary for proper enforcement of laws. 300 aight of the state t« inspect corporate affairs .... 301 i^atering of stocks .\ 305 ower to raise prices 7« 311 Limitation of profits 313 Foreign corporations 334 Taxation of capital stock 335 Control of local branches of foreign corporations.. . 338 Hemove tariff from articles produced by combina- tions 330 Taxation 341 Education 343 Competition promoted by reinvestment of profits.. 345 Advantages of small competitors discredited 346 No hope of natural dissolution of corporations .... 347 Competition should be fostered 350 Monopoly of the sources of production restricted . . 351 Paternalism 352 Conclusion 353 (, Combinations, Trusts & Monopolies CHAPTER I. PEELIMINARY OBSERVATION'S. "An" indefinable something is to be done in a way nobody knows now and at a time nobody knows when. That, as I understand, is the programme against the trusts." The foregoing summary of the attitude of the people toward the trusts is said to have been made by the late ex-Speaker Thomas B. Keed while in conversation with a leading mem- ber of the House on the opening day of the sec- ond session of the Fifty-seventh Congress, in De- cember, 1902. It fairly expressed the feelings of unrest and dissatisfaction and the spirit of de- termined but unguided and almost hopeless resist- ance to the overwhelming oppressions of the trusts which pervaded the rank and file of the people of every political party at that time. Nothing has since been done to relieve the situation, and con- ditions are daily becoming more intensified and unbearable, and we have every reason to believe that the same statement might be repeated with 2 Combinations, equal truth and fairness at the opening of the Fifty-eighth Congress. The Statute enacted by the Fifty-seventh Con- gress, commonly known as the Elkins Law, is merely an amendment to the Interstate Commerce Act, and is designed to afford a more effective means of enforcing its provisions. That act relates only to common carriers, or those engaged in the transportation of freight or passengers for hire, and the Interstate Commerce Commission has for more than sixteen j-ears been attempting, with more or less success, to insist upon a strict appli- cation of its terms to the affairs of railroad com- panies. There is, therefore, but little reason to hope for radical improvement from a mere change in the method of enforcing the provisions of the old law, and as its effects upon combinations en- gaged in other lines of trade must necessarily be indirect and secondary, it is not likely to afford any material relief to the general situation. The Bureau of Corporations, established by the last Congress in connection with the Department of Commerce and Labor, is merely empowered to inquire into the affairs of corporations engaged in commerce among the states and to collect such information as it can concerning them, all of which it is required to report to the President of the United States for the purpose of enabling him to recommend to Congress the enactment of such legislation as, in his opinion, the disclosed state of facts may seem to require. As now constituted it is simply an information bureau for the conven- ience of the President, but into what it may ulti- mately develop, and what real powers may here- Trusts and Monopolies. 3 after be conferred upon it, is a matter which at this time can only be conjectured. The considera- tion of the subject, however, will doubtless engage a considerable share of the serious attention of the Fifty-seventh Congress, and the constitutionality of any act which seeks to give to this bureau power to interfere with the affairs of any individual or corporation whose principal business is not directly connected with, or a part of interstate commerce, will be certain to present an interesting subject for investigation by the Supreme Court of the United States, upon which it is safe to predict that more than one learned opinion will be written. It is clear, therefore, that the legislation on this sub- ject thus far enacted by Congress is merely in- tended as preparatory to something more direct and effective which is expected to follow. The establishment of this bureau for the purpose of securing information relative to the management and operations of corporations is an official ac- knowledgment that there is believed to be some- thing radically wrong in the present adjustment of our industrial system, and that the facts pertain- ing to it, and the remedies required to preserve it from the danger of self-destruction, have not yet been made to appear sufficiently clear to the public. The people, then, knowing the unavoidable, but exasperating delays which almost invariably attend the inauguration of any new scheme of legislation^ should bestir themselves to determine what meas- ure will best serve to promote the general welfare of the whole country, and to insist upon their im- mediate adoption and enactment by these to whom the task of framing legislation has been entrusted. 4 Combinations, It is believed that the general confusion whicH still obscures the public understanding of the in- dustrial situation, and the hesitation and indecision which has thus far marked the course of legisla- tion concerning it, arise chiefly from a failure to properly analyze the subject and to comprehend clearly the natural functions and effects of the sim- ple elements of which it is composed. The modern printing press into which paper is fed from a roll and which returns it printed, cut into sheets and folded ready for distribution in the familiar form of newspapers; the commutating machine which by merely operating a few keys, as on a typewriter, performs the most difficult mathematical operations with mechanical case and exactness; and the watch which accurately meas- ures time to a fraction of a second, appear wonder- ful to those who are not familiar with their con- struction, but when analyzed they are found to con- sist of a combination of the most elementary me- chanical powers, the uses of which are well known to every schoolboy. Each of these machines is found to be simply a skillful adjustment of wheels and levers, the working of any one of which would attract no interest whatever, but when suitably connected their effects may sometimes be truly amazing. The phonograph seems to be a most marvellous contrivance to those who think only of its power to reproduce the human voice, but when examined closely it is discovered to be merely an application of the simplest principles which govern the production and transmission of sound. It is precisely the same with the contemplation of economic conditions. If we see only the complex Trusts and Monopolies. 5 exterior presented by a social movement and at- tempt to judge it by the results it has achieved, it will frequently be found to present difficulties 60 grave as to seem to baffle human understanding. But if we inquire what means have been employed to attain these ends, it will be found that this great social machine is nothing more than the develop- ment of simple relations with which we have long been familiar, and the recognition of them will enable us much more easily to master the intri- cate relations arising from their combined opera- tion. It is the hope of being of some assistance in removing the mystery which still envelopes so many of the features of this subject, and thus clearing the way to a just and enlightened solu- tion of the perplexing problems involved in it, that has led to the writing of these pages. The dual form of our scheme of government under which the regulation of the varied interests of society is attempted to be fairly apportioned be- tween the state and federal authorities, makes it exceedingly difficult at times to determine whether the jurisdiction over a given subject is properly vested in the one or the other, but the importance of deciding the questions correctly and preventing any usurpation of powers by the one or abandon- ment of them by the other, and of insisting upon a strict adherence to that adjustment of rights and obligations which was prescribed by the framers of our national constitution, cannot be over-esti- mated, for upon the preservation of this funda- mental principle of our organic law depends the stability and permanency of our republic. The duty of safeguarding it has been entrusted to the 6 Combinations, whole people, and from them must come the brain and the muscle, the wisdom and the courage, which are necessary to guide the nation through every danger and to protect it from all harm. Many nice questions have arisen since the adoption of the Constitution of the United States in which the powers of Congress and of the state governments have been considered, and some of the greatest minds that our country has produced have devoted their best efforts to the discussion and settlement of the constitutionality of measures in which the jurisdiction of the state and national govern- ments appeared to be brought into conflict, but no subject that has yet been proposed has promised material for a more interesting and profitable in- vestigation, or important judicial construction than the one now before us. The responsibility of determining upon the proper means of redressing wrongs or of remedying social evils, rests upon the people, and until they have done so, they cannot expect their representatives to enact satisfactory laws. Legislators, at their best, merely reflect the will of the people, and until that will is made known their position is substantially that of agents awaiting instructions, or at most they may indulge in the passage of acts which serve but for little more than temporizing experiments. No laws, however wise or good they may be, can hope to be effective under a republican form of government unless they are supported by the common people. It behooves us, therefore, to study the conditions which confront us that we may be prepared to in- telligently discharge the duties of American citi- zenship, and prove faithful to the trust imposed in. Trusts and Monopolies. 7 IIS by the Fathers of our Country. To that end we shall now proceed to examine some of the de- tails of the most absorbing topic of the day, the one subject with which every one is supposed to be familiar, but of which very few are prepared to give a satisfactory account. 8 Combinations, CHAPTER II. \F i^. THE COMPETITIVE SYSTEM. In the early settlement of every new countn% individual enterprise has been obliged to go forth to contend with the various forces of nature; to subdue the savage, to cut down the forests, to ex- terminate the animals of prey, to endure the hard- ships and privations of every kind, to encounter eickness and disease, and to face death in a hun- dred forms in order to prepare the new-found land for the requirements of civilized man. As popu- lation increased and commimities were formed, this same individuality and independence of ac- tion led to the adoption, by various persons, of all the numerous occupations that are necessary to supply the wants of society. So long as the laborers were few and the wants many, the ejfforts of all were required to supply the demands of the community, and there was no competition. As soon, however, as the needs of the people began to be in a measure supplied and two persons were obliged to bid against each other for the favor of the community in any particular line of trade or pursuit, competition had set in, and what is now known as the competitive system had begun to operate. Trusts and Monopolies. 9 In its early stages the most familiar form of competition was that carried on between the store- keepers in the towns, but it also animated the strife between the producers of various kinds of wares, and with the development of the factory system, it assumed its greatest importance and attained its fullest development in connection with that class of business. The competition of the small storekeepers is more or less familiar to every one, particularly to those who have been raised in small towns. In large cities nothing seems ever to have had a be- ginning. There never was, apparently, any first store, but there has always been an abundance of them; competition is sharp and incessant; oppor- tunities of every description are plentiful; condi- tions of all, kinds, whether for good or evil, seem to be highly developed, and every economic prin- ciple appears to have been always in operation, while in the small town there are many who remem- ber when the first storekeeper had the entire trade of the village all to himself. He knew no opposition and could conduct his business to suit his own pleasure. He need go to no expense in fitting up his store to make it attractive or inviting to the public, nor go out of his way to solicit trade, for those who desired to purchase must come to him. He could make prices to suit the convenience of his own business, limited only in a measure by the dis- tant markets of the large cities. This independence, however, was not destined to be long-lived, for a second store soon appeared in the town. The new aspirant, in order to secure business, had to overcome some part of the prestige lo Combinations attained by the older merchant, and he was there- fore obliged to exert himself to please and attract the public. He usually began by endeavoring to give an inviting appearance to his store, by dis- playing greater taste in the selection and exhibi- tion of his wares; he strove to be more attentive and obliging to his customers, offered to deliver his goods at the homes of purchasers and sent agents out to solicit orders. He also in many instances cut prices and thus compelled his competitor to sell at reasonable figures or else lose his trade alto- gether. This unusual activity on the part of the new- comer was not without its effect upon the older merchant. He was, in a measure at least, obliged to meet every innovation adopted by his new com- petitor, as well as to conform to his reduced prices. The contest having once begun, it continued to be urged with increasing vigor, just as in a game of checkers each play calls for a corresponding move on the part of the other party. Each strives to take every possible advantage of his adversary, and the more successful he becomes the greater priv- ileges he is allowed ; just as the checker which has been successfully carried through the forces of the opposition may disregard many of the rules by which the others are restricted. New fixtures and an attractive interior presented by one store called for equally fine fittings and a display store-front by the other. More clerks and errand boys to wait upon the customers of the one, was met by the delivery wagon to serve the conven- ience of those of the other, and illumination and conspicuous display of wares by one, led to adver- Trusts and Monopolies. ii, tising of various kinds by his rival. Each vied with the other in his efforts to procure the choicest goods from even the most distant markets, and the latest and most inviting patterns were placed be- fore their customers. The utmost ingenuity and incessant labor were devoted to the development of the art of collecting merchandise and presenting it in an attractive manner to the purchasing public, and every convenience that genius could devise was employed to bring merchant and consumer closer together. . Other competitors, of course, entered the contest, \ but these were merely so many additional players, I which simply added zest to the game. Each con- tributed his might to spur the others on, but was in turn compelled to keep pace with them. It not infrequently happened that in the bitter- ness of competition prices were reduced so low as to destroy all possibility of making profit, goods being often sold below cost in order to outdo com- petitors. In the earlier stages of the development of the system, however, most merchants were on a comparative equality so far as capital was con- cerned, and since neither could afford, much longer than the other, to conduct his business at a loss, the result was usually a cessation of hostilities, suc- ceeded by a period of mutual toleration which proved to be highly beneficial to the community; protecting it against the danger of extortionate de- mands by a monopoly on the one hand, and secur- ing to it the advantages of superior service induced by competition on the other. Larger amounts of capital soon began to be in- vested in mercantile business, and with it the com- 12 Combinations, petition became sharper than ever. The greatest resources at their command enabled merchants to attempt many things which had hitherto been im- possible, and provided them with the means of carrying the competitive warfare against the smaller tradesmen even to the point of extermina- tion, for they knew that after they had once driven competition from the field, they could raise prices to such a point as would speedily restore to them all the profits which they had sacrificed in the competitive struggle. The instinct of self-preservation soon began to lead the smaller dealers to combine in order to re- sist the attacks of their more powerful competitors. I Two or three individuals would unite, putting their , joint resources into the business, and would thus for a time be able to continue the contest. These partnerships proved popular and successful for a while, but like everything else in the competitive world, each new departure merely serves as a step to something higher. One partnership led to the formation of another still stronger, and so they continued to increase in number and in power until they, too, were found to be inadequate for the requirements of the trade. I Combinations capable of an almost unlimited number of individual shareholders, and possessing 1 much greater power than partnerships, now began to be formed. They were known as stock companies, or corporations, and by means of these the greatest aggregations of wealth have become practicable and the exercise of the most stupendous powers ever known to the world has been made possible. Corporations now began to supplant the individual Trusts and Monopolies. 13 and to assume control of trade. The advantages of corporate management (among which were the limited liability of the shareholders and the greater facility for raising capital) were so important in the conduct of business on a large scale that, after the first prejudices, which always retard the in- troduction of a new system, had been dissipated, the organization of corporations for all kinds of purposes became quite general. The formation of j a company in one line of business compelled the j creation of others to compete with it and thus the « movement spread until for many years the greater part of the business of the country has been con- ducted by corporations. The competition begun by individuals possessing little capital was continued by the corporations with all the rigor and severity that the shrewdest management could devise and that large capital and great power made possible. The history of competition among manufacturers has been very much the same as that which we ? have just outlined as existing between the venders | of their products. In the early days when practi-| cally all manufactured products were made by hand } labor, the same rivalry existed between the indi- Oj'vidual producers which has since been developed . ^ into the most relentless competition between giant ^^|S manufacturers, though of course it was not mani- X ^ f ested in the same way. ^ N It may easily be supposed that the competition. "^ between the early producers was conducted in much the same way as that between rival blacksmiths, or those engaged in any other of the occupations com- monly known as hand trades, at the present time, in which mechanical skill, natural taste, tact, per- 14 Combinations, sonal characteristics, and accomplishments are largely relied upon to secure for their possessors a fair share of the business. With the introduction of machinery and power, however, substantial advantages in production be- gan to be substituted for mere differences in in- i ^ dividual capabilities as a means of extending trade. y-^ The adoption of the factory, or coHDperative system i is. I of production in which many persons were em- \ J^ i ployed in large establishments with the aid of * ^ power and machinery, afforded so many important advantages over the old system of shop work, that ^ it speedily compelled those engaged in the manu- facture of the same class of goods either to adopt the system or to retire from competition with those who had done so. Every new tool or piece of machinery that was devised likewise gave to those who first employed it a material advantage over all com- petitors who had not yet done so, and thus com- pelled them to seek its aid in order to keep pace with the times. The readiness with which the latest and most improved appliances were adopted by manufacturers, and the passionate fondness of the American people for the new and the wonder- ful, have stimulated the inventive genius of the age to such a degree of activity that the manufac- turing and industrial achievements of the last cen- tury have become the wonder of the world. I The same evolution in the form of organization (and in the size of the establishment^ which we have ialready noted in relation to mercantile business, has also taken place in the manufacturing world. The shop in which the proprietor and his appren- $W\)^' ^^^^'^ wPi^i^i^ ) ^ Trusts and Monopolies. 15 tice worked together at the bench developed into J the factory in which many persons were employed ^ and which was noisy with the sound of the re- volving wheels of machinery ; ijinto the firm in which the capital of two or more Joint proprietors was invested, and which employed a great number^of men and still more exten- sive machinery ; ^^d finally into the corporation in which the proprietors as shareholders may be numbered by the thousand, which may control an almost unlimited number of employees, and in whose plants the most marvellous machinery is in operation. The excessive sharpness of competition has, at times, led to (he production and sale of inferior grades of goods of various kinds, and numerous frauds and deceptions have been practiced by un- scrupulous parties in their efforts to maintain an unequaled competition. In some cases, how- ever, this has been due to what may be termed the over-growth of the competitive system; in others, it is one of the natural evils which is bound to re- sult from individual competition, while in many in- stances it has been the work of irresponsible per- sons who have had no intention of acting in good faith, and whose misdeeds cannot, therefore, prop- erly be charged as among the effects of the eco- nomic system which chanced to be in operation at the time. These large corporations which had now assumed control of nearly every line of trade, carried on the competitive struggle with the utmost severity, and emptoyed-FvnyTheans that ingenuity could invent to undermine and destroy their competitors, and to i6 Combinations, drive them out of business, but finding that these means failed to clear the field of opposition, or growing weary of the struggle, they began to re- sort to agreements between the competing concerns for the purpose of fixing prices, to divide terri- tory between them, etc., and those who refused to voluntarily become parties to these arrangements, were then forced to join, or fight the united strength of the combination. Such has been the origin and growth of what is commonly known as the competitive system. If\ means merely the independent production, manu- facture or sale of any commodity by several indi- viduals, each of whom is striving to secure a larger share of the trade than his competitors, and who is usually willing to employ every means at his com- mand to attain his end. It is under the competitive system that our country has attained to its present position of wealth, power, and influence among the nations of the world ; it is under this system that the re- sources of our country have been developed, and the hidden treasures of the earth have been brought forth to swell the volume of that ever-growing commerce which is already carrying the products of our workshops and of our land into the remotest corners of the earth. It is under the stimulus of competition that the genius of our people has made invention after invention which have revolution- ized all processes of production, of manufacture and of transportation, have greatly increased the efficiency of labor, and have made our machinery and the equipment of our factories and our milh the study and admiration of the master mechanics Trusts and Monopolies. 17 throughout all parts of the civilized world. Most of us have been taught to regard the state of uni- versal competition as the normal and ideal condi- tion of the industrial world, the^stTmulatrhg force to promote and hasten its extension and develop- ment, and the automatic governor to regulate and control it in its maturity. In speaking of the benefits to be derived from . the competitive system^TiTTtVever, we have always \\\\ had in mind the competition of comparatively equal " forces. While the opportunities of air the parties are equal, the hope is ever entertained that each may be able to excel the other, and all are inspired to put forth the best work of which they are capa- ble. If, however, a material advantage be given to some and denied to others, the hope of the less favored is gone and the zest is taken out of the con- test, and those possessing the advantage may move leisurely on to victory, while the less fortunate are obliged to pursue a hopeless struggle for existence. The competitive system has been in operation in Europe as well as in this country, but there has never been that equality of opportunity which has existed here. The greater part of the capital has always been controlled by a few firms, or they have been favored by governmental patronage or pro- tection, while the opposition of their smaller com- petitors has not been sufficiently strong to stimulate them to any great efforts. Much has been accom- plished along old established lines, and some im- provements have been made, but no such progress has been attained as has characterized the develop- ment of our industries. It is the same spirit of individuality and in- //Il 1 8 Combinations, dependence of action which led the adventurer forth to battle with the uncouth forces of nature, that has ever since directed the course of that competitive struggle which has sharpened the wits, inspired the genius, and spurred into activity every faculty of our people and developed the varied resources of our country. It has always led the way, and the multitude has followed. It has suggested every' link in the long chain of im- provements reaching from the rough board counter in the primitive country' store, to the mer- cantile palace in the large city. It is the life of competition, and competition has built up all the great industrial institutions of to-day, and made possible all those wonderful results which combination is now securing through its operation of them. Combination, or co-operation, has thus far merely t aken ove r and combined the properties created and^tablisWd by competition. It has in- troduced a new system of control, and effected numerous economies in their management, but as yet it has added nothing distinctly new to the means of production, or to the institutions which I mark the progress of the world's material develop- ment. Competition has been recognized from the very earliest times as the natural condition of trade and the safeguard of the rights of the consumers, and the common law has for centuries been very severe and emphatic in declaring all combinations in re- straint of trade to be contrary to public policy and therefore to be prohibited. Many attempts have been made to form combinations to agreements for the purpose of neutralizing the effects of competi- Trusts and Monopolies. 19 tion in particular lines of industry, but owing to the intervention of the law, or the want of good faith on the part of the contracting parties, they have always failed in their purpose until within the last thirt y or f orty vpars.. It was about the begin- ning ol Ais latter period that combinations in re- straint of trade began to be more or less effective, and th e evolution of the modern trns| c^r mnnnpoly-- began, passing as it did through all the various stages of development from the mere working agreement to the mammoth corporation, the chief forms of which are herein elsewhere described. With the success of these combinations came the declin e of competition. This system has been supported by th^" "e^fyfriig laws and by new statutes made espe- cially for the purpose, by the long and continued usage of centuries, by the apprehensions of the peo- ple that they were about to be subjected to unjust and unreasonable oppression, and by the reluctance and timidity of capitalists to risk their fortunes in the attempt to establish a new scheme of indus- trial economy. The monopolistic system, on the other hand, was supported by the prospect of large and speedy profits, and by a host of professional promoters who sought to acquire large personal profits as a bonus for effecting organization among the firms engaged in a particular line of industry. iThe struggle between the two systems has, there- fore, been long and obstinately contested, and it is only within the last six or eight years that the supremacy of monopoly appears to have become es- tablished, and the rush to combination has become precipitate. The benefits of the competitive system are^ as -t 20 Combinations, we have seen, all to be derived from a state of com- parative equality of opportunity, and may be summarized as follows : it stimulates invention and production; it insures the manufacture or rendering of the best commodities and service to the consumer; it secures and maintains a reasonably low price to the purchaser; it allows the payment of fairly good wages !to the producers, and to all employees, and ^affords a reasonable profit to the competitors. The evils of the system, on the other hand, arise from inequalities of competition, — disportionate op- portunities discourage enterprise; — it induces de- ception and fraud in the manufacture and sale of goods; it causes great fluctuation of prices, from exorbitantly high at times to ruinously low at others. Inequality among competitors leads to the continual cutting of the wages of employees, and in many instances reduces the producers of raw materials to the position of mere servants of the large consumers, and occasions an endless, bitter strife among competitors which results in large profits to a few, a mere struggling existence to more, and ruin to many. The competitive system, in its free and natural application, has proved highly beneficial ; but from its abnormal development, or what may be termed the transition from the competitive to the co- operative or monopolistic system, many evil effects have resulted and numerous abuses have arisen for which it is very desirable that remedies shall be found either by the complete adoption of the sys- tem to which the transition is leading or by suit- able regulation and restriction upon the existing Trusts and Monopolies. 21 Bystem. Whether we consider the present indus- trial movement to be the substitution of a new sys- tem of monopoly for the old system of competition, or consider it to be merely the natural and logical , development of the competitive system, the result is the same, and the fact remains that competition is rapidly giving way in all lines of industrial activity to a system of co-operative control or monopoly, and if any of the good features of com- ipetition are to be preserved in order to serve as a check upon the absolute power of a unified control of trade, it must be through the aid of wise and judicious legislation. ^j- ~- 22 Combinations, CHAPTER III. OBJECTS OF COMBINATIONS. Among the principal causes which have lad to the formation of trusts and combinations, may be mentioned the* sharpness of competition; ^the ex- haustion of many of the sources which have hitherto offered large speculative gains ;^the lowering of the rates of interest upon money ;*" the financial and business panic of 1893;**' and the prospect oi _se« curing larger profits by f^cqiiiring rontrol of the various necessities of life and then conducting the production and manuiactjli£— Qf__them_upgn the largest possil ' Competition had been carried to such an extent" in many lines of trade that profits were reduced to a very low margin. Many manufacturers found it difficult to meet the running expenses of their business, and were rapidly becoming discouraged. The future gave no promise of relief, but seemed rather to have only greater trials in store for them, and any alternative that promised hope of improve- ment was welcomed by those who saw only loss and disaster awaiting them. The completion of various public works, such as the great railway systems of the country, in the construction of which large sums of money were employed, and the gradual payment of the national Trusts and Monopolies. 23 debt, all of which released many millions of dol- lars annually, served to increase the volume of capi- tal seeking investment and thus directly tended to lower the rates of interest. ^ This lowering of the rates of interest and the closing of many fields in which fancy profits had formerly been gathered, directed attention to the more commonplace articles of everyday consump- tion, and the possibilities of industrial develop- ment as applied to these commodities began to be seriously considered. The panic of 1893 had reduced most of the in- dustrial institutions of the country to a state of great financial distress, which made them an easy prey to those who had studied the opportunities presented by large scale production, and who were able to control a sufficient amount of capital to take advantage of them. Among the benefits to be deriverl from fh^ o^ vn^ _biiiatiQns_of manufacturing establishments, the fol- lowing have been most strongly emphasized by cor- poration promoters and those who have been par- ticularly active in bringing together the various elements which constitute the great industrial com- binations of to-day : \'th e reduction of fixed chame g "^ such as the amount paid for salaries of superSi- tendents, foremen, bookkeepers, salesmen and others, whose services are usually required to be retained throughout the year ; 1 a substantial savin^^inrent or in the amount of interest required fobechafged upon capital invested by diminish- ing the number of establishments to be maintained ; 3 a decrease in the cost of repai rs and qp exatipn by employing a smaller lEumfeoT planfsand avoid- 24 Combinations, ing the duplication of machinery, by -using only the modern appliances and by working them to the most full limit of their capacity ; Ha materi al redu c- tion in t he relativp pYpfiT^gpnfljyhj-j heaTand power, and ventilation ;^the distnHution of orders so that the goods may be produced at the points most con- venient for manufacture, transportation, and de- livery;^ the power to procure raw materials in such markets, and in such quanti ties as will enable the purchasers to secure the most f avorable terms ;7the superior opportunities presente3 for advertising their products, and of affording such inducements to the trade as would secure for the combination a virtual monopoly of the business and enable it to regulate and maintain prices^^ and the prospect of being able to extend its trade into foreiom mar- kets, thus opening up new sources of profit. The contemplation of the possibilities of com-' bination, as suggested by the plants just indicated, coming as it did at a time when so many considera- tions seemed to necessitate the abandonment of the position hitherto maintained, led to the unprec- edented rush to combination which succeeded so closely upon the panic of 1893. It may, therefore, be useful to examine, somewhat in detail, the vari- ous objects which these combinations seek to ac- complish, so that we may better understand their effects, and be able to discern the proper remedies of restrictions to be applied to them. The minimizing of expenses, the elimination of waste, and the control of the market, are the ideals of the modern corporation. In the operation of small, independent estab- lishments the services of proprietors, managers, or y Trusts and Monopolies. 25 corporation officers are to be considered in conneC' tion with each, and the smaller the output, the greater will the relative cost of their salaries ap- pear. Foremen or superintendents have also to be employed varying in number according to the size of the plant and the variety of the work to be done. It is seldom found possible to place these in charge of as large a number of men as they are capable of directing, and to just the extent that the service rendered falls short of their full capacity, are their salaries wasted to their employers. It is the same as though an ordinary mechanic would do only three-quarters of a day's work, and draw a full day's pay. Most of these establishments have also been obliged to close down for a. longer or shorter •period at least once a year, and it is usually neces- sary to retain these foremen or superintendents on the pay roll, thus creating another element of waste which must be made up by increasing the cost to the consumer of the manufactured article. In very large corporations or combinations, however, 'one set of officials will discharge the same duties .which many were required to perform for the sev- eral smaller institutions which have been absorbed by it. Superintendents and foremen will be as- signed to departments in which their capacities will be taxed to the utmost, and having secured a virtual control of a large percentage of the trade, the plants may be kept more steadily employed, thus eliminating, as far as possible, all waste in the directions just indicated. Every business necessitates a certain amount of , office work, such as bookkeeping, correspondence, billing, etc., which require the services of bookkeep- 26 Combinations, ers, clerks, and steDographers, and as much of this work is the same whether the output be ten thou- sand or one million dollars per annum, it is ap- parent that the cost of office work is relatively much greater for small establishments than for large ones. As the numerous independent concerns engaged in a particular business are gathered into combinations or into huge corporations, the cost of office service is greatly reduced by dispensing with the several sets of books formerly required, and keeping but one set, which may comprehend the en- tire business transactions of the combination, and yet require the services of only one competent book- keeper and a few assistants, thus displacing most of the skilled accountants hitherto employed by the individual firms. The clerical work has also been systematized so that the amount formerly done in many offices can now be performed in one with a much smaller force of help, and the waste in office service has been reduced to a minimum. In the competition of independent manufactur- ers the sale of their products has been chiefly ef- fected by means of traveling salesmen who were employed to exhibit them throughout the country. The salaries paid to these men have usually been large, their hotel and railway expenses have been high, and while they seem to be a necessity of the system under which they were employed, yet their maintenance added materially to the cost of goods to the consumer. As these establishments unite into larger corporations and the competition be- tween them disappears, the necessity for traveling salesmen likewise ceases to exist, and the saving of their salaries and expenses, alone, amounts to Trusts and Monopolies. 27 an important item to the combination. The unit- ing of the competing firms compels the merchant to seek for the goods which he desires to purchase, so that with the services of a few salesmen, just sufficient to meet the convenience and necessities of the trade, the combination will be able to do just as much business as did its component parts, and the saving of this expense will be clear profit to the corporation. Mr. P. E. Dowe, President of the Commercial Travelers' National League, testifying before the Industrial Commission in 1899, esti- mated the amount saved in this way alone to have been one hundred fifteen million dollars per an- num. The rent account, or its equivalent, the interest to be charged'on the capital invested in the build- ings and grounds occupied, is always an important item in the expense of manufacturing establish- ments, and like most other things in business, the more space they require the cheaper it can be had. Thus, by merging a number of small concerns into one large corporation, it not only becomes practicable to use only large buildings at relatively small rental, but in most instances, the number of establishments may be reduced and many of the original plants abandoned. The rent account will therefore be greatly reduced, while the output will not thereby be necessarily diminished. la the Twelfth Census of the United States, Volume Seven, Manufacturers, Part One, it is shown that two thousand two hundred sixteen manufacturing plants were controlled by one hundred eighty-five industrial com- binations, of which number one hundred seventy- 28 Combinations, six were reported as idle during the census year. The cost of light, heat, ventilation, and power, will also be much less owing to the de- crease in the number of buildings to be supplied, and the greater compactness and convenience of the space occupied by the work. Where there are many concerns engaged in the manufacture of one particular line of goods, great inecjualities will always be found in the equipment otthe several plants. Tli^}/ Wuru Ublablij^R^d at — different times and each was, perhaps, at the time, provided with the best appliances of the day, but the natural tendency of those who have already in- vested large amounts of capital in their business, to resist the introduction of new machinery which would put them to still greater expense, coupled with the disposition to use the old as long as it can -possibly be made to serve the purpose, generally results in a very wide difference in the productive power of the various plants at any one time. If all the establishments engaged in a given line of production were constantly to adopt all the new appliances that were proposed, the expense of doing so would be very great, and must temporarily, at least, add to the cost of manufacture ; yet if any refused to go to that expense, they would be obliged to compete at a disadvantage, which must result in. a reduction of their profits, and possibly in loss. In the case of a large corporation, however, in which all, or most of these concerns have been merged, only the best machinery would be retained, in the first place, and as improvements are introduced, the purchase of one set will often suffice to do the €ame work for which many would be required to be Trusts and Monopolies. 29 provided under independent management. As we have before remarked, the lack of orders usually requires small factories to close down at more or less frequent intervals, which not only occasions a loss of the service of employees, but the loss of the v.se of the machinery as well; whereas in a large establishment, more steady employment makes it possible more nearly to get the full use of the machinery, and it therefore requires less to accomplish the same results. In the production of heavy and bulky commodi- ties, the location of the plant and the cost of trans- portation, both of the raw materials and of the ifinished products, have much to do wifli restrict- ing the trade of an independent establishment to a limited section of the country; whereas a large combination operating several widely scattered plants may so distribute its orders that the goods may be manufactured in those factories most con- venient to the place of delivery, thus reducing the item of freight charges to the minimum and secur- ing a material advantage over its more distant competitors. Mr. John W. Gates, Chairman of the American Steel and Wire Company, testifying of the affairs of that company before the Indus- trial Commission in 1899, says : "The cross freight saving is quite an important item. I should think the cross freights would amount to half a million or one million dollars a year. It is a saving in that particular.^' There is, perhaps, no fact more familiar to com- mon experience in the mercantile world than that the larger the quantity of material required, the more favorable the terms on which they may be se- 30 Combinations, cured. The advantages of purchasing in large quantities may in some measure be diminished in cases in which it is sought to exhaust the market, or where a monopoly has obtained control of the ma- terials desired, but these are the exceptions and not the rule. The advantages to be derived from large purchases arise, in the first place, from the fact that the amount of capital involved in the transaction is sufficient to warrant the buyer in re- sorting to distant and even to foreign markets if need be, to secure more favorable rates. In the next place, the requirements of the business enable him to make contracts for large quantities of ma- terials to be delivered at stated times in the future, thus securing regularity in the supply, and almost invariably obtaining lower prices; and finally as the scope of the establishment expands, it may even acquire and operate the sources from whence its raw materials are derived. This last arrange- ment would secure to it the benefit of all profits that might otherwise go to the dealers in crude products, and render it practically independent of "all other considerations save the labor that it must employ, and the market in which it must sell. The United States Steel Corporation affords a conspicu- ous instance of the development of this feature of industrial economy, though others might be re- ferred to. The small manufacturer, on the other hand, is ordinarily compelled to purchase in the local market. As his business is small and usually irregular, he cannot contract for any great quantity of materials in advance and is therefore frequently made the victim of his own necessities and obliged to purchase as it is required, regardless of the con- Trusts and Monopolies. 31 dition of the market ; and far from hoping to con- trol the sources of his supplies, the smallness of his orders leaves him almost entirely at the mercy of the local producers. A large combination or corporation with plenty of capital at its command can afford to adopt many nueans of -advertising, and of introducing its wares that would be wholly heyond the reach of a smaller concern. The large volume of its business would in many instances enable it to secure special rates and favors from transportation companies, which would give it a material advantage over its competi- tors, and by reason of these, and the several econ- omies possible to large scale production which we have just enumerated, it might easily undersell its smaller rivals. This it may do for a longer or shorter time according as its design may be to drive them out of business entirely, or merely to take away a certain portion of their trade; but in either case, it can readily place itself in a position to dictate prices. The many advantages thus secured to combina- tions of manufacturing establishments enable them not only to control the home trade, but to invade the foreign markets as well, and 'fo sell in every part of the world iii competition with the older manufacturers of Europe. To secure these mar- kets it has been necessary to expend large sums of money in sending agents to all parts of the world to introduce their goods, and to compete with the representatives of European houses, but our large corporations are already doing this, and that they are meeting with success in their efforts to find sale for their goods in foreign lands is amply at- 32 Combinations, tested by the government records of the exports of manufactured articles from this country which amounted to $403,890,763 in the year 1902. A better appreciation of the rapidity with which this foreign trade has grown within the last few years may be derived from an inspection of some of the figures presented in the tables prepared for the j4nnual Review of the Foreign Commerce of the United States, and Summary Tables of Commerce and Production for the year ending June 30, 1902, by the Bureau of Statistics of the Treasury De- partment of the United States. The values of the principal articles of domestic manufacture, by classes, exported from the United States is there shown to have been as follows for the years indi- cated: Iron and steel 1890 $23,542,208 1900 121,913,548 1902 98,r)52,562 Copper 1890 2.,S49..31J 1900 57.Sr>2.9(iO 1902 41.21S.87.S Agricultural Implements 1890 3.859.184 1900 16.099,149' 1902 16.2S0.740 Wood manufactures 1890 6.509,645 1900 11,232.838 1902 11,617,690 Mineral oils, refined 18'.>0 44.658.854 1900 68,247.588 1902 66,218.004 Chemicals, drugs, dyes, etc 1890 5,424.279 1900 12,132.373 1902 12,141,011 Leather, manufactures of 1890 12,438.847 1900 27,293.010 1902 29,798.323 Cotton manufactures 1890 9,999,277 1900 24,003,087 1902 32,108,362 Paraffin and paraffin wax 1890 2,408,709 1900 8.602.723 1902 8 8.5S 844 Paper, and manufacturea of 1890.'!!!!.'!! l!226!686 1900 6.215.833 1902 7,312,030 Trusts and Monopolies. 33 It may also be seen from the same report that the total exports of domestic manufactures in- creased only twelve and eighty-one hundredths per cent, from 1877 to 1890, while during the period from 1890 to 1900 they increased one hundred eighty-seven and twelve hundredths per cent. This remarkable showing of the development of the export trade of our American manufacturers would seem to afford the most convincing evide];ice that combinations have succeeded in effecting many of the results which they sought to accomplish, through large scale production, and it will not be necessary to say anything further on that point. 34 Combinations, CHAPTER IV. FORMS OF ORGANIZATION. The foregoing considerations having led capital- ists to look to combination as a hopeful means of securing larger profits, and having convinced them that the advantages offered were sufficient to war- rant the trial of so new a system, the next thing to be inquired into was thp form of organ ization to be adopted. In considering the subject of organization, we might very properly begin our inquiry with the -^fiyst combination formed-between two individuals for the purpose of engaging in business or con- ducting some other enterprise which was beyond the capacity of either to undertake alone, for ihe modfiULCorppration is merely_the Jast^tage j£t>at- t ainod in th e development of^thatHrstjinion. The vjcombination "Whidi-^we have now m mind, however, /is that of a number of busin g units, many of which have long been established, and each of which had certain rights or interests which were sought to be preserved under the new form of or- ganization. Among the concerns which sought to be consolidated, many .were the property of indi- vidual proprietors, others were partnerships, and a large number were corporations. It had long been Trusts and Monopolies. 35 the policy and purpose of the laws of many of the states to discourage and prevent the merger or affiliation of any kind between corporations, and this, together with the natural desire of proprie- tors to wish to retain the largest possible degree of control over their property, led them to seek to de- vise some form of organization which would pre- serve in the largest measure the identity of the uniting concerns. The dominant idea in all the early attempts at combinations was, therefore, to secure united act ion^ and control o f a particular line of business, and at the same time causing the _ least possible inter- f eren ce with_ the__affaira-.oiLJiie_Jndivid]ial _estab- IjshTTipnfs .en gaged in it . The first and simplest forrp of organization attempted was that of the working agreement b y which the several concerns Engaged m a certain business undertook to maintain certain established prices or rates, or to conform to other regulations as to the conduct of their affairs. This left the management of the several estaWi^hmeMs^ntirelxinJhe hands ill their proprietors^ restricted only by the terms, of the agreement, and in that respect fulfilled the ideal of the form of organization sought. These agree- ments, however, were in the nature of restraint upon trade, and odious to the law, and as they were like- wise repulsive to the public, the fact of their exist- ence was obliged to be kept secret, and it was difficult, therefore, to detect those who chose to violate their terms. As the conditions of these agreements were left to be performed by each of the members in connection with the conduct of the af- fairs of his private business, it is easy to suppose 36 Combinations, that many jdelded to the temptation to cut prices or otherwise to violate their provisions in order to secure the trade of some desirable customer. Since the aid of the courts could not be invoked to en- force these contracts, these combinations have been obliged to depend for their preservation upon the good faith of their members, and this has usually been found to be a very poor anchor upon which to clepend in commercial affairs. The great freedom of individual action allowed by this form of organization together with its ina- bility to command the obedience of its members, soon made it apparent that this was not the form of organization required for great undertakings in which unity of purpose, and promptness and de- cision of execution were indispensable, and other modes of combination began to be sought. The working agreement, however, is the simplest means of bringing together the numerous con- cerns engaged in any particular business, and as may be supposed, in spite of its many defects, it has been more frequently employed than any other. The ease with which these agreements may be ef- fected even in defiance of the laws which seek to suppress them, renders them particularly conveiji- ent in those cases in which complete consolidation is not desired, for it is considered that even though individuals may at times disregard their provisions, yet in the main they will be adhered to, and many of the benefits of combinations may be secured. While other and more perfect forms of organiza- tion have been devised, some of which have openly and successfully withstood the numerous assaults made upon them by those who regard combination Trusts and Monopolies. 37 among industrial institutions as an unmitigated €vil, the secret agreement has continued to be em- ployed in many quarters, and is still the basis of a substantial imion in many branches of trade in which no combination is generally supposed to exist. The officers representing an association of the coal mine operators of Indiana and Illinois were recently indicted for regulating the coal busi- ness in that way, and it was openly charged at the time that hundreds of similar associations and agreements might be found ^ connection with nearly every important line of trade. The next mode of combination adopted was an agreement bj which the market was appor tioned between the ..seyeral esiabljShments, each being re- quired to confine its trade within the territory as- signed to it. In this form of organization, the^ combination assumed more direct control over its members than under the simple agreement, and while it was still unable to invoke the assistance of the courts, or to summarily enforce its com- mands, yet the transgressions of offenders might much more easily be detected and modes of pun- ishment could be devised. The coal dealers' asso- ciation, to which we have just referred, was said to have employed this form of regulation, also. The trade of a particular town or section of a city or of the country was allotted to a certain dealer, and all those who de- sired to purchase were obliged to resort to him> for the mine owners refused to sell their coal to any other dealers in the same territory. These agreements are, however, also illegal, and they will be speedily dissolved by the courts wherever their 38 Combinations, existence can be proved. It is necessary, therefore, to preserve the strictest secrecy regarding them and their affairs, and this, together with the same ob- jections which apply to the other class of agree- ments to which we have referred, serves to render them undesirable and unsatisfactory forms for per- manent organization. y Another form of combination is that by which the busin ess of the country, or of the district designed to be affected, is apportioned among the severa l partie 3_.to _ the. ..agregjiientt-JL. certain per- centage j>eing assigned to each according to it* capactfy,' or othenjagreed mode oi dixision. It dif- fers from the form last shown in that it does not attempt to restrict the sphere of operation of the several estabTisHmentsr~IirTeaves each member free \ ""tSTcolrtxiCt the details of his business in his own 'k way, but requires him to bring the proceeds into a ■ common fund from which each draws his allotted percentage, and the combination is called a pool. This form of organization has been most commonly emplo^'ed among railroad companies, and the ef- forts tp suppress it have given rise to much litiga- tion. j(lt was also one of the chief factors which, led to the establishment by Congress of the Inter- state Commerce Commission for the purpose of preventing combinations and other abuses among the railroads. It is a form of this class of agree- ments which was shown by the testimony before the Industrial Commission to have existed between the members of the anthracite coal combination under which the exact percentage of the total ton- nage which each road was to carry for the year was determined in advance, and by which the sell- Trusts and Monopolies*. 39 ing price of coal was fixed at regular meetings of the association. A departure was now taken from the idea which V had been adhered to in all forms of combinations / heretofore attempted, of preserving the nominal *' independence of the respective establishments, and of securing to the individual proprietors a large 'degree of freedom in the management and control of their properties. It began to be recognized that much of the efficiency of combination must nee- ■ essarily be lost through divided management, and that many of the economies which it sought to ef- fect in production would be impossible under any system which seeks to continue the entire number of plants in operation. It was, therefore, proposed |C to place the control of the several properties in the hands of a few persons to be managed for the bene- fit of all. For this purpose a^board of tr ustees was selected and the establishments were turned over to it, to be Mid .and operated f or_the_ use_flLlhe -real, -owners. This was precisely the same method of ;C control which the law had for centuries recognized and approved for the management of the business, property, or estates of minors or others who were for any reason considered incapable of conducting their own affairs, differing from it only in the manner of the creation of the trust, which was in this instance by the acts of the beneficiaries them- selves, instead of through the operation of law or the acts of third parties, as was generally the case. / The trustees gave receipts to the several proprietors^'^^K for the property turned over to them which were \ called trust certificates, and the earnings of the \ trusts were distributed among the holders of these i 40 Combinations, certificates in proportion to the value of the prop- erty represented by each. Thus the integrity of each of the constituent firms was preserved, al- though it was deprived of the active management of its business. ^ While there has been an endeavor to conceal by secrecy the existence of some trust, yet as a busi- ness organization, it was conceived for the pur- ose of assuming an independent and permanent tand among the industrial institutions of the country, and as such it has borne the brunt of a large share of the litigation which has been waged against industrial combinations during the last twenty years, and has made its name the commonly accepted expression for industrial combinations of every kind whether they partake of the trust form of organization or not. I The first and most important instance of this Itform of combination is that of the Standard Oil iTrust, organized in January, 1882. It was a com- bination of a number of the principal oil refineries of the country, and the trust was formed for the purpose of securing a more permanent organiza- tion than that under which the same properties had been working together for ten or twelve years preceding that time. It continued to fight the battles of the combinations versus the people, and was the object of almost incessant litigation and the subject of numerous official investigations, until the year 1899 when it was reorganized into the Standard Oil Company of New Jersey. The Sugar Trust, organized 1887, and the Distillers' and Cat- tle Feeders* Trust organized in the same year, are the other two most familiar examples of industrial Trusts and Monopolies. 41 trusts, and they have both since adopted the cor- porate form of organization. The operation of these trusts excited the fears and jealousies of the people, who vigorously assailed them in all parts of the country and the efforts to suppress them gave rise to the multitude of anti-trust statutes which have been adopted in nearly every State in the Union and by the National Government. The vulnerable point in the trust form combina- X tion was that it preserved the identity of the unit- f ing concerns, and merely combined them in a some- what different manner to that effected by the vari- ous forms of agreement which had preceded it. It is this act of persons conspiring together, or com- bining for the purpose of regulating or controlling trade, which the law so strongly abhors, and the restrictions and limitations designed to prevent such concerted action soon became so numerous as to cause practical abandonment of the trust form of combination. All halfway measures were now thrown aside, the pride which attaches to the preservation of family name in connection with long established business w^as cast to the winds, the names of scores of firms, the reputation of which generations had labored to establish and maintain, were wiped out of existence and all became completely merged in a ^ few great corporations. The constituent elements ; no longer preserved their distinctive identity, and • the consolidation was complete. The very same in- terests were, it is true, again united under this new form of combination, but they no longer repre- sented so many individual units of organization, each capable of a certain amount of independent I 42 Combinations, action and responsible to the people for their acts of association. They now began to throw aside every appearance of individual power and sought to organize corporations for the purpose of carrying on their business just as the most modest set of in- corporators might do. The new form of industrial combination which now began to supersede the trust was simply that of the private business corporation. Some sj>ecial powers and privileges were accorded to it by the laws of a few states, but the general course of pro- cedure and plan of organization was precisely the same as that pursued in the creation of the simplest business corporation. Tlie properties' of the older establishments were bought in by these corporations, some being paid for with stock in the new concerns, while others were paid for in cash. The new companies proceeded to conduct their business with all the freedom and confidence of institutions organized for purely legitimate pur- poses, with no apparent appreciation of the fact that they were pursuing the very same ends for which their predecessors had been condemned by law and declared to be illegal. These had been regularly created in the manner prescribed by law for tlie organization of business corporations, and as it made no difference in principle whether the pro- moters had formerly been engaged in the same busi- ness or not, or whether the properties acquired were entirely new or had hitherto belonged to the trusts, there appeared to be but little grounds for attack- ing these new combinations. No means had been devised for discriminating between the good and the bad use of corporate Trusts and Monopolies. 43 powers, or of determining to what extent tliey might be employed or by whom they may be exer- cised. The people were thus caught unprepared to cope with this new phase of combination, and while some of the courts were disposed to go be- hind the garb of regularity, and to make the motive the test of legality, the temporary lull in the legal warfare waged upon them was sufficient to cause a most wonderful increase in the number of these monopolistic corporations, and to give to combina- tion a prestige and power which it had never be- fore attained in the history of the industrial world. The capitalization of these corporations has fre- I quently been very great, the more important of f them ranging from ten million to fifty million, a hundred million, and to one hundred fifty million dollars and upwards, and the extent of their influ- ence among the industries of the country can in. some measure be imagined from the amount of capi- tal which they have had at their command. Among the more conspicuous examples of this class may be mentioned the three trusts to which we have al- ready referred, the Standard Oil Trust, the Sugar \ Trust, and the Distillers' and Cattle Feeders' Trust, ^ all of which are now important corporations though they do not occupy as prominent positions in this class as they did among trusts. A table giving the names of one hundred and eighty-five indus- trial combinations, all of which belong to this class, is elsewhere presented in this work. These corporations have now come to be pretty generally recognized as a part of our industrial system and have established themselves with a rea- sonable degree of security in the position which V 44 Combinations, they now hold. Their efforts, however, to extend their power still further, awl to include within a single management nearly every conceivable line of industry, have met with persistent opposition in come quarters especially in connection with their attempts to control the railway systems, and this has led to the development of still another form of combination. This new organization of capital, which seems ^destined to control so large a share of the indus- trial interests of the country, is what is com- monly known as a security holding corporation. It is organized in precisely the same way as any other business corporation, and differs from it only in this, that instead of directly conducting a regular business in the usual way, it merely proposes to hold the stocks of other corporations. Thus it may hold the controlling percentage of the stocks of many companies, which will entitle it to vote, and there- by elect its own officers and directors for each of these companies who will m^inage the business in the interest of the controlling corporation. These several establishments, which remain nominally independent, thus become merely the servants of the great central organization, while the new cor- poration which conducts no active operations of its own, and is apparently unimportant in the l)usiness world, is in reality the most successful means which has yet been devised for bringing together the varied interests of our industrial sys- jtem. The number of these organizations has been much less than those of the class last mentioned, but their capitalization has usually been very large. Trusts and Monopolies. 45 The most important among them are the United States Steel Corporation, capitalized at one bil- iTofi, four hundred and three million dollars, which in a large measure controls the iron and steel busi- ness of the United States, and the ISorthwestern Securities Company, with a capital oflouf hun- dred million dollars, which controls a number of the largest railroad systems of the country. The attitude of these combinations is that of a stock- holder in many corporations which seeks to manip- ulate them so as to promote its own private interest, ^nd while they are just as truly the owners of the various properties which they control as though they directly supervised the operation of them, and. just as guilty of the charge of combining to regu- late trade as the trust and other forms of com- bination which have preceded them, yet they ap- pear to have evaded the provisions of the laws designed to prevent consolidation, and have thuL far successfully withstood all attempts to disrupt them. They have already resulted in the great- est aggregation of private capital that the world has ever witnessed, and they mark the highest degree of perfection which has yet been attained in the development of industrial organization. 46 Combinations, CHAPTER V. POWERS AND EFFECTS OF MOXOPOLIES. \ Monopoly may be defined to be the unified con- trol of the production, manufacture, sale, distribu- Tii iti otpict /V ^' tion, or use of a given commodity. X '^ opplioation t he term mcans^ the aboolut Q oon tfol ; ( but as it is most commonly used in relation to \ practical economics, it means the command of so y large a percentage of the commodity as will enable N it to exercise virtual control over the entire mar- ket, and concerns which have attained to this de- gree of power, and which have developed strong • monopolistic tendencies, are usually spoken of as - monopolies. It is, therefore, in this general sense that the term monopoly is used in this work, ex- cept where an absolute monopoly is expressly re- ferred to. ^ Monopolies, more or less complete, have existed /at various times and places throughout the his- \iory of civilization^ and England in particular was for a long time ewieiy oppressed by them. The Crown, seeing in monopolies a fruitful source of revenue, both for itself and its favorites^ gave them out with a lavish hand, until nearly every article of daily consumption, including the merest necessities of life, was controlled by private mon- Trusts and Monopolies. 47 opolists. Great abuse was made of the powers thus grasted to individuals, and the people were driven to such desperation in their resistance to the un- just oppression, that the Crown, in order to save its prerogative from being entirely swept away by a jpopular revolt of the common people, began ^to recall the most obnoxious of these grants as an act of gracious clemency to its subjects, and the others were later modified or removed entirely. The people have always regarded monopoly as being one of the greatest enemies of their liber- ties^ and-a3-^:fiJmy.e_i).efoxe -rem-arked, Af l^rr- AlleiTi, repotted h^-Lord Coke, which v.,;^ . 4 injjie Ei^^sh counts in the !;i>t v. ;ir of tlir rei^^ofQueen Eliza- beth, jn<^ ill!, . I iinMi.J \, ir< ncfo, as being one of the t ol3\ Tll€Bt~t\ils ar^h^iiLiuinviuixu, iH-nri-t, ;is follows I "Fiist, thatlhe price of the same commodity will be raised, for he who has the sole selling of any commodity may well make the price as he pleases. Second, the incident to a monopoly is that after the mo* nopoly is granted, the commodity is not so good j_ and merchantable as it was before; for the pat- "^ entee, having the sole trade, regards only his pri- vate benefit, and not the common wealth. Third, v. < it tends to the impoverishment of di^^^^rs-firtrficeTS vi t»"^ ^ y and others who before, by the labor of their hands in their art or trade, had maintained themselves and their families, who will now of necessity be constrained to live in idleness a-nd lyffgntjr.^^ It is not so easy to point to well-established in- stances of the abuse of the power of monopolies to jegulate the quality of their products as in the con- trol of their quantity, for the production of infe- rior goods always partakes of the nature of a fraud upon the public and is therefore more difficult to Trusts and Monopolies. 51 prove beyond dispute; but in the case of public service monopolies, such as railways, telegraph, telephone, gas and electric light plants, street rail- ways, water works, etc., it is a matter of general knowledge that the service rendered in localities in which they have an absolute monopoly is often very inferior to that which is provided at points where competition is active. It is undoubtedly true that the same care is not €0 likely to be taken to preserve the excellence of the goods manufactured in cases in which a com- plete monopoly has been established, and that the same stimulus to improve the quality of their products which impels competitors to adopt the latest and most improved methods and appliances, would in a large measure be lost. On the other hand, it is equally true that the necessity for striv- ing to undersell competitors, which is the chief incentive to adulteration and the production of inferior products, is removed ; and, having control of the market, it is in a position to command its ovm. prices, and should, therefore, be more willing and able to produce a good grade of goods. We already have state and national statutes regulating and prohibiting the adulteration of food and other products, and it would seem that, with perhaps some extension of their scope, a thorough appli- cation of the provisions of these statutes might do much to minimize the evil effects of the exercise of this power by combinations. Possessing the power to regulate production and to restrict or expand the supply of a commodity, monopoly can, therefore, control prices; for price, meaning as it does, the amount which the public 52 Combinations, is willing to pay for a given article at a given time, is always governed by the available supply of the article in the market, and the number of persons who desire to purchase it; and whoever, therefore, can control either the supply or the de- mand, can fix the price. This power, as we have just seen in the case re- ^-- ported by Lord Coke, was also early recognized ' ^s being one of the ,>ehicf "]5o^'5r5"-fet^il which, pertained to mofrepoly,^ and the three hundred \ years which have since elapsed^have merely served to confirm the truth of the positiqii then taken ( by the English courts, and to multiply ^examples \ of the exercise of the power of monopolies. "^" v^^^^^ Other monopolies which do not enjoy the excep-^ iional advantages possessed by the coal combina- tion, owning directly the means of transpor- tation as well as a controlling percentage of the coal to be transported, have also resorted to the expedient of reducing prices in order to cripple or destroy competition. T'hese in many instances have formed alliances with the railway companies serving substan- tially the same purposes as owning them out- Tight, while others rely upon their great financial resources to enable them to outlast and to ruin their competitors. A most remarkable instance of the extent to which these alliances between great -corporations and the railroads have been carried, yy^HAi presented by the agreement entered into be- tween the Standard Oil people and the railroads, which was brought out in a congressional investi- gation in 1872. By this contract the railroads not only undertook to charge the independent refiners Trusts and Monopolies. 53 double the rates charged the Standard Oil people for the transportation of their oil, but agreed to pay over the amount so collected in excess of the regular rates to the Standard Oil people. The contest between the Standard Oil Trust and the independent refiners affords one of the best known examples of the efforts of a would-be mo- nopoly to destroy competition by reducing prices, and it is very nicely described by Mr. Byron W. Holt in an article in the "American Monthly Ee- view of Eeviews" for June, 1899, as follows: "Un- able to obtain fair treatment from railroads, the independent refiners in 1878 and 1879, with a cap« ital of five million dollars, constructed the Tide- water Pipe Line Company. Immediately the rail- Toads reduced their rates on oil from $1 per barrel to 80 cents, to 30 cents, to 10 cents, and at last, as the general freight agent of one of the roads stated, to a rate that would not pay for wheel grease. The Tidewater Pipe Line Company sur- vived the many attacks until 1883, when it was gobbled up by the trust." Another familiar in- stance of this method of enforcing the dictation of large concerns upon the smaller ones "ite^ found in the frequent rate wars between competing rail- way lines. I Having thus established the ability of monopo- llies to so reduce prices as to compel obedience to •their dictation by those of their competitors who^ are permitted to remain in the business, it re-^ quires no further discussion to show that, having (secured control of the market, it may advance (prices sufficiently high, at least, to yield excessive profits to itself, and to unduly oppress the con- 54 Combinations, sumer. The Standard Oil Trust again affords us an example of the exercise of this power, for after maintaining ruinous prices until it secured control of the market, it then raised prices to such an extent as to yield profits ranging from twelve per cent, per annum in 1894, to forty-eight per cent, per annum in 1901, as shown by the table of the earnings of that company printed in an- other chapter. It may be that there is a point be- yond which prices cannot be raised without at- tracting new competitors into the business, but the experience of the Standard Oil Trust proves that millions of dollars of unearned profits may be collected from the people before this remedy can prove effective in checking the power of the monopolist. The theory has been advanced by one of the best known economists of our day that there is always a certain price in every business which may be designated the monopoly price, at which the great- est number of persons are able and willing to pur- chase, and at which the fixed charges will be smallest in proportion to the amount of sales, and which, therefore, yields the largest possible net profit to the producer; that if prices are raised above this point, the sales will diminish more rapidly than the profits w411 be increased by the higher prices charged; while if prices be reduced below that point, the increase in the sales will not be sufficient to counteract the proportionate in- crease in the fixed charges, and that if combina- tions are left to themselves, they will eventually fix prices at this point of greatest return. Tables have been prepared with much care to illustrate Trusts and Monopolies. 55 the natural law of gravitation of prices to this point of equilibrium, but it appears that indus- trial combinations had not yet sufficiently devel- oped to afford the writer practical examples of the application of his theory, and natural monopolies such as street car companies, etc., which had long enjoyed monopolistic privileges, appear to be the only instance in which we might reasonably ex- pect to see the principle exemplified. It may be true that there is such an ideal price to be found in business if those engaged could be induced to seek for it, and to be content with it when found, but it is also true that cor- porations as well as individuals will ever be found reluctant to reduce prices which have once been established, in the belief that by sacrificing present profits they may hope to secure larger returns in the future; and if the public is to be protected from excessive overcharges by monopolies, which according to many authorities amounts to 66 2-3 per cent, in the case of street car fare, some more powerful influence than the mere automatic work- ing of an economic principle must be invoked to arrest the hand of greed. The power of monopolies to control prices hav- ing now, we believe, been made sufficiently ap- parent, let us inquire what use are they likely to make of it. The Standard Oil Trust, the Sugar Trust, the Anthracite Coal Combination, and the Whiskey Trust, are about ,the only important members of their class that have been in operation long enough to afford much of a foundation for judgment as to what the effect of combination on prices really has been. They, being the pioneers \ ^6 Combinations, in the combination movement, have been so fiercely assailed by the courts, by the press, by public sentipent, by politicians, and by competi- tors; bfc^!*fexisted under so many varying condi- i ^^ tions, and been obliged to change their form of organization so many times, that it is doubtful , .: whether their effect upon prices 4uriug Um j Mwt f* . ,/(,^ -fifteen or -twrn IV vcarft Trill afford any trueclue to what their (Mi-Ht will be dnriiii!^ the next-fffteen years under the new and M.iiiinc'-Ir ainidst unas- sailable formo|^,jW>gatfization, and that-vB-ith a h2t2X.^lli«rTnafield which appears to be nearly [ cleared of all effective opposition.^ Numerous tables showing the prices of oil, sugar, and ^^'his- -K p^ ^ » key, at frequent intervals during Him luui fiftiMii j^ '^ ' 01 ' twenty y taw i ^ have been prepared and published/^^A^ but they fail to afford any convincing evidence of ^u the effect of combination on prices. The general conclusioJ&deri^ed from an examination of these tables ipprnn li nn that prices have been a little higher during the periods in which the trusts were more nearly in complete control of the mar- ^ v^ ket than they were at other times. Wo fi g d , *^ )f^ however, nothing in them that would seem to war- ^ rant iig iik drawing any definite conclusions^ -v '"■ "-^"TThich woifld be of any mntcrinl to -ij^aa, pursuing our investigation of the c-,.^.... JJ^ Wr believe that the only true key to the correct understanding of the purpose and ultimate ef- fects of combinations and monopolies is to be found in the study of the nature of the organiza- tions, and of the character of the individuals who compose them. The men who organize and con- trol these large monopolistic corporations are men Trusts and Monopolies. 57 •who have devoted their lives to the acquisition of wealth and whose experience and training have all been calculated to fit them to drive the shrewdest bargains, and to secure the largest possible profit upon every dollar invested. Their sole purpose in organizing these corporations is to secure greater profits than they can hope to secure through their individual efforts. Every individual, no matter how engrossed he may be in the strife for gain, is more or less in- fluenced by feelings of social and moral obligation and restraint, and is liable at times to be swerved from the strict path of profit seeking and led to yield a point to considerations of charity or hu- manity, but not so with a corporation. Its officers feel no moral responsibility for the acts which they perform in the name of the corporation; they are limited in powers and responsibilities, and distress may plead in vain for mercy to the average cor- poration official, only to be informed that the rules of the corporation will not permit him to grant the relief sought; and the larger and more powerful a corporation grows, the less sentimental it be- comes. Profit is its purpose, the statute book its conscience, and it knows no higher law or motive. It is frequently claimed by the friends of com- bination that its purpose is not to raise prices but merely to steady them and to do away with ruinous "competition. But if, as seems to be the case, by steadying prices they mean to preserve any given set of rates and to prevent the gradual reduction an prices which should naturally follow the con- tinual improvements which are being made in ithe methods of production and manufacture, it 58 Combinations, is virtually the same as if they had openly avowed their purpose of raising prices. Such being the purpose of its creation, having such skillful talent to direct it, and enjoying such freedom from moral or human restraint, what use can we reasonably expect a monopolistic corpora- tion to make of its powers except to secure the largest possible profits for itself? It is dictated by the natural instincts of human nature; it was practiced with relentless severity centuries ago when monopolies controlled the industries of Eng- land; thjai^anwal course of prices of all articles i,, ly^ju^' lifflfrnliPFM largely controlled by trusts dur- ^ JT ingl ^ t a t years, coupled with the stubborn resist- (^•^ ance with which trusts and monopolies ^Sm£ met every effort to linut their power, sufficiently indi- fi cates that such ]i a o *i OQ& the purpose of the trusts . ? r''*of recent wtws ; the prevailing high prices of arti- cles controlled by combinatians at the-ptefieat-time/ ^ / i ^» aMkifift it clear that ther^T^i* no disposition on the ,f^J •i-y^ part of the monopolies «©f.4«-4«y to give the public ' the benefit of the increased facilities for production and distribution, and there appeariJ to be nothing \ to indicate that the same purpose jKi^jL not continu e \ to be the prevailing policy of the monopolistic^ ^fc^' >^.. K tjorporations of the future. e here present a section of a number of tables prepared by Professor Jenks for the Department of Labor of theJJnited States, and published in the Bulletin Departm^i^t of Labor No. 29, July, ISOO, showing the montll!!^'p^jces of a number of the leading articles controlled 'by combination for the years 1897, 1898 and 1899. We have merely reproduced the last three years of the tables be- Trusts and Monopolies. 59 lieving that this is a sufficient length of time to afford a general idea of the range of prices. It will also be seen, from the notes accompanying the tables, that many of the combinations referred to were organized some years prior to the period covered by the tables, while others were formed during that time, thus enabling the reader to note the effect upon prices of the transition from comi- petition to combination, and to compare the fluctu- ation in the prices thus effected with that of the price of articles controlled by combinations which had been long established or which had not yet been subjected to such control. We are told that the great advance in the price of many of the articles shown in these tables can- not be wholly charged to the effect of combination, and that much of it is due to the increased cost of raw materials, but we wish to call attention to the fact that, particularly in the iron and steel indus- tries, the raw materials are largely controlled by the same combinations that control the finished products, and that whether the increased cost is due to the one or the other, it all goes into the same treasury, and amounts to the same thing in the end. And, while some portion of this enhanced price may doubtless be due to a normal increase in value of all kinds of property, there can be no reasonable doubt that a large part of the enormous^ increase in prices, which resulted immediately upon A organization of the combinations controlling the J production of iron and steel and tfieir products, y' must be directly due to the power of combination ; also that in the absence of special circumstances, it would seem that any general increase in prices 6o Combinations, that might be due to improved business conditions would be pretty generally reflected all along the line, and that any very considerable increase in prices in excess of this general average might be fairly charged to combinations if they have ac- quired control of the product. Trusts and Monopolies. 6ri MONTHLY PRICES OF CORN MEAL, OATMEAL, ETC.;, AND THE MATERIALS ENTERING INTO THEIR MANUFACTURE, 1897 TO 1899. (The combination manufacturing a large quantity of tliese products was organized in June, 1891.) Products. Corn Year and month. meal, white, per 196 pounds. 1837. January $1.95 February 1.60 March 1.60 April 1.60 May 1.70 June 1.70 July 1.70 August 1.95 September 2.00 October 2.00 November 1.85 December 1.85 1898. January 1.85 February 1.85 March 1.95 April 1.95 May 1.95 June 2.05 July 2.05 August 2.15 September 2.00 October 2.00 November 2.00 December 2.00 1899. January 2.05 February 2.05 March 2.15 April 2.15 May 2.05 June 2.15 July 2.15 August 2.15 September 2.10 October 2.10 November 2.10 December 2.10 Mate- rial. Corn, No. 2, Products. Corn meal, No. 2, Oat- Rolled yellow, cash, per meal oats per 196 bushel, per 200 per 180 pounds. pounds, pounds. $1.65 1.45 1.40 1.40 1.45 1.45 1.40 1.60 1.85 1.80 1.70 1.70 1.70 1.65 1.75 1.75 1.80 2.00 1.75 1.80 1.70 1.70 1.70 1.95 2.00 2.00 2.10 2.10 1.80 2.10 2.10 2.10 2.10 2.10 2.05 2.05 $0.2256 .2250 .2375 .2419 .2425 .2444 .2644 .2937 .2962 .2650 .2669 .2625 .2713 .2894 .2894 .3206 .3469 .3362 .3362 .3175 .3025 .3081 .3306 .3556 .3668 ..3525 .3456 .3462 .3344 .3438 .3294 .3175 .3313 .3200 .3200 .3075 $4.25 3.65 3.40 3.40 3.30 3.20 3.20 3.40 4.40 3.40 3.40 3.40 3.60 3.75 3.90 4.00 4.20 4.10 3.90 3.70 3.70 3.00 3.60 3.70 3.70 3.00 4.15 3.90 3.85 3.80 3.90 3.90 4.00 4.55 4.65 4.30 $3.50 3.25 3.00 2.90 2.90 2.75 2.75 3.00 4.00 3.00 3.00 3.00 3.25 3.35 3.50 3.60 3.85 3.70 3.50 3.30 3.25 3.20 3.20 3.30 3.30 3.50 3.65 3.45 3.45 3.40 3.40 3.40 3.60 4.15 4.25 3.90 62 Combinations, MONTHLY PRICES OF CORN MEAL^ OATMEAL, ETC. ,Year and month. Material— oats. No. 2, cash, per bushel. 1897. January $0.16,3-8 February 16 1-8 March 16 1-2 April 17 1-8 May 17 2-3 June 18 1-8 July 17 1-2 August 18 1-6 September 19 4-5 October 18.3-4 November 20 7-8 December 22 2-5 Product — Material- pearl barley, barley. No. 3, per per pound. bushel. $0.01 3-8 .2940 .01 3-10 .2859 .01 1-4 .2813 .01 1-8 .2925 .01 1-8 .2'J87 .01 1-8 .2988 .01 1-7 .3090 .01 1-4 .3245 .01 2-5 .3813 .01 3-8 .3518 .01 5-8 .8919 .01 1-2 .3555 January . February March . . . April Uay June July August . . September October . November December .22 3-4 .01 1-2 .3238 .25 1-2 .01 3-8 .3387 25 4-5 .01 2-5 .3737 .28 2-5 .01 1-2 .4125 .29 .01 5-8 .4675 .23 3-4 .01 3-4 .,3575 .23 3-8 .01 5-8 .3310 .21 3-8 .01 1-2 .3687 .21 3-10 .01 5-8 .3660 .23 1-4 .01 3-4 .8850 .20 .01 7-8 .4313 .26 7-8 .02 .4520 1899. January . .*. 27 February 27 .3-5 March 26 1-2 April 26 4-5 May 25 7-12 June 25 1-4 July 23 3-4 August 20 3-5 September 22 1-8 October 22 3-4 November 23 1-4 December 22 3-5 01 9-10 .4656 01 9-10 .4581 .01 9-10 .4485 013-4 .4412 01 3-4 ..3912 .01 3-4 .3817 .01 3-4 .3910 01 $-4 .3713 .01 5-8 .4005 02 1-10 .4162 .02 1-4 .4016 .02 1-4 .3890 Trusts and Monopolies. 63 MONTHLY PRICES OF WHEAT AND RYE FLOUR, AND THE MATERIALS ENTERING INTO THEIR MANUFACTURE, 1897 TO 1899. (The combination manufacturing a large quantity of these products was organized in June, 1891.) Products. Flour, Flour, Flour, spring good spring medium to Tear and month. wheat, pat- supers choice win- ent process, low grade, ter wheat, per barrel. per barrel, per barrel. 1897. January $4.27 $1.70 $4.32 February 4.1.3 1.57 4.15 March 4.05 1.48 4.10 April 3.98 1.47 4.09 May 4.09 1.47 4.44 June 3.85 1.44 4.05 July 3.93 1.44 4.96 August 4.65 1.74 4.33 September 5.28 2.00 4.78 October 4.89 1.96 4.68 November 4.75 1.78 4.44 December 4.61 1.75 4.30 1898. January 4.59 1.67 4.33 February 4.84 1.77 4.45 March 4.89 1.95 4.40 April 5.12 2.04 4.49 May 6.66 2.56 6.15 June 5.19 2.12 4.90 July 4.48 1.62 3.96 August 4.17 1.52 3.36 September 3.53 1.50 3.11 October 3.49 1.55 3.14 November 3.48 1.65 3.15 December 3.37 1.65 3.20 1899. January 3.46 1.68 3.40 February 3.55 1.65 3.50 March 3.47 1.52 3.30 April 3.45 1.48 3.19 May 3.52 1.50 3.22 June 3.60 1.58 3.30 July : 3.52 1.57 3.22 August 3.50 1.52 3.16 September 3.55 1.53 3.21 October 3.55 1.62 3.29 November 3.42 3.42 3.20 December 3,38 1.52 3.10 64 Combinations, MONTHLY PRICES OF WHEAT AND BYE FLOUB. Material — wheat. No. 2, Year and month. cash. per bush. 1807. January $0.77 February 74 1-2 March 73 1-2 Aorll 72 ^lay 72 1-4 June 70 July 73 1-4 August 88 September 92 1-2 October «>0 November 92 1-4 December 96 1898. January 99 1-2 February 1.01 1-2 March 1.03 1-4 April 1.12 1-4 May 1.51 June 97 1-2 July 76 4-5 August 70 1-4 September 65 1-4 October 66 1-12 November 67 December 66 1-4 1899. January 71 1-4 February 72 1-12 March 70 1-4 April 73 1-4 M^y 73 9-10 June 75 1-4 July 72 August 71 3-4 September 72 1-4 October 71 5-12 November 68 1-4 December 66 3-4 Product — Material- rye flour, rye, No. 2, good to in store, choice. per bush. per barrel. 12.65 $0.3708 2.31 1-4 .3390 2.22 1-2 .3337 2.22 1-2 .3310 2.30 .3425 2.18 ..3.^37 2.23 .3627 2.55 .4600 3.30 .4987 2.94 1-2 .4608 2.97 1-2 .4747 2.82 1-2 .4640 2.70 .4525 2.80 .4853 2.75 .4031 2.96 1-2 .5320 8.78 3-4 .6624 2.96 1-4 .4487 2.60 .4555 2.51 1-4 .4378 2.43 .4543 2.64 .4916 2.78 3-4 .5131 2.85 .5375 2.97 1-2 .5504 3.00 .5577 2.79 .5387 2.80 .5565 2.88 .6012 2.91 1-2 .5927 2.82 1-2 .5504 2.63 .5343 2.79 .5595 2.91 .5568 2.83 .5247 2.79 .5040 Trusts and Monopolies. 6s MONTHLY PRICES OF CRACKERS AND THE MATE- RIALS ENTERING INTO THEIR MANU- FACTURE, 1897 TO 1899. (The combination controlling 60 per cent, of these prod- ucts was organized in February, -"-^-^ Soda crackers. Tear and month. XXX, per pound. 1897. January $0.06 February 05^4 March 05Mi April OSVa May 05^ June OoVi July 05 Va August 05^ September 05^ October 05^ November 05 ^ December 06 1898. January 06^4 February 06% March 06 Va April OeVa May 07 June 07 Vi July O6V2 August 06% September 06% October 06^ November 06 December 06 1899. January 06 February 06 March 06 April 06 May 06 June 06 July 06 August 06 September 06 October 06% November 06% December 06 % 1898.) Products. Soda Ginger crackers, snaps. standard, XXX, per per pound. pound. $0.06 $0.08 .05% .05% .07 .07 .05% .05% .07 .07 .05% .07 .05% .07 .05% .07 .05% .07 .05% .05% .07 .07 .06 .08 .06% .08 .06% .08% .06% .08% .06% .08 .07 .08 .07 .08% .06% .07% .06% .07% .06% .07% .06 .07% .06 .07% .06 .07% .06 .07% .06 .07% .06 .07% .06 .07% .06 .07% .06 .07% .06 .06 .07% ,06 i07% .06 .0(1 .07% .06 .07% 66 Combinations, MONTHLY PRICES OF CRACKERS. Flour, spring wheat, Year and month. patent process, per bar- rel. 1897. January $4.27 February 4.13 March 4.05 April 8.98 May 4.09 June 3.85 July 3.93 August 4.65 September 5.28 October 4.8 > November 4.75 December 4.61 1898. January 4.59 February 4.84 March 4.89 April 5.12 May 6.66 June 5.19 July 4.48 August 4.17 September 3.53 October 3.49 November 3.48 December 3.37 1899. January 3.46 February 3.55 March 3.47 April 3.45 May 3.52 June 3.60 July 3.52 August 3.50 Boptember 3.55 October 3.55 November 3.42 December 3.38 Materials. Flour, good spring su- pers, low grade, per bar- rel. $1.70 1.57 1.48 1.47 1.47 1.44 1.44 1.74 2.00 1.96 1.78 1.75 1.67 1.77 1.95 2.04 2.56 2.12 1.62 1.52 1.50 1.55 1.65 1.65 1.68 1.65 1.52 1.48 1.50 1.58 1.57 1.52 1.53 1.32 l.H(» 1.52 Flour, medium to choice winter wheat, per bar- rel. $4.32 4.15 4.10 4.09 4.44 4.05 3.96 4.33 4.78 4.68 4.44 4.30 4.33 4.45 4.40 4.49 6.15 4.90 3.96 3.36 3.11 3.14 3.15 3.20 3.40 3.50 3.30 3.19 3.22 3. .30 3.22 3.16 3.21 3.29 3.20 3.10 Lard, steam retined, per 100 pounds. $3.90 8.85 4.13 4.17 3.92 3.60 4.05 4.47 4.61 4. .37 4.23 4.33 4.72 5.02 5.19 5.28 6.23 5.87 5.46 5.20 4.91 4.89 4.93 5.20 5.5» 5.54 5.28 5.21 5.09 4.98 5.?4 5.10 5.21 5.41 5.08 5.26 Trusts and Monopolies, 67 MONTHLY PRICES OF ONE LEADING BRAND EACH OF CHEROOTS, CIGARETTES, AND SMOKING TO- BACCO, AND THE MATERIALS ENTERING INTO THE MANUFACTURE OF EACH, (The combinatio n contr< filing tt le greater proportion of these products was organized in 1890.) Cheroots. Cigarettes. Smoking tobacco. ???5' 1? u^:^ ?S p fc 3 ?S « 2 X 2 crps t<^-o crp Year «^i 2 ^ I? is S r °^ ^ ^ -®E •S S- -°E and •a — •^ -^S- 2 1 M'l 1 •^ 1 n \ "O 1 month. is! 1\ o2 5" 41 1897. §? p ' s? pS? ^a Jan.... .$9.25 $0.1328 $2.92 $0.1089 $0.20 $0,031.3 Feb. . . . . 9.25 .1384 2.02 .1083 .20 .0316 March . . 9.25 .1317 2.92 .1077 .20 .0317 April .. Uky ... . 9.25 .1211 3.30 .1071 .20 .0317 . 9.121^ .1206 2.92 .1053 .20 .0318 June . . . 9.00 .1211 2.92 .1058 .20 .0317 July ., .. 9.00 .1200 2.96 .1057 .20 .0317 Aug. ... . 9.00 .1177 2.71 .1015 .20 .0317 Sept ... ,. 9.00 .1239 2.42 .1034 .20 .0352 Oct .... . 9.00 .1222 2.42 .1052 .20 .0386 Nov. . . , .. 9.00 .1228 2.42 .1058 .20 .0414 Dec ... . 9.00 .1272 2.50 .1063 .20 .0425 1898. Jan . . . . 9.00 .1.339 2.70 .1064 .20 .0431 Feb. ... . 9.00 .1288 2.70 .1063 .20 .0438 March . . 9.00 .1299 2.70 .1063 .20 .0448 April . . ISJay .. . 9.00 .1322 2.70 .1062 .20 .045) .. 9.00 .1328 2.70 .1061 .20 .0466 June . . . 8.321^ .1333 2.45 .1061 .20 .0470 July .. .. 7.65 .1305 2.20 .1062 .22 .0473 Aug. . . .. 7.65 .1383 2.20 .1061 .22 .0472 Sept. .. . 7.65 .1378 2.20 .1055 .22 .0508 Oct .... , . 7.65 .1395 2.20 .1043 .22 .0502 Nov. . . . , . 7.65 .1488 2.20 .1040 .22 .0498 Dec. .. .. 7.65 .1538 2.20 .1047 .22 .0498 1899. Jan. .., . . 7.65 .1428 2.20 .1051 .22 .0498 Feb. ... . . 7.65 .1417 2.20 .1052 .22 .0498 March , . . 7.65 .1217 2.20 .1053 .22 .0496 April ., M^y .. . . 7.65 .1367 2.20 .1053 .22 .0495 .. 7.65 .1244 2.20 .1053 .22 .0495 June . . . . 7.65 .1177 2.20 .1054 .22 .0495 July .. .. 7.65 .1200 2.20 .1054 .23 .0496 Aug. .. . . 7.65 .1317 2.20 .1054 .23 .04? 6 Sept. . . . 7.65 .1277 2.20 .1026 .23 .0532 Oct. .. . . 7.65 .1350 2.20 .1032 .23 .0536 Nov. . . .. 7.65 .1.362 2.20 .1023 .23 .0542 Dec. .. .. 7.65 .1516 2.20 .1024 .23 .0544 68 Combinations, MONTHLY PRICES OF LAGER BEER AND THE MATE- RIALS ENTERING INTO ITS MANUFACTURE. (The combination manufacturing a large quantity of this product was organized in August, 1898.) Product Materials. 5»§ ¥4 n J' -5 Year and month. 2.T f T 1 a. " si 11 ^,1 •SB o a hi cr 1807. Jan , . .^ts.oo 10.14 10.10 $0.14 $0.22.56 $0.2940 Feb , . 5.00 .13 .10 .14 .2250 .28.59 March .... . . 5.00 .12 .08 .13 .2.S75 .281.3 April M^y . . 5.00 .10 .07 .12 .241".> .. 6.00 .10 .06 .12 .242."> "•.1x7 June , . . 5.00 .07 .2444 ^l^'.'-^S July . . 6.00 .09 .06 .12 .2644 .3o October 1.28 November 1.86 December 1.18 Products. Crystal Mixing and jelly. Material glucose, — corn. per 100 glucose, per per bush. lbs. 100 lbs. $0.77 10.72 $0.1978 .74 .70 .1851 .75 .72 .1983 .78 .72 .2261 .80 .77 .2348 .87 .84 .'2VM 1.04 1.00 .2577 1.75 1.45 .2'.i5t> 1.75 1.55 .2051) 1.75 1.15 .2675 1.60 1.25 .2661 1.52% 1.30 .2657 1.55 1.30 .2678 1.60 1.30 .l'7i»7 1.50 1.15 .21»(t6 1.45 1.15 .2983 1.45 1.15 .3440 1.22 1.08 .3215 1.17% 1.02% ..3222 1.20 1.07 .3374 1.22 1.08% .3105 1.45 1.11 .3049 1.28% 1.13 .3278 1.28 1.15 .3262 1.23 1.08 .3335 1.20 1.09 .3384 1.19 1.12 .3241 1.18 1.12 .3362 1.19% 1.13 .3272 1.29 1.26 .3106 1.28 1.20% .3242 1.27 1.20 .3150 1.23 1.16% .3144 1.25 1.18 .3197 1.24 1.15 .3162 1.16 1.04 .3090 Trusts and Monopolies. 73 MONTHLY PRICES OF AMERICAN TIN PLATES AND THE MATERIALS ENTERING INTO THEIR MANUFACTURE, 1897 TO 1899. (The combination controlling 95 per cent, of this product was organized in 1898.) Year Product — glates, Amer iessemer coke 20, at New Y per 108 lbs. ©OS 2. P i and month. a"" 1 ? ®'* ?r_ M^ -pS- r?Ss ^1 ¥¥l 1897 . Jan $3.40 $0.3300 $0.7131 $1.0431 $2.3569 Feb 3.30 .3350 .7258 1.0608 2.2392 March . . . 3.35 .3300 .7352 1.0652 2.2848 April .... May 3.40 .3300 .7352 1.0652 2.3348 3.40 .3300 .7371 1.0671 2.3329 June 3.35 .3400 .7281 1.0681 2.2810 July 3.30 .3450 Aug 3.20 .3450 Sept 3.15 .3400 .6928 1.0328 2.1172 Oct 3.15 .3400 .7098 1.0498 2.1002 Nov 3.15 .3400 .6834 1.0234 2.1266 Dec 3.15 .3400 .6509 0.9909 2.1591 1898 Jan 3.15 .3450 .6561 1.0011 2.1489 Feb 3.13 .3500 .6603 1.0103 2.1397 March ... 3.15 .3550 .6594 1.0144 2.1356 April . . . 3.10 .3600 .6613 1.0213 2.0787 May 3.10 .3675 .6669 1.0344 2.0656 June 3.10 .3750 .7102 1.0852 2.0148 July 3.05 .3850 .6989 1.0839 1.9661 Aug 3.00 .3950 .6961 1.0811 1.9089 Kept. . . . 3.00 .4050 .6942 1.0992 1.9008 Oct 2.90 .4250 .7022 1.1272 1.7728 Nov 2.95 .4500 .7112 1.1612 1.7888 Dec. .... 3.10 .4650 .6947 1.1597 1.9403 1899 Jan 3.34 .5500 .7314 1.2814 2.0586 Feb 3.84 ,5750 .7055 1.2805 2.5595 March ... 4.21 i/a .5875 .6886 1.2761 2.9389 April .... M^y .... 4.21% .6250 .7649 1.3899 2.8251 4.21 Va .6350 .7192 1.3542 2.8608 June .... 4.21% 4.7H/a .6400 .7107 1.3507 2.8643 July .7125 .8091 1.5216 3.1934 Aug 5.00 .7750 1.2476 2.0226 2.9774 Sept 5.00 .7900 1.2651 2.0551 2.9449 Oct 5.00 .7800 1.5717 2.3517 2.6483 Nov 5.00 .7000 1.5255 2.2255 2.7745 Dec 5.00 74 Combinations, MONTHLY PRICES OF PIG IROX, STEEL, BILLETS, RAILS, ETC., 1897 TO 1899. (The combinations controlling the most of these products were organized In December, 1898, and the first half of 1899.) Pig Iron. •og-hj gTJ-i 5:2.5^ ^o'^o pc-a "ssci Year »..-| ^Sl If- ^1" "I {|.^ and r^ ^.^1 p- rt? ^' ^;? month. j-S^J I^S- ^?t^ 5^ - ^g? S^? o^r- ito^ ' ^^ ' ^- 1897. Jan 111.02 $13.50 $9.31 $11.06 flO.77 ?9.66 Feb 11.00 13.50 9.00 11.00 10.72 9.54 March 10.88 13.50 8.94 10.65 10.57 9.41 April 10.75 13.50 8.40 10.50 9.91 8.85 May 10.38 13.00 8.19 10.25 9.52 8.70 June 10.25 13.00 8.25 10.10 9.74 8.36 July 10.25 13.00 8.45 10.19 9.39 8.36 Aug 10.25 13.00 8.45 10.05 9.54 8.29 Sept, 10.40 12.00 8.80 10.50 10.04 8.85 Oct 11.00 12.50 9.00 10.50 10.70 9.75 Nov 11.00 12.50 9.00 10.50 10.52 9.56 Dec 11.00 12.50 9.00 10.50 10.09 9.00 1898. Jan 11.00 12.50 9.00 10.37 10.00 9.00 Feb 10.93 11.50 8.75 10.25 10.06 8.97 March 10.75 11.50 8.55 10.25 10.37 9.06 April 10.91 11.50 8.50 10.25 10.35 9.22 May 11.00 11.50 8.62 10.25 10.41 9.12 June 11.00 11.50 8.55 10.25 10.42 9.14 July 11.00 11.50 8.38 10.25 10.25 9.11 Aug 11.00 11.50 8.37 10.25 10.35 9.19 Sept 11.00 11.50 8.55 10.19 10.45 9.36 Oct 11.00 11.50 8.75 10.00 10.40 9.33 Nov 11.00 11.50 8.75 10.00 10.22 9.24 Dec 11.00 11.50 8.90 10.41 10.64 9.46 1899. , Jan 11.12 11.50 9.56 10.75 11.00 9.89 Feb 12.12 12.50 10.42 11.69 11.69 10.87 March 14.60 15.75 12.70 14.37 14.77 13.29 April 15.12 17.00 13.25 15.00 15.06 14.50 May 15.37 17.25 13.43 15.30 16.32 15.07 June 17.60 19.50 14.85 16.50 18.70 15.04 July 19.50 21.50 16.25 17.81 20.45 17.50 Aug 20.50 22.50 17.25 18.10 22.37 18.37 Sept 23.00 24.50 19.00 19.50 23.85 20.90 Oct 23.00 25.00 19.25 10.65 24.50 21.19 Nov 23.50 25.50 19.25 20.19 24.69 21.56 Dec 23.50 25.50 19.12% 20.31 25.00 21.52 Trusts and Monopolies. 75 Year ' ff and Ig. month. M^ ^5rJ• ©=? 1897. January .... $15.42 B^ebruary 15.23 March 15.44 April 14.00 May 13.82 June 14.06 July 14.00 August 14.00 September . . 15.60 October 16.44 November . . . 15.57 December .... 15.00 1898. January 14.93 February 15.06 March 15.25 April 15.06 May 14.85 June 14.65 July 14.50 August 15.85 September . . . 16.00 October 15.56 November . . . 15.06 December .... 15.80 1899. January 16.62 February .... 18.00 March 24.30 April 25.37 May 26.75 June 30.10 July 33.12 August 35.62 September . . . 38.37 October 33.75 November . . . 36.50 December .... 38.75 ;teel billets^ rails. ETC. Slabs 8 in. burg, lbs. ^^1 tin « •1 EB %^^ -s. ^ii. rf^B *^^o- >-;• — oa OTVJ f 5" $15.14 $16.92 $25.00 15.41 16.75 20.00 15.61 16.94 18.00 15.61 16.10 18.00 15.65 15.32 18.00 15.46 15.56 18.00 15.50 18.00 15.50 18.00 14.71 17.10 18.00 15.07 17.94 18.00 14.51 17.07 18.00 13.82 16.50 18.00 13.03 16.43 18.00 14.02 16.56 18.00 14.00 16.75 18.00 14.04 16.56 18.00 14.16 16.35 18.00 15.08 16.15 17.50 14.84 16.00 17.00 14.78 17.35 18.00 14.74 17.50 17.50 14.91 17.06 17.50 15.10 16.56 17.00 14.75 17.30 17.50 15.53 18.12 18.50 14.98 19.50 20.25 14.62 25.80 24.80 16.24 26.87 25.75 15.27 28.25 25.20 15.09 31.60 27.25 17.18 35.50 28.25 26.49 38.50 31.00 26.86 40.50 32.50 33.37 40.50 34.00 32.39 35.50 35.00 34.50 35.00 76 Combinations, MONTHLY PRICES OF FINISHED IRON AND STEEL, 1897 TO 1899. (The combinations controlling the most of these products were organized in December, 1898, and the first half of 1890.) ana -"gi iS'l fi SS| month. 2 '^ '^- tr-* ' - ^3 1897. • ■^'" January |1.25 |1.40 |1.15 fl.22 February 1.25 1.40 1.15 1.20 March 112% 1.40 1.14 1.20 April 1.05 1.25 1.15 1.14 May 1.05 1.25 1.10 1.04 June 1.00 1.25 1.07 .99 July 1.07V6 1.25 1.08 .95 August 1.10 1.25 1.08 .99 September ... 1.10 1.25 1.14 1.07 October 1.15 1.35 1.10 1.15 November 1.10 1.35 1.20 1.15 December 1.10 1.35 1.15 1.15 1898 January ..*... 1.05 1.40 1.11 l.i;^ February 1.05 1.35 1.11 1.15 March 1.05 1.35 1.06 1.05 April 1.07% 1.25 1.05 1.05 Mjay 1.10 1.25 1.05 1.05 June 1.12% 1.25 1.05 1.05 July 1.02% 1.25 1.00 1.05 August 1.05 1.25 1.06 1.05 September ... 1.05 1.25 1.14 1.08 October 1.05 1.25 1.13 1.10 November 102% 1.25 1.10 1.04 December 1.05 1.25 1.11 1.00 1899. January 1.05 1.30 1.15 1.12 February 1.15 1.45 1.20 1.22 March 1.45 1.70 1.41 1.38 April 1.57% 1.75 1.50 1.65 M^y 1.62% 1.90 1.56 1.75 June 1.80 2.00 1.81 1.88 July 1.85 2.30 2.00 2.00 August 2.00 2.40 2.00 2.28 September .... 2.25 2.50 2.10 2.50 October 2.30 2.50 2.10 2.60 November 2.30 2.50 2.20 2.56 December 2.30 2.50 2.05 2.50 Trusts and Monopolies. 77 MON'THLY PRICES OF FINISHED IRON AND STEEL. Year and month. ChtK p O a £.0- Si 200a p 2 fO !» Em 1897. January $1.20 February . . . 1.20 March 1.20 April 1.20 May 1.11 June 1.10 July 1.10 August .... 1.08 September . . 1.14 October 1.15 November . . 1.14 December . . , 1.13 $1.70 1.70 1.70 1.70 1.49 1.25 1.15 1.15 1.15 1.20 1.20 1.20 $1.25 1.25 1.25 1.20 1.15 1.15 1.10 i.i2y2 1.17^ 1.20 1.20 1.20 $20.99 21.18 19.57 19.43 18.92 18.83 18.83 18.93 19.82 21.63 20.91 19.62 $2.15 2.12^' 2.07 Ml 2.021^ 2.00 1.90 1.95 2.05 2.05 2.15 2.20 2.15 1898. January .... 1.10 February . . . 1.10 March 1.08 April 1.12 M^y 1.21 June 1.23 July 1.20 August 1.23 September . . 1.27 October 1.27 November ... 1.25 December . . . 1.26 1.30 1.30 1.30 1.30 1.30 1.30 1.30 1.37 1.40 1.38 1.35 1.35 1.30 1.15 1.15 1.30 1.25 1.20 1.20 1.30 1.30 1.30 1.30 1.30 19.77 19.87 19.70 19.86 19.29 19.24 19.24 19.33 20.71 20.81 20.33 20.22 2.10 2.07%' 2.05 2.00 2.05 1.95 I 1.95 2.00 2.05 2.00 2.00 , 1.95 1899. January .... 1.35 February . . . 1.55 March 1.89 April 2.18 M^ay 2.23 June 2.48 July 2.65 August 2.80 September . . 3.00 October 3.00 November . . 2.65 December . . . 2.40 1.40 1.42 1.55 1.64 1.63 1.82 2.15 2.40 2.40 2.40 2.40 2.40 1.40 1.40 1.55 1.75 1.75 1.90 2.15 2.25 2.40 2.40 2.40 2.40 20.62 21.91 25.59 30.13 33.92 37.88 42.65 46.00 44.22 45.82 42.82 37.29 2.00 2.35 2.45 2.80 2.95 3.05 3.15 3.20 3.25 3.15 3.10 3.00 78 Combinations, MONTHLY PRICES OF FINISHED IRON AND STEEL. Year ^ S g^ 2 w and "2, o- ^ month. 1 — ^? 1897. Jan $1.76 Feb 1.73 March 1.70 April 1.70 Way 1.68 June 1.64 July 1.60 Aug. 1.60 8ept 1.70 Oct 1.70 Nov 1.69 Dec 1.75 1898. Jan 1.71 Feb 1.75 March 1.77 April 1.65 May 1.66 June 1.70 July 1.70 Aug 1.65 Sept 1.67 Oct 1.71 Nov 1.71 Dec. 1.60 1899. Jan 1.88 Feb 2.02 March 2.43 Anril 2.60 May 2.70 June 2.90% July 3.02% Aug 8.10 Sept 3.36% Oct 3.55 Nov 3.55 Dec 3.47% asg' a^2 ^^2 a?^ ^^n 1^ 5" 1^ ^I'- ll ^^3 h •o.'* •o ■o **» •s = *» ^* «p t r* 1 a ►1 r* •t rf t r* n.90 $1.50 $1.28 $1.39 $1.47 1.85 1.50 1.25 1.35 1.45 1.90 1.45 1.25 1.40 1.50 1.80 1.40 1.25 1.40 1.47 1.80 1.35 1.23 1.35 1.43 1.75 1.30 1.23 1.31 1.41 1.75 1.35 1.20 1.25 1.35 1.65 1.40 1.19 1.26 1.36 1.80 1.40 1.19 1.41 1.49 1.80 1.55 1.28 1.49 l.o4 1.80 1.45 1.14 1.41 1.49 1.80 1.45 1.12 1.39 1.49 1.00 1.45 1.10 1.43 1.55 1.90 1.45 1.10 1.45 1.57 1.00 1.47% 1.37% 1.10 1.43 1.55 1.87% 1.08 1.31 1.47 1.80 1.35 1.08 1.31 1.45 1.80 1.35 1.06 1.35 1.43 1.80 1.35 1.06 1.31 1.36 1.80 1.35 1.05 1.26 1.36 1.80 1.35 1.08 1.32 1.43 1.82% 1.35 1.10 1.33 1.46 1.82% 1.35 1.10 1.28 1.39 1.82% 1.35 1.10 1.27 1.37 2.05 1.40 1.18 1.43 1.50 2.25 1.40 1.22 1.57 1.73 2.62% 1.65 1.48 1.94 2.09 2.80 1.85 1.67 2.05 2.25 2.95 1.90 1.65 2.10 2.35 3.20 2.00 1.97 2.30 2.57 3.30 2.30 2.20 2.42% 2.70 3.40 2.35 2.20 2.50 2.80 3.67% 2.55 2.50 2.76% 3.06 3.77% 2.70 2.50 2.95 3.17 3.88 2.80 2.40 2.95 3.28 4.13 2.80 2.45 2.87% 3.28 Trusts and Monopolies. 79 MONTHLY PRICES OF FINISHED IRON AND STEEL. Machinery steel, open Year and month. hearth, at Chicago, per cwt. 1897. January $1.60 February 1.57i^ March 1.55 April 1.55 May 1.50 June 1.50 July 1.45 August 1.40 September 1.45 October 1.60 November 1.60 December 1.60 Spring Black steel, at merchant Chicago, pipe, % in. per cwt. to 8 in. per ton. $1.85 $35.70 1.80 36.09 1.75 33.80 1.75 32.54 1.60 32.21 1.60 32.26 1.55 33.58 1.60 33.67 1.70 34.98 1.65 35.58 1.65 35.62 1.65 36.09 1898. January 1.60 February 1.60 March 1.60 April 1.60 May 1.50 June 1.50 July 1.50 August 1.50 September 1.55 October 1.55 November 1.55 December 1.55 1890. January 1.55 February 1.60 March 2.10 April 2.40 May 2.40 June 2.55 July 2.70 August 2.90 September 2.95 October 2.1)5 November . . . . , 2.95 December 2.95 1.65 35.10 1.65 33.75 1.60 33.90 1.60 27.97 1.60 27.92 1.60 27.62 1.60 28.37 1.60 28.64 1.60 31.46 1.60 32.44 1.60 33.42 1.60 83.83 1.60 35.43 1.75 32.62 2.25 32.12 2.40 34.94 2.50 36.13 2.85 40.48 3.20 47.84 3.20 64.07 3.50 66.80 3.60 77.09 3.60 79.76 3.60 81.65 8o Combinations, MONTHLY PEICES OF OLD MATERIAL, COAL AND COKE, 1897 TO 1899. (The combinations controlling the most of these products were organized In 1898, and the first half of 1899.) Year ^S2 M Q, and i* 5" month. SS 1897. January $12.00 February 13.00 March 11.75 April 11.50 May 11.00 June 10.50 July 11.00 August 11.00 September 12.00 C»ctober 12.25 November 12.00 December 12.00 1898. January 12.25 February 12.25 March 12.00 April 12.00 Alaj 12.25 June 12.37% July 12.50 August 12.50 September 12.62% October 12.75 November 12.75 December 12.50 1899. January 13.00 February 14.00 March 16.25 April 18.00 Mfay 18.00 June 18.00 July 18.75 August 21.00 September 27.50 October 30.00 November 30.00 December 27.00 tC-5 O 3Q lOf^OB li^l ■pi ',> n «§M ^m 17.00 17.00 7.00 7.00 7.00 7.25 6.75 7.50 6.00 7.00 5.50 7.00 5.75 7.25 6.75 7.25 6.50 7.25 7.00 7.50 6.50 7.50 6.50 7.50 6.50 7.50 6.75 8.25 7.00 8.00 7.00 8.50 6.50 8.75 6.50 8.00 6.50 7.75 6.50 8.00 6.62% 8.25 6.75 8.1i5 6.25 8.ii5 6.75 8.25 7.00 8.25 7.75 9.00 8.75 11.50 9.00 12.00 9.00 11.50 8.75 11.50 8.50 12 00 9.00 12.50 13.00 15.00 14.50 16.00 13.50 15.50 13.00 14.00 Trusts and Monopolies. 8i! MONTHLY PRICES OF OLD MATERIAL, COAL AND COKE. xear -^tra^o month. P°^o / i8o Combinations, all of which fall within this classification of our subject. By a quasi-public monopoly we mean the sub- stantially exclusive right to discharge some duty or service to the public which is possessed by pri- vate persons, either as individuals or corporations, but over which the public retains certain powers of control, such as the right to regulate the service, to fix the charges, etcr^n considering this branch ef the subject, therefore, we should always keep in mind the rights of both parties, the public on the one hand, and the private individuals or corpora- tions whose time and capital are invested on the other. Since the rights of the parties appear to, •interweave more intricately in relation to thisl class of employment than in any other known toj the law, it is clear that we should first thoroughly \ understand the nature and origin of the rights j which we are now about to examine, if we hope to avoid confusion in our attempt to adjust their re-^' lations to each other. The rights of the public atise from the very or- ganization of civil society. They grow out of the obligation which society has assumed to protect each and all of its members in the possession of property, and "in the enjoyment of life, liberty and the pursuit of happiness." These rights and obli- gations may be few and simple in primitive so- ciety, but they multiply and become more complex, comprehensive and far reaching as society becomes more highly developed and the social requirements become numerous and exacting. Public highways were early recognized as one of the first requisites for the promotion of intercourse Trusts and Monopolies. i8i' among the inhabitants of civilized communities, and in order to protect the whole people in the full enjoyment of them, free from molestation or in- terference of any kind, they were placed in charge of the government. The right of organized government thus to con- trol the streets in towns and the highways through- out the country is generally admitted. It is the almost universal practice among civilized nations, and there would seem to be no difference in princi- ple, whether the highway extends merely from town to town, from state to state, or from ocean to ocean, or whether it be made of clay, wood, stone, or of steel. The right of government to control highways intended for the general use of pedestrians, equestrians, bicycles, and vehicles pro- pelled by horse, gas, compressed air, electricity, steam, or other forms of power, is everywhere con- ceded, and that though they may extend from one end of the continent to the other. The right to control navigable lakes and rivers, which are Na- ture's highways, has never been disputed. What distinction, then, should be made because of the fact that the roads be constructed of asphaltum, of granite blocks, or of steel rails? The purposes and ends of the road are identical, the people are entitled to the same protection in making use of it, and the government is under the same obligation to afford that protection to them. Every right that a government possesses arises out of some duty which it owes to its people. Thus [the government denies to its subjects the right to carry arms, which deprives them of the means of being at all times ready to repel assault or to en- i82 Combinations, force redress of other wrongs, and it therefore as- sumes the obligation to protect them against mo- lestation or injury. It is equally bound to afford this protection, whether the people be walking on. the sidewalk or riding on a railway train, and is therefore endowed with all rights necessary for that purpose. Government denies to individuals the right to cross grounds or otherwise trespass on private property, and it is therefore bound to af- ford them a safe and suitable highway upon which they may be protected in passing through the country, and it possesses all rights and powers es- sential to that end. In speaking herein of governmental control, we have not meant to refer to any particular branch or division of the government, for the public rights and obligations of which we have spoken pertain equally to all, so far as the subject matter lies within their particular jurisdiction, and it will serve equally well to illustrate our point, whether we have in mind a general Government, as a State or Nation, or one or all of its subdivisions, as in the case of highways which become successively subject to the jurisdiction of township after town- ship, extending over perhaps the entire width of the country. Among other subjects of public concern which have imposed additional duties upon government, and have therefore conferred certain rights of con- trol, are bridges, which always have to be con- structed under governmental authority, and have usually been retained under its exclusive control. Water-works have been required to supply the peo- ple of the towns with water, and in order to oper- Trusts and Monopolies. 183 ate these pipes were required to be laid through the public streets, which, as we have seen, have been vested in the town government. The towns have therefore been obliged either to construct the water-works themselves or to grant to private per- sons or corporations the right to make use of the streets for that purpose; but the granting of these rights would be the giving to private persons the use of public property for the purpose of affording certain services to the people, and the government cannot thus escape its duty to see to it that proper services are rendered, and to regulate them both as to quality and price. Gas and electric light plants, street car service, telephones, telegraphs, the postal system, elevators, warehouses and other public utilities all fall with- in this same class and impose similar rights and obligations upon the government. The education of children, the care of the sick, and the protection of the poor, the feeble and the helpless are also subjects of public concern, and impose duties upon the government which have generally been recog- nized and complied with, more or less satisfactorily, by the establishment of schools, the erection of hos- pitals, and the maintenance of asylums and homes of various kinds. ^^ Thus we see that when society requires indi- viduals to submit to the will of the majority in all matters in which their actions or property inter- ests become intimately involved with, or appear to conflict with, the rights of their fellow citizens, it assumes the duty of regulating these matters and of protecting the people in the free and full enjoy- ment of all those rights and privileges which the 184 Combinations, laws of civilized society have guaranteed to its members, and in order to discharge these duties it, in the form of organized government, assumes control of all property of every kind which is re- quired to be used in common or for the public good, and acquires the right to do all things neces- sary to the complete discharge of the obligations which it has assumed. It is not intended, in this review of the growth of governmental powers, to depict the successive steps by which any community or government has actually attained to the full possession ef those powers which enable it to command the obedience and respect of its citizens, and for certain pur- poses to exercise absolute control over the lives and property of its people ; but it does in effect present the course of development through which all gov- ernments have passed. Instead of progressing by clearly defined steps from the acquisition of one power to that of another, it is true that this devel- jopment has been an almost imperceptible move- ment onward along many lines at the same time; there has been no deliberate assumption of new and distinct powers marking successive epochs in the development of the functions and scope of the government of to-day, but rather a gradual un- dertaking of a little here and a little there, without any consideration of the extent to which these small beginnings would ultimately lead, or the im- portant part which these small duties so naturally assumed were to play in controlling the affairs of civilized society. By thus tracing the development of a few individual functions of government from their origin to their present advanced stage of per- Trusts and Monopolies. 185 ' tFection, it is believed that the true nature of the rights and obligations which they entail will be jnore clearly understood. Let us now for a few moments turn our atten- tion to the rights and privileges of the individual members of society. Among the earliest public lemployments to which private individuals devoted their services were stage lines, which were estab- lished for the purpose of carrying the mails and of conveying passengers and freight to and fro. .These lines were owned and operated by private in- dividuals, who invested large sums of money in them, and they frequently proved to be very profit- able investments. In the course of time, however, as the country became more generally populated, and with the advent of the steam locomotive, rail- roads began to supersede the stage lines and to drive them out of business. Their proprietors complained grievously of the injustice that was being done them by the establishment of the railroads, the loss of the occupations they had followed for so many years, and the practical de- struction of their property by rendering it useless for the purpose for which it was intended. They took no account of the fact that their properties may have repaid them several times the amount which they had originally invested in them, or that the business had afforded them a remunera- tive occupation during such time as they had fol- lowed it. They merely knew that they were in possession of a highly profitable business which was about to be wrested from them, and past profits count for but little when we are contemplating present or future losses ; but the new and superior i86 Combinations, accommodation afforded by the railroads prevailed, just as the more useful and progressive institutions of advancing civilizations always will, even though the interests of those who have built up and sup- ported the institutions of the past and present must be sacrificed in their wake. As the work of opening highways throughout the country progressed large rivers were encountered to be crossed, and in the absence of bridges this could only be done by the use of boats. Boatmen early began to devote their time to the operation of ferries for the transportation of freight and pas- sengers across these rivers. Many of these ferries have continued in operation throughout, several generations, and although subjected to certain gov- ernmental regulations, as to charges, to provide for the safety of passengers, etc., they have always been owned, operated and recognized as private prop- erty. But as a demand for open and unobstructed highways became more pressing, the cities, towns or counties in which these ferries were located in many instances constructed bridges across these streams, thus driving the ferries out of business, just as the railroads had done with the stage coach. The capital invested in these ferries was likewise sacrificed, and it is to be supposed that their pro- prietors did all in their power to oppose the con- struction of bridges, but the public recognized it to be the duty of the government to provide high- ways suitable and adequate to the needs of the community, and its right to adopt any or all means suitable or essential to that end, even though the interests of individuals might suffer in the transi- tion from the old forms to the new. Trusts and Monopolies. 187 The public was aware of the fact that the ferry- men had been discharging a service for which they had received compensation, and which it had a perfect right at any time to undertake to discharge for itself, in the same, or in any other way. In most cases ferrymen have been required to procure a license before being allowed to pursue their busi- ness. They have been subjected to official inspec- tion, they are obliged to serve the whole public without discrimination, and they collect their fees from the people at rates which have been prescribed by law. In short, they have virtually been in the service and pay of the public, and to dispense with -their services by the construction of a bridge or otherwise is no more unjust than it is to discharge a clerk who has for many years been employed in the county clerk's office but whose services are no longer required. The ferryman would have no more right to set up the claim of vested interest in the continuation of the ferry than the man who might be appointed to swing the bridge would have to claim property rights in that occupation. The fact that a ferryman brings his property into the service of the public, together with his personal services, does not alter the principle in the least. It is just the same as when a man engages to work with his team of horses for the city — he will simply receive a larger salary than one who merely drives a team which belongs to the city or does other work of the same kind. So the ferry- man is presumed to receive a greater amount of compensation in consideration of the amount of capital which he had invested in the property which he employs in the service. 1 88 Combinations, The crowded condition of the population, and the erection of buildings covering practically every available foot of ground in the congested portions of large cities, renders it impracticable to obtain a supply of water from private wells as in the less thickly populated districts of the country. This makes it a necessity, as well as a convenience, to draw the water supply from a distant point for dis- tribution. In order to do this, it becomes neces- sary to conduct the water through the city by means of pipes laid in the streets, and since it is also required to make provision for the laying of sewer and gas pipes, electric light and power wires, telegraph and telephone wires, cables, street car tracks, trolley wires, anl perhaps pneumatic tubes and other services, all in the same street, it follows that whoever first secures the privilege of laying water pipes through the streets would have a prac- tical, if not an absolute, monopoly of that service. As we have before remarked, the streets belong to the public, or its representative, the govern- ment. ]N'o one, therefore, can undertake to furnish water or other public service of that character to the people of a city without first obtaining author- ity from the city government to exercise rights and powers which have been intrusted to it for the protection and interests of the people. A public water service is an absolute necessity of city life, and the city government controls the only avenues through which this service can be supplied. If, then, no private parties were to come forward and offer to supply this want it would seem imquestionably to be the imperative duty of the city government to supply it; but if, on the Trusts and Monopolies. i8g| other hand, private parties did offer to provide this service, it would indicate that large profits are ex- pected to be derived from the business, and would appear to afford an additional reason why the serv- ice should be rendered by the government itself. If, however, the government grants to private in- dividuals or corporations the privilege of supplying water to the people of the city, it still retains its full share of responsibility to the people, not only to see that water is supplied, but to protect them from imposition and injustice of every kind as to price, quality, quantity and manner of service. If, then, the relationship of the water company to the city government be analyzed it will be found that it occupies precisely the same position as did the ferryman whose relations to the municipality hav- ing immediate jurisdiction over him we have just described at some length. That is to say, the gov- ernment owes it as a duty to the people to provide an efficient supply of water, but instead of doing so directly itself it permitted a private company to do so for it. Thus the water company became the agent of the government, and might be dealt with just as any other employee. It may be that the employment might be fixed by the franchise for a definite number of years, but that does not affect the relationship. The relation of the parties is that of employer and em- ployee, and so long as a private company continues to devote time and capital to a public service, it should be regarded as a servant of the government, and be presumed to have undertaken the risks and liabilities of the employment. A laboring man who works for small wages is held by the common 190 Combinations, law to have assumed all the ordinary hazards of the business in which he is employed ; and though he may become permanently disabled, or even lose his life through the carelessness or negligence of a fellow servant, he and his family are wholly without redress and must bear their loss as best they can. Or, if an individual who has received no special privileges from the government in- vests a hundred thousand dollars in a plant for the manufacture of bicycles, and the following year the bicycle is superseded by the automobile, or the demand for bicycles otherwise decreases to such an extent as to render the business an entire failure, there is nothing left for him but to bear his loss in silence, and to make the best of a bad bargain. Why, then, should any greater consideration be shown for a corporation which has devoted its time and property to a public service upon conditions which it had carefully considered in advance, and from which it has almost invari- ably reaped a rich harvest? The development of modern civilization has made gas and electric lights, street car service, the telephone and the telegraph quite as much a ne- cessity of city life as is the supply of water. Since these can only be supplied through the use of the same public streets through which, as we have just seen, the water must be conducted, and as this use of the streets involves the exercise of precisely the same powers and privileges which we have just de- scribed in connection with the granting of fran- chises to water companies, it follows that the same conditions, rights and obligations which pertain to the operation of the public water service are equally Trusts and Monopolies. 191* applicable to each of these several branches of the public service, whether they be supplied di- rectly by the government or by private individuals or corporations; but as we have already described them with some degree of detail, it is unnecessary to repeat our observations here. One of the most fundamental principles of or- ganized society is to secure to every individual the right to engage in whatever business or employ- ment he may select, and to pursue his happiness according to his own wishes, providing that he does not interfere with the right of any other citi- zen to do the same. This means that in the exer- cise of those rights in which he conflicts with the rights or interests of no other man, the individual is supreme, and the only relation which govern- ment bears to him is to protect him in the free and full enjoyment of them; but whenever the rights of two or more private persons conflict they are obliged to yield to the rules which the government has prescribed for the regulation of such cases. Thus if a person in the exercise of his right to travel the public highways free from all unneces- sary interference or molestation chooses to keep to the left-hand side of the road, and another exercis- ing the same right, but traveling in the opposite direction, resolves to keep to the right-hand side^ it is evident that a collision will most likely occun. These individuals, then, are in these cases required to subordinate their own wishes to the expressed will of the public and to obey the law of the roads^ by keeping to the right. It follows from the provision that no individual shall interfere with the rights of any other that no 192 Combinations, person shall claim or acquire any exclusive rights in property, powers, privileges, duties or occupa- tions in which a number of individuals or the whole public are equally interested. In those cases, then, in which the interests of the public are directly affected by the discharge of the duty, serv- ice, employment or business, the rights of the public are paramount, and those of the individual become a matter of mere secondary importance. Thus a public highway is a public necessity, and its preservation is a matter which directly affects the interests of the entire community. Every citi- zen is entitled to make free use of it in common with all other members of the community for cer- tain purposes and in the manner prescribed by law; but no individual will be permitted to erect his house upon or otherwise to appropriate any portion of it to his own private use. The fact that the appropriation by a private in- dividual to his own use of a portion of the public highway or of certain rights or privileges in it, is for the purpose of affording some service to a large number of persons or even to the entire com- munity, does not in any way affect his rights to do so. In either case he is a mere trespasser upon public property and he has no more right to place any obstruction upon it, or to attempt to exercise control over any portion of it, than he has to enter upon or to attempt to exercise the same rights over the private property of an individual. The public may choose to grant to certain private per- sons or corporations the right to use a portion of the public highway or to exercise certain privi- leges in it for the purpose of affording certain Trusts and Monopolies. 193 services or conveniences to the community, but their right to exercise these privileges is derived solely from the grant or franchise which they re- ceived from the government, and is in no way dependent upon or influenced by the amount of capital which they may have invested in the con- struction or preparation of these highways, or in private properties which they have placed under, over, or upon them, or in a business which may be entirely dependent upon the exercise of these privi- leges. No amount of investment of capital by a stranger in the private property of an individual will give him a right to claim any interest in it as against the true owner, and it is just the same with the property of the public. We may then sum up the situation briefly as fol- lows: In those employments in which no public property is employed and in which no governmental powers are exercised the rights of the individual are supreme, so long as they are not used in such a manner as to interfere or impair the rights of any other person; and the government has no right "to interfere with him except in those cases in which it becomes necessary to take private property for the use of the public, and then only upon con- ditions which secure to the owner full value in re- turn for the property taken and compensation for any further injury he may have sustained. The gov- ernment is, in these cases, further bound to protect private persons in the free and full enjoyment of their rights and is, in effect, the servant of the in- dividual. \ In those cases, however, in which public prop- erty is employed, in which powers and privileges 194 Combinations, belonging solely to the government are required to be exercised, and in which the interests of the whole community are directly affected, the rights of the public are superior to every other considera- tion, and the private individual or corporation who devotes his time or property to such an employ- ment becomes merely the agent of the government, and as such he can claim no rights in the propei^ty of his principal. Much interest has recently been manifested in the discussion of the granting of perpetual fran- chises to railroads, street railwa3's and other public seryice corporations, and it may be as well to make a few remarks on the subject here. As we have already seen, all the collective powers of the people, as well as all public property, are vested by society in the government for the benefit and protection of all its citizens. That is to say, all those powers and privileges which are not al- lowed to be exercised by each and every individual at his own discretion and in his own manner are reserved to the government to be exercised for the common good of all. It should be carefully borne in mind, then, that all the powers of government are derived from the people; that they are en- trusted to it for the mutual benefit of all ; that the government in exercising these powers is acting merely as the agent of the people who support it and who owe allegiance to it, and of those who afterward ratify its acts, and that as such agent it has no power to bind its principal by anything done in excess of the authority vested in it. Thus the government of to-day has authority to act only for the people of to-day, and can bind Trusts and Monopolies. 195 future generations only in so far as they may elect to be bound by its acts, and to avail themselves of the benefits accruing therefrom. Nor can the gov- ernment bind the people of to-day by any act or contract which is clearly prejudicial to their in- terests, or the terms of which are obnoxious to them. The form of government may be changed, its action may be repudiated by the people, or it may be overthrown; but the rights of its citizens remain inalienable, and no power on earth has any authority to sell the people into chattel slavery or otherwise to deprive them of their liberty, or to take away those natural and civil rights which make that liberty worth having. Any act of the government, therefore, which proposes to barter away the interests of the people, or in any way seeks to place control of their affairs beyond their power, whether it be for the purpose of affording to favored private individuals or cor- porations opportunities of amassing great fortunes at the expense of the public, or to secure temporary or permanent and substantial benefits to the people^ no matter how valuable the consideration may be, is contrary to natural justice, and can only endure so long as the people are willing to tolerate it. The reservation of these powers to the govern- ment for the purpose of safeguarding the interests of the people would seem, on the face of it, to im- ply that they were to be exercised and controlled by the government itself; but it is also clear that the government must act in all matters through its officers or agents, who are to be selected in some manner not definitely determined, and that it may therefore exercise these powers through agents di- 196 Combinations, rectly appointed for the purpose, or let them out under terms to be fixed by itself, to be exercised by private individuals or corporations over which it has practically no control, if such an arrange- ment would be consistent with the obligations which the government owes to the people and with the trust imposed in it. Let us suppose that the government were to del- egate its police powers, such as are now exercised by marshals, sheriffs, constables and policemen, to a private detective agency. It might be urged that these agencies are managed by experienced, practi- cal men who would employ only competent per- sons. It is quite possible that a much more ef- ficient service might be secured in that way than is now to be had in many places, and that it would be much more economical for the government ; but we know that the people would protest most ve- hemently against the placing of the enforcement of the law and the execution of its writs in the hands of private individuals, just as they now ob- ject to the exercise of police powers by those agencies when employed to protect mines or other property during strikes, lockouts, etc. Suppose, then, that the government were to elect to confide the making of its laws to a private as- sociation of attorneys. It might be claimed in de- fense of this course that it would secure the mak- ing of wiser and better laws, that much time and money now lost through the efforts of inexperi- enced men to secure the enactment of impractica- ble, unconstitutional and unsafe legislation might be saved, and that the unseemly wrangling and manoeuvring of party politicians, which occupies Trusts and Monopolies. 197 so mucli time in all of our legislative assemblies, might be avoided. It is altogether likely that many benefits might be thus secured, but it would be said that in the government by the people they should make their own laws, and that it is better to have poor laws made by the people themselves than to have good laws imposed upon them in the making of which they have had no voice. Again, it might be thought wise to turn the management and control of the courts over to a firm of private attorneys for a certain number of years. It might then be said that the judiciary would thus be taken entirely out of politics, that the service of the best legal talent might in that way be secured for the bench, and that the cost of litigation might be greatly reduced. It is easy to believe that many of the abuses which are now complained of, particularly in connection with the lower courts, might in that way be remedied, that ^the cost of litigation might be reduced, and that a much greater amount of business might be trans- acted, the people would, however, revolt against thus placing the administration of justice into the hands of private individuals, and would never sub- mit to have their rights adjudicated by private persons over whom they have no control and in whose selection they had no choice. Finally, suppose that in some one of our large cities the government were to become convinced that it would be a wise business venture, and prof- itable to the whole community, to grant the entire management and control of the city government to a well known private business corporation for a term of twenty or thirty years. It might be shown 198 Combinations, that only in that way could strictly business meth- ods be introduced into the management of munici- pal affairs, that the ordinary duties of the govern- ment, the construction of public improvements and the repair and preservation of public property, might be more efficiently and satisfactorily con- ducted, that many additional accommodations might be provided for the people, that the finances of the city might be more judiciously and economi- cally expended, and that the taxes might be re- duced. It is not difficult to see how it would be possible for even a very ordinary business corpora- tion to provide a much more businesslike adminis- tration than is now enjoyed in many of our great cities, and that many of the reforms just indicated might be effected without any additional expense to the people, while yet affording a handsome profit to the corporation to which the franchise of gov- ernment had been granted; but the love of free- dom and pride of self-government are too strong in the hearts of the people to allow them to tolerate for an instant the thought of such a contract for the sale of their rights. It would be contrary to the instinct of a liberty-loving people and destruc- tive of the spirit of our free institutions; and tlie mere material advantages which might doubtless, in many instances, be derived from such a letting out of the powers of government would be worth nothing in comparison to the loss of manhood and of the rights and privileges of a self-respecting cit- izenship resulting from such a surrender of the right of the people to govern themselves. If, then, the very thought of granting to private individuals the power to exercise these important Trusts and Monopolies. 199 functions of government is so repulsive to the peo- ple, why is the relinquishing of less important powers of government less distasteful to their sense of honor and love of principle? If the policy of delegating the powers and duties of government to private individuals or corporations, when car- ried to its natural and logical conclusion and full development, becomes so subversive of the funda- mental principles of a republican form of govern- ment, why is the partial application of that policy less inconsistent with these same principles? In matters of principle there can be no question of degree. The action is either right or wrong. Most of the important functions of government are made up of a number of more or less unimpor- tant duties, and since the right to delegate one power implies the right to delegate another, it is clear that, even if we assume that the government has the right to assign merely its minor duties, a government disposed to dispense its powers might soon divest itself of practically all of those which the people had entrusted to it. It is true that the government has, as a matter of convenience, in many instances permitted cer- tain of its powers and duties to be exercised by pri- vate individuals or corporations, but these have been, for the most part, mere temporary arrange- ments, to continue only until such time as the government should choose to assume the direct discharge of such duties; or have been grants for a definite term of years, upon conditions which gave the government more or less complete control over the individuals who were to exercise or dis- oharge the duties. 200 Combinations, The relation of the community to the individuals to whom franchises are granted is precisely the game as that of the government to private property which has been employed for public purposes. Thus private buildings are frequently employed for use as post offices, custom houses, etc., and if the government wore to take a lease of one of these buildings for a reasonable number of years it would be bound by its contract ; but no officer of depart- ment would have the power to bind the govern- ment by a perpetual lease of such a building. It would also be free at any time to erect its own buildings and to abandon the private property which it has hitherto employed, subject only to the terms of such contract as it had entered into con- cerning it. By these short term franchises the power to reg- ulate these public services is kept well within the control of the government; but by perpetual fran- chises it is sought to place it beyond the reach of governmental interference. The distinction is pre- cisely the same as that which exists between the leasing of a man's property for a term of years and the sale of that property altogether. In the one case he retains a large degree of control over it, while in the other, even though certain reserva- tions as to its use may be made in the deed, he be- comes an absolute stranger to it. It may be urged that regulations as to the range of charges, the rates of compensation, the manner of service, etc., may all be provided for in the char- ter. Provisions, however, which would be fair and reasonable to-day might be very unjust under the conditions which obtain fifty years from now, and, Trusts and Monopolies. 201 as explained before, the government of to-day has no right to impose unreasonable obligations upon future generations or to bind them by contracts for which they do not receive a good and sufficient con- sideration. No individual has any power to bind his heirs for the payment of his debts, unless he leaves them sufficient property out of which to pay them; nor can any heir be compelled to accept an inheritance unless he believes that it will be to his interest to do so. It is just the same with the gov- ernment. It would seem, then, that a perpetual franchise could only hope to be enforced, so long as its terms continued to be reasonably just to the people. ,. If, now, it be proposed to grant a perpetual fran- chise, but to reserve to the government the right to revise its provisions from time to time, the gov- ernment must then possess the power to revoke the grant whenever the grantee refuses to comply with its regulations; else it would be powerless to en- force the acceptance of the revised conditions. I Having the power to terminate the grant and to i impose new conditions, every readjustment of the terms would be equivalent to the granting of a new 'lease, and the franchise would, in fact, amount to I but little more than a tenancy at will, or during ' good behavior. The power of the government to bargain away any of the rights and duties which have been en- trusted to it for the protection of the people is questioned by Chief Justice Waite, in the language used in deciding the Railroad Commission cases, 1 116th United States Reports, page 325, in which, speaking for the court, he says: ^*This power of 202 Combinations, regulation is a power of government, continuing in its nature, and if it can be bargained away at all, it can only be by words of positive grant, or something which is in law equivalent. If there is a reasonable doubt, it must be resolved in favor of the existence of the power." The question in- volved in this case was the right of the state to reg- ulate the charges of railroad companies, and while the court did not go further in its decision than was necessary to decide the case in hand, and found in the construction of the contract which existed between the state and its chartered corporations a sufficient opportunity to sustain the right of state control without placing its decision upon broader grounds, the language employed clearly indicates that, in the mind of the court, the right of the state to preserve its power of control over all pub- lic service corporations rests upon much broader principles of law, which might be invoked when- ever the necessities of the case might require it. The same principle was more fully expressed by the court in the case of Stone versus Mississippi, 101st United States Ecports, page 814, as follows: "No legislature can bargain away the public health or the public morals. The people themselves can- not do it, much less their servants. The supervi- sion of both these subjects of governmental power is continuing in its nature, and they are to be dealt with as the special exigencies of the moment may require. Government is organized with power to provide for them. For this purpose the largest legislative discretion is allowed, and the discretion cannot be parted with any more than the power it- self." It has again been thus strongly approved ia Trusts and Monopolies. 203 one of the most recent decisions of the court, the opinion being delivered by Mr. Justice Harlan: **In other cases we have adjudged that the author^ ity given by legislative enactment to carry on a lottery, although based upon a consideration in money, was not protected by the contract clause of the Constitution, this for the reason that no state may bargain away its power to protect the public^ morals, nor excuse its failure to perform a public duty by saying that it had agreed by legislative enactment not to do so." ( Champion versus Ames, United States Reports, No. 188, page 321; also Douglas versus Kentucky, United States Reports, No. 168, page 488.) It seems probable, therefore, that the principle of Ultra Vires will before long come to be applied to the govcrunient itself, as well as to its minor subdivisions and to private corporations, and that the granting of franchises will not be construed to bring the matter within the doctrine of the Dart- mouth College case, except in cases in which the parties are clearly capable of contracting upon the subject in question. Perpetual franchises, then, are contrary to the spirit and purposes of the government of a free people, and while there are instances in which such franchises have been granted to private corpora- tions in various parts of this country, their dura- tion, it is believed, will be found to depend upon the skill which is displayed by their proprietors in conforming to the wishes of the public. 4 We now come to consider the conditions which confront us at the present time. Nearly all those branches of public service commonly known as 204 Combinations, public utilities, such as railroads, telegraphs, tele- phones, gas and electric light, water-works, street railways, etc., are in the great majority of cases now controlled by private corporations. We be- lieye that what has already been said of the rights of private individuals and of the public in relation to these various forms of service will be sufficient to indicate our position on the subject, and that it is merely necessary to point out the conditions in order to suggest the remedy. As we have seen, the convenience or benefit to the public is the only justification for the operation of these services by private individuals. The ques- tion arises, then, is the present service satisfactory to the public ? We will take the street railway situation in the city of Chicago as an instance. In 1883 the fran- chises of the principal lines of street railway in that city were extended for a period of twenty years, which was the full length of time to which they could be extended under the city charter. About ten years later these same companies began to work to secure a further extension of time, and to that end they invoked the aid of the State Legis- lature. From that time until the present day the City Council has had traction measures constantly before it claiming its' attention, committees and commissions have been appointed, investigations made and elaborate reports returned upon the sub- ject. For ten years the State Legislature has had measures pending at every session looking to some settlement of the traction question in the city of Chicago, out of which many scandals have arisen and which have occasioned much loss of time and Trusts and Monopolies. 205 expense to the State Government. During that time committees of city officials and private citi- zens have gone from Chicago to Springfield to at- tend every session of the State Legislature to work for or against the passage of one or more of these traction measures ; for six years the sole important issue in every municipal election held in the city has been the traction question, and during these contests neither political party has ever assumed the defense of the local traction companies; hun- dreds of suits have been instituted by the city gov- ernment to compel these companies to comply with various provisions of city ordinances, most of which have been stubbornly contested, and in April, 1902, the people of the city were asked to vote by ballot for or against municipal ownership of the street car system. The vote stood 142,826 for municipal ownership and 27,998 against it; the question, however, was merely submitted to ascer- tain public sentiment, and the vote had no legal ef- fect whatever. The traction companies have ad- mittedly allowed their properties to sink into an; 'intolerable state of neglect and inefficiency, until it is estimated that it will require an expenditure of from forty to fifty millions of dollars to put them in condition to aiford to the people a first- class, up-to-date street car service. The accommo- dation rendered has for several years been very un- satisfactory, and no other subject since the days of the Spanish-American War has occupied so much space in the columns of the local press as have the various phases of the traction problem. The city has recently secured the enactment of legislation enabling it to enter into arrangements with the 2o6 Combinations, traction companies looking to the early acquisition of the street car properties by the city, but no set- tlement has been effected and negotiations for the extension of the company's franchises are still pending. All this, at the end of more than forty years' experience with the operation of the street icar system by private corporations, would seem to make it quite clear that private ownership of pub- lic utilities in this instance has not proved entirely satisfactory to the people of Chicago. The railroad systems of the country are also pwned and operated by private corporations, and nearly every state in the Union has attempted to regulate their affairs, and to secure to the people a fair measure of service at reasonable charges, by the enactment of laws and the appointment of boards for their supervision and control. In spite of these attempts on the part of the states to re- strain them, they began to form trusts, pools and combinations of various kinds, to discriminate in their rates made to different persons and between different places, to pay rebates to some and to make excessively high charges to others, all of which caused such general and widespread dissatis- faction among the people that Congress in 1887 es- tablished the Interstate Commerce Commission for the purpose of correcting these and similar abuses. The result of the labors of this commission, in conjunction with the efforts of the several s^tate«, to remedy these same evils may perhaps best be judged from the conditions which prevailed during the past year, as shown by the following expres- sions contained in the report of the Interstate Commerce Commission for the year 1902: "The Trusts and Monopolies. 207 tendency to combine continues to be the most sig- nificant feature of railway development. The facts in this regard are matters of common knowledge, and little is gained by the mention of particular instances. It is not open to question that the com- petition between railroad carriers which formerly prevailed has been largely suppressed, or at least brought to the condition of effective restraint. The progress of consolidation, in one form or another, will at no distant day confine this competition within narrow and unimportant limits, because the control of most railway properties will be merged in a few individuals whose common interests impel them to act in concert. While this will insure, as probably nothing else can in equal degree, the ob- servance of published tariffs, and so measurably remove some of the evils which the act was de- signed to prevent, the resulting situation involves consequences to the public which claim the most serious attention. A law which might have an- swered the purpose when competition was relied upon to secure reasonable rates is demonstrably in- adequate when that competition is displaced by the most far reaching and powerful combinations. So great a change in conditions calls for corresponding change in the regulating statutes. . . . Thir- ty-eight formal proceedings, double the number brought in the preceding year, have been instituted before the commission since its last report to Con- gress. These cases directly involve some of the rates and practices of three hundred carriers. . . . Besides the injunction and criminal pro- ceedings which have been instituted at the request of the commission, ten civil cases to enforce orders, 2o8 Combinations, of the commission are pending in the Federal courts." We have already referred to the extraordinary contract between the railroads and the Standard Oil Trust by which the railroads undertook to as- sist in crushing out the independent oil refiners by charging them in excess of the usual rates Tor car- rying their products, and then paying over the ex- cess so collected to the Standard Oil people. It i3 commonly accepted as an established fact that the railroads continued to pay rebates to favored ship- pers, at least until the establishment of the Inter- state Commerce Commission, and most people be- lieve that they have continued to pay them until very recently, if, in fact, they are not still doing so. Mr. John W. Gates thus estimates the amount of such rebates which have been paid, and describes the prosperity and business methods of the railroad companies: "The amount of money paid out by railroad companies in rebates since the passage of the Interstate Commerce law in 1886 would, in my judgment, almost pay the national debt. What has made the railroads poor has been the carryincj of people for nothing and cutting nominal tariffs actually in two in many instances. The railroad situation in the United States to-day, however, is better than ever in its history. While rates are low, they are adhered to. There is not one dollar paid out now in rebates where two years ago there were perhai)s one thousand or ten thousand. This ac- counts very largely for the increased net earnings and the supposed decrease in cost of operation. "People here in Xew York have but a remote idea of the magnificent condition of most of the rail- (.■ Trusts and Monopolies. 209 roads of the West, unless they have traversed them within the past three or four years. "The railroads have been earning so much money that their greatest trouble has been to hide a large portion of their net earnings, and this they have done by charging them to operating expenses." Thus we see that private control of public util- ities of national interest and importance has alsQ given much cause for dissatisfaction. Instances of this Kind might be multiplied, and much might be said of the dissatisfaction occa- sioned by private control of the telegraph, the tele- phone, of gas and electric light plants, water- works, etc., but the principle involved in all of these cases is precisely identical with that of the rail- roads and street railway service, some of the con- ditions of which we have just described, and the same evils are in a greater or less degree common to all and require a like remedy. It is not our purpose to attempt to make it appear that private management of public services has in all cases proved unsatisfactory or injurious to the public; we merely wish to show that there are instances in which it has proved to be so, and to indicate the remedy to be applied in those cases. We leave it to the general knowledge of the reader to suggest how many of such cases there are to be found. We have shown an instance of a local street railway system subject to the jurisdiction of city govern- ment, and of great railway systems subject both to fitate and federal jurisdiction, in both of which private management has resulted in very general discontent among the people, and we shall now tura 2IO Combinations, our attention to the consideration of the remedies to be applied. Let us first inquire, what is it that gives rise to this general displeasure with the private control of public services? In the case of the street rail- way companies to which we have referred, it was the continual efforts of the corporations to increase their private gains by stinting the service they af- forded to the people, and by securing greater powers and privileges, and longer leases of their right of way. In the case of the railroads, it was the unfair methods resorted to by the companies to increase their profits. Thus we see that in both instances it :was private interest that inspired the persistent opposition to the will of the people, and which prompted the corporations to render the most in- ferior service that would be tolerated by the muni- cipalities in return for the grants which they had received. What, then, is the remedy which would natu- rally suggest itself? Eliminate private interest from the problem and you have removed the chief cause of all the evils of which we now hear com- plaints in connection with the operation of public services. We have already seen from our analysis of the rights of the individual and of the com- munity, that all proprietary rights in these various services, as well as the duty of providing tliem, be- long to the community. There can, therefore, be no valid objection to the right of the government to dispense with the services of private individuals or corporations in connection with these public duties whenever their management of them ceases to be beneficial to the public. Trusts and Monopolies. 211 The natural obligation which rests upon the government to provide for the people all those forms of public service which the very structure and or- ganization of society forbids and prevents any in- dividual or group of individuals from providing without the sanction and assistance of the govern- ment; the ownership and control of the only ave- nues through which it is possible to afford these services to the people; the supervision and control which it is absolutely necessary for it to maintain over these services no matter by whom they may be provided ; and the great difficulty of procuring the most efficient service from private individuals wherever their personal interests become directly opposed to the public; all serve to indicate it to be the imperative duty of the government to assume the direct management and control of all these sev- eral forms of public service. That the assumption of these duties by govern- ment is correct in theory, has, we believe, already been made sufficiently clear by what has been said of the close relationship of such services to the functions of government, and of the nature of the duties to be discharged. The Government of the United States has recognized it to be the duty of the government to provide these services, by grant- ing millions of acres of the public land and lending its own credit to private corporations for the pur- pose of encouraging the construction of railroads and canals, and the practicability of government operation of these public necessities would seem to be sufficiently demonstrated by the numerous well known instances both in this country and Europe in which nearly every form of these services has 212 Combinations for years been owned and operated by municipali- ties. There are those, however, who question the ex- pediency of the government undertaking the direct management of street railways and other branches of service, in which great amounts of capital are involved and large numbers of persons are em- ployed. They do not question the correctness of the principle, of the right of government to assume the discharge of such duties ; but they say that our municipal governments are too loosely managed, that they are too new and inexperienced, and too much subject to change and manipulation by par- tisan politicians to be intrusted with the manage- ment of the affairs of a great business enterprise. Thus it is thought by many that it would be impracticable for the city of Chicago to undertake to operate its own street railway system. Yet these same people think nothing of establishing a sanitary district, comprising territory lying largely within the limits of the city and controlled by the votes of the same citizens, from which is elected a board of six trustees which is given the power to levy taxes and to expend forty or fifty millions of dollars in the construction and operation of a canal — an amount which would be more than sufficient to re- produce the entire street car system of the city as it stands to-day. It is admitted that municipal ownership may work well enough in England, Scotland and Ger- many where government is old and settled in its way, and not likely to be influenced by the enthu- siasm and impetuosity of youth; but we are told that under our form of government, the placing Trusts and Monopolies. 213 of so much power in the hands of the adminis- tration is apt to lead to the building up of strong- political machines at the expense of the public serv- ice; that the appointment of politicians to more responsible positions would lead to greater corrup- tion and mismanagement, and that the employ- ment and control of so great a number of voters would give to any political party a very material advantage in its attempts to perpetuate itself in , power. ■ > As to the capacity of our municipalities to eon- ^ duct their own public works in a thoroughly busi- nesslike and satisfactory manner, we wish to re- ';' mind the reader that the ability of the American : people to govern themselves was also denied at the j time of the Amerrfcan revolution, and the same thing has been said of every nation which has ever attempted to establish a republican form of govern- ment. In this case, however, it is the same American people, or their descendants, who have proven to the world their ability to govern them- selves, who now question their own ability to con- duct certain minor forms of public service which are merely designed to contribute to their own per- sonal convenience and comfort. ^ But what is it that renders our people incapable of discharging these duties? It is not the power to do so that is denied, for that is admitted; it is i not the intellectual capacity, for much greater ; things have been successfully undertaken ; it is not the want of business experience, for the serv- ' ices of the very same men who are now employed to manage these properties could be secured by the _ government as well as by private corporations, and 214 Combinations, the entire staff of employees might be retained, if desired. It is, then, their honesty that is called in question. If the honesty of the American peo- ple can be trusted with the protection of our lives and property ; if it has built up the greatest govern- ment that the world has ever known and preserved its national institutions throughout a century and a quarter, free from corruption, and true to the pur- poses of their creation, surely it can be trusted with the management of a local street car line or water works. Numerous instances of dishonesty in public life are to be found, it is true, but these may be shown to exist under every form of government, and are not peculiar to our own. Dishonesty is also to be met with in the management of private affairs, and our state penitentiaries are filled with examples. AVhen an employee of a private corporation is found to be dishonest, he may be promptly pun- ished ; but when the corporation itself is dishonest in its dealings with the public, it cannot be ef- fectively punished so long as it is allowed to re- main in control of the public service. When, on the other hand, an employee of the government is found to be dishonest he may also be speedily punished ; but if the administration of the govern- ment itself is found to be dishonest, it may be promptly removed by the votes of the people. Dishonesty in private corporations which are operating public services may, and undoubtedly, does exist in spite of the efforts of the government to prevent it, but dishonesty in governmental af- fairs can only exist so long as the people are willing to tolerate it. Trusts and Monopolies. 215 The American people have thus far proved equal to every emergency which has been encountered and it is believed that they will not now be found in- capable of managing their own local affairs. Greater difficulties inspire more determined efforts, and in- creasing responsibilities suggest more perfect safe- guards ; and with the development and application of a thorough and practical civil service system to the affairs of municipalities, there would seem to be no reason why they should not be capable of managing all their various forms of public service. As has already been suggested, one or more forms of these public utilities have for years been operated by municipalities in various parts of this country; but even in those localities in which one class of service has been successfully and satisfactorily con- ducted, the same objections are made to the exten- sion of municipal ownership to other branches. Thus, in the city of Chicago, although the public water service has been owned and operated by the city government for more than fifty years to the en- tire satisfaction of the people, and while no one would now think of transferring this service to private management, yet there has been a consider- able protest made against the extension of munici- pal control so as to include the street car system. The prevailing sentiment, however, appears to be in favor of acquiring this service at the earliest practical date. It is the custom of this class of objectors to compare some weak point of municipal operation, not with the accommodation furnished by individ- uals in some similar service, but with some par- ticular feature of the management of strictly pri- 2i6 Combinations, vate property; such as to contrast the erection of public buildings when clone directly by the govern- ment, with the speed with which similar structures are erected by private parties. This comparison is manifestly unfair, for in the case of individual property, every consideration requires the proprie- tor to use the utmost care and most skillful manage- ment ; whereas in the operation of public property by private persons, the controlling purpose is to get the most out of it in the shortest time, lest it be taken from them. If comparisons are to be made, they should be with the management of pub- lic property by private corporations, and then, even in the case of the erection of the public buildings referred to, if the comparison is made with the numerous delays and innumerable devices which are resorted to, in order to procure extensions of time and additional expenditures of money, which are so common in the constructioij of public build- ings by private contractors, it will not, it is be- lieved, appear so entirely discreditable to the show- ing made by government work. The operation of the postal system by the United States Government would seem to afford a sufficient answer to those who fear the use of the patronage thus afforded for political purposes. Tens of thou- sands of men, who belong to every political party, are there employed throughout the changing ad- ministrations of government, but with the aid of a rigid civil service system, they are kept practi- cally free from political control, and afford but slight aid to the administration in matters of parti- san politics. It is safe to say that the employees of the Post Office Department are much less obedient Trusts and Monopolies. 217 to the political dictation of the administration in power, than are the employees of private corpora- tions which have received special favors from the government. While these are among the objections usually re- lied upon in opposing municipal ownership of pub- lic utilities, it is believed that the fear of invading the domain of private enterprise is the one which has had the most influence with the people at large, and it is chiefly to anticipate this objection that we have entered into so extended an analysis of the rights and powers of government. We have attempted to show from the very nature of these public services that the duty of providing them rests primarily upon the government, and that the letting of them to be operated by private individuals is a mere secondary consideration which is neces- sarily temporary in its duration; that the dis- charge of these duties is, therefore, a governmental function no matter by whom they may be per- formed, and the government has an absolute right to regulate them, and to change its methods of performing them whenever it sees fit to do so. It will, of course, be understood that it is not pro- posed to take any of the property of private in- dividuals which may have been used in connection with the operation of these services without making due compensation therefore, as required by law. We thus show that these services are proper func- tions of government, and make a distinction be- tween the service itself and the property used in connection with it, and between the right of the public to control the service and its right to con- trol the property employed in it, believing that 2i8 Combinations, when the people understand the true extent to which the community may justly go in its control of pub- lic affairs, and realize that there is no danger of any encroachment upon the natural field of private business, they will unhesitatingly demand muni- cipal ownership and control of all forms of public service. In making this distinction between the service rendered by quasi-public corporations, and the prop- erty employed in connection with it, we have de- parted somewhat from the usual custom of writers upon the subject ; but it is believed that it will be found to be in perfect accord with the spirit of the decisions of the courts and the principles an- nounced by the best writers, if not always in entire harmony with the language employed. Thus, the point established by these decisions is the power of government to regulate the charges and manner of service afforded by these quasi- public corporations. On this proposition the Su- preme Court of the United States was unanimous, and is supported by the leading jurists and text writers. In the case of Munn versus Illinois, 94 United States Report, page 311, however, which is the leading ca«e upon the subject, the Supreme Court of the United States expressed itself as fol- lows: "It has been customary in England from time immemorial, and in this country from its first colonization, to regulate ferries, common car- riers, hackmen, bakers, millers, wharfingers, inn- keepers, etc., and in so doing to fix a maximum of charge to be made for services rendered, accom- modations furnished and articles sold. To this day statutes are to be found in many of the states upon Trusts and Monopolies. 219 some or all these subjects ; and we think it has never yet been successfully contended that such legisla- tion came within any of the constitutional prohibi- tions against interference with private property. ^'When, therefore, one devotes his property to a use in which the public has an interest, he in effect grants to the public an interest in that use and must submit to be controlled by the public for the com- mon good to the extent of the interest he has thus created. He may withdraw his grant by discon- tinuing the use, but so long as he maintains the use he must submit to the control." The court would thus appear to have emphasized the right of the government to exercise a certain amount of control in private property which is de- voted to a public use, and this has given rise to much adverse criticism of the decision. It is said that the right of private property is as sacred as the right of life and liberty, and that the government is equally bound to protect the individual in the en- joyment of it. The power of the government to regulate the charge or compensation which a per- son shall receive for the use of his property is said to be in fact the right to deprive him of the fruits of his property and of all that makes it useful or desirable to him, leaving him merely the empty title, and that it amounts to a virtual confiscation of his property under the guise of regulation. It is declared to be subversive of the rights of private property and to destroy practically all the guaran- ties of the Constitution and of the common law invoked for the protection of vested corporate rights. Speaking of Munn versus Illinois and the Granger 220 Combinations, Cases, Mr. W. P. Wells, in his treatise entitled The Dartmouth College Case and Private Corpora- tions, 9 Am. Bar Assoc. Rep., 229, says ; "The de- cisions seem to us to be subversive of the rights of private property, heretofore believed to be pro- tected by constitutional guaranties against legisla- tive interference; they hold that all property and all business of the state are held at the mercy of the legislature ; they deprive private and corporate owners of their property absolutely, although under the guise of mere regulations as to its use and em- ployment and non-interference with its title and possession." Referring to the decisions in the Railway Commission Cases, 116 U. S., 307, which affirm the same principle, and to the dissenting opinions of Justices Harlan and Field, he contin- ues : "These decisions assert principles which have not received, and, as we believe, cannot receive, the assent of the most weighty professional opinion. The reasoning of the dissenting opinions seems to be unanswerable. These express with cogent logic, abundant authority and masterly strength the con- sequences of a doctrine that the legislative power can be unchecked in its interference with business essentially private, or its prescription of the com- pensation which private and corporate owners Bhall receive for the use of their property." The court in Munn versus Illinois quotes high English authorities in which similar language is employed and which shows that the right of the government to regulate the use of property which has been dedicated to a public use, has been recog- nized by the common law for the last three hundred years; but the point which the court had in mind Trusts and Monopolies. 22ii in these cases, as well as in the other cases cited, was clearly, the regulation of the service, and not the property. The property is regarded as a tangible representative of the service, which must be oper- ated upon in order to control the service; it is merely an incident to the service and not an in- dependent object which is sought to be controlled. It is said that property becomes clothed with a public interest when used in a manner to make it of public consequence and to affect the community at large; but while the power to regulate these properties is said to be fundamental with the gov- -ernment, the public interest in them is admitted to be so slight that it may be destroyed at the pleas- ure of the individual proprietors. They may as- sign, remove, destroy, or otherwise withdraw their property from use without the leave or assent of the public, and in any of these cases the interest of the public is said to be terminated. Thus, the dignity of this power appears to be entirely dispro- portionate to the interests or title of the government to the property over which it is supposed to be exer- cised, and upon the existence of which it would seem to depend. But the power to regulate does not cease with the destruction of the tangible property. The ferry may be destroyed, but the power to regulate the carrying of persons and property across the stream remains, and the duty to provide another ferry or bridge, continues to rest upon the government. It is therefore the service, and not the property which the government seeks to regulate; and it is that which the courts have had in mind. Mr. Justice Field dissented from the finding of 222 Combinations, the court in the case of Munn versus Illinois, in an elaborate opinion in which he was joined by Mr. Justice Strong. After assenting to the propo- sition that government has a right to control pri- vate property which has been regularly dedicated to a public use, he disagrees with a more general statement that property becomes clothed with a public interest whenever it is used in a manner to make it of public consequence. He said that the right to regulate private property meant the right to take the beneficial interest of that property, and that to give to legislatures the power to deter- mine when property became so clothed with a pub- lic interest and, therefore, subject to governmental control, was to destroy for all useful purposes the eflBciency of the constitutional guaranties. The particular point at issue in the case was whether the grain elevators of the city of Chicago constituted such a public service as to bring them within the power of the state to control their charges. The court held that they did, but the dis- senting opinion maintained that the rule an- nounced by the court for determining the right of government to control private property, was so broad and indefinite that it might be extended so as to include nearly every form of private property that became in any way serviceable to the public; that the operation of grain elevators was not a form of public service known to the common law; that it was conducted by private persons upon private property ; that no franchise or grant was received from the government ; that no public property was employed in connection with it; and that it did not fall within any rule that would not be equally Trusts and Monopolies. 223 applicable to almost every form of private business. The criticism of the case, then, has chiefly been based upon the declared right of government to regulate certain classes of private property, an^ the fear of the extension of that power so as to abro- gate all the safeguards which have been established for the protection of the rights of private property. But in spite of the storm of criticism with which it has been assailed, the principle announced in the case has been ever since sustained, and has not been extended in its application beyond that class of cases which we may reasonably presume to have been contemplated by the court. Let us then inquire whether the difference be- tween the court and its critics has not rather been one of definition, than of principle. The following extract from the opinion of Lord Ellenborough in the case of Alnutt versus Inglis, 12 East., 537, decided in 1810, was approvingly quoted both in the opinion of the court and in the dissenting opinion of Mr. Justice Field ; and as it would therefore seem to contain the principle which the whole court had in mind, the difficulty in reaching the unanimous decision appears to have been in construing it and applying it to the affairs of to-day. "There is no doubt that the general principle is favored, both in law and justice, that every man may fix what price he pleases upon his own prop- erty, for the use of it ; but if for a particular pur- pose, the public have a right to resort to his prem- ises and make use of them, and he have a mo- nopoly in them for that purpose, if he will take the benefit of that monopoly he must, as an equivalent. 224 Combinations, perform the duty attached to it on reasonable terms." After quoting this passage Justice Field ob- serves that in this case it was the grant from the government together with the use which clothed the property with a public interest. This was undoubt- edly, in a sense, true of the particular case in ques- tion, for that particular monopoly was created by royal grant; but it will be readily perceived that the language of Lord Ellenborough clearly an- nounces a much broader principle. It is there de- clared to be the monopoly, together with the use, which creates the public interest, and that is just as true to-day as it was when announced nearly one hundred years ago ; and it makes no difference whether the monopoly be created by governmental grant or otherwise. That the court in Munn versus Illinois had this rule in mind, is shown by the reproduction of it in the opinion of the court, and by the statement that the elevators in question had acquired a virtual monopoly of the business in the city of Chicago, that the entire business was controlled by a few men who fixed prices at the beginning of the year to which all were obliged to conform, that com- petition was destroyed, and that the public was compelled to submit to their terms. The rule laid down by Lord Ellenborough, then, appears to include all that was intended to be af- firmed by the Supreme Court of the United States in Munn versus Illinois, and since it defines the means by which it may be determined with reason- able certainty the limits to which governmental control may be extended, and is not, therefore, Trusts and Monopolies. 225 open to the same criticism to which that case has been subjected, it would seem to be a much more appropriate statement of the law than that adopted by our court. It will also be further observed that this definition of Lord Ellenborough eliminates the idea of governmental control of private prop- erty, and deals directly with the subject proposed to be regulated, which is the service. We thus find a highly authoritative statement of the law in perfect accord with the views which we have already expressed ; that government possesses the power to protect its people against every in- fringement of their rights, and that it is its duty to regulate and control all those forms of public service which the very organization of society re- quires to be kept equally accessible to all its mem- bers. This rule which has stood as the definition of the common law upon the subject for nearly a century, is safe, yet comprehensive. It assures the people against the fear of governmental interference in the affairs of private business ; it encourages them to allow to the government the full measure of power necessary to insure the best possible manage- ment of all public affairs, and secures to the govern- ment complete power to control monopolies of every kind wherever they may be found. "There is no doubt that the general principle is favored both in law and justice, that every man may fix what price he pleases upon his own prop- erty, for the use of it ; but if, for a particular pur- pose, the public have a right to his premises and make use of them, and he have a monopoly in them for that purpose, if he will take the benefit of that 226 Combinations, monopoly he must, as an equivalent, perform the duty attached to it on reasonable terms." This is sound law. It means that the government is com- petent to protect every interest of its citizens ; that whenever any person secures a monopoly of any service or commodity which is necessary to the com- fort or convenience of the public, no matter in what way that monopoly may have been acquired, he thereby makes his business subject to govern- mental regulation and control for the benefit of all who are dependent upon its products; and in af- fording this protection and regulation, it may as- sume the ownership and operation of any or all of these public interests whenever, in its judg- ment, the best interests of the people and the wel- fare of the community may seem to require it to do so. Trusts and Monopolies. 227 CHAPTER IX. MONOPOLIES AND THE TARIFF. In considering the relations between monopolies and the tariff, we have no intention of allowing ourselves to be drawn into any discussion of the merits of the protective system in its general ap- plication, or of the relative merits of protection or free trade. We wish to keep constantly before our minds the fact that monopoly is the central subject of our investigation, and that we are to study the tariff merely to determine wherein it may tend to create, promote, perpetuate, assist, or otherwise affect monopolies. In pursuing this inquiry, we wish our readers to lay aside for the time, whatever feelings of political friendship or antipathy they may have associated with the policy of protection, and to examine this question strictly upon its merits, regardless of how their conclusions may prove to coincide, or be at variance with their views respecting the policy in general. We wish them to look upon the protection afforded to mo- nopolies as a new application of the principle, and 228 Combinations, one which was not contemplated by the founders of "the protective theory, and to examine it impar- tially, with no disposition to question the motives or good intentions of those who framed the tariff laws ; also, with no reference to the question as to whether protection should, or should not, continue to be afforded to the manufacturers of articles which are not controlled by monopolies. Monopoly, in the first instance, depends upon the ability to secure control of a sufficiently large percentage of a commodity to enable the would-be monopolist virtually to control the market for that article. Thus, a concern which controls from sixty to eighty per cent, of the production of petroleum, can very largely dictate prices, and prescribe the conditions under which its rivals must do busi- ness. The ability to secure control of such a percentage of a given commodity, depends upon the available supply of it in the market, the abundance and dis- tribution of the raw materials of which it is made„ and the difficulties attendant upon the production of the finished product. Thus, the greater the supply the more difficult it will be, and the greater amount of capital will be required to make it possible to purchase a sufficient quantity to be able to control the market; but even the greatest sup- ply must eventually become exhausted or insuffi- cient, and the power of the monopolist must ulti- mately depend upon his ability to control the sources of production, and the supply of the Taw materials required. Thus, the raw material required in the produc- Trusts and Monopolies. 229 tion of corn, namely, the soil, is very abundant, and may be found in all parts of the country; the process of production, or cultivation, is simple, re- quiring but little skill and small capital, and is pursued by a very great number of individual proprietors. The attempt, therefore, to secure con- trol of a sufficient percentage of the source of pro- duction to monopolize this commodity, would be attended with very great difficulties, and so there is no monopoly in the production of corn. Bitu- minous coal is found in large quantities, under- lying large tracts of land in numerous districts, widely scattered, throughout the country. It would require a great amount of capital to purchase and hold these lands, and we have thus far had no mo- nopoly in the output of bituminous coal. Anthracite coal, on the other hand, is deposited in comparatively small quantities, in relatively narrow districts, and in but few parts of the United States. It has been quite easy, therefore, for a few large corporations to purchase practically all these sources of supply, and we have a most power- ful and oppressive monopoly in that product. Iron ore is found in many parts of the country, and while it is not difficult to take the ore from the earth, yet it requires large amounts of capital to convert it into iron and steel, and we find a gigantic monopoly in the production of these metals. Whatever serves to restrict the supply of any commodity, makes it easier to secure control of the market, and thereby facilitates the creation of a monopoly. A duty levied upon the importation of 230 Combinations, a given class of foreigii'inade articles, for the pur- pose of encouraging the manufacture of them in this country, must necessarily raise the price of these goods to the American consumer, and will therefore tend to restrict their importation. The purpose of the imposition of protective du- ties is to enable the home producer to raise the price of his product to a point just a little below that of the foreign-made article, plus the amount of duty imposed. So long, therefore, as the home pro- ducers are content to keep their prices a little be- low the point at which foreign-made articles of the same kind can be sold after paying the duties im- posed, the tariff laws serve as a wall encircling our country, and excluding all products of foreign na- tions, which fall within the enumerated lists of articles to which protection is afforded. The exclusion of this volume of foreign-made goods, manifestly greatly reduces the extent of what we term our home market, and renders it much more susceptible to manipulation by those who are seeking to secure a monopoly. A moment's reflection will suggest to any one many of the difficulties which must necessarily at- tend any attempt to monopolize the world's pro- duction of any given article. Kace distinctions and prejudices, variety of language, international politi- cal relations, difference of taste, customs, and man- ner of doing business, diversity of class, the diffi- culties of enforcing agreements between the parties to a combination, and the vast amount of capital that would be required, — all combine to discourage any attempt to form a monopoly. Whereas, with Trusts and Monopolies. 231 the market restricted to the confines of a single nation, many of these difficulties would disappear entirely, and others would assume much less for- midable proportions. It is just as though we were to attempt to dip out or control the waters of Lake Michigan ; we would have before us an intermina- ble task. But if we construct a wall around a small portion of it, just as is commonly done in the con- struction of dry docks in which vessels are to be repaired, we can then pump out the water, or con- trol the volume within the inclosure at pleasure, and with but little difficulty. Or, to be more specific, let us take a practical example. Suppose we wish to monopolize the world's output of penknives ; we shall have to take into consideration the productive capacity of all the civilized nations, the different languages, cus- toms and laws which are peculiar to each, the diffi- culty of inducing the manufacturers of one nation to confide in, and to combine with those of another, and the great amount of capital that would be required to unite the widely scattered plants, and we will soon be forced to realize that a task full of extraordinary difficulties awaits us. But, if one nation will levy an import duty upon penknives of, say, forty cents each on those valued at fifty cents, which is the duty imposed by the present tariff laws of the United States, a knife which before sold for fifty cents in the open market could not now be sold within that nation for less than fifty cents plus the duty paid, which in the case assumed is forty cents, making the selling price of the foreign- made knife ninety cents. The levying of the im- 232 Combinations, port duty, or tariff, as it is termed, does not, however, necessarily increase the cost of produc- tion of the domestic article, and the manufacturers may continue to sell them at fifty cents each, or raise the price to eighty or eighty-five cents; but so long as they keep the price below ninety cents, it is clear that the foreign-made knives cannot be sold in competition with them. There are cases, however, in which peculiar excellence, familiar "usage, or other distinction has established a repu- tation for some particular make, for which people may be willing to pay a premium in excess of the price charged for other knives of the same clasr^, but this set of cases forms an exception to the operation of the laws of trade, and should be carefully excluded from every discussion of the natural and probable results of any proposed sys- tem of protection. With the foreign-made knives thus excluded from our market, we have only the home manu- facturers to deal with. These are all men of the same nationality, who speak one language, are sub- ject to similar laws, customs and conditions, have a like class of employees to deal with, and sub- stantially equal rates of wages to pay, and it is merely necessary to stimulate the growth of a few of the larger concerns, and to squeeze out a num- ber of the smaller ones, in order to get the entire business into the hands of a few large manufac- turers, when it will be comparatively easy for them to get together, and to make the necessary agree- ments and arrangements for consolidation into one great monopoly. Trusts and Monopolies. 233 It is clear, therefore, that the imposition of a tariff for protection tends to create conditions which are favorable to the formation of combina- tions among manufacturers, and to the exercise of monopolistic powers. Let us now inquire whether monopolistic com- binations have actually been formed in the produc* tion of those articles upon which a protective tariff has been laid, for the purpose of encouraging their production in this country. Those readers who will take the trouble to ex- amine the schedules of the tariff law of 1897, com- monly known as the Dingley law, may learn upon just what articles import duties are levied by the United States, and the exact amount of these duties. Any attempt to enumerate these articles, even in general classes, w^ould require much more space than this work can afford, and we must rely upon the reader^s knowledge of the general character of these articles to guide him in pursuing the investi- gation attempted in this chapter. Some notion of their character and variety may, however, be de- rived from the general statement that, in the Ding- ley law, tariff duties varying in amount from ten per cent, on diamonds to several hundred per cent, on proof spirits, are levied upon nearly every article that is manufactured or produced in this country, and especially those in which labor forms a large element of the cost. It would be almost impossible to arrive at any accurate statement of what the average of all the duties imposed by the Dingley law really is, owing to the method adopted of levying both specific and 234 Combinations, ad valorem duties, and to the great number and variety of articles, and grades of articles enumer- ated, but the amount of these duties actually paid into the treasury of the Unitejd States on goods imported into this country, as shown by the Monthly Summary of Commerce and Finance of the United States for June, 1902, prepared in the Bu- reau of Statistics of the Treasury Department of the United States, has during the last five years ranged from forty-nine and twenty hundredths per cent, to fifty-two and thirty-eight hundredths per cent, of the value of the articles upon which it was paid, being in 1901 forty-nine and eighty-three hundredths per cent. So it seems entirely fair to say that the average amount of duty paid upon articles imported into this country is fifty per cent., and that will be assumed to be the true rate for the purpose of this chapter. In volume seven of the Twelfth Census of the United States, for 1900, Manufactures, Part One, page 86, there is given a table showing one hun- dred and eighty-five bona fide, legally chartered combinations that were engaged in the business of manufacturing in the United States during the year 1900, and the table is here reproduced in full, excepting the portions which relate to capitaliza- tion with which we are not now concerned, in order that the reader may examine for himself, and take such other and further means as he may choose to ascertain how many of them are engaged in the manufacture of tariff protected articles. Many more combinations have been organized since the date of the census table, such as the United States Trusts and Monopolies. 235 Steel Corporation and others which might properly be added to this table, but it is preferred to give the table just as prepared by the Director of the Cei^sus, for it is sufficiently comprehensive for our present purpose, and the fact that it was not prepared especially to bring out the points which we have now in mind, will serve to make it more convinc- ing to the average reader. 236 Combinations, CAPITALIZATION OF IXDUSTRIAI* Name of Combination. Location of General Oflace. Alabama Consolidated Coal Equitable Bldg., Baltimore, and Iron Co. Maryland. American Axe and Tool Co. 2.'53 Broadway, New York city. American Bridge Co. 100 Broadway, New York city. American Iron and Steel Mfg. Lebanon, Pa. Co., American Ordnance Co. 718 Crescent Ave., Bridgeport, Conn. American Radiator Co. Lake and Dearborn Sts., Chi- cago, 111. American Sheet Steel Co. Battery I'ark Bldg., New York city. American Steel and Wire Com- Rookery Bldg., Chicago, 111. panv of New Jersey. American Steel Casting Co. Chester, Pa. American Steel Hoop Co. Carnegie Bldg., Pittsburg, Pa. American Tin Plate Co. 24 State St.. New York city. American Wood Working Ma- 136 Liberty St., New York city, chine Co. Atlas Tack Co. Taunton, Mass. Central Foundry Co. 116 Nassau St.. New York city. Continental Gin Co. Blrmiugban], Ala. Empire Steel and Iron Co. Empire Bldg., New York city- Federal Steel Co. Empire Bldg.. New York city. Ilerrlng-Hall-Marvln Co. 400 Broadway, New York city. International Heater Co. International Power Co. 253 Broadway, New York city. International Steam Pump Co. 26 Broadway, New York city. National Enameling and 81-83 Fulton St., New York Stamping Co. city. Katlonal Malleable Cleveland, Ohio.- Castings Co. Katlonal Saw Co. Newark, N. J. National Shear Co. Fremont, Ohio. National Steel Co. Carnegie Bldg.. Pittsburg, Pa. National Tube Co. Havemeyer Bldg., New York city. Niles-Bement-Pond Co. 136 Liberty St., New York city. Ohio Tool Co., of Auburn, N.Y.Columbus. Ohio. Otis Elevator Co. 71 Broadway. New York city. I'lttsburg Stove & Range Co. 610-612 Wood St., Pittsburg, Pa. Republic Iron & Steel Co. Stock Exchange Bldg., Chi- cago, 111. Fhelby Steel Tube Co. American Trust Bldg., Cleve- land, O. Trusts and Monopolies. 237 COMBINATIONS AND DIVIDENDS PAID. =11 Date of Or- &»§* ganization. ' ^^^ CPPS |J P2.M Dividends Paid during Census. Rate on Pre- Rate on Com- ferred Stock. mon Stock. July 10, 1899... 4 $5,000,000 7 percent. None. Dec. 1, 1889.. April 14, 1900.. Aug. 21, 1899.. 6 24 5 2,000,000 70,000,000 20,000,000 None. None. 5 per cent. None. 20 per cent. None. Dec. 31, 1895.. 2 2,500,000 None. None. Feb. 10, 1899.. 9 10,000,000 7 per cent. None. March 28, 1900. 29 53,000,000 None. None. Jan. 13, 1899.. 42 90,000,000 7 per cent. 5 per cent. Feb. 23, 1894.. April 14, 1899.. Dec. 15, 1898. . Nov. 20, 1897. 6 15 65 8 4,200,000 33,000,000 50,000,000 4,000,000 7 per cent. 7 per cent. 7 per cent. None. 6 per cent. None. None. None. June 1, 1891... July 15, 1899.. Nov. 27, 1899. . March 14, 1899. Sept. 9, 1898.. June, 1892 July 1, 1898.. Jan. 14, 1899.. March 24, 1899. Jan. 29, 1899.. 4 14 6 10 17 : 2 2 2 6 10 700,000 14,000,000 3,000,000 5,000,000 200,000,000 3,300,000 1,800,000 8,000,000 27,500,000 30,000,000 None. 6 per cent. 6 per cent. None. 6 per cent. 6 per cent. 7 per cent. None. None. None. None. 3%2percent. None. None. None. None. Jan. 30, 1891.. 4 3,000,000 None. May 23, 1890.. May 23, 1898.. Feb. 25, 1899.. June 16, 1899. 4 3 22 26 1,000,000 3,000,000 59,000,000 80,000,000 4 per cent. 7 per cent. 7 percent. None. None. None. Aug. 11, 1899 . . Sept. 12, 1893.. Nov. 28, 1898.. Sept. 1, 1899.. 4 2 6 8 8,000,000 350,000 11,000,000 2,000,000 6 per cent. 6 per cent. 7 percent. None. None. None. None. May 3, 1899... 35 55,000,000 7 per cent. None. Feb. 9, 1900.. 14 15,000,000 3ya percent. None. 238 Combinations, CAPITALIZATION OF INDUSTRIAL Name of Combination. Location of General Office. Standard Chain Co. First National Bank BIdg.» Pittsburg. Pa. Steel Tired Wheel Co. New York city. Susquehanna Iron & Steel Co. Columbia, Pa. United Shoe Machinery Co. 205 Lincoln St., Boston, Masc United States Cast Iron 80 Broadway, New York city. Pipe & Foundry Co. Virginia Iron, Coal and Coke Bristol, Va. — Tenn. Co. Wheeling Steel & Iron Co. Wheeling, West Va. American Beet Sugar Co. 32 Nassau St., New York city. American Caramel Co. American Cereal Co. American Chicle Co. American Pastry & Manufac turing Co. American Preserve Co. American Sugar Refining Co. California Fruit Canners' Ass'n. Columbia River Packers' Ass'n. Continental Biscuit Co. Continental Creamery Co. Glucose Sugar Refining Co. National Biscuit Co. National Rice Milling Co. National Sugar Refining Co. Pacific Const Biscuit Co. Flllsbury-Washburn Flour Mills Co., Ltd. Boyal Baking Powder Co. Seacoast Packing Co. Sperry Flour Co. Standard Sardine Co. United States Flour Milling Co. 20 E. Allen St.. Philadelphia, Pa. 1340 Monadnock Bldg., Chi- cago. 111. Park Row Bldg., New York city. Broadway. Thirty-sixth St., and Sixth Ave., N. Y. city» 950 Beach St., Philadelphia, Pa. 117 Wall St.. New York city. 203 California St., San Fran- cisco, Cal. Astoria, Ore. Chicago, III. 523 Jackson St., Topeka, Kan. 845 Rookery Bldg., Chicago, 205 La Salle St., Chicago, 111. 542 Montegut St., New Or- leans. La. 109 Wall St., New York city. Seattle. Wash. 301 Guaranty Bldg., Minne- apolis, Minn. 100 William St., New York city. Royal Ins. Bldg., Chicago, 111. 134 California St., San Fran- cisco, Cal. Eastport, Me. 207 Produce Exchange, New York city. Trusts and Monopolies. 239 COMBINATIONS AND DIVIDENDS PAID. Number of Plants Con- trolled. Oo Si Otrp P Hm m Dividends Paid during Census. Rate on Pre- Rate on Com- ferred Stock. mon Stock. Feb. 2, 1900.. 11 $3,000,000 None. None. Jan. 26, 1897. . June, 1899 Feb. 8, 1899... March 13, 1899. 5 7 5 17 4,000,000 1,500,000 25,000,000 30,000,000 3 per cent. 6 per cent. SVi per cent. 3 per cent. 18 per cent. 8 per cent. None. Jan. 2, 1899... 21 10,000,000 None. April 16, 1892.. March 24, 1899. 7 4 5,000,000 20,000,000 8 per cent. 6 percent. None. March 28, 1898. 2 2,000,000 8 percent. None. June, 1891 6 3,400,000 8 per cent. June 30, 1899.. 6 9,000,000 6 per cent. 81^ per cent. July 7, 1899.. 6 3,000,000 None. None. Dec. 21, 1807.. 1 125,000 6 per cent. Jan. 10, 1891.. July 30, 1899.. Feb., 1899 5 20 4 10,000,000 3,500,000 2,000,000 7 per cent. 9 per cent. 60 cts. per share monthly. 21^ per cent. June 15, 1898. . March 1, 1900.. Aug. 3, 1897.. 5 13 5 500,000 500,000 40,000,000 None. 7 per cent. 7 per cent. 6 per cent. Feb. 3, 1898.. May, 1892 95 5 55,000,000 5,000,000 7 percent. None. 4 per cent. None. June 2, 1900.. Sept. 15, 1899.. Oct. 18, 1899.. 3 12 5 20,000,000 4,000,000 4,850,000 None. None. 8 per cent. None. None. 4 per cent. March 1, 1899 3 20,000,000 6 per cent. None. April 5, 1899.. Sept., 1892 8« 11 8,000,000 10,000,000 None. None. 114 per cent. March 16, 1899. April 27, 1899.. 25 16 5,000,000 25,000,000 None. None. None. None. 240 Combinations, ClPITALIZATION OF INDUSTRIAL Name of Combination. Location of General Offlce. American Agricultural Chemi-26 Broadway, New York city, cal Co. American Cotton Oil Co. 27 Beaver St.. New York city. American Linseed Co. 100 William St., New York city. Barrett Manufacturing Co., 1205 Land Title Bldg., Phll- The. adelphia, Pa. California Powder Works. 330 Market St., San Fran- cisco, Cal. The Celluloid Co. 30-36 Washington PI., New York city. Continental Cotton Oil Co. 4.'> Cedar St., New York city. The Fisheries Co. 135 Front St., New York city. CJeneral Chemical Co. 25 Broad St., New York city. 9.. 17 June 10, 1885.. 7 March 18, 1899 31 April 12, 1890. 22 6,000,000 3,000,000 25,000,000 7,500,000 12,000,000 10,500,000 7 per cent. None. 6 per cent. 7 per cent. 4 per cent. 6 per cent. None. 4 per cent. 7 per cent. None. None. Aug. 1, 1882.. Aug. 31, 189.>. Sept. 12, 1895. . 26 . 3 . 33 110,000,000 6,000,000 50,000,000 6 per cent. 3 per cent. 8 per cent. 45 per cent. None. 4 per cent. April 27, 189£ March 1, 1899 Aug. 27, 1890. K 4 ... 4 . 12 75,000,000 20,000,000 3,000,000 8 per cent. 5 per cent. None. April 4, 1899. . 13 65,000,000 7 per cent. None. Feb. 8, 1892.. 12 4,000,000 4 per cent. Jan. 1, 1896.. Nov. 19, 1898. June, 1899... Dec. 7, 1891.. . 14 . 13 . 5 . 17 600,000 20,000,000 3,000,000 30,000,000 1 % per cent. 8 percent. 7 per cent. None. None. 10 per cent. 1 per cent. June 30, 1880. Jan. 1, 1900. . 8 . 6 10,000,000 5,000,000 None. 6 per cent. None. Aug. 10, 1891. . 2 5,000,000 None. Sept.» 1897... . 26 30,000,000 3% per cent. None. Aug. 22, 1895. . 13 35,000,000 None. None. Aug. 10, 1894. . 9 10,000,000 6 per cent. 242 Combinations, CAPITALIZATION OF INDUSTRIAL Name of Combination. Location of General Office. Chicago Breweries, Ltd. Chicago Consolidated Brewing & Malting Co. Cleveland & Sandusky Brewing Co. Connecticut Breweries Co., Ltd. Consumers' Brewing Co. Erie Brewing Co. Evansville Brewing Ass'n. Indianapolis Brewing Co. Kentucky Distilleries and Warehouse Co. Maryland Brewing Co. New Orleans Brewing Co. New York & Kentucky Co. Paterson Brewing & Malting Co. Pennsylvania Central Brewing Co. Pittsburg Brewing Co. St. Louis Brewing Ass'n. San Francisco Breweries, Ltd. Seattle Brewing & Malting Co. Springfield Breweries, Ltd. Springfield Breweries Co. Standard Distilling and Dis- tributing Co. United Breweries Co. United States Brewing Co., Ltd. United States Brewing Co. American Bicycle Co. American Car & Foundry Co. I'ressed Steel Car Co. I'-iTman Co.. The. Fianrtard Wheel Co. Sv/uthern Car & Foundry Co. Chicago, 111. 1422 Monadnock Bldg., Chi- cago, III. Cleveland, Ohio. Bridgeport, Conn. Philadelphia, Pa. Erie, Pa. 5th & Ingle Sts., Evansville, Ind. 820 High St., Indianapolis* Ind. 27 William St.. New York city. Brewers' Exchange Bldg., Bal- timore, Md. New Orleans, La. 67 Lake Ave., Rochester, N. Y. Paterson, N. J. 431 N. Seventh St, Scranton, Pa. Pittsburg. Pa. Walnwrlght Bldg., St. Louis, Mo. 240 Second St., San Fran- cisco, Cal. Seattle. Wash. Springfield. Ohio. Springfield, Mass. 27 William St., New York city. Stock Exchange Bldg., Chi- cago. 111. 788 liroad St., Newark, N. J. Monadnock Bldg., Chicago, 111. Park Row Bldg., New York city. Lincoln Trust Bldg., St. Louis, Mo. Tradesmen's Bldg., Pittsburg, Pa. 309 W. Third St., Chicago, 111. Terre Haute, Ind. Birmingham, Ala. Trusts and Monopolies, 243 COMBINATIONS AND DIVIDENDS PAID. O pC ganization. April, 1889 2 June, 1890 4 June 7, 1898... 9 1890 3 Oct. 26, 1896.. 4 March 20, 1899. 2 March, 1894. . . 3 $3,000,000 5,000,000 6,000,000 700,000 3,800,000 1,G00,000 400,000 Dividends Paid during Census. Rate on Pre- Rate on Com- ferred Stocl£. mon Steels. % per cent, 6 per cent. None. 8 per cent. None. None. 7 percent. None. None. Feb. 3, 1899 ... 50 32,000,000 Dec. 23, 1898.. 16 6,500,000 Oct. 6, 1899... 4 2,790,000 Jan. 25, 1900.. 3 2,000,000 July 1, 1899... 6 3,000,000 Aug. 23, 1897.. 12 5, Feb. 4, 1899... 18 13,000,000 June 1, 1889... 11 5,250,000 April 30,1899.. 6 1,023,300 1893 3 1,000,000 June 1, 18 -O.. 11 509,250 April 19, 1899.. 3 1,375,000 June 27, 1898.. 10 24,000,000 Aug. 8, 1898... 12 5,600,000 1889 5 3,500,000 Sept. 1, 1890.. 6 6,000,000 May 12, 1889.. 35 30,000,000 Feb. 20, 1889 . . 17 60,000,000 Jan. 12, 1899 . . 4 25,000,000 Dec, 1899 5 74,000,000 Aug. 20, 1892.. 6 1,000,000 June 1, 1899.. 5 3,000,000 None. None. 6 per cent. None. None. None. 7 per cent. None. None. 600,000 None None. 7 per cent. 4 per cent. $2.70 per share. None. None. 6 per cent. 8 per cent. 6 per cent. 8 per cent. None. None. None. None. 8 per cent. 5 per cent. 70 cts. per share. None. None. 7 percent. None. 7 percent. 6 per cent. 8 per cent.* 6 per cent. None. None. None. 244 Combinations, CAPITALIZATION OF INDUSTRIAL Name of Combination. Location of General Office. Ill Fifth Ave., New York city. Ill Fifth Ave., New Yoric city. Ill Fifth Ave., New York city. 1322 Avenue A, New York city. 110-112 E. Thirteenth St., New York city. 35 Wall St., New York city. 260 Broadway, New York city. Ames lildg., Itoston, Mass. American Snuff Co. American Tobacco Co. Continental Tobacco Co. Havana-American Co., The American Felt Co. American Grass Twine Co. American Thread Co. American Woolen Co. Mt. Vernon-Woodberry CottonEqultable Bldg. Baltimore, Md. Duck Co. New England Cotton Yarn Co. 37 N. Water St, New Bed- ford, Mass. 17 State St., New York city. 320 Broadway, New York city. 92 Cliff St., New York city. RIdcway, Pa. Shoffield. Pa. WilUamsport, Pa. 26 Ferry St., New York city. Fourth Ave. & Nineteenth St., New York city. 84 Van Buren St., Chicago, 111. Springfield. Mass. 30 Broad St.. New York city. 121-127 Crosby St., New York city. 1602 Fisher Bldg., Chicago, 111. Standard Rope & Twine Co. United States IMnishlng Co. American Hide & Leather Co Elk Tanning Co. Penn Tanning Co. Union Tanning Co. United States Leather Co. American Lithographic Co. American Straw Board Co. American Writing Paper Co. International Paper Co. National Wall Paper Co. Union Bag & Paper Co. Springfield, Mass. 22 S. Fifteenth. St., United States Envelope Co. American Cement Co. phia, Pa American Clay ManufacturingAkron, Ohio. Co. American Window Glass Co. Baltimore Brick Co. Philadel- Illlnois Brick Co. International Pulp Co. Macbeth-Evans Glass Co. National Fire Proofing Co. T^ational Glass Co. 200 Ninth St., Pittsburg, Pa. 1002 Atlantic Trust Bldg., Baltimore, Md. Chamber of Com. Bldg., Chi- cago. 111. 41 Park Row Bldg., N. Y. city. Telephone Bldg., Pittsburg, Carnegie Bldg., Pittsburg, Pa. Neeren Bldg., Pittsburg, Pa. Trusts and Monopolies. 245 COMBINATIONS AND DIVIDENDS PAID. Date of Or- ganization. o go «< Co erg — 2p,o March 12, 1900. Jan. 21, 18st0. . Nov. 28, 1898. Nov. 9, 1899 . . 9 ?25,000.000 13 70,000,000 9 100,000,000 8 10,000,000 Dividends Paid during Census. Rate on Pre-Rate on Com- ferred Stock. mon Stocks None. None. 8 per cent. 6 per cent. 7 per cent. None. 7 per cent. None. Feb. 9, 1899 ... 5 5,000,000 6 per cent. None. June 8, 1899. .. March 10, 1898. March 29, 1899. Aug. 29, 1899 . . 3 15,000,000 10 12,000,000 30 65,000,000 7 9,500,000 July 15, 1899... 9 11,500,000 Nov. 1, 1895... July 1, 1899.. Aug. 29, 1899. . April 17, 1893. Aoril 13, 1893. April 13, 1893.. Feb. 25, 1893.. Jan. 1, 1896... 12,000,000 3,000,000 35,000,000 12,500,000 13,500,000 10,000,000 23 128,000,000 1 4,000,000 5 3 30 23 14 18 None. 5 per cent. 10 per cent.^ 7 per cent. None. IV2 per cent. 7 per cent. None. None. 7 per cent. None. None. None. $1.50 per share. None. $1.50 per share. 6 per cent. None. None. May 29, 1889.. 17 6,000,000 July 25, 1899.. Jan. 31, 1898.. June, 1892 25,000,000 45,000,000 30,000,000 Feb. 27, 1899.. 17 27,000,000 June, 1808 March 11, 1890. 5,000,000 500,000 March 1, 1900.. 28 10,000,000 July 31, 1899. June 23, 1899. 39 28 17,000,000 2,100,000 None. 6 per cent. 7 per cent. 7 per cent. 7 per cent. 6 per cent. 3 per cent. None. None. None. None. None. 32% percent. None. None. None. Feb. 13, 1900.. 36 9,000,000 None. None. March, 1893.. July 7, 1899... Dec. 20, 1899. Nov. 1, 1899.. 1 5,000,000 7 2,200,000 5 2,000,000 19 4,000,000 4 per cent. 7 per cent. 7 per cent. None. None. 4 per cent. None. None. 246 Combinations, CAPITALIZATION OF INDUSTRIAL Name of Combination. Location of Generai Office. Carnegie Bldg.. Pittsburg, Pa. Pittsburg Plate Glass Co. Suburban Briclc Co. Trenton Potteries Co. 30.» N. Clinton Ave., Trenton, N. J. United States Clay Manufac- Fifth &_ Liberty Sts., Pltt»- WheelTng, V. Va. .» N. Cll turing Co. United Glass Co. Western Stone Co. burg. Pa. Ninth & Bingham Sts., Pitta- burg, Pa. Chamber of Com. Bldg., Chi- cago, III. Ill Fifth Ave., New York city. American School Furniture Co. Brunswlek-Balke-Coliender Co. 860 Broadway, New York city. Diamoud Match Co. 504 Pullman Bldg., Chicago, Hevwood Bros. & Wakefield Co. Gardner, Mass. National Casket Co. Oneida, New York. National Cooperage and Wood- Peoria, 111. ware Co. United States Bobbin & Shut- 270 Butler Exchange Bldg., tie Co, Yellow Pine Co. American Glue Co. American Hard Rubber Co. American Ice Co. Providence, R. I. 16 Beaver St., New York city. 419 Atlantic Ave., Boston, Mass. 9-13 Mercer St., New York city. 131 E. Twenty-third St., New York city. 120 Viaduct, Cleveland, Ohio. 278 Congress St., Boston, Mass. 15 Exchange PI., Jersey City, N, J. 100 William St., New York city. Thirteenth and Pine Sts., Pittsburg. Pa. Consolidated Railway ElectriclOO Broadway, New York city. Lighting & Equipment Co. American Shipbuilding Co. American Soda Fountain Co. Central Fireworks Co. Commonwealth Roofing Co. Consolidated Ice Co. Electric Boat Co. General Arlsto Co. National Carbon Co. Pittsburg Coal Co. Rubber Goods Manuf. Co, United States Rubber C4 Ferro-manganese l,29t> All other 3,763,287 Scrap and old, fit only for remanufacture. . . . 544,394 Bars or rods of steel : Wire rods 336,680 All other 2,651,089 Billets, ingots, and blooms 3,158,239 Hoop, band and scroll 167,942 Ingots, bars and rods of steel rails for rail- ways : Iron 32,567 Steel 10,841,189 Sheets and plates : Iron 498,964 Steel 1,752,873 Tin plates, terne plates, and taggers tin 66,550 Structural iron and steel 3,357,023 Wire 4,104,563 Builders' hardware, saws, and tools : Locks, hinges and other builders' hardware.... 5,569,903 Saws 327,859 Tools not elsewhere specified 3,306,751 Car wheels 203,396 Castings. N. E. S 1,135,453 Cutlery : Table 33,647 All other 200,640 Firearms 958,324 Machinery, machines, and parts of : Cash registers 873,121 Electrical 5,812,715 Laundry machinery 479,274 Metal workings 4,054,313 Printing presses and parts of 1,005,929 Pumps and pumping machinery 2,187,246 Sewing machines, and parts of 4,095,663 Shoe machinery 953,898 Steam engines, and parts of : Fire 23,370 Locomotives 4,039,006 Stationary 901,888 Boilers and parts of engines 1,696,385 Typewriting machines, and parts of 2,827,329 All other 20,864,352 Total machinery 49,814,489 Nails and spikes : Cut 575,285 Wire 982,31 3 All other, including tacks 257,700 Pipes and fittings 5,139,895 254 Combinations, Safes V. .. f 112,068 Bcales and balances 532,640 Stoves, ranges, and parts of 548,716 All other manufactures of iron and steel 15,459,491 Total iron and steel, not including ore 117,319,320 Jewelry and gold and silver manufactures 1,455,487 Lamps, chandeliers, etc 1,021,435 Lead manufactures 671,679 Leather, and manufactures of 27,923,653 Lime 29,562 Malt liquors 1,723,025 Marble and stone manufactures 1,544,594 Matches 88,739 MuBlcal instruments 2,780.796 Oil cloths 172,635 Oils, refined or manufactured 65.021,591 I'aints, pigments and colors 2,036,34a I'aper, manufactures of 7,438,901 I'araffln and paraflin wax 6,857,288 I'erfumery and cosmetics 380,9:^4 I'hotographic materials 1,098.445 Plated ware 517.208 Silk manufactures (and waste) 253,816 Soap 1 .509.180 Spirits, distilled 3.054,723 Starch 7 2,005.865 Straw and palm leaf manufactures 412.668 Sugar, refined and confectionery 981,356 Tin, and manufactures of 516,343 Tobacco manufactures 5,092,603 Toys 280,546 Trunks, valises, etc 115,881 Varnish 611.459 Vessels sold abroad 1 12.906 Wood manufactures 11,099.643 Wool manufactures 1,542,733 Zinc manufactures 965,510 All other articles 6,317,480 Total $412,155,066 The table shown does not include the exporta- tion of breadstuffs, comprising bread, wheat flour, com meal, oatmeal, grains of all kind, and all preparations of food made from them, or meat, dairy products, and other articles, all of which, amount to hundreds of millions of dollars, but which are included, in the statistics prepared by the Treasury Department, under the head of agri- cultural products. Trusts and Monopolies. 255 The exports of domestic manufactures, strictly so-called, from the United States during the last thirteen years have amounted to $3,389,931,951, as follows : $151,102,376 in 1890, $168,927,315 in 1891, $158,510,937 in 1892, $158,023,118 in 1893, $183,728,808 in 1894, $183,595,743 in 1895, $228,- 571,178 in 1896, $277,285,391 in 1897, $290,697,- 354 in 1898, $339,592,146 in 1899, $433,851,756 in 1900, $412,155,066 in 1901, $403,890,763 in 1902. With this long list before us, of articles which have actually been exported from this country and sold in foreign markets in competition with foreign producers, it w^ould seem to be established beyond the possibility of contradiction that the manufac- turers of this country are now able to compete with those of the world in the production of these arti- cles. The fact that large quantities of the products of the American factories have been sold abroad — hav- ing been, we believe, now fully established, we are led to inquire by whom has this great volume of goods been created, and who is it that has thus risen from the position of mere local producers to the rank of manufacturers of international repu- tation, and to be competitors in the markets of the world ? The combinations recently formed, and still forming, among manufacturers are steadily reduc- ing the cost of production to the lowest possible point ; it has been claimed by the promoters of com- binations that by reducing the cost of production, they would be enabled to sell in foreign markets, thus opening up new sources of profit ; these com- 256 Combinations, binations have been sending their representatives abroad, and going to considerable expense in de- veloping foreign trade. The remarkable increase in our exportation of manufactured articles, from $151,102,376 in 1890 to $433,851,756 in 1900, has been coincident with the even more remarkable development of the industrial combinations of which, as shown by the table given from the Twelfth Census, there were only five in existence prior to 1889 while there were 185 in 1900; and even a most casual examination of the foregoing list of exported articles, will be sufficient to enable the reader to discover in them the prod- ucts of nearly every branch of manufacture repre- sented by the combinations shown in the table pre- sented in this chapter. We are forced, then, to the conclusion that it is the industrial combinations which have attained to this proud distinction, and have proved their abil- ity to compete with the older institutions of Eu- rope. The ability to sell in foreign markets carries with it, as a necessary incident, the power to sell for the same, or lower prices than those demanded by foreign producers; but our protective tariff is levied upon the selling value of articles in the for- eign market in order to enable our home producers to charge higher prices, and for the purpose of pro- tecting them in those higher prices until such time as they shall be able to compete with foreign manu- facturers. The question then arises, are our industrial combinations charging high prices to the home con- sumer, while they are selling at low prices in the Trusts and Monopolies. 257 foreign markets? If so, it is a most grievous vio- lation of the spirit of the tariff law, for the purpose of that law is to secure benefits to the American citizens, and not to secure lower prices to the peo- ple of Europe at the expense of our home con- sumers ; nor merely to afford larger profits to a few manufacturers. The combinations will, however, generally deny that they thus discriminate in prices in favor of the foreign markets; and admitting their denial to be true, we then have this condition of affairs. We have positive assurance that large quantities of American-made articles are annually exported from this country which must, therefore, be sold in for- eign markets and at foreign prices ; and we are as- sured that there is no discrimination made between the prices charged for wares at home or abroad ; it follows, therefore, that these combinations are sell- ing their products in this country at the same prices for which similar articles are sold by foreign manu- facturers in foreign markets, which means that our home producers have ceased to avail themselves of the protection afforded by the tariff, and that it is therefore useless so far as they are concerned. We have, therefore, these two alternatives to choose from: — either our home manufacturers are charging high prices at home and low prices abroad, which is an absolute abuse of the protection af- forded to them by the tariff, or they are selling their goods in this country for the same prices at which foreign manufacturers are selling the same article in foreign markets, and therefore as cheaply as these foreign manufacturers could sell in this country if there were no tariff duties imposed. 258 Combinations, which is making no use whatever of the protective tariif. In the year 1900 the Department of Labor of the United States prepared a list of questions for the purpose of determining the effects of indus- trial combinations upon wages, prices, etc., and the replies received to these inquiries have been skill- fully classified and analyzed by Professor Jere- miah W. Jenks and published in the bulletin of the Department of Labor No. 29, for July, 1900, en- titled Industrial Combinations. Twenty-nine combinations replied to the questions relative to the prices made to the export trade which are classi- fied by Professor Jenks as follows : "Sixteen stated that their export prices are the same as the prices within the boundaries of the United States, due allowance being made for transportation; three more said that they are approximately so, while ten stated that the prices differ ; eight of the ten giving lower prices to foreign bu3'ers in order to secure their market, one reporting higher or lower prices to meet European competition, and one reporting higher prices in foreign countries." Admitting the reports of these combinations to be true and to be representative of their classes, and in view of what has already been said on the subject, the situation which confronts us is briefly this: a large number of the industrial combina- tions are making no use whatever of the protective ' tariff, while others make only an abusive use of it; the tariff has, therefore, ceased to be of any further legitimate service to them ; no one has ever claimed that a protective tariff is of any direct benefit to Trusts and Monopolies. 259 the consumer as such, and since it does not benefit the consumer and has ceased to be of any legiti- mate service to these producers, the tariff, so far as it applies to the products of industrial com- binations, should be removed. The tariff duties should be removed from all ar- | tides the production of which is controlled by com- \ binations, for, as has been said, some of these com- \ binations admit that they afford lower prices to '• foreign buyers than to home consumers, which is a perversion of the purpose of protection; others claim to sell for the same prices at home and abroad, which is equivalent to saying that they take no advantage of the protection afforded them by the tariff, while the published tables of manu- factured articles exported from this country afford ample evidence of the ability of nearly all of them to compete with foreign manufacturers. It is con- trary to common justice and public policy to con- tinue to afford protection to combinations whose purpose it is to defeat every object for the promo- tion of which, the protective tariff was originally established. The exportation of domestic manufactures af- fords an indisputable test of the ability of our in- dustrial combinations to sell as cheaply as foreign, producers; but in times of heavy home consump- tion the capacity of our factories may be taxed to meet the demands of domestic trade and the ex- ports of their products may therefore show a tem- porary decrease. This will, however, be simply due to the fact that our manufacturers have found a more profitable market at home, and not to any inability to compete for the foreign trade. The 26o Combinations, annual Treasury statement of our exports, while it affords a very appropriate list of articles from which to begin removing tariff duties, cannot, therefore, be accepted as the only guide to be fol- lowed in withdrawing tariff protection from monopolies, for many combinations which are en- gaged in production may not export their products, yet it is desirable that protection shall be with- held from them, and every legitimate means should be employed to identify their products and to ex- clude them from the schedules of protected articles, for, as we have already shown, all of these com- binations are organized for the purpose of de- stroying competition, and of depriving the public of every benefit which the framers of the tariff laws sought to secure to it. There are those, however, who attempt to ex- plain our exports of manufactured products, and to excuse the practice of making lower prices to foreign buyers than to home consumers, by saying that after the demands of domestic consumption have been supplied, they can continue to operate their plants for the balance of the year at a less proportionate expense ; and in order to give con- tinuous employment to their employees, they can afford to send this surplus product to Europe, and to sell it below the prevailing rates of prices in this country. It is something of a revelation to discover that these combinations are so solicitous to secure steady employment for their employees; but let us inquire a little further into this reduc- tion in the cost of operating their plants, which enables them to sell so much more cheaply to foreign buyers. Trusts and Monopolies. 261 The best way to prove or disprove a proposition of this kind is to attempt its practical demonstra- tion by the use of figures known to represent the true operating expenses of manufacturing concerns similar to those in which the reduction in the cost of the production of surplus products is said to have been effected. Instead, however, of adopting a set of figures relative to the operation of some one particular factory, for the accuracy of which the reader would have to depend upon the judg- ment and information of the writer, we prefer to use the figures furnished by the Census Depart- ment of the United States, in volume seven of the Twelfth Census, relative to industrial combina- tions. Tjje figures given relate to the expenses of all of the one hundred and eighty-five combina- tions reported, but they will serve our purpose as well, and be, perhaps, more truly representative of the real situation than would the figures of any one plant. In the table shown in the Census the expenses of the industrial combinations are classified under the following heads: wages, salaries, cost of ma- terial used and miscellaneous expenses. It re- quires no argument to show that the item of wages must continue to increase with the amount of the product, and that it cannot be even relatively re- duced whether the plant be operated for ten months or for twelve months in the year. Under the heading "salaries" are included salaried officials, general superintendents, managers, clerks, etc. ; and the total salaries paid by the combinations during the year 1900 amounted to $32,738,208, which amount is subdivided as follows: $7,152,067 was 262 Combinations, paid to officers of corporations and $25,586,141 to general superintendents, managers, clerks, etc. The amount thus shown to have been paid to sal- aried officials of corporations may be admitted to be a fixed charge, which would not have been in- creased by the continuous operation of the plants, but the amount paid to general superintendents, managers, clerks, etc., cannot be properly so classed. In order to be entirely fair, however, we may grant that one-third of the entire force of superintendents, managers, clerks, etc., would have to be retained, even though the plant were to be obliged to close down during a portion of the year, thus making their salaries a fixed charge which might properly be added to the cost of production for home consumption. We then have, including the salaries of the officials of corpora- tions, the sum of $15,680,780 which may properly be classified as fixed charges. The materials used, like the wages paid, must continue to increase with the amount of the output, and having been already reduced to about the minimum cost, by their production and sale in quantities necessary to supply the large scale pro- duction of finished products for the home market, their relative cost cannot be much further de- creased, whether the plants be operated for a longer or a shorter time. Under the title miscellaneous expenses are in- cluded rent of works, taxes, rent of offices, insur- ance, interest and all sundry expenses not else- where included, most of which we may allow to be taken as fixed charges, and to be added solely to the cost of production for home consumption. Trusts and Monopolies. 263 though it is obvious that the expense of such items as light, heat, wear and tear of machinery, etc., must continue to increase with the operation of the plant, and cannot fairly be classed as a charge which must be met whether it is operated or not. We find, then, the total possible fixed charges to be: miscellaneous expenses, amounting to $152,- 157,700, and salaries of officers of corporations, general superintendents, managers, clerks, etc., amounting to $15,680,780, making a total of $167,- 838,480. The total value of the products of these combinations during the census year, as shown by the same table was $1,667,350,9-49. Thus, we find that in the production of $1,667,350,949 worth of products, there were incurred fixed charges amount- ing to $167,838,480 which is approximately ten per cent, of the total value of the products. Suppose, then, that the preparation of this amount of product or the amount required for home consumption would only require the plants to be operated for ten months dur- ing the year, and that the fixed charges suffi- cient to cover the whole year's operation of the plants have been paid. It would then be possible to continue to operate the plants during the re- mainder of the year for the purpose of manufac- turing surplus products intended for the export trade, at a reduced expense equal to the percentage of the fixed charges to the entire operating ex- penses of the business, and the cost of the output so manufactured would be just that much less than the cost of the goods produced for home consump- tion. We have just seen that the fixed charges 264 Combinations, constitute ten per cent, of the cost of wares in- tended for domestic use, and the so-called surplus product, or that manufactured for sale in foreign markets, would therefore be ten per cent, less than the cost of the goods produced for sale in this country. This is the full extent of the reduction in the cost that can be effected in this way. It may also be urged that these producers are willing to accept smaller profits in order to secure foreign trade, but the expenses of selling in foreign markets are much larger, the freight charges are higher, and the risks involved are much greater than they are in selling to the home trade, and if the profits received are still large enough to induce those combinations to assume these additional bur- dens and responsibilities, they should be sufficient to compensate them for engaging in the less bur- densome task of supplying the demands of home consumption. We must, therefore, conclude that the ten per cent, decrease which we have shown that it is possible to effect in the cost of produc- tion, is the total reduction that can be made from a legitimate price charged to home consumers, in order to enable manufacturers to sell in foreign markets; and, that if any greater discount than this is made in the price to foreign trade, it must be due to a decrease in the profit, and as we are not prepared to believe that these combinations are willing to go to great additional expense and incur much greater risks in order to secure smaller profits abroad than the investment of the same money would bring at home, their disposition to sell in foreign markets must be taken as an indi- Trusts and Monopolies. 265 cation that they have been reaping unusually large profits from the American consumers. Since this claim of reduced cost in the produc- tion of products for foreign markets has been of- fered in defense of the claims of these combinations to continued protection by tariff duties, let us in- quire to what amount of protection they are en- titled upon the showing made. If, as is claimed, the reduction in the cost of production, which it is possible to effect by in- cluding all the fixed charges of the business in the cost of manufacture for domestic use, is sufficient to enable our industrial combinations to sell in competition with foreign producers in foreign mar- kets, and, as we have already seen, the total reduc- tion which it is possible to effect in that way is ten per cent., it follows that ten per cent, must represent the difference in the cost of production in this country and in foreign nations, for we are not willing to believe that foreign manufacturers cannot afford to sell on as small margins of profit as can our own producers. If, then, ten per cent, represents the difference in the cost of produc- tion at home and abroad, it is clear that the im- position of a duty of ten per cent, would prevent foreigners from underselling our manufacturers in our home markets, for the amount of the duty would in effect equalize the cost of production and place the producers on equality, whereas a duty of twelve to fifteen per cent, would suffice to exclude foreign manufacturers from our market altogether. The prevailing rates of tariff duties, as we have already shown in the beginning of this chapter. 266 Combinations, average fifty per cent, of the value of the article upon which it is laid, which is five times the amount of the protection to which the products of our combinations would appear to be entitled under the most favorable showing. What, then, becomes of the forty per cent, of protection which is af- forded in excess of the ten per cent, which is claimed to be necessary in order to equalize the cost of production? If ten per cent, is sufficient to equalize the cost of production, which includes all that is paid out in wages, for material, and all expenses of the business, it is clear that the re- maining forty per cent, of the protection afforded must go to swell the profits of the manufacturers. But some will tell us that no advantage is taken of this additional forty per cent, of protection, and that prices are not raised unnecessarily high on account of it. Why, then, we ask, should this un- necessary protection be retained as a temptation to the less scrupulous to extort exorbitant profits whenever an opportunity to do so is presented? Whether these combinations are taking full ad- vantage of the opportunity which the high pro- tection affords them, and are charging excessively high prices to American consumers ; or whether, as many of them claim, they are selling to home con- sumers at the same prices for which they sell abroad, and are thus making no use of the pro- tection offered them, it is remarkable that none of them are ever willing to consent to a reduction of the tariff upon their products. A notable in- stance of this has recently been presented in the case of the anthracite coal combination. It had popularly been supposed that the tariff Trusts and Monopolies. 267 on anthracite coal was merely nominal, and that it had little or no effect in enhancing the price of coal ; but in view of the great scarcity of fuel and the consequent high prices, due to the recent strike in the anthracite coal region, President Roosevelt, in his message to the second session of the Fifty- seventh Congress, recommended that the tarilf be removed from anthracite coal. Measures were at once prepared to carry into effect the President's recommendation, but notwithstanding the extreme necessity to which the people in all parts of the country were reduced for want of fuel, and the supposed indifference of the anthracite coal com- bination, a determined opposition at once developed to the repeal of the duty, and it became evident that a compromise was all that could be hoped for. A bill was then passed repealing the duty on an- thracite coal for the period of one year. With this record before us of successful partici- pation by our home manufacturers in the trade of foreign markets, and in view of the small difference which it is possible to make in the cost of production, even by throwing the whole burden of the fixed charges upon the home consumer, we are forced to believe that our indus- trial combinations can produce as cheaply as any other manufacturers in the world ; but the rapidity with which these combinations are increasing in numbers and in power, leads us to believe that they are reaping much larger profits than could be derived from the sale of their entire product at the same prices for which they are obliged to sell that portion of it which they send abroad, and the des- perate determination with which they resist every 268 Combinations, attempt to lower the tariff duties upon their prod- ucts, as has recently been illustrated by the action of the beet-sugar interests and by the anthracite coal combination, confirms the belief that the pro- tection afforded by the tariff is being used for the purpose of protecting them in charging high prices at home, while they are able to sell for much lower prices abroad. It would seem, therefore, to be the plain and imperative duty of the National Government to remove the tariff duties from all articles which are produced or controlled by com- binations, trusts or monopolies of whatever kind, and thus to diminish their power to levy tribute upon the American people for the sole purpose of Bwelling their private treasuries. But we are told that by removing the duties from articles the production of which is controlled by combinations, we would not only cripple the combinations, but would also destroy the business of the individual manufacturers who are engaged in the production of the same articles. Let us see if this is true. The purpose of the protection afforded by the tariff is to enable home manufacturers to demand high prices for their products, and to prevent them from being undersold by foreign producers. One of the purposes of our industrial combinations is to acquire the ability to produce as cheaply as foreign manufacturers and to sell their products in the foreign markets, and the published statis- tics of the exports of our domestic manufactures appear to furnish conclusive proof that many of them have succeeded in accomplishing their pur- pose. We have, then, individual manufacturers Trusts and Monopolies. 269 who are protected from foreign competition by high protective duties, and, side b}^ side with them, combinations which are active competitors of those same foreign producers from whose competition our manufacturers are protected. If our domes- tic combinations can compete with foreign manu- facturers abroad, they must be even better able to compete with them at home in our own country, where the extra burden of ocean transportation must be borne by the foreigner and be saved by the domestic producers, and since the tariff does not protect our individual manufacturers against homemade products of combinations or trusts, what is there to protect them from this competition which is capable of being even more severe than that of the foreigner from whom they have already sought and secured protection? Are we to suppose that the combinations will prove to be less active competitors of our individual manufacturers than the foreigners would be? Experience has already shown that they can, and will, undersell the in- dividual producer whenever and wherever it be- comes necessary, in order to enable them to secure control of the market, and the power of most of these combinations is built upon the ruins of the once prosperous business of individual producers. Are we to be expected to believe that the combina- tions and monopolies will be more merciful to their individual competitors than they are to the con- sumers of their products? No; we must recog- nize the fact that the tariff affords no real protec- tion to the individual manufacturer, wherever he is opposed by a combination of sufficient size to control the market. 270 Combinations, Our individual manufacturers may be able to produce as cheaply as the manufacturers of Europe, but we are not discussing that point. We have every reason, however, to believe that our indus- trial combinations certainly are able to produce as cheaply, and that they may at will depress prices to the level of the foreign market, or raise them to the highest level to which the tariff af- fords protection. Thus the tariff is made to serve the purpose of the combinations, and if the indi- vidual manufacturers derive any benefit from it, it is merely during the will and pleasure of the combinations to allow them to do so. Instances have already been shown of the power of monopo- lies to destroy competition by the arbitrary rais- ing and lowering of prices in this way, and it makes no difference whether the articles produced or dealt in are protected by tariff duties or not, save that the tariff excludes foreign competition altogether, and to that extent facilitates the control of the home market or domestic combinations or monop- olies. We are also frequently reminded that combina- tions and monopolies have been formed in the pro- duction of articles upon which there are no tariff duties imposed, and this is advanced as an evidence of the fact that combinations can exist independ- ently of tariff protection. In reply to this we would say that the fact that one or more combina- tions exists independently of tariff protection, does not in any way tend to prove that others may not be largely, or even entirely, dependent upon it. We wish to repeat that we have not attempted to prove that combinations are dependent upon the Trusts and Monopolies. 27B tariff, but rather that they are independent of it.[ It affords to them a protection which is no longer] necessary to enable them to pursue their legiti-" mate business, and which they now use merely as a means of extorting high prices from the American consumers, while they are at the same time dis- playing their ability to compete with those foreign manufacturers against whose products they are receiving protection. We admit, and have shown by the table of com- binations herein published, that there are com- binations and monopolies which receive no pro- tection from the tariff, and, for the purpose of this discussion, we are willing to admit that there may be industries and individual manufacturers which are deserving of, and entitled to receive-tariff pro- tection ; but the same table also shows that a great majority of the combinations which have been formed are engaged in the production of tariff protected articles, and the record of the exporta- tion of domestic manufactures from this country, appears to show further that a large majority of these combinations are able to sell their products abroad in competition with the products of foreign, manufacturers, and that they are therefore able to compete with these foreign manufacturers in our home market and require no tariff protection. We therefore contend, that whenever a sufficient number of producers to represent fifty per cent, or more of the output of any one industry combine together, — they forfeit all further right to tariff protection. They then take the matter of protec- tion into their own hands ; they have the indi- vidual producers completely at their mercy and can 272 Combinations, deprive them of the benefits of tariff protection at will; and since the individual producers cannot be protected against the competition of the combi- nations, the power of the combinations to levy ex- cessive charges upon the people under the shelter of tariff protection, should be destroyed by remov- ing the tariff duties altogether from all articles, the production of which is controlled by combina- tions, trusts, or monopolies of any kind. Trusts ,aad, Monopolies. 273 CHAPTER X. REMEDIES. The first and most fundamental purpose of every government is the protection of the life, lib- erty and property of its citizens. When man first ceased to roam the world in savage freedom, and became a member of organ- ized society, he surrendered the right to wage war upon his neighbor, and yielded to society the right to make laws for the control of his intercourse with his fellow-man. In return for this, he re- ceived the assurance that the government would, by its duly appointed officers, afford him protection to life, liberty and property, and make laws which, would secure to him the greatest possible amount of freedom consistent with the rights of every other member of the community: and his descendants have inherited his rights under this unwritten con- tract. Mutual concession is the foundation of all so- ciety. The power of the wealthy depends upon the strength of society, and its ability to afford them protection. Let the stability of a government be shaken, and a financial panic will immediately; ensue, and the confidence of the wealthy disappear. The strength of society depends upon the readi- ness of the people to support it, to obey its lawSj, 274 Combinations, and to respond to the demands of its officers; to support it with their money by paying taxes, and with their lives in the enforcement of its laws, or in waging war in defense of its rights when neces- sary. Can any one doubt, then, that the first and highest function of every government is the pro-* tection of the rights of the whole people, whose mutual sacrifice brought it into being, and whose constant support is necessary to its preservation? There would be no difference in principle whether a foreign prince were to come with force of arms to our sliores to take possession of our land, and then to exact tribute from the people for the privilege of living upon it, or whether a syndicate of our own citizens were to secure title to the same lands by purchase, and then to proceed to exact an exorbitant rental for the use of it; or, again, whe'ther the foreign conqueror were to assume the absolute control of the production of some one of the necessaries of life, and then to raise its price to an unreasonable fi